Neurim Pharmaceuticals (1991) Ltd v Generic Partners Pty Ltd (No 3)
[2020] FCA 1552
•23 October 2020
FEDERAL COURT OF AUSTRALIA
Neurim Pharmaceuticals (1991) Ltd v Generic Partners Pty Ltd (No 3) [2020] FCA 1552
File number: NSD 656 of 2017 Judgment of: NICHOLAS J Date of judgment: 23 October 2020 Catchwords: PRACTICE AND PROCEDURE – proceeding for patent infringement – whether the applicant’s entitlement (if any) to additional damages under s 122(1A) of the Patents Act 1990 (Cth) should be determined at the trial of liability issues or deferred for determination at any damages hearing – where applicant seeks to rely on other matters not pleaded in support of claim for additional damages Legislation: Federal Court Rules 2011 (Cth) r 30.01(1)
Patents Act 1990 (Cth) s 122(1A)
Division: General Division Registry: New South Wales National Practice Area: Intellectual Property Sub-area: Patents and associated Statutes Number of paragraphs: 16 Date of hearing: 23 October 2020 Counsel for the Applicant/Cross-Respondent: Mr D Shavin QC with Ms L Thomas Solicitor for the Applicant/Cross-Respondent: DLA Piper Australia Counsel for the Respondents/Cross-Claimants: Mr N Murray SC with Mr B Mee Solicitor for the Respondents/Cross-Claimants: Herbert Smith Freehills ORDERS
NSD 656 of 2017 BETWEEN: NEURIM PHARMACEUTICALS (1991) LTD
Applicant
AND: GENERIC PARTNERS PTY LTD (ACN 132 833 777)
First Respondent
APOTEX PTY LTD ACN (096 916 148)
Second Respondent
AND BETWEEN: APOTEX PTY LTD (ACN 096 916 148)
Cross-Claimant
AND: NEURIM PHARMACEUTICALS (1991) LTD
Cross-Respondent
AND BETWEEN: GENERIC PARTNERS PTY LTD (ACN 132 833 777)
Cross-Claimant
AND: NEURIM PHARMACEUTICALS (1991) LTD
Cross-Respondent
ORDER MADE BY:
NICHOLAS J
DATE OF ORDER:
23 OCTOBER 2020
THE COURT ORDERS THAT:
1.Pursuant to Rule 30.01(1) of the Federal Court Rules 2011 (Cth) all issues relating to liability for infringement (including validity) of Australian Patent AU 2002326114 (including the entitlement of the applicant to injunctive relief and additional damages based on any one or more of the matters pleaded in paragraph 45 of the amended statement of claim) be determined prior to and separately from any issues of election and quantification of pecuniary relief (including any additional damages).
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
NICHOLAS J:
A dispute has arisen concerning the issues to be dealt with at the trial of the proceedings which is fixed for later in the year.
While the parties agree that there should be an order which defers for later determination the quantification of any damages to which the applicant may establish an entitlement, the applicant contends that the question of whether or not the applicant is entitled to any additional damages should also be dealt with after the determination of liability.
The claims in suit are all method of treatment or Swiss-style claims which relate to the use of melatonin in the treatment of what is referred to as “primary insomnia characterized by non-restorative sleep”. The respondents deny infringement and also seeks orders revoking the claims in suit on a variety of grounds.
In its amended statement of claim, the applicant alleges in paragraph 45 that the respondents have engaged in what is alleged to be infringing conduct:
(a)flagrantly;
(b)with knowledge of the patent;
(c)knowing that the supply of the respondents’ products would infringe the patent;
(d)in reckless disregard of infringement of the patent; and
(e)intending that substantial benefit would accrue to each of them by the infringement of the patent.
It is clear that the allegations made in paragraph 45 are made in support of a claim to additional damages under s 122(1A) of the Patents Act 1990 (Cth) and are otherwise irrelevant to the applicant’s pleaded cause of action.
Pursuant to an order made only recently after the present dispute arose, the applicant was ordered to file a statement of further particulars of the allegations made in paragraph 45. That order required that:
… the applicant file and serve a statement of particulars of all facts, matters and circumstances upon which the applicant will rely in support of its claim for additional damages pleaded in paragraph [45] of the Amended Statement of Claim and which specifies on what basis it is contended by the applicant that the respondents’ alleged infringement of the patent has been:
(a) ‘flagrant’; and
(b) ‘in reckless disregard’ of the patent.
A statement of particulars was duly filed. It includes the following:
(a)Around May 2020, Apotex launched at least one of the Generic Partners Products with an indication for monotherapy for the short term treatment of primary insomnia characterised by poor quality of sleep in patients who are aged 55 or over.
…
(d)The conduct referred to in subparagraph (a) above occurred in circumstances in which:
(i)the hearing of the matter had been scheduled to commence on 17 March 2020;
(ii)the respondents had the whole of the Applicant’s evidence filed in the proceedings, the joint expert report, and the Applicant’s written opening submissions filed and served on 10 March 2020; and
(iii)on 16 March 2020, the hearing due to commence on 17 March 2020 was vacated due to circumstances outside the control of any party.
(e)An award of additional damages may be necessary in order to strip the respondents of all of the pecuniary benefits received from the infringing conduct.
(f)The Applicant says that each supply of the Generic Partners Products in Australia is an infringing supply.
(g)In the event that the Court finds that any instances of supply of the Generic Partners Products in Australia do not infringe the Patent:
(i)that non-infringing supply is only possible because the Generic Partners Products have been registered on the ARTG for an indication that is, or alternatively includes, a use that infringes the Patent; and
(ii)the profits earned as a result of any instances of non-infringing supply of the Generic Partners Products are a benefit that has accrued to the Respondents (because of their infringement of the Patent.
(h)In the circumstances, an award of additional damages may be necessary to deter conduct of a similar kind.
Among other things the particulars now assert in para (e) that an award of additional damages may be necessary in order to strip the respondents of all the pecuniary benefits received from the infringing conduct and, in para (h), to deter conduct of a similar kind in the future. The applicant contends that the first of these matters raises for consideration the scope of any benefit that has been received by the respondents as a result of their alleged infringement and that this is a matter that is most conveniently dealt with after determination of liability for infringement.
The case for additional damages as pleaded in para 45(a)-(d) of the amended statement of claim rests on an assertion that the respondents’ infringements were flagrant and that any infringing conduct was engaged in by the respondents either knowing that such conduct was infringing or in reckless disregard of that fact. These are matters that go to the respondents’ state of mind at the time they engaged in the alleged infringing conduct. Paragraph 45(e) also goes to the respondents’ state of mind since it involves an assertion that the infringing conduct was engaged in by the respondents with the intention of deriving a substantial benefit from the infringement of the patent.
The purpose of the order requiring the applicant to provide particulars of the allegations pleaded in para 45 was to ensure that the respondents were given some notice of the particular matters and circumstances that were to be relied upon in support of allegations of flagrancy and recklessness. What is currently pleaded involves little more than generalised assertion. Based on the particulars appended to para 45, the allegation that the relevant infringements were flagrant or engaged in recklessly seems to have been based on no more than the fact that the respondents elected to supply their products in circumstances where they were on notice of the existence of the patent and the applicant’s assertion that any supply by the respondents of their products would constitute an infringement of a claim of the patent.
The particulars that have now been provided travel beyond what is alleged in para 45 of the amended statement of claim. During the course of the argument today the applicant accepted as much and indicated that it wished to apply to amend the amended statement of claim to rely on other matters in support of its claim for additional damages which it accepts are not raised in para 45.
In my view the matters alleged in para 45 should be addressed at the trial rather than left for determination at any later damages hearing. Although the Court is not bound to take any particular approach in relation to how it proceeds in the present circumstances, the course I propose is broadly consistent with the approach usually followed in this Court in intellectual property cases in which the relevant legislation authorises the Court to make an award of additional damages if the Court considers it appropriate to do so having regard to relevant matters.
Mr Shavin QC, who appeared for the applicant, submitted that the additional matters upon which the applicant now wishes to rely would involve a consideration of the extent to which the respondents may be found to have benefited from both infringing and non-infringing sales of relevant product. The applicant will contend that additional damages should be awarded on account of the applicant having made non-infringing sales (in addition to infringing sales) on the basis, as I understand the submission, that those non-infringing supplies could not have occurred unless the respondents had obtained a registration of their products on the Australian Therapeutic Goods Register in respect of indications within the scope of at least some of the claims in suit. This is the point that is alluded to in para (g) of the particulars.
I am far from convinced that it would be appropriate to allow any amendment to the amended statement of claim along the lines now foreshadowed by the applicant. While I consider that the allegations made in para 45 of the amended statement of claim should be dealt with at the trial (and not deferred until any damages hearing) the question whether any other aspect of the applicant’s claim for additional damages in any amended form should be dealt with at the trial or at any damages hearing is a matter that can be addressed if any application to amend para 45 is made and allowed.
The order I propose to make is as follows:
Pursuant to Rule 30.01(1) of the Federal Court Rules 2011 (Cth) all issues relating to liability for infringement (including validity) of Australian Patent AU 2002326114 (including the entitlement of the applicant to injunctive relief and additional damages based on any one or more of the matters pleaded in paragraph 45 of the amended statement of claim) be determined prior to and separately from any issues of election and quantification of pecuniary relief (including any additional damages).
Orders accordingly.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Nicholas. Associate:
Dated: 23 October 2020
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