Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 3)

[2011] FCA 846

FEDERAL COURT OF AUSTRALIA

Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 3) [2011] FCA 846

Citation:

Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 3) [2011] FCA 846

Parties:

SANOFI-AVENTIS AUSTRALIA PTY LTD ACN 008 558 807, SANOFI-AVENTIS DEUTSCHLAND GMBH and AVENTISUB II INCORPORATED v APOTEX PTY LTD ACN 096 916 148

File number(s):

NSD 1664 of 2008

Judge:

JAGOT J

Date of judgment:

29 July 2011

Catchwords:

COPYRIGHT – subsistence of copyright – whether product information documents for pharmaceutical drugs were original literary works attracting copyright protection – whether product information documents were works of joint authorship attracting copyright protection – infringement – whether respondent reproduced whole or a substantial part of product information documents – whether respondent had implied licence to reproduce product information documents

PATENTS – proper construction of claim of patent – validity – whether invention novel – whether invention involved inventive step – whether invention as claimed a manner of manufacture – whether invention useful – whether invention as claimed fairly based on specification – infringement – whether respondent threatened to infringe patent by supplying pharmaceutical drug for particular purposes

TRADE PRACTICES – misleading or deceptive conduct – false representations – whether respondent in providing pharmaceutical drug for supply to practitioners made representations which were false or were likely to mislead or deceive  

Legislation:

Competition and Consumer Act 2010 (Cth)
Copyright Act 1968 (Cth) ss 10, 13, 14, 31, 32, 35, 36, 78, 184
Patents Act 1990 (Cth) ss 3, 7, 13, 18, 40, 117, 138, Sch 1
Therapeutic Goods Act 1989 (Cth) ss 3, 7D, 23, 25AA, 25A, 26B
Therapeutic Goods Legislation Amendment (Copyright) Act 2011 (Cth)
Trade Practices Act 1974 (Cth) ss 52, 53
Copyright (International Protection Regulations) 1969 (Cth)

Cases cited:

Abbott GMBH and Co KG v Apotex Pty Ltd (No 2) (2010) 87 IPR 561; [2010] FCA 940
Acohs Pty Ltd v Ucorp Pty Ltd (2010) 86 IPR 492; [2010] FCA 577
Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411
Allsop Inc v Bintang Ltd (1989) 15 IPR 686
Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 50 FCR 1
Apotex Pty Ltd (formerly GenRx Pty Ltd) v Sanofi-Aventis (2008) 78 IPR 485; [2008] FCA 1194
Apotex Pty Ltd v Sanofi-Aventis (2009) 82 IPR 416; [2009] FCAFC 134
Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88
Bristol-Myers Squibb Co v FH Faulding & Co Ltd (2000) 97 FCR 524
Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410
Catnic Components Ltd v Hill & Smith Ltd (No 1) [1982] RPC 183
Chase Manhattan Overseas Corporation v Chase Corporation Ltd (1985) 9 FCR 129
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577
Con-Stan Industries v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226
Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232
Copyright Agency Ltd v State of New South Wales (2008) 233 CLR 279
EI Du Pont de Nemours & Co v Imperial Chemical Industries PLC (2007) 163 FCR 381
Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd (2010) 189 FCR 109
Flour Oxidising Co Ltd v Carr & Co Ltd (1908) 25 RPC 428
Gambro Pty Ltd v Fresenius Medical Care South East Asia Pty Ltd (2004) 61 IPR 442; [2004] FCA 323
General Tire and Rubber Company Ltd v The Firestone Tyre and Rubber Company Ltd [1972] RPC 457
Hill v Evans (1862) 45 ER 1195
H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151
IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458
ICI Chemicals & Polymers Ltd v Lubrizol Corp Inc (2000) 106 FCR 214
IGT (Australia) Pty Ltd v Aristocrat Technologies Australia Ltd (2008) 77 IPR 482; [2008] FCAFC 131
Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1
Liverpool City Council v Irwin [1977] AC 239
Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274
Lorenzo & Sons Pty Ltd v Roland Corporation (1992) 23 IPR 376
Merck and Co Inc v Arrow Pharmaceuticals Limited (2006) 154 FCR 31
Merrell Dow [1996] RPC 76
Meyers Taylor Pty Ltd v Vicarr Industries Ltd (1977) 137 CLR 228
Milwell Pty Ltd v Olympic Amusements Pty Ltd (1999) 85 FCR 436
National Research Development Corp v Commissioner of Patents (1959) 102 CLR 252
Northern Territory v Collins (2008) 235 CLR 619
NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655
PAC Mining Pty Ltd v Esco Corporation (2009) 80 IPR 1; [2009] FCAFC 18
Pfizer Overseas Pharmaceuticals v Eli Lilly & Co (2005) 225 ALR 416; [2005] FCAFC 224
Primary Health Care Ltd v Commissioner of Taxation (2010) 186 FCR 301
Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 164 ALR 239; [1999] FCA 898
RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1989) 25 FCR 565
Re BA’s Application (1915) 32 RPC 348
Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 25 IPR 119
Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 49 IPR 225; [2000] FCA 980
Sachtler GmbH & Co KG v RE Miller Pty Ltd [2005] FCA 788
SmithKline Beecham Plc’s (Paroxetine Methanesulfonate) Patent [2006] RPC 10
SW Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466
TCN Channel Nine v Network Ten [2001] FCA 841
Telstra Corp Ltd v Phone Directories Co Pty Ltd (2010) 273 ALR 725; [2010] FCAFC 149
Warner-Lambert Company v Apotex Corp 316 F3d 1348 (Fed. Cir. 2003)
WM Wrigley Jr Co v Cadbury Schweppes Pty Ltd (2005) 66 IPR 298; [2005] FCA 1035

Date of hearing:

10-11, 14-17, 22-24 March 2011

Date of last submissions:

30 March 2011

Place:

Sydney

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

385

Counsel for the Applicants:

Mr R Cobden SC with Mr C Dimitriadis and Mr A R Lang

Solicitor for the Applicants:

Jones Day

Counsel for the Respondent:

Mr D K Catterns QC with Mr N R Murray

Solicitor for the Respondent:

Freehills

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1664 of 2008

BETWEEN:

SANOFI-AVENTIS AUSTRALIA PTY LTD ACN 008 558 807
First Applicant

SANOFI-AVENTIS DEUTSCHLAND GMBH
Second Applicant

AVENTISUB II INCORPORATED
Third Applicant

AND:

APOTEX PTY LTD ACN 096 916 148
Respondent

JUDGE:	JAGOT J
DATE OF ORDER:	29 JULY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The parties confer and file agreed or competing proposed orders reflecting the reasons for judgment published today by 12 August 2011.

2.The proceeding be listed for directions and/or the making of orders at 9.30 a.m. on 16 August 2011.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1664 of 2008

BETWEEN:

SANOFI-AVENTIS AUSTRALIA PTY LTD ACN 008 558 807
First Applicant

SANOFI-AVENTIS DEUTSCHLAND GMBH
Second Applicant

AVENTISUB II INCORPORATED
Third Applicant

AND:

APOTEX PTY LTD ACN 096 916 148
Respondent

JUDGE:	JAGOT J
DATE:	29 JULY 2011
PLACE:	SYDNEY

REASONS FOR JUDGMENT

A        BACKGROUND

A1      The proceeding

1. This proceeding concerns three principal issues.  The first is the validity and, if valid, alleged threatened infringement of Australian Patent No. 670491 (the patent).  The second, which depends on the resolution of the first issue, relates to alleged contraventions of the Trade Practices Act 1974 (Cth) (the Trade Practices Act) by reason of the alleged threatened infringement of the patent.  The third relates to alleged contraventions of the Copyright Act 1968 (Cth) (the Copyright Act) in connection with product information documents.

   A2      The factual context

2. The patent is entitled “pharmaceutical for the treatment of skin disorders”.  It has a priority date of 31 March 1993 and expires on 29 March 2014. 

3. The patent has a single claim only.  Claim 1 of the patent is in these terms:

   A method of preventing or treating a skin disorder, wherein the skin disorder is psoriasis, which comprises administering to a recipient an effective amount of a pharmaceutical composition containing as an active ingredient a compound of the formula I or II…

4. A compound of formula I is leflunomide.  The compound leflunomide was the subject of Australian Patent No. 529341, which expired in 2004 (the 341 patent). 

5. The first applicant, Sanofi-Aventis Australia Pty Ltd (Sanofi-Aventis Australia), supplies leflunomide in Australia under the trade names “Arava” and “Arabloc” and, it is alleged, is the owner of copyright in certain product information documents associated with the product Arava (the Arava works).  The second applicant, Sanofi-Aventis Deutschland GMBH (Sanofi-Aventis Deutschland), is the registered owner of the patent under the Patents Act 1990 (Cth) (the Patents Act) and, it is alleged, the joint owner with the third applicant, Aventisub II Incorporated (Aventisub II), of copyright in some of the Arava works.  The applicants are referred to in these reasons for judgment as the Sanofi-Aventis parties or Sanofi-Aventis unless it is necessary to distinguish between them. 

6. In or about July 2008 the respondent, Apotex Pty Ltd (Apotex), obtained registration of its generic versions of leflunomide on the Australian Register of Therapeutic Goods (the ARTG).  Apotex did so in order to implement its acknowledged intention to supply and offer to supply in Australia its generic leflunomide products for the treatment of psoriatic arthritis and rheumatoid arthritis (referred to as PsA and RA respectively in much of the evidence and, where convenient, below). Sanofi-Aventis claimed that, by its proposed conduct in respect of the indication for PsA, Apotex threatens to infringe claim 1 of the patent by reason of which Sanofi-Aventis Australia and Sanofi-Aventis Deutschland will suffer loss and damage. Sanofi-Aventis further claimed that Apotex’s failure to warn customers that use of Apotex’s leflunomide products will infringe the patent constitutes misleading and deceptive conduct in contravention of the Trade Practices Act.

7. In answer, Apotex contended that if the patent is valid, the supply of its leflunomide products for the treatment of PsA will not infringe the patent because, properly construed, an essential integer of claim 1 is that the method constituting the invention is a method for the treatment of the skin disease psoriasis only and not the joint disease psoriatic arthritis. Alternatively, Apotex contended that the patent is invalid and should be revoked on one or more of the following grounds identified in s 138(3) of the Patents Act:

   ·Claim 1 of the patent does not identify a patentable invention within the meaning of s 18(1)(b)(i) of the Patents Act as the alleged invention was not novel at the priority date (see s 138(3)(b)).

   ·Claim 1 of the patent does not identify a patentable invention within the meaning of s 18(1)(b)(ii) of the Patents Act as the alleged invention does not involve an inventive step (see s 138(3)(b)).

   ·Claim 1 of the patent does not identify a patentable invention within the meaning of s 18(1)(a) of the Patents Act as the alleged invention is not an “invention” or, further or alternatively, is not a “manner of manufacture” (see s 138(3)(b)).

   ·Claim 1 of the patent does not identify a patentable invention within the meaning of s 18(1)(c) of the Patents Act as the alleged invention is not useful (see s 138(3)(b)).

   ·The specification of the patent does not comply with the sufficiency requirement in s 40(2) of the Patents Act (see s 138(3)(f)).

   ·The alleged invention in claim 1 of the patent is not fairly based on the specification as required by s 40(3) of the Patents Act (see s 138(3)(f)).

8. In obtaining registration on the ARTG, Apotex made and supplied to the Therapeutic Goods Administration (the TGA) a product information document concerning the Apotex leflunomide products.  The Sanofi-Aventis parties contended that in so doing Apotex infringed the copyright owned by them in certain of the Arava works.  Apotex admits that, in making its product information document, it copied a document identified as Arava product information dated 12 February 2007 (otherwise referred to below as the approved Arava PI or version 21).  According to Apotex, this act of copying did not breach copyright either because copyright does not subsist in the Arava works as they are not original works, or because Apotex had an implied licence to copy the Arava works. 

   A3      Table of contents

9. These reasons for judgment are ordered as follows:

A........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . BACKGROUND........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[1]
A1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... The proceeding........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[1]
A2 The factual context........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[2]
A3 Table of contents........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[9]
A4 Meaning of terms........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[10]
B OVERVIEW OF THE EVIDENCE ABOUT PSORIASIS, RA AND PSA........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[11]
B1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... Dr Shumack........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[12]
B2........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... Professor Smith........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[28]
B3........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... Professor Brooks........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[44]
B4 The TOPAS study........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[54]
B5 The product information documents........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[59]
B5.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. General........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[59]
B5.2 Approved Arava PI........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[60]
B5.3 Approved Apotex PI and proposed Apotex PI........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[62]
B6 The prior art documents........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[64]
B6.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 341 patent........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[65]
B6.2........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . Bartlett article........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[69]
B6.3........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... Rozman abstract........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[70]
B6.4 Dr Shumack’s evidence about the prior art documents........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[72]
B6.5 Professor Smith’s evidence about the prior art documents........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[76]
B6.6 Professor Brooks’ evidence about the prior art documents........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[86]
C THE PATENT IN MORE DETAIL........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[94]
C1 Specification and claim........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[94]
C2 Expert evidence about the patent........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[104]
D SOME DIFFERENCES OF OPINION BETWEEN THE EXPERTS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[108]
D1 Differences of opinion........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[108]
D2 Comments on the differences........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[113]
E GENERAL FINDINGS ABOUT PSORIASIS, PSA AND RA........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[116]
F CONSTRUCTION OF CLAIM 1 OF THE PATENT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[131]
F1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... Possible constructions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[131]
F2 Competing submissions about claim construction........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[134]
F2.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . Preliminary comments........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[134]
F2.2........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... Apotex’s submissions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[139]
F2.3........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. Sanofi-Aventis’s submissions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[146]
F3........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . Discussion........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[150]
G........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... NOVELTY........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[156]
G1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... Statutory provisions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[156]
G2 Competing submissions – novelty........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[160]
G2.1 Apotex’s submissions – novelty........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[160]
G2.2 Sanofi-Aventis’s submissions – novelty........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[168]
G3 Discussion – novelty........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[175]
G3.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. General observations	[175]
G3.2 The Bartlett article and the Rozman abstract........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[193]
G3.3 The 341 patent........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[207]
H........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. INVENTIVE STEP........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[228]
I MANNER OF MANUFACTURE........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[236]
J........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... UTILITY........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[244]
K........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... SUFFICIENCY........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[247]
L........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ FAIR BASIS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[254]
M........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... INFRINGEMENT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[259]
N CONCLUSIONS ABOUT PATENT ISSUES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[274]
O THE MISLEADING AND DECEPTIVE CONDUCT ISSUES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[275]
P THE COPYRIGHT ISSUES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[283]
P1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... Introductory remarks........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[283]
P2 Regulation of product information........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[286]
P3 Some uncontentious facts........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[289]
P4........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. Other findings........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[293]
P4.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. General........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[293]
P4.2 The documents in more detail........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[302]
P5 Competing submissions on copyright infringement........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[316]
P5.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. Sanofi-Aventis’s submissions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[316]
P5.2........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... Apotex’s submissions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[321]
P6........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . Discussion........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[332]
P6.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... The authorities........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[332]
P6.2........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... Conclusions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[348]
P7........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... Implied licence........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[362]
P7.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... Apotex’s case........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[362]
P7.2........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... Discussion........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[370]
P7.3........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... Conclusions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[384]
Q........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . CONCLUSIONS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[385]

A4      Meaning of terms

1. In these reasons for judgment certain abbreviations are used as follows:

   AA model means the Adjuvant Arthritis animal model referred to in the 341 patent.

   AAP model means the Adjuvant Arthritis Perper Modification animal model referred to in the 341 patent.

   AE model means the Allergic Encephalomyelitis animal model referred to in the 341 patent.

   approved Apotex PI means Apotex’s Apo-Leflunomide product information document approved by the TGA in July 2008.

   approved Arava PI means the Arava product information document dated 12 February 2007.

   Arava works means the product information documents for Sanofi-Aventis’s leflunomide product Arava.

   ARTG means the Australian Register of Therapeutic Goods.

   Bartlett article means Bartlett et al, Leflunomide (HWA 486), a novel immunomodulating compound for the treatment of autoimmune disorders and reactions leading to transplant rejections (1991) 32 Agents and Actions 10-21.

   CCP test means the cyclic citrullinated peptide (CCP) test.  This is a blood test highly specific for RA.

   DMDS means the Development Master Data Sheet created during the early clinical phase of the development of leflunomide.

   Gladman article means Gladman D, Toward Unravelling the Mystery of Psoriatic Arthritis (1993) 36 Arthritis and Rheumatism 881-884)

   Kaltwasser article means Kaltwasser et al, Efficacy and Safety of Leflunomide in the Treatment of Psoriatic Arthritis and Psoriasis (2004) 5 Arthritis & Rheumatism 1939-1950.

   Nash article means Nash et al, Leflunomide Improves Psoriasis in Patients with Psoriatic Arthritis: An In-Depth Analysis of Data from the TOPAS Study (2005) 212 Dermatology 238-249.

   NHEK means normal human epidermis keratinocytes.

   NSAIDS means non-steroidal anti-inflammatory drugs.

   PASI means the Psoriasis Area Severity Index.

   341 patent means Australian Patent No. 529341 (a patent for the compound leflunomide).

   the patent means Australian Patent No. 670491 (the patent in suit).

   PBS means the Pharmaceutical Benefits Scheme.

   PI means a product information document regulated by the Therapeutic Goods Act1989 (Cth).

   proposed Apotex PI means Apotex’s Apo-Leflunomide product information document submitted to the TGA for approval in June 2010.

   PsA means psoriatic arthritis.

   PsARC means the Psoriatic Arthritis Treatment Response Criteria.

   RA means rheumatoid arthritis.

   Regulatory Guidelines means the Australian Regulatory Guidelines for Prescription Medicines (June 2004) published by the TGA.

   RF means the “rheumatoid factor” disclosed in the blood, which is an indicator for RA in about 70% of cases but is not specific for RA.

   Rozman abstract means Rozman et al, The effects of Leflunomide (LF) in patients with rheumatoid arthritis (1992) 35 Arthritis and Rheumatism S108.

   SPC means the Summary of Product Characteristics created for Arava in about 1997-1998.

   TGA means the Therapeutic Goods Administration.

   TNF α means Tumour Necrosis Factor α.

   TOPAS study means the multinational, double-blind, randomised, placebo-controlled clinical trial of leflunomide for the treatment of PsA and psoriasis the results of which were published in the Kaltwasser article

   US PI means the United States product information document for Arava.

   B        OVERVIEW OF THE EVIDENCE ABOUT PSORIASIS, RA AND PSA

2. There was little disagreement between the medical experts (Dr Stephen Shumack, Professor Malcolm Smith and Professor Peter Brooks) about the diseases psoriasis, psoriatic arthritis and rheumatoid arthritis as understood in 1993 (the priority date of the patent being 31 March 1993) and today.

   B1      Dr Shumack

3. Dr Shumack is a physician specialising in dermatology.  He graduated from the University of New South Wales in 1980 (Bachelor of Medicine / Bachelor of Surgery).  In 1991 he became an Elected Fellow of the Australasian College of Dermatologists, having been a Dermatology Registrar both at St Vincent’s Hospital (Sydney) in 1987-1988 and 1990, and at Royal Prince Alfred Hospital (Sydney) in 1989.  Between 1991 and 1993 Dr Shumack was an Honorary Consultant Dermatologist of the Skin and Cancer Foundation in Sydney.  From 1991 to the present day he has practised at two private clinics.  From 1992 to the present day Dr Shumack has also held the position of Consultant Dermatologist at the Royal North Shore Hospital.  Between 1992 and 2004 he was also a Consultant Dermatologist at St George Hospital in Sydney, and between 1996 and 2004 he was the Chair of the Department of Dermatology there.  He has been a clinical investigator in a number of human trials involving new agents for the treatment of dermatological conditions and has presented the results of a number of these trials in Australia and internationally.  Dr Shumack has been a Member of the Board of the College of Dermatologists since 1996.  The College administers the accreditation program for dermatologists in Australia.  Dr Shumack has held a number of honorary appointments and has co-authored various publications in a range of medical journals. 

4. Dr Shumack explained that the skin comprises three distinct layers: the subcutaneous tissue, the dermis, and the outer layer or epidermis.  The subcutaneous tissue consists of fat, blood vessels and nerve fibres, and forms the base of the supporting structures for the skin.  The dermis consists of collagen and elastin fibres as well as blood vessels, nerve fibres, hair follicles and sweat ducts.  The epidermis consists of “a proliferative basal layer where the cells divide before progressing to the outer surface where the cells die, producing a boundary layer of dead cells.”  According to Dr Shumack, “[i]n normal skin, the movement of cells from the basal layer to the outer surface of the skin (referred to as cell turnover) takes approximately 35 days.  After this, the dead cells shed off either as individual cells or in small microscopic groups.”

5. Dr Shumack described psoriasis as:

   …a genetically determined proliferative disease of the skin characterised by demarcated, red scaly plaques.

6. Psoriasis thus results from a genetic abnormality, although the nature of that abnormality is yet to be determined.

7. In patients with psoriasis, “the turnover rate of epidermal cells is increased by a factor of around 5.  This means that the time taken for a cell dividing at the base of the skin to reach the surface is approximately 7 days” (in contrast to the 35-day cell turnover in normal skin).

8. Dr Shumack explained that:

   Psoriasis is also associated with an inflammatory response primarily confined to the dermis and epidermis, characterised by a microscopic collection of inflammatory cells.  These inflammatory cells secrete cytokines which are proteins able to modulate the activity of other cells.  The cytokines released by the localized [sic] inflammatory cells produce a number of morphological changes to the skin including increased size and tortuosity (i.e. twisting) of dermal blood vessels, leading to increased blood supply and thickening of the epidermis.

9. Dr Shumack said that psoriasis can range in severity from mild to quite severe.  There are a large number of measures used to assess severity, but the most commonly used in a clinical setting is the Psoriasis Area Severity Index (PASI) scoring method.  In Australia (given the requirements of the PBS regulating prescriptions) a PASI score of greater than 15 is usually considered severe, whereas as a score of 8 to 15 is usually considered moderate (though medical practitioners would accept a lower PASI score of 12 or above as severe in clinical terms).  Psoriasis is characterised by returning bouts of clinical signs of the disease.  About one in 40 people worldwide – that is, around 2% of the population – suffers from psoriasis. 

10. According to Dr Shumack, in 1993 the cause of the inflammation associated with psoriasis was considered to be the proliferation of skin cells.  As Dr Shumack explained:

    …it was thought that the genetic abnormality associated with psoriasis directly influenced the epidermal cellular turnover rate.  In other words, the genetic abnormality programmed the epidermal cells to turnover more quickly.  In 1993, it was also thought that the hyper-proliferation of epidermal cells was itself the cause of the inflammation observed in psoriasis.

11. However, the current view (which is now accepted as orthodox) is that the proliferation of skin cells in psoriasis is caused by inflammation.  As Dr Shumack explained:

    [t]he current view is that the genetic abnormality associated with psoriasis leads to an abnormal inflammatory reaction localised predominantly to the dermis and epidermis of the psoriasis plaques.  This localisation of inflammatory cells leads to the secretion of cytokines which are responsible for increased epidermal cell turnover.

12. In summary, as Dr Shumack put it:

    the role that the immune system played in psoriasis was not well defined or understood in March 1993 but rather was seen as a secondary phenomenon resulting from the hyper-proliferation of keratinocytes.  Therefore, prior to March 1993, it was not an objective of treatment to specifically target the inflammatory cells in the treatment of psoriasis.  It was thought that by treating the hyper-proliferation of skin cells, the inflammation would resolve.

13. Hence, in 1993 Dr Shumack would not have considered administering a drug to a patient with psoriasis on the basis that the drug had been shown to have an effect on the immune system.  The reason for this is that as psoriasis was thought to be a condition resulting from hyper-proliferation of skin cells (with the associated inflammation resulting from the hyper-proliferation), treatment with an anti-inflammatory drug would have assisted in resolving the inflammation but the psoriasis would persist.  Today, however, psoriasis is considered by dermatologists to be an immune disorder (in that the mechanism underlying the development of psoriasis is known to involve the abnormal activation of the immune system, which is believed to result in inflammation).  Dr Shumack confirmed this evidence in cross-examination in the following terms:

    But you, yourself, were aware in ’93 of this developing view that the immune system was the driver of psoriasis?   I was.

    To what extent does the hyperproliferative view actually contradict the immune view now?   Well, it doesn’t really contradict.  I mean, the view is that – the hyperproliferative view is that the genetic abnormality which is associated with psoriasis results in an increased cellular turnover of the epidermal – that’s the top layer of skin – the epidermal cells, and the increased cellular turnover in itself causes some degree of inflammation which draws in inflammatory cells, which are really, I suppose, passengers in that increased cellular turnover theory.  And this was the commonly held view up until probably that time or shortly thereafter.  The other view, the alternative view, which we now know is the correct, at this point in time, view, is that the genetic abnormality in psoriasis causes an abnormal immunological action secondary to something that we don’t know, probably an unknown allergen, and it’s this increased cellular infiltrate associated with this inflammation which produces the cytokines that we were talking about before, these inflammatory mediators, and that in itself causes the increased cellular turnover in the mechanism psoriasis.  So it’s a bit like the chicken and the egg, in the sense that the old theory – increased cellular turnover, inflammation – and the new theory – inflammation, increased cellular turnover.

14. Dr Shumack explained that both in 1993 and today, as a dermatologist, he had and has a rudimentary understanding of psoriatic arthritis (which he described as “an inflammatory disease in which inflammation is directed at the joint”), including its clinical signs.  In 1993 he saw (and today sees) very few psoriasis patients with severe psoriatic arthritis, as these patients ordinarily would be under the care of a rheumatologist.  However, he has treated a small number of psoriasis patients who have also been under the care of a rheumatologist for their concurrent psoriatic arthritis. 

15. In 1993, “psoriasis and psoriatic arthritis were considered to be distinct disorders both in terms of aetiology and clinically.”  To Dr Shumack’s knowledge the only drug then available that treated both diseases was methotrexate, although it was thought to treat psoriatic arthritis by its anti-inflammatory action and psoriasis by its anti-mitotic (i.e. anti-proliferative) activity.

16. According to Dr Shumack:

    (1)approximately 65% of patients exhibit psoriatic skin lesions (psoriasis) before the development of psoriatic arthritis;

    (2)approximately 19% of patients are diagnosed with psoriatic arthritis before the development of psoriasis; and

    (3)approximately 16% of patients develop psoriasis and psoriatic arthritis at the same time.

17. In other words, almost all patients diagnosed with psoriatic arthritis who have not been diagnosed with psoriasis develop psoriasis at some time in the future, although its severity is variable. 

18. Dr Shumack had not heard of leflunomide in 1993 and has never prescribed it to any of his patients. 

    B2      Professor Smith

19. Professor Smith graduated with a Bachelor of Science (Biochemistry) in 1973 and with a Bachelor of Medicine / Bachelor of Surgery in 1977, and was awarded his PhD by Flinders University in 1989.  He has been a Fellow of the Royal Australian College of Physicians since 1985 and is a member of the Australian Rheumatology Association.  He specialised in rheumatology from 1982, training under Professor Brooks, and was appointed Senior Registrar in Rheumatology at Flinders Medical Centre and Repatriation General Hospital in 1984.  His PhD involved research into the immunological mechanisms which underlie inflammatory arthritis (specifically the role of the cytokine interleukin 2 in rheumatoid arthritis and psoriatic arthritis).  Professor Smith was a postdoctoral research fellow at Harvard Medical School in 1988 and 1989.  His research focused on the regulation of cytokines involved in inflammatory conditions including arthritis.  In 2002, he was appointed Professor of Medicine at Flinders University in South Australia.  Professor Smith is currently Senior Consultant in Rheumatology at Flinders Medical Centre and Repatriation General Hospital.  He has been actively involved in research since 1982, including in the establishment of the Rheumatology Research Laboratory at Flinders Medical Centre in 1990 and the synovial membrane tissue bank at the Repatriation General Hospital in 1993.  He has been involved in undergraduate and postgraduate teaching since 1980.  Professor Smith regularly attends key rheumatology conferences and is the author and co-author of numerous articles in medical journals.

20. Professor Smith described the immune system as “a mechanism for the body to deal with foreign agents or cells that are recognised as foreign.”  The immune system includes a soluble chemical-mediated response known as cytokines and a cell-mediated response.  Hence, the “immune system involves a complex interaction between a range of cell types, tissues, organs, chemicals, pathways and processes.”  Different cell types are involved in an immune response including lymphocytes, particularly B lymphocytes and T lymphocytes.  There are different classes of T lymphocytes (or T cells) which play different roles in the immune system. 

21. Inflammation is the reaction of the immune system to stimuli.  In an inflammatory response, cells of the immune system are drawn to the site of the injury or infection.  The hallmarks of inflammation are redness, swelling, pain, increased temperature and loss of function. 

22. Conditions involving defects in the immune system may be referred to generally as “immune disorders”, but it is known (and has been known for decades) that each disease manifests from a defect in a particular aspect of the immune system.  Hence, according to Professor Smith:

    The fact that a drug is known to suppress or modify the immune system is not sufficient to determine whether it will be adequate to treat a particular disease state.  To determine this, it is necessary to determine that the drug affects the same immune pathways or cell types that are responsible for the disease state of interest.  In the absence of such information one could not have any confidence that the drug would be effective to treat that disease state.

23. Professor Smith described “arthritis” as “a global term applied to a large number of joint-related disorders.”  The expression “inflammatory arthritis” is reserved for those forms of arthritis where inflammation of the joint tissues is the underlying cause of damage to the joints (in contrast, for example, to osteoarthritis where the inflammation of the joint is the result of degenerative changes).  The so-called inflammatory arthridities or arthropathies are rheumatoid arthritis (on the one hand) and the seronegative arthropathies (on the other hand).  The seronegative arthropathies include psoriatic arthritis, ankylosing spondylitis, reactive arthritis and inflammatory bowel disease-associated arthritis.  Of the seronegative arthropathies psoriatic arthritis is the most common, accounting for some 25% of all cases of inflammatory arthritis.  Rheumatoid arthritis accounts for 60-70% of cases of inflammatory arthritis. 

24. Professor Smith explained that rheumatoid arthritis is an autoimmune disease in which the body mounts an immune response to “self”, resulting in inflammation of the synovial membrane that lines joints and tendon sheaths.  About 1% of people suffer from RA.  RA usually presents as peripheral symmetrical arthritis (i.e. it affects the small joints of the hands and feet on both sides of the body).  Professor Smith said that in 1993 it was believed that RA was a T cell-mediated disorder.  Subsequent research demonstrated that various types of inflammatory cells, not only T cells, play important roles in the mechanism underlying RA. 

25. In 1993, patients were diagnosed with RA largely by reference to the symmetrical peripheral pattern of joint inflammation, which is highly distinctive of RA.  In addition, patients would be given a blood test to determine if they were rheumatoid factor (RF) positive.  Overall RF is detected in 70% of patients with RA, but rates of detection tend to be lower in the early stages of the disease and increase thereafter.  RF, however, can also be detected in patients with other disorders and is not specific for RA.  Today other blood tests are available to help confirm a diagnosis of RA, including the cyclic citrullinated peptide (CCP) test.  The CCP test is highly specific for RA.  Approximately 98% of patients with anti-CCP antibodies in their blood have or will develop RA.  Due to this specificity Professor Smith says one can be confident that, if the CCP test is positive, the person has or will develop RA and, if the CCP test is negative, the person does not have and will not develop RA.  The CCP test has been available in Australia since 2003. 

26. Professor Smith described psoriatic arthritis as an “inflammatory arthritis associated with the skin disorder psoriasis and a negative blood test for RF.”  Typically PsA presents as “an asymmetrical inflammatory arthritis affecting around three to five joints in total.  Arthritis is said to be ‘asymmetrical’ if it affects a joint on one side of the body without affecting the corresponding joint on the other side.” 

27. In 1993, the diagnosis of PsA usually involved taking a family history (as the vast majority of patients with PsA have a personal or family history of the disease).  Also, certain X-ray changes are highly characteristic of PsA.  Further, since it became available in 2003, a positive CCP test would indicate that a patient suffered from RA rather than PsA. 

28. According to Professor Smith, in 1993, although PsA was known to be an inflammatory arthritis, “the specific inflammatory cells, chemicals and pathways driving inflammation and joint damage had not been identified.”  In 1993 there was no evidence that PsA was T cell-mediated; in contrast, RA was known to be so.  Since 1993, increased research into the pathology of the seronegative arthropathies means that it became known that PsA, like RA, is a T cell-mediated disease.  As to treatment, in 1993 there were no drugs specifically identified or designed for the treatment of PsA, while a number of drugs had by then been developed for RA. 

1. As to psoriasis, Professor Smith said that:

   In 1993, diagnosis and management of psoriasis was not part of the discipline of rheumatologists, but was the domain of dermatologists.  The relevance of psoriasis to rheumatologists was as an element in the diagnosis of psoriatic arthritis.  Given this, rheumatologists only had a basic or rudimentary understanding of psoriasis (including its underlying pathology) based primarily on study at medical school.

2. Professor Smith said that in 1993 rheumatologists understood psoriasis to be a disease resulting from excessive proliferation of skin cells, although the trigger for the proliferative response was unclear.  While it was known in 1993 that psoriasis was characterised by the presence of increased numbers of inflammatory cells in the skin, and increased blood supply, “it was thought this was caused by the hyper-proliferating cells in the basal layer of the skin.”  Accordingly, Professor Smith said:

   In 1993, given that psoriasis was considered a proliferative disease, it was thought that the pathology of this disease was not related to the pathology of psoriatic arthritis (or rheumatoid arthritis).  Given this, rheumatologists did not take any interest in the disease (other than as part of the diagnostic process).

3. As Professor Smith explained in cross-examination:

   There were certainly known to be lymphocytes present in the synovial membrane of patients with psoriatic arthritis.  Whether they were important in the pathogenesis of the disease was unknown at that stage.

4. In 1993, Professor Smith was aware that most drugs used to treat PsA did not show any benefit in the treatment of psoriasis, with the exception of methotrexate.  At that time it was thought that methotrexate “might act beneficially” in the treatment of psoriasis because it has anti-proliferative effects. 

5. Professor Smith was not aware of leflunomide in 1993 and did not become aware of it until 1998.  Leflunomide modifies the function of different types of T cells.  Professor Smith uses leflunomide today to treat both RA and PsA.  According to Professor Smith:

   Today, on the basis that psoriatic arthritis and psoriasis are both understood to be T cell-mediated disorders, I expect that if a patient suffering from psoriatic arthritis with associated psoriasis received Leflunomide, the Leflunomide would, in addition to treating their psoriatic arthritis, also treat their psoriasis.

   Furthermore, if a patient presented with psoriatic arthritis but had not yet manifested psoriasis, I expect that if the patient received Leflunomide, in addition to treating their psoriatic arthritis, the Leflunomide would also reduce the probability of that patient developing psoriasis in the future.  If the patient did subsequently develop psoriasis, I expect that it would be less severe, as a result of the Leflunomide treatment, than would otherwise have been the case.

6. When asked in cross-examination about the use of leflunomide in the treatment of psoriasis, Professor Smith gave this evidence:

   …the question is asking me how effective is leflunomide in psoriasis, and I can’t answer that because I’m not a dermatologist and I don’t treat psoriasis except when it is in the situation of psoriatic arthritis, and, even then, I’m treating the psoriatic arthritis; I’m not treating the psoriasis.  So I can’t really honestly answer that question.

   When you say, even then, you are not treating the psoriasis, you are treating the psoriatic arthritis – I think that is what you said?   Yes.

   You mean you are administering the, let’s say, leflunomide for the purpose of treating psoriatic arthritis in that case?   Correct.

   The joint disease?   Yes.

   And if it has a benefit, as the TOPAS study suggests, in relation to the patient’s dermatological disease, that’s an incidental benefit?   I am certainly pleased with the result for the patient, but that is not my primary aim of treating the patient.

   B3      Professor Brooks

7. Professor Brooks is the Director of the Australian Health Workforce Institute at the University of Melbourne and has practised as a rheumatologist for over 30 years. He completed his medical degree at Monash University in 1967.  In 1974 and 1975 he was the Research Registrar at the Centre for Rheumatic Diseases in Glasgow, Scotland, where he studied rheumatology under Professor Watson Buchanan.  He returned to Australia in 1975, taking up a lecturing post in medicine at the University of Tasmania.  Professor Smith then held the positions of Senior Lecturer in Medicine and Associate Professor in Medicine at Flinders University.  From 1983 to 1991 he was the Florance and Cope Professor of Rheumatology at the University of Sydney.  During the same period he was the Head of the Department of Rheumatology and the Foundation Professor of Rheumatology at the Royal North Shore Hospital.  Between 1991 and 1998 Professor Smith was Professor of Medicine and the Head of the Department of Medicine, University of New South Wales, at St Vincent’s Hospital.  From 1992 to 1998 Professor Smith served as Chairman of the International League Against Rheumatism Standing Committee on Clinical Trials.  He has been Associate Dean, Clinical School, St Vincent’s Hospital (1993-1994 and 1997-1998) and Presiding Member, Faculty of Medicine, University of New South Wales (1995-1997).  From 1998 until sometime after June 2009 he held the position of Executive Dean, Faculty of Health Sciences, University of Queensland.  Sometime between June 2009 and April 2010 he became the Director of the Australian Health Workforce Institute at the University of Melbourne.  Professor Brooks is a member of numerous national and international committees, boards and scientific societies (including many editorial boards for medical and research journals).  He is the author and co-author and has been the peer reviewer of many articles published in various journals. 

8. Professor Brooks explained that inflammatory arthritis affects about 2-3% of the population.  In 1993, according to Professor Brooks, patients could first be diagnosed with seronegative arthritis and then develop positive rheumatoid factor, indicating rheumatoid arthritis.  As such, in 1993 for about 5-10% of patients he could not be sure whether they had RA or seronegative arthritis.  One reason for this is that the RF is present in only 70% of patients with initial phase RA.  Since 2003, however, the availability of the CCP test has meant that RA can be distinguished from PsA in 98% or more of cases.  In 1993 this potential overlap did not matter as the treatments for RA and the seronegative arthropathies, including PsA, were the same, being non-steroidal anti-inflammatory drugs (NSAIDS) and methotrexate. 

9. While Professor Brooks agreed that in 1993 it was not known that PsA was a T cell-mediated disease, he explained that it was known at that time that T cells were involved in PsA.  Professor Brooks said that by 1993 it was known, for example, that a principal driver for inflammation in all inflammatory arthropathies was a molecule called Tumour Necrosis Factor α (TNF α).  Hence, “[t]he theory developed that if a drug could specifically target the TNF α driver of inflammation it would avoid the undesirable downstream effects of general immunosuppressant drugs.”  As further explained by Professor Brooks in cross examination:

   …the proposition is that there was no evidence available that suggested that the seronegative arthropathies, including psoriatic arthritis, were mediated by T cells in the way rheumatoid arthritis was then thought to be?   Well, I think at the time that the work had not been done, but there was very clear evidence that T cells were involved in inflammatory responses in psoriatic arthritis, as they were in other seronegative arthropathies.

   The involvement of T cells doesn’t lead to any evidence that suggests, or knowledge, that the psoriatic arthritis was known to be T cell mediated, does it?   Well, that’s absolutely – that’s a different point.  T cell mediated versus T cells being involved.

   Yes, but you do agree that the propositions that I have been putting to you have been in relation to whether there was knowledge or indeed evidence about psoriatic arthritis being T cell-mediated?   Okay, well, if that’s the issue, yes, I would agree with you.

10. Professor Brooks was also questioned about an article published in July 1993 (Gladman D, Toward Unravelling the Mystery of Psoriatic Arthritis (1993) 36 Arthritis and Rheumatism 881-884) (the Gladman article)).  This article records that the “pathogenesis of psoriatic arthritis remains to be elucidated, but genetic, environmental, and immunologic factors are thought to be prominent in the development and perpetuation of the disease.”  According to the article, while studies had “helped to identify some of the abnormalities seen in patients with psoriatic arthritis, the exact mechanism of the disease remain[ed] a mystery.”  Professor Brooks generally agreed with these propositions, noting that the author’s point was essentially that “there’s a whole bunch of stuff about immunological factors that are involved, but the cause of psoriatic arthritis is not known, as is the cause of psoriasis not known.”

11. In response to another article (Ogilvie et al, Treatment of psoriatic arthritis with antitumour necrosis factor-α antibody clears skin lesions of psoriasis resistant to treatment with methotrexate (2001) 144 British Journal of Dermatology 587-589), Professor Brooks gave the following evidence:

    This tells us, does it not, that TNF alpha inhibitors, in this area certainly, were originally developed as treatments for rheumatoid arthritis; correct?   That’s correct.

    And it was only towards the end of the 1990s that they were explored for treatment of the seronegative arthropathies?   Yes, it’s unfortunately driven very much by the pharmaceutical industry.

    But the statement is true, whatever the factors behind it?   Yes.

12. Professor Brooks said that rheumatologists focussed on RA throughout the 1970s, 80s and 90s (and to some extent continue to do so today) because it is the most severe of the rheumatic diseases and the most challenging and intellectually interesting form of arthritis to treat (“rheumatic diseases”, as I understand it, is an umbrella term for diseases affecting the joints encompassing but not limited to both inflammatory and non-inflammatory forms of arthritis).  This is consistent with the Gladman article which, amongst other things, notes that RA had been far more intensively studied than PsA (at 883).

13. Professor Brooks said that PsA, a seronegative inflammatory arthritis, has a very low incidence in the population (0.04-0.1%).  Nevertheless, by 1993 Professor Brooks had significant experience in diagnosing and treating patients with PsA.  Professor Brooks described PsA as usually presenting as asymmetric and affecting only a few joints (in contrast with RA, which presents with more joints affected symmetrically).  When diagnosing PsA (in 1993 and today), Professor Brooks looks for the clinical signs of psoriasis.  Psoriasis occurs much more frequently than PsA in the population (as psoriasis occurs in about 2% of people).  In 1993 Professor Brooks would also take a blood sample and test it for RF.  The result would typically be negative in a patient with PsA.  According to Professor Brooks:

    It is possible, but unusual, for a patient to have psoriatic arthritis without apparent clinical signs of psoriasis…  However when such patients are followed over time, about 60-70% of them will develop clinical signs of psoriasis…

14. Professor Brooks’ position was further disclosed in cross examination as follows:

    You yourself don’t suggest that, as at 1993, you had any more than a basic understanding of psoriasis?   Yes, I would have to say specialties are obviously individual, but I think it is important to understand that physicians, rheumatologists, are actually trained as general physicians, so we actually do a lot more training in the general person that, say, a dermatologist.

    In the general person?   Yes.

    Thank you.  But focusing on psoriasis, just to clear it up, if I may clear up the point   you don’t suggest that as at 1993 had you any more than a basic understanding of psoriasis?   Yes, a reasonable basis, but it was basic.

    It is fair to describe it as basic?   All right, yes.

    …

    Even now, however long after it is from 1993, perhaps if I take you to the date you swore your first affidavit, would still describe your knowledge of psoriasis as being a basic knowledge of psoriasis?   Yes, in terms of being able to diagnose it and treat it.

    …

    And so it was acceptable, in fact, in 1993, for a rheumatologist to have a basic knowledge of psoriasis?   Well, it depends what you define as a “basic knowledge”.  I would expect rheumatologists to know more than be able to spell the condition.  Because they are dealing with making a diagnosis of psoriatic arthritis, they need to be able to diagnose it almost as well as a dermatologist, and they need to be able to treat it almost as well as a dermatologist.

    …

    … I think that, as I said, rheumatologists need to know about psoriasis probably more than most other specialties apart from dermatologists, because they are dealing with a disease that crosses those two boundaries.

    …

    Not the way it is written there, really.  I mean, as I have just said, rheumatologists have to be able to diagnose psoriasis and know basically how to manage it, because otherwise how can they treat psoriatic arthritis?

    Sorry, the diagnosis of psoriasis is effectively a key part of the diagnosis of psoriatic arthritis?   Absolutely.

    But the management of the psoriasis itself is not primarily, at least, the responsibility of the rheumatologist?   No, it is not the responsibility.

15. Professor Brooks said that:

    You need to know about the basics of the treatments that you would use for psoriasis to ensure that the treatments that you might use for psoriatic arthritis or any other condition – you need to know what are the potential side effects of any other drug that the patient might be taking.  That’s what I meant by that.  I mean, medicine is not – I know, unfortunately, these days we do tend to compartmentalise it and you have to go to 15 specialists if you have more than two or three diseases, but when you are treating a patient, you really do need to have more than a rudimentary, a basic, understanding of the other drugs the patient might be on, so that you are not going to give them something that might interfere with those other treatments.  If you are concerned about that, then obviously you would contact the other doctor who was looking after them or their general practitioner who is trying to coordinate all of these things. 

16. Professor Brooks was aware of leflunomide in 1993.  To the best of his knowledge it became available in Australia in about 2000.  He has prescribed leflunomide for both RA and PsA.  Due to the complex nature of the drug, according to Professor Brooks, it is invariably initially prescribed by a rheumatologist. 

    B4      The TOPAS study

17. The TOPAS study was a multinational, double-blind, randomised, placebo-controlled clinical trial of leflunomide for the treatment of PsA and psoriasis, the results of which were published in an article by Kaltwasser et al in June 2004 (Kaltwasser et al, Efficacy and Safety of Leflunomide in the Treatment of Psoriatic Arthritis and Psoriasis (2004) 5 Arthritis & Rheumatism 1939-1950 (the Kaltwasser article)) and expanded upon in an article by Nash et al in 2006 (Nash et al, Leflunomide Improves Psoriasis in Patients with Psoriatic Arthritis: An In-Depth Analysis of Data from the TOPAS Study (2005) 212 Dermatology 238-249 (the Nash article)).  

18. According to Dr Shumack, the TOPAS study demonstrated that, along with efficacy in the treatment of PsA, leflunomide also exhibited “a degree of efficacy in the treatment of psoriasis” and “a good safety profile”.  Dr Shumack particularly noted the conclusions of the Nash article (at 248) that:

    …once-daily leflunomide is an effective and convenient treatment for psoriasis as well as PsA, resulting in significant improvements in both skin symptoms and quality of life, with the additional advantage of reducing joint symptoms in those patients who have active arthropathy.

19. Despite Apotex’s efforts to characterise the efficacy of leflunomide for the treatment of psoriasis as “modest” (with the results of the TOPAS study showing that only 11.5% or 1 in 9 of the patients in the trial obtained a “PASI 50” benefit over and above placebo), Dr Shumack maintained that the TOPAS study showed that leflunomide has clinical efficacy.  As Dr Shumack explained, a PASI 50 benefit means an equal to or greater than 50% reduction in a patient’s scores on the PASI.  He described a PASI 50 result as a “significant benefit” to the 11.5% of the patients in the trial who achieved it, and noted that the TOPAS study showed other patients would receive a less significant (or “modest”) but nevertheless measurable benefit to their psoriasis from the administration of leflunomide. 

20. Professor Smith also gave evidence relating to the TOPAS study.  Professor Smith considered that this study showed that both PsA and psoriasis improved with treatment by administration of leflunomide.  Professor Brooks agreed that the results of the TOPAS study disclosed that leflunomide treats not only PsA but also psoriasis. 

21. After publication of the TOPAS study, Sanofi-Aventis applied to the TGA to extend the indications for which leflunomide was registered on the ARTG to include PsA (its initial registered indication being for RA only).  The TGA approved this application.  The current approved Arava product information document (discussed below) reflects the approval of this application in late 2004.

    B5      The product information documents

    B5.1    General

22. A product information document (PI) is regulated by the Therapeutic Goods Act 1989 (Cth) (the Therapeutic Goods Act). Under s 23(2)(ba) of that Act an application for registration or listing of therapeutic goods on the ARTG, in the case of restricted medicine, must be “accompanied by product information, in relation to the medicine, that is in the form approved under section 7D in relation to the medicine”. Leflunomide is a restricted medicine. In s 3(1) “product information” is defined to mean “…in relation to therapeutic goods… information relating to the safe and effective use of the goods, including information regarding the usefulness and limitations of the goods.” The form approved under s 7D is the form approved in writing by the Secretary of the Department of Health and Ageing. According to Apppendix 8 of the TGA’s published Australian Regulatory Guidelines for Prescription Medicines (June 2004) (which the parties agreed currently applied), a PI:

    is regarded as a document that contains information sufficient to ensure safe and effective use of the medicine under nearly all circumstances.  It is to present a scientific, objective account of the medicine’s usefulness and limitations as shown by the data supporting the application.  It is to be devoid of promotional material.

    B5.2    Approved Arava PI

23. The approved PI for Arava (Sanofi-Aventis’s leflunomide product) describes leflunomide as an immunomodulatory agent.  The approved Arava PI refers to the results of clinical trials of leflunomide for adult RA, juvenile RA and PsA.  According to that part of the PI dealing with PsA, the efficacy of Arava was assessed by reference to the Psoriatic Arthritis Treatment Response Criteria (the PsARC), which is based on changes in joint pain/tenderness and swelling, and the PASI, which is based on “changes in the extent and severity of psoriasis lesions as judged by erythema [as I understand it, redness from inflammation], desquamation [as I understand it, removal of scaly crust], and infiltration [the meaning of which is unclear to me in this context].”  According to the results of the clinical trials, Arava “resulted in a significant improvement of PASI scores over the 24-week study relative to placebo.”

1. The approved Arava PI deals with “indications” in these terms:

   INDICATIONS
   ARAVA is indicated for the treatment of:

   ·Active Rheumatoid Arthritis

   ·Active Psoriatic Arthritis.  ARAVA is not indicated for the treatment of psoriasis that is not associated with manifestations of arthritic disease.

   The combined use of ARAVA with other Disease Modifying Anti-Rheumatic Drugs (DMARDS) has not been adequately studied (see PRECAUTIONS).

   B5.3    Approved Apotex PI and proposed Apotex PI

2. The TGA approved the PI for Apotex’s leflunomide product (the approved Apotex PI) in July 2008.  The approved Apotex PI is a copy of the approved Arava PI with the name changed from Arava to “Apo-Leflunomide” (the name of Apotex’s leflunomide product) and other minor differences (as explained in more detail below in respect of the copyright claims).  Accordingly, the approved Apotex PI contains the same clinical trial information as the Arava PI.  Its indications are also the same, appearing as follows:

   INDICATIONS
   Apo-Leflunomide is indicated for the treatment of:

   ·Active Rheumatoid Arthritis

   ·Active Psoriatic Arthritis.  Apo-Leflunomide is not indicated for the treatment of psoriasis that is not associated with manifestations of arthritic disease.

   The combined use of Apo-Leflunomide with other Disease Modifying Anti-Rheumatic Drugs (DMARDS) has not been adequately studied (see PRECAUTIONS).

3. Apotex prepared and applied to the TGA for approval of a new PI in June 2010 (the proposed Apotex PI).  The proposed Apotex PI contains information about clinical trials of leflunomide in respect of RA only.  The indications in the proposed Apotex PI appear as follows:

   INDICATIONS
   Treatment of active rheumatoid arthritis.

   B6      The prior art documents

4. Apotex identified three documents as part of the “prior art base” for the purpose of determining the challenges to the validity of the patent on the grounds of lack of novelty and inventive step: – (i) the 341 patent, (ii) an article by Bartlett et al entitled Leflunomide (HWA 486), a novel immunomodulating compound for the treatment of autoimmune disorders and reactions leading to transplant rejections (1991) 32 Agents and Actions 10-21 (the Bartlett Article), and (iii) an article by Rozman et al entitled The effects of Leflunomide (LF) in patients with rheumatoid arthritis (1992) 35 Arthritis and Rheumatism S108. (the Rozman abstract).

   B6.1    341 patent

5. The 341 patent became publicly available in 1980 and expired in 2004 (after an extension of its term).  The 341 patent is for the compound leflunomide (amongst other compounds).  Leflunomide is described as “formula I”.  According to the specification of the 341 patent:

   By virtue of its pharmacological properties, the isoxazole compound according to the invention, of the formula I, can be used especially as an antirheumatic, antiphlogistic, antipyretic and analgesic agent, and for the treatment of multiple sclerosis.

6. The specification refers to investigations in respect of three animal models – Adjuvant Arthritis (the AA model), Adjuvant Arthritis Perper Modification (the AAP model) and Allergic Encephalomyelitis (the AE model). 

7. According to the specification, leflunomide inhibits immunopathological processes in the AAP model and AE model tests.  The specification continues in these terms:

   The above pharmacological findings show that the compound according to the invention, of the formula I differs advantageously in its pattern of action from the tested antiphlogistic agents, in particular in respect of the inhibition of immunopathological processes on animal models which are also relevant to human illness.  This is probably equally true relative to other antiphlogistic agents hitherto employed in therapy.  This fact opens up the possibility of tackling, by medication, rheumatic illnesses in man by more nearly treating the cause, instead of purely symptomatic treatment as with the antiphlogistic agents used hitherto.

8. The claims of the 341 patent include the compound leflunomide in claim 1 and, relevantly, claim 4 as follows:

   4. Method for the treatment of inflammations, rheumatic complaints or multiple sclerosis by administering to the patient an effective amount of the compound as claimed in claim 1.

   B6.2    Bartlett article

9. The Bartlett article was published in 1991.  The article states that leflunomide “would seem to be a universal drug to combat autoimmune disorders.”  The article presents “very preliminary clinical data concerning leflunomide’s effects on the immune response of patients with rheumatoid arthritis.” 

   B6.3    Rozman abstract

10. The Rozman abstract was published in 1992.  The abstract states that:

    Having shown efficacy in animal models of arthritis, leflunomide is under investigation as a potential DMARD.  380 patients with active RA were enrolled in a randomized, double-blind, placebo-controlled trial.

11. It further states that:

    The results suggest a dose related trend towards efficacy of LF [leflunomide] in RA patients.  Further studies will determine its role in the management of RA.

    B6.4    Dr Shumack’s evidence about the prior art documents

12. The 341 patent: Dr Shumack was not aware of the compound leflunomide in 1993.  Nor had he read the 341 patent (or any patent) at that time.  He would have had to consult a medical dictionary to understand the meaning of “antiphlogistic” in 1993 (and had to do so when asked to review the 341 patent).  Having done so, he understands it to mean “anti-inflammatory”.  In 1993, Dr Shumack would have understood the statement in the 341 patent that leflunomide could be used as “an antirheumatic, antiphlogistic, antipyretic and analgesic agent, and for the treatment of multiple sclerosis” to mean that leflunomide may be useful in the treatment of arthritic and inflammatory conditions and for multiple sclerosis.  Dr Shumack agreed that, in 1993, he understood “arthritic and inflammatory conditions” to include RA and PsA.  According to Dr Shumack, because the animal models in the 341 patent were based on immune mechanisms and did not involve any hyper-proliferation of skin cells, in 1993 he would not have considered the results of the animal models to be relevant to psoriasis, which was then thought to be a proliferative disease.  Hence, Dr Shumack concluded that:

    Had I reviewed [the 341 patent] in 1993, given that the aetiology of psoriasis at that time was thought to be a hyper-proliferation process and not an inflammatory or immune-mediated process, there is nothing in the document which would have suggested to me that psoriasis would have been an appropriate condition in which to use Leflunomide.

13. The Bartlett article: Dr Shumack was not aware of the existence of the Bartlett article (or the existence of the journal in which it was published) in 1993.  In 1993 the Bartlett article would have shown Dr Shumack (and shows him today) that leflunomide is effective in a number of animal models as an immunological therapy.  Further, the Bartlett article would have shown that leflunomide “may be a drug useful in modulating immune reactions and may therefore show efficacy in a number of immunological disorders, although the only clinical results are those shown in rheumatoid arthritis patients.”  Dr Shumack thus concluded that:

    Had I reviewed [the Bartlett article] in 1993, given that the aetiology of psoriasis at that time was thought to be a hyper-proliferation process and not an inflammatory or immune-mediated process, the [Bartlett article] would not have suggested to me that psoriasis would have been an appropriate condition in which to use Leflunomide.

14. The Rozman abstract: Dr Shumack was not aware of the Rozman abstract in 1993.  He described the abstract as relating to a short-term efficacy trial of leflunomide for the treatment of RA.  Dr Shumack said that:

    In 1993, rheumatoid arthritis and psoriasis were considered unrelated conditions in terms of their aetiology, clinical manifestations and therapy.  From a dermatologist’s point of view, very little was known about rheumatoid arthritis other than that it was an autoimmune condition, suffered by a small proportion of the population, affecting the joints.  While rheumatoid arthritis was thought to be an immune disease, psoriasis was thought to be a proliferative disease.

15. Dr Shumack thus concluded that:

    There is therefore nothing in the Rozman Abstract which would have suggested to me in 1993 that psoriasis would have been an appropriate condition in which to use Leflunomide.

    B6.5    Professor Smith’s evidence about the prior art documents

16. The 341 patent: Professor Smith also did not read patents in 1993 as part of his practice as a rheumatologist (and nor does he today).  He had not seen and was not aware of the 341 patent in 1993 or until this proceeding.  According to Professor Smith, the AA and AAP models, in 1993, were thought to be models of rheumatoid arthritis, and the AE model is a model for multiple sclerosis.  Professor Smith thus said (and maintained in cross-examination) that:

    …in 1993 and still today, AA, AAP, and AE are not recognised as models for psoriatic arthritis.  This is in part because the pattern of joint involvement characteristic of these models differs from that seen in psoriatic arthritis.  Given this, in my opinion, the results in [the 341 patent] would in 1993 (and today) have provided no basis for a belief that [leflunomide] might be effective in treating psoriatic arthritis.

17. Professor Smith acknowledged that he did not work in animal models and they were not his area of expertise, but said that there was “certainly no evidence in the literature” in 1993 or today that the AA model was a model for psoriatic arthritis.

18. Having regard to his opinion about the relevance of the animal models in the 341 patent, Professor Smith considered that the phrase “rheumatic illnesses in man”, as used in the specification of the 341 patent, meant to him that the compound leflunomide might be useful in the treatment of rheumatoid arthritis.  Professor Smith continued:

    There is however no data to suggest that [leflunomide] might have efficacy in any other rheumatic illnesses and so I would not have considered the [341] patent to be making any assertions as to the use of the compound in any other rheumatic conditions.

19. On the same basis Professor Smith would have read “inflammations” and “rheumatic complaints” in claim 4 of the 341 patent as references to rheumatoid arthritis and not psoriatic arthritis or any other inflammatory arthritis.  Professor Smith thus would have understood claim 4 of the 341 patent to describe a method of treating rheumatoid arthritis.  As Professor Smith put it:

    The 341 Patent makes no reference to the use of Leflunomide to treat psoriatic arthritis.  The models used in the patent are not models of psoriatic arthritis.  Further, given the lack of understanding of the mechanisms responsible for psoriatic arthritis in 1993 (and the fact that it was not in 1993 known to be a T cell-mediated disorder like rheumatoid arthritis[)], the 341 patent would not have informed me at all as to whether Leflunomide would be effective in the treatment or prevention of psoriatic arthritis.

20. Further, as Professor Smith put it:

    The 341 Patent also makes no reference to the use of Leflunomide to treat psoriasis.  Indeed, the information contained in the 341 Patent does not inform me at all as to whether Leflunomide may be useful in the treatment of psoriasis given that in 1993 it was thought to be a proliferative disease of skin cells and no data is presented showing that Leflunomide has anti-proliferative properties.

21. Professor Smith did not accept the suggestion that rheumatoid arthritis and psoriatic arthritis were closely associated conditions.  While both are inflammatory diseases their underlying pathology is, and in 1993 was, understood to be different.  Hence, Professor Smith said “the reason you try to distinguish between two diseases is not just about pathogenesis.  It is about what the patient can expect in the long term in their condition and what treatments you would offer them.”  He agreed that if the words “certain illnesses of the rheumatic type” in the specification of the 341 patent were considered in isolation, they were “very unclear” and would cover any rheumatic condition.  So too, “rheumatic complaints” (used in claim 4 of the 341 patent) “could include everything” (that is, all arthritic diseases, including the most common forms of inflammatory arthritis, being RA and PsA).  However, Professor Smith did not read the references to rheumatic illnesses and complaints in the 341 patent in that broad way because he considered that the animal models used in the 341 patent related to RA and multiple sclerosis and not to PsA.

22. The Bartlett article: Professor Smith also had not seen the Bartlett article in 1993 or, indeed, until his involvement in this proceeding.  Professor Smith noted that the only study conducted in humans in the Bartlett article is an early dosing study investigating the use of leflunomide in patients with active rheumatoid arthritis.  Professor Smith also noted that animal models have limitations.  Animal models, according to Professor Smith, can only provide an indication as to whether or not a particular treatment may work for a particular disease.  In Professor Smith’s view there was no animal model available in 1993 relevant to psoriatic arthritis; nor is there any such model relevant today.  As to the study of humans in the Bartlett article Professor Smith said:

    Even in light of this study, before one could have any confidence that this drug would be safe and effective in the treatment of rheumatoid arthritis (so as to warrant its administration to a patient), one would have to conduct long-term efficacy studies… and also provide appropriate long-term safety data.

    Further, … as rheumatoid arthritis and psoriatic arthritis were considered to be distinct disorders in 1993, the results of this human study would not have led me to consider the use of this drug in the treatment of psoriatic arthritis.

23. Further, as psoriasis was thought in 1993 to be caused by keratinocyte proliferation, the Bartlett article would not have informed Professor Smith as to whether leflunomide might be effective in the treatment or prevention of psoriasis. 

24. Professor Smith also noted that the Bartlett article suggests that leflunomide has a selective immunomodulatory activity rather than an immunosuppressive effect in a number of the models used.  An immunomodulatory agent is one that has different effects on different aspects of the immune response.  Professor Smith thus would have expected leflunomide to suppress some aspects of the immune response whilst restoring other aspects back to normal.  Professor Smith thus said:

    In the absence of an understanding as to the mechanisms underlying any disease, one could not make any predictions as to whether the drug would work in any particular condition other than those for which the animal models are relevant…

    Given the lack of understanding of the mechanisms responsible for psoriatic arthritis in 1993 (and the fact that in 1993 it was not known to be a T cell-mediated disorder), the Bartlett Article would not have informed me at all as to whether Leflunomide would be effective in the treatment or prevention of psoriatic arthritis. 

25. The Rozman abstract: Professor Smith had not seen and was not aware of the Rozman abstract until his involvement in this proceeding.  The abstract describes a short-term dose-finding efficacy study undertaken in patients with active rheumatoid arthritis.  Again, given the lack of understanding of the mechanisms responsible for psoriatic arthritis in 1993 (and the fact that in 1993 it was not known to be a T cell-mediated disorder), Professor Smith said that the Rozman abstract would not have informed him at all whether leflunomide would be effective in the treatment or prevention of psoriatic arthritis.  Nor would it have informed him at all as to whether leflunomide might be effective in the treatment or prevention of psoriasis.

    B6.6    Professor Brooks’ evidence about the prior art documents

26. The 341 patent: Professor Brooks described the AA model in the 341 patent as one he had used in his own research before 1993 for inflammatory forms of arthritis.  While Professor Brooks considered the AA model a very reasonable model for rheumatoid arthritis, he also considered it “a closer model for seronegative arthropathies” (such as PsA) because the animals used in the AA model usually exhibit effects in their spine and often develop a skin rash, both of which are associated with the seronegative arthropathies.  Professor Brooks has specific experience in dealing with animal models and is the author of a number of papers based on those models.  In this regard Professor Brooks was unusual because, as he said:

    … rheumatologists, with the greatest respect, don’t know too much about animal models, clinical rheumatologists, because they don’t deal with them.

27. For this reason Professor Brooks acknowledged that “it might be a reasonably held view by a rheumatologist not dealing much with animal models to not have regard to AA, adjuvant arthritis, as a model for psoriatic arthritis.”

28. Professor Brooks considered that the word “inflammations” in claim 4 of the 341 patent in theory could encompass “all of the 150 or so types of arthritic disease”.  However, in light of the animal models and his experience with using the AA model in investigations of rheumatoid and psoriatic arthritis he considered that the references to “inflammations” and “rheumatic complaints” in claim 4 of the 341 patent include at least the inflammatory rheumatic diseases (RA, PsA and other seronegative arthropathies), and that claim 4 is describing a method of treating those inflammatory arthropathies. 

29. Professor Brooks, in common with Professor Smith, acknowledged the importance of the particular pathways or mechanisms by which inflammations occur.  Professor Brooks gave this evidence:

    But it’s correct, isn’t it, moving on, as it were, from inflammation to the immune system, that the fact that a drug is known to suppress or modify the immune system is not sufficient to determine whether it will be adequate to treat a particular disease state?   Well, it’s not totally adequate, but if you have a drug which suppresses the immune system and you have a disease where the immune system is in overdrive – ie, inflammatory arthritis, rheumatoid, cancer, all of those things – then you might be swayed to use that drug again initially in in vitro studies in the test tube, then in animal models and then in patients.

    Without knowing more, all you would know is that it may or may not work?   Absolutely.

30. Professor Brooks also acknowledged the limitations on the use of animal models.  Animal models rarely mimic human disease.  The ability to extrapolate from an animal model to humans is limited to provision of an indication that the treatment may work in the relevant disease in humans.  In terms of the 341 patent, Professor Brooks agreed substantial further work, including phase 1, 2 and 3 clinical trials, would be required in addition to that reported in the 341 patent before he could determine whether leflunomide would in fact be safe and/or effective to treat RA in humans. 

31. The Bartlett article: Professor Brooks had not read the Bartlett article before this proceeding.  Consistent with his position in respect of the 341 patent, Professor Brooks would have found the Bartlett article of interest in 1993 (particularly given the reference to the AA model, which Professor Brooks considered to be a good model for the seronegative arthropathies) but agreed substantial further work, including clinical trials as described in respect of the 341 patent, would have been required before he could determine whether leflunomide in fact would be safe and/or effective to treat RA in humans. 

32. The Rozman abstract: Professor Brooks described the clinical trial in the Rozman abstract as the “gold standard” (as it was a randomised, double-blind, placebo-controlled trial).  Professor Brooks also would have found the Rozman abstract interesting in 1993 based on his view that RA and PsA could be described as “closely associated” (both being inflammatory arthropathies), but acknowledged that the same limitations identified in relation to the 341 patent applied also to the Rozman abstract (namely, that substantial further work, including phase 1, 2 and 3 clinical trials, would have been required before he could determine whether leflunomide would in fact be safe and/or effective to treat RA in humans). 

1. Accordingly, and as Sanofi-Aventis submitted:

   It is clear from the evidence, and from inferences that may comfortably be drawn from the evidence, that the Australian PI is a document that exists nowhere else in the world… the Australian PI, principally for present purposes in the form in which it appears in Version 19, can only have resulted from the application of “pen to paper” by Australian residents working in Australia and from the selection and arrangement of the source materials into the particular form of the Australian PI… Given the nature of the work, and given the description of the type of work, it is quite evident that the overall form, arrangement, content and presentation of Version 19 has resulted in a very significant measure from the skill and labour of Australian-based authors.  As submitted elsewhere, Apotex has taken as good as the whole of version 19.

2. Nor can it be said that the preparation of the product information documents involved the kind of separate and individual contributions that led to the conclusion that the alleged works in Primary Health Care and Acohs were not works of joint authorship.  The members of the Arava Cross-Functional Team and the global labelling team may well have made suggestions as individuals about various aspects of the product information documents.  But it cannot be said that the documents are the result of individual and separate efforts rather than collaboration as required by the definition of “work of joint authorship”.  The works in question are the result of a collaborative effort.  They are not analogous to a series of individual patient notes written by different healthcare professionals as in Primary Healthcare.  Nor are they analogous to the individual contributions of programmers necessary to create material safety data sheets in Acohs.  Apotex’s submissions to the contrary are not persuasive and seek to recast the evidence of Dr Bruand, Dr Fontaine and Ms Deane about the process of preparing the Arava works in a manner which does not accurately reflect the import of that evidence.  The evidence does not support Apotex’s characterisation of the process as people simply “plugging in various materials from various sources”.  The work involved was iterative and collaborative. 

3. For the same reasons the balance of Apotex’s contentions on the subsistence of copyright in the SPC, the Arava PI version B and the Arava PI version 19, as well as the reproduction of a substantial part of these works, should not be accepted.  Curiosities in the relationship between the DMDS and the SPC are not material to the resolution of the issues in dispute.  It may be accepted that Ms Patel is not the sole author of the Arava PI version 19.  But it is apparent from the evidence that the people who first reduced to material form the various versions of the Arava PI are the members of the Arava Cross-Functional Team in collaboration with each other and the global labelling team.  In other words, the authors of the Arava works are all Sanofi-Aventis employees who collaborated with each other to create the documents.  Ms Patel, accordingly, is one author but not the sole author of one or more versions of the Arava works, including the Arava PI version 19.  The same reasoning applies to Dr Bruand in respect of version B, and Ms Deane in respect of version A.  Apotex, moreover, reproduced the whole or a substantial part of the Arava PI version 21 (by its own admission).  In so doing, Apotex also reproduced at least a substantial part of the SPC, version B and version 19.  The extent and quality of what Apotex copied in the approved Apotex PI, as well as the causal connection established by Apotex’s act of copying version 21, leads inevitably to the conclusion that Apotex, in its approved Apotex PI, reproduced a substantial part of each of the copyright works in suit. 

4. Again, adopting Sanofi-Aventis’s submissions with respect to version 19 in particular:

   (a)if there is any originality in Version 19 by way of selection of material from the multiple sources, Apotex appropriates that originality;

   (b)if there is any originality in Version 19 by way of arrangement of material from multiple sources – and for the purposes of this exercise sanofi-aventis would say that one can “subtract” the high-level heading structure required by the TGA – Apotex appropriates that originality;

   (c)if there is any originality in Version 19 by way of rewriting and digesting the material from the sources, Apotex appropriates that originality;

   (d)if there is any originality in Version 19 in editing and adapting the material from other sources, Apotex appropriates that originality.

5. The Arava PI version 19 is original in each of the ways Sanofi-Aventis described and Apotex has appropriated that originality by reproducing the whole, or at the least a substantial part, of that work.

6. It should also be noted that no issue was raised – and I have accepted above – that, if copyright subsists in the Arava works in suit, the relevant copyright owners are Sanofi-Aventis Australia for each version of the Arava PI (including the Arava PI versions B and 19) and Sanofi-Aventis Deutschland and Aventisub II for the SPC (as well as the DMDS).

7. For these reasons, Sanofi-Aventis has established that Apotex infringed copyright in the SPC, the Arava PI version B and the Arava PI version 19 by reproducing in a material form (see s 31(a)(1)(i) of the Copyright Act) a substantial part of each of those works (see ss 13 and 14 of the Copyright Act).

8. The only remaining issue is whether, as Apotex contended in the alternative, it reproduced a substantial part of these copyright works with the copyright owners’ implied licence. This question arises under the terms of s 36(1) of the Copyright Act, which provides as follows:

   Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes [sic] the doing in Australia of, any act comprised in the copyright.

   P7       Implied licence

   P7.1     Apotex’s case

9. Apotex’s first point concerns the question of onus. According to Apotex, as the absence of a licence is a necessary ingredient of infringement (see s 36(1) of the Copyright Act), the onus of disproving the existence of a licence lies on Sanofi-Aventis (citing in support Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88; [1990] HCA 58 (Avel v Multicoin)). 

10. In terms of evidence, Apotex relied on the affidavit of Shaun McVicar, solicitor.  Mr McVicar’s affidavit annexes PIs for three classes of drugs as follows: – (i) 13 drugs of which Sanofi-Aventis was the innovator and 22 generic versions of the same drug, (ii) the top 10 drugs by value on the PBS and 62 generic versions of the same drug, and (iii) eight drugs of which companies other than Sanofi-Aventis were the innovators and generic versions of those drugs of which Sanofi-Aventis was the issuer.  The purpose of this affidavit is to demonstrate that the PIs for the generic versions of the drugs are close copies of the PIs of the innovator companies, in circumstances where there is no evidence of complaint of copyright infringement in respect of any of the innovator PIs before this proceeding. 

11. Apotex stressed that Sanofi-Aventis filed no evidence in reply to the affidavit of Mr McVicar.  Further, Sanofi-Aventis did not call any witness who was in a position to prove that the practice of copying PIs was other than universal.  Dr Bruand, according to Apotex, “could offer only some limited confirmation of the practice and no evidence at all to contradict it”.  Insofar as Sanofi-Aventis relied on other PIs for generic versions of drugs which were not copied from the relevant innovator PI, Apotex noted that the evidence: – (i)  was not provided until the last day of the hearing, (ii) was of limited value as the nature and extent of the searches conducted to discover these examples had not been disclosed (Chase Manhattan Overseas Corporation v Chase Corporation Ltd (1985) 9 FCR 129), and (iii) did not in any event disprove the practice of copying.

12. Using Apotex’s words, the evidence establishes that Sanofi-Aventis has “been aware of, participated in, benefited from and never complained about the practice of generic companies making close copies of originators’ PIs.”  As such, Apotex said that:

    In light of the unchallenged evidence on this matter and the Applicants’ failure even to attempt to discharge their onus (except perfunctorily, at the last minute), their copyright case must fail in limine because an essential element of s 36(1) is not made out.

13. Apotex also submitted in the alternative that an implied licence can arise from the circumstances.  In Avelv Multicoin at 123, McHugh J acknowledged that a licence might be implied from conduct (including indifference), although mere failure to object or even intention not to do so would not necessarily suffice. Apotex relied on a number of circumstances from which it said an implied licence could be inferred: – (i) the Second Reading speech and Explanatory Memorandum for the amendment Act both refer to the “long-standing practice” of the TGA of approving PIs for generic versions of drugs in essentially the same or similar form to the PI approved for the original version of the drug, (ii) Dr Bruand and Ms Deane agreed that this long-standing practice existed, (iii) the exhibits to the affidavit of Mr McVicar established that Sanofi-Aventis had both acquiesced in and benefited from this long-standing practice, (iv) the regulatory regime under the Therapeutic Goods Act (s 25A in particular) provides a five-year data exclusivity period and thereafter permits the TGA to use the original supplier’s data to assess drugs subsequently submitted for evaluation, (v) this regime is reflected in the Regulatory Guidelines, which require safety and efficacy data if the PI is not identical to that of the already registered version of the drug (see the summary of the Regulatory Guidelines above), (vi) the public policy benefits flowing from PIs for generic drugs being in the same form as that of the already registered brand (which presupposes the generic versions being established to be bioequivalent to the original drug, in which event safety and efficacy data are not required by the TGA unless the PI is different) are manifest in terms of safety and convenience, (vii) the MIMS Annual contains the full text of the innovator PI under the originator brand for a particular drug and then invites the reader to “see other brands/presentations” under the generic brand of the same drug, (viii) in addition to Mr McVicar’s affidavit, Apotex identified another 38 drugs in which the generic PIs are close copies of the innovator PIs, including well-known brands which have been the subject of patent litigation in this Court and in relation to which no complaint of copyright infringement has been made, (ix) from the evidence of Dr Bruand and Ms Deane it is apparent that great care is taken by the originator company in formulating the PI to ensure its accuracy without over- or understatement; as a PI is the primary source of information about a drug, the risk of confusing and inconsistent messages must be avoided, and (x) the originator company is the repository of relevant safety updates and thus has access to the information required for safety-related and other necessary amendments to PIs.

14. According to Apotex, necessity is not a requirement of a licence implied from conduct.  Cases referring to necessity concern the implication of a term as a matter of law (for example, Copyright Agency Ltd v State of New South Wales (2008) 233 CLR 279; [2008] HCA 35 (Copyright Agency v State of New South Wales) at [80]-[81] and [84]-[93], Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24 (Byrne v Australian Airlines) at 440, Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55 (Concrete v Parramatta Design), Con-Stan Industries v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226; [1986] HCA 14 and Liverpool City Council v Irwin [1977] AC 239 at 254). Apotex also rejected the proposition that its evidence of the custom on which it relied was insufficient, pointing out that evidence “is to be weighed according to the proof which it was in the power of one party to produce and in the power of the other to contradict” (citing in support Odgers, Uniform Evidence Law (9^th ed, 2010), [1.4.120]).

15. Apotex contended that it was not now open to Sanofi-Aventis to claim that it had revoked any implied licence.  Sanofi-Aventis’s case as pleaded and position as adopted in evidence was that there was no such licence.  Accordingly, Apoex said Sanofi-Aventis could not claim that any implied licence was revoked and, had it done so earlier, Apotex would have pleaded an estoppel in response.

16. As Apotex put it in conclusion:

    in the present circumstances, there is an implied licence to do what Apotex has done.   Compare TCN Channel Nine v Network Ten [2001] FCA 841, where an implied licence was held not to exist, principally because there was not “any established trade practice or custom constituting a mutually implied licence” to the relevant effect. Here, there is.

    P7.2     Discussion

17. In Lorenzo & Sons Pty Ltd v Roland Corporation (1992) 23 IPR 376 at 380 the Full Court of the Federal Court said:

    Counsel for Lorenzo emphasised that it was now established that the onus of proving the absence of a licence by the owner of a copyright in relation to an issue of infringement under s 37 of the [Copyright] Act lay on the party who asserted the infringement, that is to say, upon Roland and Roland Australia, and that it was not for Lorenzo to establish the presence of such a licence: Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88.

    In response, counsel for the respondents submitted that the appellant was inviting the court to proceed on assumptions and conjecture as to any relationship between Roland and one or more of the businesses in Hong Kong, let alone the resale by them to Australian purchasers of Roland products which would be unsuitable for use in Australia.  He submitted that whilst undoubtedly the respondents had borne the onus to prove the absence of a licence by Roland that did not mean that in the course of reaching a conclusion upon that issue there would arise, in the conduct of the trial, an evidential burden as distinct from the ultimate legal burden of proving (or disproving) the ultimate fact in issue: see Byrne and Heydon Cross on Evidence, 4th Australian ed. 1991, paras 7005-7030.  We accept that submission.  Counsel for the respondents contended that when all the relevant circumstances were looked at they did not lay a proper foundation for the drawing of an inference that Roland had given its permission, informally, to the importation of the D-50 booklets.

    The relevant principles as to the implication of licences in this field are discussed in Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV (1977) 138 CLR 534, Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 20 FCR 46 (Full Court), Avel Pty Ltd v Multicoin Amusements Pty Ltd supra, StarMicronics Pty Ltd v Five Star Computers Pty Ltd (1990) 18 IPR 225 (Davies J), and Broderbund Software Inc v Computermate Products (Australia) Pty Ltd (1991) 22 IPR 215 (Beaumont J).

18. Consistent with these observations, it is not necessary to analyse the pleadings and conduct of the hearing to determine whether one or other of the parties accepted an evidentiary burden to prove or disprove the implication of a licence said to be based on industry custom (including Sanofi-Aventis’s own conduct in respect of PIs).  The relevant question is whether, in all the relevant circumstances, there is a proper foundation for the existence of the implied licence by which Apotex claimed it was authorised to copy the Arava PI version 21. 

19. I am satisfied that the evidence requires the conclusion that there is no such proper foundation.  My reasons are as follows.

20. First, insofar as the regulatory regime is concerned, it is apparent that the TGA does not require PIs for a generic or later version of a drug to be identical to the PI for the original drug.  To the contrary, the Regulatory Guidelines disclose that if the PI is “different in content” or “not identical” to that of the registered brand then safety and/or efficacy data may be needed “depending on the case”.  There are also in evidence communications from the TGA articulating its position.  According to these communications:

    While the expression “requirement” has been used (as in the brief attached to this email), it is not, as you know, a legal requirement that the documents be the same. Relevant to the emergence of that practice may be the fact that any differences in the wording of a draft PI submitted by a generic may indicate to the TGA differences in substance in the medicine itself from the originator’s medicine (which in turn may require additional information and evaluation, and possibly additional fees).  Generic companies may well have taken the view that providing a draft PI for a medicine in very similar terms to the approved PI of the originator’s medicine would reduce that risk.

    […]

    In summary, in the period 2007-2008 there was a practice in the TGA to approve PIs for generic medicines that contained similar information to that in PIs for the originator medicine.  Some generic companies have provided to the TGA draft PIs in very similar terms to the originator’s approved PI.  PIs have been approved by the TGA for generic medicines in very similar terms to the approved PI of the originator’s medicine.  There was no articulated “policy” as such.

21. It may be accepted that the preparation of safety and efficacy data, if required by the TGA due to differences between innovator and generic PIs, would be likely to involve significant time and expense.  However, the Regulatory Guidelines disclose that such data may not be needed even if the PIs are different, it being a matter for the TGA depending on the circumstances of each case.  It is also not impossible for such data to be provided if required, albeit at a cost to the generic supplier. 

22. Second, insofar as public policy is concerned, it also may be accepted that there is a public interest in PIs for the same or bioequivalent drugs also being the same.  These considerations may be inferred to be the reason for the amendment Act.  While this public policy issue may explain the TGA’s position, it does not establish the existence of an implied licence for one drug company to copy the PI of another drug company.  There are many circumstances in which it might be said that a particular statutory monopoly, on reflection, is contrary to the public interest.  The legal consequence of that is not that the statutory monopoly simply ceases to exist on recognition of the inconsistency with public policy.  It becomes a matter for the legislature to determine whether the monopoly should continue or be modified.  In the present case, the legislature has made its determination and has passed the amendment Act.  As the reasoning in Copyright Agency v State of New South Wales discloses, the balance to be struck between competing policy interests in this context is a matter for the legislature with many options available including, for example, statutory licence regimes (see, for example, [48] and [71]).

23. Third, insofar as the “long-standing practice” of copying PIs is concerned, the evidence is equivocal.  It is true that Apotex has discovered PIs where one may infer that the generic company has copied from the innovator PI (including PIs which suggest such copying by Sanofi-Aventis itself).  It is also true that, albeit late in the day, Sanofi-Aventis has located other PIs which appear not to have been copied or, at least, not to have been copied to the same extent.  It may also be accepted that the MIMS annual takes the approach of cross-referring from a generic drug to the innovator PI for that drug.  But the evidence as a whole is simply insufficient to establish either the existence of an industry-wide practice of copying, or anything more than apparent neutrality by participants in the industry as to the copyright implications of such copying (at least until the present case).  As to the issue of custom, the evidence does not disclose the proportion of PIs in evidence (tendered by either party) compared to all approved PIs.  The PIs in evidence, accordingly, lack any meaningful context.  As to mere neutrality, it cannot be inferred from the lack of evidence of any objection until that of Sanofi-Aventis in the present case that participants in the industry implicitly consented to the so-called industry-wide practice of copying.  The evidence, at best, indicates a mere lack of objection to apparent cases of PIs being copied.  In the circumstances outlined above, lack of objection without a duty to object is equivalent to mere neutrality which, as McHugh J said in Avel v Multicoin at 123, is not sufficient to establish an implied licence.

1. Fourth, insofar as the care with which PIs are created is concerned, the consequences are far from clear-cut.  The fact that originator companies take care when crafting a PI (a proposition which I accept, but which is not readily reconcilable with Apotex’s submissions on the subsistence of copyright in the Arava works in the present case) does not seem to make the alleged industry-wide practice more or less likely.  Apotex itself managed to create a draft PI for its leflunomide product (the proposed Apotex PI) which does not copy any part of the approved Arava PI (or any of the other Arava works).  The fate of the proposed Apotex PI has not yet been determined by the TGA and, given the commencement of the amendment Act, may never be determined.  The point is that, when it considered it might be necessary to do so, Apotex managed to create a PI which had not been copied from the innovator PI, presumably with the same level of care an originator company brings to bear upon that process, and without any evidence of it having been particularly difficult to do so.

2. Fifth, insofar as safety updates are concerned, Apotex sought to make a case based in part on the fact that the originator drug company is the repository of all reports of adverse reactions and thus is best placed to make any required safety amendment to a PI.  This may be so.  But it is presumably a circumstance which has existed for many years.  Generic brands must have PIs.  PIs are often amended over the years as more information becomes available.  The evidence does not disclose the details of practices by which drug companies review and disclose their safety data or by which drug companies remain apprised of amendments to PIs (including amendments by generic companies which have become aware of some safety issue).  While it might be presumed (and hoped) that suitable systems are in place for the disclosure and exchange of safety information, the evidence in this case shows (for example) that some generic PIs contain warnings and safety information, as well as information about adverse reactions and drug interactions, which are not found in the relevant innovator PI.  In other words, the evidence about the need for the copying of innovator PIs based on the system for safety notifications is equivocal at best.

3. Taken together these considerations indicate that, in all of the circumstances, a licence to copy innovator PIs for the purposes of obtaining regulatory approval for generic drugs cannot be implied.  If, consistent with Avel v Multicoin, the legal onus for disproving the alleged implied licence lies upon Sanofi-Aventis the evidence, taken as a whole, has enabled that burden to be discharged.  As a result it is not necessary to deal with the balance of the issues between the parties including shifting evidentiary burdens, the requirement for necessity and/or mutuality, or the possible revocation of any implied licence.  Nevertheless I briefly record my conclusions on those remaining issues. 

4. As to shifting burdens of proof, it is the case that Sanofi-Aventis pleaded that the infringing acts were done without its licence (para 23 of the further amended statement of claim).  Apotex denied the allegation and, in the particulars of its denial, asserted that it benefitted from a licence from Sanofi-Aventis “which is to be implied according to trade, custom, conduct or acquiescence”.  By the terms of its denial Apotex accepted that there was no express licence.  While correspondence between the parties about this issue ensued, Apotex’s implied licence case, as the above discussion indicates, remained broadly based.  As Sanofi-Aventis submitted, given the pleading as particularised it is difficult to see how Sanofi-Aventis could be expected to adduce evidence to disprove each and every class of implied licence on which Apotex appeared to rely.  This lends support to Sanofi-Aventis’s submission that Apotex’s case was not made good by any alleged default on Sanofi-Aventis’s part in adducing evidence to rebut the suggested implied licence. 

5. As to necessity, it is plain that the evidence does not establish that it is necessary for drug companies seeking to register a generic version of a drug to copy the relevant innovator PI.  It is also apparent that the observation in Copyright Agency v State of New South Wales at [92] (“[f]inally, and importantly, a licence will only be implied when there is a necessity to do so”) is not limited to cases of licences as terms implied by law into a contract. Copyright Agency v State of New South Wales itself is not such a case. While there is no doubt, as Apotex said, that an implied licence can arise outside of a contractual setting, it seems to me that the observation at [92] involves a more general unifying principle: unless necessary, terms and consents will not be implied. Even if this is incorrect, and necessity is not required for the implication of a licence in a non-contractual setting, the evidence establishes that copying innovator PIs may be convenient but is by no means necessary. Lack of necessity, even if not decisive, is not an irrelevant consideration and, if weighed along with the other evidence, would be an indicator against the existence of the implied licence as claimed.

6. Mutuality involves different considerations.  It appears that mutuality has arisen because Apotex relied on TCN Channel Nine v Network Ten [2001] FCA 841 to support its case. In that case there was emphasis on the mutuality of any implied licence, as there was in Concrete v Parramatta Design.  In the present case it would be difficult to find any form of mutuality as between originator and generic drug companies.  On the evidence, for example, Apotex has never contributed an innovator PI to the pool of PIs it maintains are available for copying by other drug companies.  Apotex has only copied other companies’ innovator PIs.  While mutuality might not be an essential component of an implied licence the fact is that, in the present case, there is no relationship (contractual or otherwise) between the various drug companies generally or Sanofi-Aventis and Apotex in particular.  As with necessity, it is difficult to accept that mutuality would be an irrelevant consideration – and, if this is weighed with the other evidence, it too would tend to negate the existence of an implied licence as claimed.

7. As to revocation, Sanofi-Aventis said that Apotex could not assert that it was too late for the alleged implied licence to be revoked for two reasons: – (i) Sanofi-Aventis could not revoke a licence before the infringing conduct, and (ii) Apotex’s complaint could not answer the quia timet case in respect of threatened infringements.  It seems to me that neither proposition is an answer to Apotex’s point that, before closing submissions, Sanofi-Aventis did not rely on any claimed revocation.  Had it done so it might have been open to Apotex to claim that Sanofi-Aventis was estopped from revoking the licence.  The issue is one of fairness.  It would be unfair, and irremediably so, for Sanofi-Aventis to now be permitted to rely on a claim of alleged revocation.  For the reasons given above, however, it is also unnecessary for Sanofi-Aventis to do so.

   P7.3     Conclusions

8. For these reasons Sanofi-Aventis has established that Apotex, without a licence to do so, infringed copyright in the Arava works on which Sanofi-Aventis relied (the SPC, the Arava PI version B and the Arava PI version 19) in contravention of s 36 of the Copyright Act. The amendment Act, however, must be taken into account. The parties may wish to be heard on that issue.

   Q        CONCLUSIONS

9. For the reasons given above, Sanofi-Aventis has established that Apotex threatens to infringe the patent and has infringed its copyright in the Arava works.  Apotex has not established invalidity of the patent on any ground.  The terms of final orders will be determined after hearing further from the parties.

I certify that the preceding three hundred and eighty-five (385) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

Associate:

Dated:       29 July 2011