Norbrook Laboratories Limited v Bayer New Zealand Limited - [2019] APO 37

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Norbrook Laboratories Limited v Bayer New Zealand Limited [2019] APO 37

Patent Application: 2015202929

Title:Anti-infective formulation and methods of use

Patent Applicant:                   Bayer New Zealand Limited
Opponent:  Norbrook Laboratories Limited
Hearing Officer:  Dr S.D. Barker – Deputy Commissioner of Patents
Decision Date:  7 August 2019
Hearing Date:  1 August 2019 in Canberra; the parties appeared by video conference

Catchwords: PATENTS – section 210 – request for production of documents – whether the documents are likely to be of substantial relevance to the matter – substantial relevance not established – notice to produce refused

Representation: Counsel for the applicant: Ian Finch
Patent attorneys for the applicant: Dr Andrew Scott and Wing Seow of James & Wells
Counsel for the opponent: C. Elliot QC
Patent attorney for the opponent: J. Ballance of In-Legal Limited

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2015202929

Title:Anti-infective formulation and methods of use

Patent Applicant: Bayer New Zealand Limited
Date of Decision: 7 August 2019
DECISION
I refuse to issue a notice to produce.
REASONS FOR DECISION

This matter concerns a request by Norbrook Laboratories Limited (Norbrook) for orders under section 210 of the Patents Act 1990 (the Act) for the production of documents for the purpose of an opposition under section 59.
Background
Patent application 2015202929 was filed in the name of Bayer New Zealand Limited (Bayer) on 29 May 2015. The application was accepted, and a notice of opposition was filed by Norbrook. The grounds of opposition assert that the applicant is not entitled to the invention, the invention is not a manner of manufacture, lack of utility, lack of inventive step, lack of clear enough and complete enough disclosure, lack of a best method, the claims do not define the invention, the claims lack clarity, and the claims lack support. The opposition is ready to be heard, except for the question of the notice to produce.[1]
[1] Recently the parties asked the Commissioner to invoke regulation 5.23 in relation to declarations referred to in this decision.
The patent application
The specification relates to formulations that are used to prevent or ameliorate infections in the teat of milking cattle. In its broadest aspect the invention is described as a paste containing:
"an oil-based physical barrier material which is stable to form a cohesive mass in the teat canal and/or the lower portion of the teat cistern, and
[2] Specification at page 7.
at least one antiseptic compound mixed with the barrier material."[2]
Preferably the antiseptic is chlorhexidine.[3] However, other antiseptics are mentioned:
"For example, quaternary ammonium compounds may be suitable, including, but not limited to Cetrimide and BZK. Similarly povidone-iodine which is currently used in the dairy industry may be suitable."[4]
[3] Specification at page 12.
[4] Specification at page 13.
There are 16 claims. Claim 1 relates to a formulation in the form of a paste which includes three components:
"an oil-based physical barrier material which is able to form a cohesive mass in the teat canal and/or the lower portion of the teat cistern, and
povidone-iodine mixed with the barrier material;
wherein the povidone-iodine is an antiseptic, to kill or prevent the spread of mastitis causing infectious organisms in the teat cistern of the animal following administration, and
[5] Claim 1.
wherein the barrier material includes barium or bismuth."[5]
It is important to note that the invention as claimed contains povidone-iodine.
The notice to produce
On 15 June 2018 Norbrook requested the Commissioner to issue a notice to produce documents related to the product Intercept. Intercept is a teat sealant that was marketed in New Zealand for a period of time and was later withdrawn from the market. Intercept contains chlorhexidine, and does not contain povidone-iodine. Norbrook seeks a notice directed to the following documents.
"Any documents (whether in hard copy or electronic form) in the possession, custody or power of Bayer which comprise, contain or relate to:
1.   Any adverse events reported following the administration of Intercept (ACVM Registration No. A010540) in cattle in New Zealand.
2.   Any events specifically testing, documenting or reporting lack of efficacy, including failure to adequately seal the cow's teat, following the administration of Intercept (ACVM Registration No. A010540) in cattle in New Zealand;
3.   the number of adverse events specifically reporting lack of efficacy, i.e., failure to adequately seal the cow's teat, following the administration of Intercept (ACVM Registration No. A010540) in cattle in New Zealand.
4.   the reasons why Bayer removed Intercept from the New Zealand market in 2013."[6]
[6] Letter dated 15 June 2018.
The product Intercept does not fall within the scope of the present claims, but as will be seen later does fall within the range of formulations that are described in the specification. The request for a notice states that the documents sought relate to "the grounds that the specification of the application make insufficient disclosure, lacks support, and does not disclose the best method".[7]
[7] Letter dated 15 June 2018.
On 19 June 2018 a Senior Examiner raised concerns about the relevance of documents about the withdrawal from sale of the product Intercept:
"The present claims are directed to a formulation including an oil-based physical barrier material and povidone-iodine mixed with the barrier material. The declaration of Michael Stephen Dhar indicates that Intercept is a teat seal product containing chlorhexidine. The specification indicates that povidone-iodine is an alternative to chlorhexidine … it is not clear how information which appears to relate to an embodiment disclosed in the specification but not claimed is likely to be determinative of the section 40 grounds."[8]
[8] Letter dated 19 June 2018.
On 11 January 2019 Norbrook responded with the following explanation:
"The opponent has provided evidence that Bayer's Intercept product suffered from formulation viscosity issues. … A key ground in the opposition is sufficiency. It is the opponent's position that the specification of the opposed application is deficient in terms of teaching the skilled formulator how to make a teat sealant and that the difficulty is exacerbated by the view taken by Dr Rowe, the opponent's independent formulation expert, that substitution of chlorhexidine by povidone-iodine will not necessarily result in a viable and effective teat sealant composition."[9]
[9] Letter dated 11 January 2019.
Norbrook then set out the factual matter that they consider is in dispute between the parties:
"by its evidence, the opponent says that mere substitution is problematic … by its evidence, the applicant says that substitution is a matter or routine … there is a clear divergence of views on this point"[10]
[10] Letter dated 11 January 2019.
Norbrook then summed up their case in this statement:
"the perceived formulation problems encountered with the applicant's Intercept product (comprising chlorhexidine) strongly support the opponent's position that formulation is not a straightforward matter, and certainly not as straightforward as Bayer contends."[11]
[11] Letter dated 11 January 2019.
On 25 January 2019 the Senior Examiner responded:
"I agree that it is clear that there is a divergence of views with regard to whether one antiseptic can be substituted for another (i.e. chlorhexidine for povidone-iodine) in a straight forward manner. However, this is not a dispute that I can see would be resolved by production of the requested documents … the evidence on file indicates that there were problems with the Intercept teat sealant formulation and it is not apparent that there is any dispute that this was the case."[12]
[12] Letter dated 25 January 2019.
Norbrook have now asked to be heard in relation to the notice to produce. Norbrook filed written submissions on 18 July 2019. Bayer filed written submissions on 25 July 2019. Normally this would have been the last step prior to the hearing. However, on 30 July 2019 Bayer filed supplementary submissions and a declaration by Abigail Marie Harwood. Norbrook requested that the hearing be deferred to allow time to obtain instructions in relation to the new evidence. The Commissioner did not consider it was necessary to defer the hearing, but indicated that Norbrook could raise any concerns at the hearing if it considered that it had been disadvantaged. Norbrook filed evidence on the morning of the hearing: declarations by Michael Stephen Dhar and Richard Anthony Laven. Both parties appeared at the hearing by videoconference.
The law
Section 210 of the Act provides:
210 Commissioner's powers
Commissioner's powers
(1) The Commissioner may, for the purposes of this Act:
(a) summon witnesses; and
(b) receive written or oral evidence on oath or affirmation; and
(c) require the production of documents or articles; and
(d) award costs against a party to proceedings before the Commissioner.
Exercise of power to summon witnesses
(2) The Commissioner must not summon a witness under paragraph (1)(a) unless:
(a) the Commissioner is satisfied, on the balance of probabilities, of the following matters:
(i) the witness has a substantial interest in the proceedings before the Commissioner;
(ii) the witness is likely to provide oral evidence of substantial relevance to a matter before the Commissioner;
(iii) receiving oral evidence from the witness is necessary or desirable in all the circumstances; and
(b) the Commissioner notifies the witness of the actions the Commissioner may take under section 210A if the witness fails or refuses to comply with the summons.
(3) The Commissioner may summon a witness under paragraph (1)(a) whether the witness is in or out of the patent area.
Exercise of power to require production of document or article
(4) The Commissioner must not require a person to produce a document or article under paragraph (1)(c) unless:
(a) the Commissioner is satisfied, on the balance of probabilities, of the following matters:
(i) the person has a substantial interest in the proceedings before the Commissioner;
(ii) the document or article is likely to be of substantial relevance to a matter before the Commissioner; and
(b) the Commissioner notifies the person of the actions the Commissioner may take under section 210A if the person fails or refuses to comply with the requirement.
(5) The Commissioner may require a person to produce a document or article under paragraph (1)(c) whether the person is in or out of the patent area.
Exercise of powers in relation to bodies corporate
(6) The Commissioner's powers in subsection (1) to make a requirement of a person extend, if the person is a body corporate, to making that requirement of any person who is an officer, agent or employee of the body corporate.
It is important to note that the Commissioner must not issue a notice to produce unless the document or article is likely to be of "substantial relevance" to a matter. I will come back to this point a little later. Section 210A provides the consequences for failing to comply with a summons or requirement under section 210:
210A Sanctions for noncompliance with Commissioner's requirements
(1) The Commissioner may take one or more of the actions listed in subsection (2) in relation to a person if:
(a) the Commissioner summons the person to appear as a witness under paragraph 210(1)(a) or requires the person to produce a document or article under paragraph 210(1)(c); and
(b) the person refuses or fails to comply with the summons or requirement; and
(c) the Commissioner is satisfied, on the balance of probabilities, that it is appropriate in the circumstances to take the action.
(2) The actions the Commissioner may take are:
(a) if the person is an applicant for a patent—a refusal to grant the patent (see subsection 61(1); and
(b) the drawing of an inference unfavourable to the person’s interest in proceedings before the Commissioner; and
(c) actions of a kind that are prescribed by the regulations.
(3) In deciding whether it is appropriate to take the action, the Commissioner must consider the following:
(a) whether the person has a reasonable excuse for refusing or failing to comply with the summons or requirement;
(b) whether the person has been offered payment of reasonable expenses associated with complying with the summons or requirement;
(c) any other matter the Commissioner considers to be relevant.
These provisions apply to the exercise of the Commissioner's powers on or after the commencement of Schedule 3 of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Raising the Bar Act), that is, after 15 April 2013. Substantially the changes brought about at that time were the insertion of subsections (2) to (6) and section 210A. The effect of these changes was discussed by the Deputy Commissioner in Domino's Pizza Enterprises Limited v Precision Tracking Pty Ltd (Domino's):[13]
"in my view 'substantial relevance' means more than just 'substantive relevance' or 'not of limited relevance' as suggested by Mr Cordiner. It must be something that is likely to be, if not determinative, highly significant in the determination of a relevant issue in dispute in the proceedings."[14]
[13] [2016] APO 13.
[14] Domino's at [31].
The Deputy Commissioner drew a clear distinction between production under the Act and discovery:
"It follows that section 210 as amended is unlike the scheme for discovery and production in other jurisdictions. It is not to be invoked by one party as a general means of exploring the other party’s case and particularly is not to be used in a fishing expedition or a hunt for a ‘smoking gun’. Usually it will be necessary to identify a real and specific factual issue in dispute, not merely speculation that production or summons might reveal such a matter and a plausible basis for concluding that the order will in some way be likely to provide substantial assistance in resolving the matter. Otherwise the Commissioner cannot be satisfied on the balance of probabilities that what is sought is 'likely to be of substantial relevance'."[15]
[15] Domino's at [32].
The Deputy Commissioner also pointed out that the power is discretionary:
"The power exercised by the Commissioner is discretionary and must only be exercised after considering the respective interests involved and the purpose of the legislation. Some relevant factors will include fairness to the respective parties, whether any order made would be onerous, delay in the resolution of the proceedings and in the granting of the patent, the correctness of the determination of the proceedings and the efficiency of IP Australia in administering the process."[16]
[16] Domino's at [33].
I adopt the reasoning and conclusions of the Deputy Commissioner in Domino's in relation to the operation of section 210.
In Sanofi v Amgen Inc.[17] I stated that "substantial relevance" is not to be understood as merely relevant to a substantial issue that is in dispute. Rather it is the degree of relevance that must be considered, and it is the high threshold set out in Domino's that applies.
[17] [2018] APO 3, 134 IPR 150 at [12].
Consideration
I note that new evidence was filed up to the morning of the hearing. A free for all approach to filing evidence does not assist the Commissioner. I informed the parties I would have regard to all material available to me, to the extent that it is relevant to the decision I have to make.
Norbrook questioned whether Bayer had standing to appear at the hearing. It is trite law that the Commissioner acting as a tribunal is "master of its own procedure" (similar to the planning inquiry of the Minister in T.A. Miller Ltd v Minister for Housing and Local Government[18]). Consequently it is more appropriate to ask whether including Bayer is an appropriate procedure. While the processing of a request for a notice to produce is generally a matter between the Commissioner and the party seeking the notice, the Commissioner does not disregard any information provided by the other party. If the matter comes on for a hearing, the other party is clearly an interested person who is likely to make submissions that will assist the Commissioner to make the correct decision. The Commissioner will be inclined to hear from them if, as in this case, they appear at the hearing. There is no doubt that Bayer can be heard in these proceedings.
[18] (1968) 1 WLR 992, [1969] RPC 91.
The draft notice is directed to Bayer, who clearly have a substantial interest in the proceedings. Consequently the only question is whether documents about the withdrawal of Intercept are likely to be of substantial relevance to the opposition. The relevance is said to relate to the assertion that the specification provides insufficient information to enable a person to produce an effective formulation containing povidone-iodine.
Intercept does not fall within the scope of the present claims, but is said to be a commercial embodiment of the invention described in the present application:
"I understand that Intercept is the commercial embodiment of Bayer's #201502929 patent."[19]
"a teat sealant containing an antiseptic and is the first commercial embodiment of the invention described in the family of applications originating with AU2009304000, being the parent application of AU2015202929"[20]
[19] Declaration of Michael Stephen Dhar dated 15 June 2018 at paragraph [3].
[20] Declaration of Dee Addison Nicholls dated 17 September 2018 at paragraph [3].
Bayer cast some doubt on this in their submissions:
"There is no evidence that Intercept is made following the teaching in the specification."[21]
[21] Written submissions dated 25 July 2019.
For the purposes of this decision I am satisfied that Intercept is a product that is an embodiment of the invention as described in the application. I will proceed on this basis
The parties are in agreement that the product Intercept is relevant to the opposition, and that conclusions can be drawn from its properties (to some extent). The evidence shows that the product Intercept was withdrawn from the market in New Zealand. There is disagreement as to why the product with withdrawn. I do not consider that the reasons for the withdrawal of Intercept are material to the opposition. What is material is the technical properties of the product Intercept. Norbrook argue that Intercept was perceived to have technical problems. Bayer indicated that they would contest this point at the substantive hearing of the opposition. On the face of it there is a serious dispute on a matter which a notice would likely resolve. However, it seems to me there is no inconsistency in the evidence, rather there is a difference of opinion as to what conclusions can be drawn from the evidence. I will explain. Mr Dhar declared:
"Specifically, there were reports in the industry of retention issues. Based on the feedback and information I received it seems that the formulation did not remain uniform during the manufacturing process, and the end product did not attain a consistent viscosity."[22]
"The feedback I have received indicates that the product suffered from a perceived lack of efficacy because the formulation's viscosity resulted in the product not remaining in the teat after administration."[23]
[22] Declaration of Michael Stephen Dhar dated 15 June 2018 at paragraph [5].
[23] Declaration of Michael Stephen Dhar dated 2 January 2019 at paragraph [21].
Ms Harwood acknowledged that there were adverse events relating to Intercept, but she was of the opinion that they were few in number:
"The total number of Intercept syringes sold in 2013 was approximately 740,000. In the period of October 2012 to September 2013, there were 12 adverse events received against the Bayer Intercept product. There was no conclusion from either Bayer or the ACVM that the reported adverse events were caused by lack of efficacy of the product."[24]
"The number of adverse events reported against Intercept is relatively small compared to the number of product sales."[25]
[24] Declaration of Abigail Marie Harwood dated 29 July 2019 at paragraph [9].
[25] Declaration of Abigail Marie Harwood dated 29 July 2019 at paragraph [11].

Ms Harwood also declared that Intercept was withdrawn from sale for commercial reasons and not because of efficacy problems:
"I can specifically confirm that Intercept was not withdrawn from sale due to actual or perceived efficacy issues."[26]
[26] Declaration of Abigail Marie Harwood dated 29 July 2019at paragraph [14].
Professor Laven declared that there were observations of inconsistent viscosity:
"In paragraph 112 of my earlier affidavit I stated: 'there were also reports of retention issues and inconsistent viscosity'. I confirm that I had personal knowledge of these reports at the time and was aware of a high level of dissatisfaction with the Intercept product. While this was partly attributable to the issue of syringability, it was also a result of retention issues and inconsistent viscosity."[27]
[27] Declaration of Richard Anthony Laven dated 1 August 2019 at paragraph [5].
It is clear that Intercept was the subject of a low level of adverse events. There were also observations of inconsistent viscosity. There is no inconsistency in the evidence. In the absence of a real and specific factual issue in dispute, a notice to produce documents that would confirm these facts would have no significant relevance. This is enough to dispose of the matter.
As I indicated above, the parties disagree on the conclusions to be drawn from the facts about Intercept. For completeness I will briefly comment on this aspect as it leads to the same conclusion. Norbrook appear to assume that the adverse events would relate to inconsistent viscosity. That seems a reasonable assumption. They argue that information about the adverse events would show that Bayer had difficulty producing a consistent chlorhexidine product using the teaching of the application. This follows logically. By extrapolation, a person using that method to produce a povidone-iodine product would also have difficulty producing a consistent product. Another reasonable assumption. Norbrook assert that it would then follow that the application does not comply with section 40(2)(a). This conclusion is only reasonable if the claims are construed as directed to compositions that would be free of adverse events. I express no view on the construction of the claims, but this construction is not unambiguously correct. A different construction is plainly open to the delegate who decides the opposition. The relevance of the documents is merely arguable (depending on the construction of the claims), and does not meet the high threshold.
Conclusion
I am not satisfied on the balance of probabilities that what is sought is likely to be of substantial relevance. A notice would simply delay the resolution of the proceedings without aiding the correctness of the outcome of the opposition. It follows that I must refuse to issue a notice.
Dr S.D. Barker
Deputy Commissioner of Patents