Pfizer Ireland Pharmaceuticals v Sandoz Pty Ltd
[2020] FCA 1648
•13 November 2020
FEDERAL COURT OF AUSTRALIA
Pfizer Ireland Pharmaceuticals v Sandoz Pty Ltd [2020] FCA 1648
File number(s): VID 1200 of 2019 Judgment of: BURLEY J Date of judgment: 13 November 2020 Catchwords: PRACTICE AND PROCEDURE – preliminary discovery – where prospective respondent has no current intention to launch pharmaceutical product in Australia – where prospective respondent has undertaken not to launch its pharmaceutical product without first providing the prospective applicants with a substantial notice period – whether prospective applicants hold a reasonable belief that they may be entitled to relief for patent infringement as required by r 7.23(1)(a) of the Federal Court Rules 2011 (Cth) – whether discretion under r 7.23(2) of the Federal Court Rules 2011 (Cth) should be exercised – application dismissed Legislation: Federal Court of Australia Act 1976 (Cth) s 37AF(1)(b)
Patents Act 1990 (Cth) s 119A
Federal Court Rules 2011 (Cth) r 7.23
Cases cited: Luna Park Ltd v the Commonwealth [1923] HCA 49; 32 CLR 596
Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193; 257 FCR 62
Re Barrow [2017] HCA 47; 91 ALJR 1240
Reeve v Aqualast Pty Ltd [2012] FCA 679
St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; 211 ALR 147
Warner-Lambert Company LLC v Apotex Pty Limited [2017] FCAFC 58; 249 FCR 17
Division: General Division Registry: New South Wales National Practice Area: Intellectual Property Sub-area: Patents and associated Statutes Number of paragraphs: 36 Date of hearing: 1 July 2020; 6 November 2020 Counsel for the Prospective Applicants: Mr D. Shavin QC with Ms C. Cochrane Solicitor for the Prospective Applicants: DLA Piper Australia Counsel for the Prospective Respondent: Mr C. Burgess Solicitor for the Prospective Respondent: Clayton Utz ORDERS
VID 1200 of 2019 BETWEEN: PFIZER IRELAND PHARMACEUTICALS
First Prospective Applicant
WYETH LLC
Second Prospective Applicant
PFIZER AUSTRALIA PTY LTD
Third Prospective Applicant
AND: SANDOZ PTY LTD
Prospective Respondent
ORDER MADE BY:
BURLEY J
DATE OF ORDER:
13 NOVEMBER 2020
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The Prospective Applicants pay the Prospective Respondent’s costs of the proceedings.
3.Until further order, the text of the reasons for judgment published today is to be published and disclosed only to the parties to these proceedings and their external legal representatives.
4.The parties are to confer and provide to chambers proposed redactions of the reasons published today by 4.00pm on 17 November 2020.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BURLEY J:
1. INTRODUCTION
By originating application filed on 1 November 2019, Pfizer Ireland Pharmaceuticals, Wyeth LLC and Pfizer Australia Pty Ltd (collectively Pfizer) seek orders pursuant to r 7.23 of the Federal Court Rules 2011 (Cth) (FCR) for preliminary discovery of documents from the prospective respondent, Sandoz Pty Ltd. The application concerns the production of documents held by or on behalf of Sandoz concerning a pharmaceutical product called ERELZI, in respect of which Sandoz has obtained regulatory approval on the Australian Register of Therapeutic Goods (ARTG). ERELZI contains as its active ingredient etanercept, and has been approved as a biosimilar to Pfizer’s product ENBREL, a drug used to treat autoimmune diseases including rheumatoid arthritis and other similar conditions.
The proceedings were listed for hearing on 1 July 2020, but were adjourned part-heard to enable for discussions to take place between the parties. Those discussions yielded some further common ground, but not resolution of the matter, and so on 6 November 2020 the hearing resumed.
Pfizer relies on affidavits from: its external solicitor, Nicholas Tyacke, who is a partner at DLA Piper Australia, affirmed on 17 October 2019, 9 June 2020 and 15 October 2020; and Shahan Islam, senior corporate counsel at Pfizer Inc (the parent company of Pfizer) affirmed on 24 October 2019. Mr Islam’s affidavit attaches a report prepared by Dr Neysi Ibarra dated 11 April 2019. Sandoz relies on affidavits from: its external solicitor John Collins, who is a partner at Clayton Utz, sworn on 16 June 2020; Clinton Holland, Business Unit Director, Biopharma & Hospital employed by Sandoz, sworn on 17 January 2020; and Elizabeth Joshi, Director of Scientific Affairs Australia and New Zealand employed by Sandoz, sworn on 16 January 2020.
In the course of these reasons it is necessary to refer to information that has been the subject of suppression orders made pursuant to s 37AF(1)(b) of the Federal Court of Australia Act 1976 (Cth) (FCAA). I do so by reference to the items in the confidential annexure to these reasons.
FCR 7.23 provides:
7.23 Discovery from prospective respondent
(1) A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:
(a)reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and
(b)after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and
(c)reasonably believes that:
(i)the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and
(ii)inspection of the documents by the prospective applicant would assist in making the decision.
(2) If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).
Pfizer contends, and Sandoz accepts for the purpose of the present application, that it reasonably believes that the process used to manufacture the etanercept in the ERELZI product may be within the scope of any one or more of the claims of three patents that it owns, being patent No. 2005280034 entitled “Production of polypeptides” (034 patent), patent No. 2005280036 entitled “Production of TNFR-Ig fusion protein” (036 patent) and patent No. 2008242632 entitled “Use of low temperature and/or low pH in cell culture” (632 patent) (collectively Pfizer patents).
The following background is material and emerges from Sandoz’s evidence. It is conveniently summarised in Sandoz’s submissions in answer:
(1)Sandoz is the sponsor of three forms of ERELZI: 50 mg solution for auto-injector, 50 mg solution for pre-filled syringe and 25 mg solution for pre-filled syringe;
(2)In November 2016, Sandoz sought ARTG approval in relation to these products. Mr Holland gives evidence that this was in accordance with Sandoz’s usual practice and was done for practical reasons, irrespective of Sandoz’s intention to launch the product in Australia.
(3)European regulatory approval was granted in June 2017 and ERELZI entered the market in the UK, Germany, Spain and France between June and December 2017. Canadian regulatory approval was granted in April 2017 and ERELZI entered the market there in August 2017;
(4)On 18 October 2017, the Therapeutic Goods Administration (TGA) approved the ERELZI products for ARTG registration in Australia, subject to certain conditions. Sandoz has not fulfilled those conditions.
(5)In about December 2017, Sandoz filed a submission with the Department of Health’s Pharmaceutical Board Advisory Committee (PBAC) seeking a recommendation that its 50 mg products be listed on the Pharmaceutical Benefits Scheme (PBS). On 29 March 2018, the PBAC recommended that those products be listed. Despite this, it is necessary for Sandoz to take a further step to achieve listing on the PBS, which involves filing a form identifying Sandoz’s proposed approved ex-manufacturer price. On 26 April 2018, Sandoz informed the Department of Health that it had decided not to proceed to the next step “at this point in time”. No applications have been made to the PBAC in relation to the other ERELZI products.
(6)Since that time, Sandoz has not taken any of the steps necessary to progress the listing of any of the ERELZI products and has no commercial stock of ERELZI in Australia.
Sandoz relies on the following evidence from Mr Holland (emphasis added):
Companies within the Sandoz Group have launched ERELZI in a number of countries, including in the UK in late June 2017, in Germany in July 2017, Spain in November 2017 and France in December 2017 (following regulatory approval in the EU in June 2017), and in Canada in August 2017 (following regulatory approval in Canada in April 2017). However, Sandoz has not made any decision to launch any Erelzi products in Australia. Consequently, there is no proposed launch date for any Erelzi product in Australia. It is possible that Sandoz will never make a decision to launch the Erelzi products in Australia. Sandoz has no commercial stock of Erelzi in Australia.
On 2 February 2018, Pfizer, by its solicitors DLA Piper, wrote to Sandoz noting the ARTG registration and requesting production of documents. Sandoz responded by indicating that it had not finalised plans to launch its ERELZI product in Australia and undertaking to provide Pfizer with 60 days’ notice if its plan changed. On 26 February 2018, DLA Piper wrote again to Sandoz, insisting on the production of documents and referring to the application made to the PBAC. Sandoz responded by noting its earlier undertaking. Lengthy correspondence then followed between Clayton Utz and DLA Piper.
On 14 June 2018, Sandoz gave an undertaking that it would provide Pfizer with at least 150 days’ prior written notice before making an application to list any of its ERELZI products on the PBS or exploiting any of its ERELZI products in Australia. On 3 October 2018, DLA Piper rejected the undertaking on the basis that 150 days’ was insufficient notice and set out a detailed list of the documents in respect of which it required production, failing which it would commence proceedings seeking preliminary discovery. Sandoz declined to provide the documents.
Pfizer then went quiet on the point for eight months until 4 June 2019 when it repeated its rejection of Sandoz’s offered undertakings, and requested the production of documents.
On 1 November 2019, Pfizer commenced the present proceedings. Since then, the parties have had ongoing discussions attempting to refine terms of an undertaking offered by Sandoz and the scope of documents to be produced.
The final form of the Sandoz undertaking that has been provided to Pfizer is in a form attached to a letter from Sandoz dated 13 August 2020. Its terms are confidential, and it relevantly provides:
(a)An undertaking to Pfizer that while the Pfizer patents are in force, Sandoz will not to exploit any of the ERELZI products in Australia, and not to take any steps to proceed with any PBS listing, without first giving Pfizer [Confidential Item 1] day’s notice;
(b)If Sandoz gives such written notice, then it undertakes that within [Confidential Item 2] days it will consent to orders providing for [Confidential Item 3]; and
(c)The undertaking is offered now, and the terms of the proposed consent orders are included within the undertaking.
Notwithstanding the proffered undertaking, Pfizer presses for orders for preliminary discovery. The form of orders that it seeks now are set out in a confidential annexure to its submissions of 15 October 2020 which contains the following components:
(1)A reproduction of the Sandoz proposed undertaking;
(2)An order that Sandoz give preliminary discovery pursuant to FCR 7.23 within 7 days of the Notice Date, being the day when Sandoz provides Pfizer with the notice set out in Confidential Item 1;
(3)Confidential schedules 1 and 2 which set out the documents in respect of which preliminary discovery is sought;
(4)A Sabre order for the production of documents insofar as they are in the control of companies related to Sandoz and are not produced as a result of the provision of preliminary discovery; and
(5)Confidentiality orders relevant to the documents to be produced.
Despite differences in form, the substantive disagreement between the parties is in narrow compass. The first issue arising concerns Pfizer’s entitlement to relief sought. This concerns whether Pfizer is able to satisfy the requirements for preliminary discovery on the basis that it reasonably believes that it may have a right to relief from Sandoz pursuant to FCR 7.23(1)(a) and, if so, whether in the present circumstances it is appropriate for the Court to exercise its discretion to do so pursuant to FCR 7.23(2). The second issue concerns the scope of any discovery that may be ordered. Much of this has been agreed between the parties, but there is a residue of disagreement which is identified by reference to the confidential schedules in the proposed undertaking. The third concerns the terms of a confidentiality regime, and in particular whether the highly confidential process documents to be produced by Sandoz should be made available for inspection by Mr Islam and another in-house lawyer at Pfizer Inc, Mr Rennecker.
2. IS PFIZER ENTITLED TO PRELIMINARY DISCOVERY?
Pfizer submits that the requirements of FCR 7.23(1)(a) are met for the following reasons:
(a)There is no dispute that Pfizer reasonably believes that the process used to manufacture the etanercept in the ERELZI products may fall within the scope of any one or more of the claims of the Pfizer patents; and
(b)It reasonably believes that it may have the right to obtain an interlocutory injunction to obtain relief from Sandoz for threatened patent infringement if Sandoz decides to launch an ERELZI product in Australia.
Pfizer does not challenge the unequivocal evidence given by Mr Holland that Sandoz has not yet made a decision, one way or the other, whether to launch ERELZI in Australia. Nor does it challenge the proposition that on the state of the evidence there are several possibilities available: (a) Sandoz may decide to launch sometime in the near future; (b) Sandoz may not decide to launch at all in Australia; (c) Sandoz may decide to launch not in the near future, but at any point of time within the next five to eight years (being the terms of the Pfizer patents); or (d) Sandoz may decide not to launch unless the Pfizer patents are found to lack validity.
Pfizer submits, however, that the evidence going to Sandoz’s current intention should be afforded little weight, noting that this intention is liable to change. Pfizer submits that if Sandoz’s current intention changes, and at some point in the next eight years it decides to launch, then the [Confidential Item 1] days’ notice offered in the Sandoz undertaking will afford Pfizer insufficient time to protect itself by seeking and obtaining an interlocutory injunction. For this reason, Pfizer submits that the Court ought to make orders now that anticipate the reception of notice on the Notice Date, and make provision for the production of documents on preliminary discovery to enable it to prepare its interlocutory application.
I consider Pfizer’s application to be misconceived.
FCR 7.23(1)(a) requires that the prospective applicant “reasonably believes” that it may have the right to obtain relief in the Court. There can be no sensible doubt that the requisite belief must be current as at the date when the application is being assessed. The present tense of the verb “believes” makes that plain. So too does the language of FCR 7.23(1)(b) which requires that the prospective applicant “does not have sufficient information to decide whether to start a proceeding in the Court” (emphasis added). Similar observations apply to the language of FCR 7.23(1)(c). The sub-rule requires the prospective applicant actually to hold a subjective belief that they may have a right to obtain relief: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193; 257 FCR 62 (Perram J, with whom Allsop CJ and Nicholas J generally agreed) at [107]. It does not provide that, in the event that sometime in the future a prospective applicant reasonably believes that it may have the right to obtain relief, the Court may make such an order.
In the present case, although Pfizer contends that it holds a reasonable belief that it may have the right to obtain relief from Sandoz for threatened patent infringement, it is clear that this belief is contingent upon Sandoz, sometime in the future, changing its current intention and deciding to launch its ERELZI products in Australia. As Pfizer’s own proposed orders demonstrate, it is not until the provision of notice on the Notice Date that such a belief may arise and Sandoz will be obliged to produce relevant documents. Such notice may never be provided, or it may be provided at some point in the next eight years.
To overcome this problem, Pfizer contends that the relevant question as to whether the requirements of FCR 7.23(1)(a) are met is whether Pfizer holds a reasonable belief that the [Confidential Item 1] days’ notice, which Sandoz has undertaken to provide prior to launching its ERELZI product(s) in Australia, is likely to afford Pfizer insufficient time to protect itself from material harm. On this basis, Pfizer asks the Court to exercise its discretion now.
However, the occasion for doing so has not yet arisen. I do not consider that the present case warrants a reading of FCR 7.23 to provide an exception to the long-standing reluctance of the Court to answer questions based on hypothetical facts, or to provide advisory opinions: see Luna Park Ltd v the Commonwealth [1923] HCA 49; 32 CLR 596 (Knox CJ) at 600; Re Barrow [2017] HCA 47; 91 ALJR 1240 (Edelman J). In circumstances where I accept the evidence given by Sandoz that it has made no decision to launch (as I do), the question remains hypothetical.
Furthermore, there are a number of obvious difficulties apparent from the course proposed by Pfizer that emerge from the dispute between the parties about the terms of the orders for the production of documents that Pfizer seeks. I provide two examples.
One possibility contemplated in the proposed Pfizer orders is that Sandoz will, on the Notice Date, make admissions as to infringement of the claims of the Pfizer patents. In broad terms, Pfizer contends that only if Sandoz admits to infringement of all of the claims relevant to one its patents should it be relieved of its obligation to provide discovery relevant to that patent. Sandoz submits that, depending on what admissions are made, some documents may not need to be discovered. There is force in this submission. Plainly enough, an admission of infringement of a broad independent claim may obviate the need for discovery in respect of all but a narrow aspect of a dependent claim. The scope of any preliminary discovery is not the same as general discovery. The measure of any preliminary discovery to be ordered is the extent of information that is necessary, but no more than that which is necessary, to overcome the insufficiency of information already possessed by the prospective applicant after the making of all reasonable inquiries, to enable a decision to be made whether to commence proceedings: Reeve v Aqualast Pty Ltd [2012] FCA 679 (Yates J) at [65(d)]. Because of the contingent nature of the present application, it is impossible for the parties to engage sensibly on this aspect of the scope of the discovery to be given. Pfizer, unreasonably in my view, seeks orders now for the production of documents against the possibility that, on the Notice Date, Sandoz may not admit to the infringement of all of the claims asserted.
Another possibility is apparent from the dispute as to the terms upon which any discovered documents may be shown to in-house counsel at Pfizer. There is no dispute that the documents concerning the method by which the etanercept in ERELZI is produced are highly confidential and valuable to Sandoz. It has a keen (and reasonable) interest to ensure that Pfizer, a competitor, does not have any more access to them than is strictly necessary.
Pfizer submits that Mr Islam and Mr Rennecker should be entitled to see the documents in order to provide instructions as to whether to commence proceedings. Sandoz agrees that they may see the documents, but requires as a condition an undertaking from each of them that neither be directly or indirectly involved in the conduct of any legal proceedings relating to etanercept in any other jurisdiction in which Sandoz is a party. It contends that neither is so involved now, because Pfizer has not commenced proceedings anywhere in the world against Sandoz for its etanercept product, and so there can be no hardship to either person. Pfizer submits that they could not do their jobs without being able to be involved in future international etanercept litigation.
However, on the Notice Date, circumstances relevant to this dispute may well have changed dramatically. Mr Islam and Mr Rennecker may no longer be relevant decision makers, Pfizer may have commenced proceedings in Canada against Sandoz, and so on. Again, decisions made now in relation to the documents are hypothetical.
Pfizer submits that the purpose of quia timet relief is to prevent material injury being inflicted. It submits that the Court will enable a party to sue on an imminent threat and ensure that it has sufficient time, before injury is inflicted, to obtain appropriate relief from the Court. Accordingly, Pfizer submits, the Court should assist it by requiring the production of documents from Sandoz within “sufficient time” before the end of the Notice Period, and make orders now, for preliminary discovery to enable it to do so. Otherwise, it submits, Pfizer may not be in a position to seek interlocutory relief to prevent the harm which it seeks to avoid.
This is not an argument that addresses the difficulties that I have identified, having regard to the language of FCR 7.23(1). It assumes that FCR 7.23(1) operates for the purpose of enabling a party who has no present reasonable belief that it may have a right to obtain relief to obtain an order upon a contingent belief. Furthermore, it incorrectly assumes that the Court would not make such urgent orders as are necessary to preserve property rights as need arises.
For these reasons, I consider that Pfizer has not met the requirements of FCR 7.23(1)(a). If I am incorrect about that, I would in any event not exercise my discretion to grant the orders sought. Even if a prospective applicant establishes the requirements of FCR 7.23(1), FCR 7.23(2) shows that a broad discretion remains in the Court as to whether, and to what extent, discovery should be granted. In this connection the intrusive nature of an order for preliminary discovery should be borne in mind. Nevertheless, the rule is to be construed beneficially so as to be given “the fullest scope that its language will reasonably allow”: St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; 211 ALR 147 (Hely J) at [26].
First, I consider the hypothetical possibilities arising as to the circumstances as at the Notice Date to indicate that it is not prudent to make a present order for preliminary discovery that is applicable in the future. It is not possible now to ascertain the measure of preliminary discovery to be ordered that is no more than is necessary to overcome the insufficiency of information possessed by the prospective applicant.
Secondly, there appears to be no imminent threat of a launch by Sandoz. It has held its ARTG listings for three years and its partially complete PBAC approval since 2018, yet it confirms that it still has not made a decision to launch. In this context I note that Pfizer relies on Sandoz’s conduct in applying for ARTG approval and seeking a PBAC recommendation as indicating that Sandoz may form an intention in the future to launch an ERELZI product in Australia. Neither of these acts can be considered acts of patent infringement: s 119A of the Patents Act 1990 (Cth); Warner-Lambert Company LLC v Apotex Pty Limited [2017] FCAFC 58; 249 FCR 17 (Jagot, Yates and Burley JJ) at [15] – [19]. Having regard to the evidence of Mr Holland that Sandoz has not, and may never, form an intention to launch ERELZI, these matters do not weigh in favour of Pfizer.
Thirdly, the Sandoz undertaking, which has been provided inter partes, provides very substantial notice to Pfizer. It also makes provision for the supply of documents, the terms of which are almost entirely agreed. I consider that the Notice Period should be adequate to enable Pfizer to seek, if so advised, the relief that it may wish. If it is not sufficient, then it could approach the Court for accommodation.
Accordingly, I would not in any event exercise the discretion in FCR 7.23(2) in favour of Pfizer.
Having decided the first issue adversely to Pfizer, it is not necessary or appropriate to determine the remaining issues. The application must be dismissed. Pfizer must pay Sandoz’s costs.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Burley. Associate:
Dated: 13 November 2020
6
3