Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth

Link copied
Case Copied 76 min read

FEDERAL COURT OF AUSTRALIA

Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2018] FCA 1556

File numbers:

VID 195 of 2009

NSD 596 of 2009

NSD 1124 of 2009

Judge:

JAGOT J

Date of judgment:

19 October 2018

Catchwords:

PATENTS – interlocutory injunctions – undertakings as to damages – enforcement of undertakings – interlocutory injunctions wrongly granted – adverse effects of operation of interlocutory injunctions – losses of opportunity to supply – standard of proof – some loss proved on balance of probabilities – possibilities and probabilities of supply – supply under PBS and on private market – losses reasonably foreseeable – direct and indirect losses – remoteness of damage – illegality of hypothetical profits – abuse of process – assessment of loss – discretionary considerations

DAMAGES – interlocutory injunctions – undertakings as to damages – enforcement of undertakings – assessment of loss

Legislation:

Evidence Act 1995 (Cth) ss 81, 87

Federal Court of Australia Act 1976 (Cth) ss 4, 51A

Federal Court Rules 2011 (Cth) rr 39.06

National Health Act 1953 (Cth) ss 84, 85, 85AD, 98B, 99, 99ACI, 99ADB, 99AEB, 99AED, 99AEG, 99AEH, 99AEI
National Health (Pharmaceutical Benefit) Regulations 1960 (Cth) reg 10A, 37, 37D

Patents Act 1990 (Cth) ss 13, 128, 138

Therapeutic Goods Act 1989 (Cth) ss 3, 9A, 9D, 19B, 19D, 20, 23, 25, 26, 26C, 28, 30, 31A, 41JD, 42E

Therapeutic Goods Legislation Amendments (Copyright) Act 2011 (Cth) ss 25AA, 44B

Trade Practices Act 1974 (Cth) s 82

Therapeutic Goods Regulations 1990 (Cth) reg 9A

Cases cited:

Abbey Forwarding Ltd (in liq) v HM Revenue & Customs [2015] EWHC 225 (Ch); [2015] Bus LR 882

Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249

Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310

Asden Developments Pty Ltd (in liq) v Dinoris (No 3) [2016] FCA 788

AstraZeneca AB v KRKA dd Novo Mesto [2015] EWCA Civ 484

Badenach v Calvert [2016] HCA 18; (2016) 257 CLR 440

Barnes v Forty Two International Pty Ltd [2014] FCAFC 152; (2014) 316 ALR 408

Barratt Manchester Ltd v Bolton Metropolitan Borough Council [1998] 1 All ER 1

Batistatos v Newcastle City Council [2006] HCA 27; (2006) 226 CLR 256

Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618

CGU Insurance Ltd v Watson (as trustee of the deed of arrangement in respect of Greaves) [2007] NSWCA 301

Chaplin v Hicks [1911] 2 KB 786

Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-Operative Assurance Co of Australia Ltd [1931] HCA 53; (1931) 46 CLR 41

Columbia Pictures Industries Inc v Robinson [1987] Ch 38; [1986] 3 WLR 542

Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64

Commonwealth v SCI Operations Pty Limited [1998] HCA 20; (1998) 192 CLR 285

Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 5] [2012] WASC 382;

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2018] FCA 1556
Decision Date

CaseChat Overview and Summary

In the case of Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth, the Federal Court was required to assess compensation for losses incurred due to the wrongful grant of interlocutory injunctions. The claimants, comprising several pharmaceutical companies and the Commonwealth, sought damages based on the impact of these injunctions, which prevented the supply of generic venlafaxine products. The court had to determine whether the losses claimed were foreseeable and if they were sufficiently substantiated to warrant compensation.

The legal issues before the court involved the enforceability of undertakings as to damages, the standard of proof required to substantiate loss, and the remoteness of damage in relation to the interlocutory injunctions. The court examined the nature of the losses claimed, including both direct losses such as lost sales and indirect losses like the opportunity to supply products under the Pharmaceutical Benefits Scheme (PBS) and on the private market. The court also considered the illegality of hypothetical profits and the principle of abuse of process in assessing these claims.

The court found that the interlocutory injunctions were indeed wrongly granted, as affirmed by the Full Court's subsequent decision that the method patent was invalid. The primary adverse effect of these injunctions was the prevention of the claimants from supplying their products, which had a direct and foreseeable impact on their business operations. The court held that the losses of opportunity to supply were reasonably foreseeable and sufficiently proved on the balance of probabilities. The court further determined that the losses were not too remote and that the claimants were entitled to compensation under the undertakings given by Wyeth.

In conclusion, the court ordered compensation for each claimant, assessing the losses based on the probabilities and possibilities of supply under the PBS and on the private market, if the interlocutory injunctions had not been granted. The court also considered the discretionary factors involved in making these orders, ensuring that the compensation reflected the actual adverse effects of the injunctions on the claimants.

Orders

Orders of the court

1. Until 5.00pm on 26 October 2018, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) and on the ground that it is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a), there be no disclosure (by publication or otherwise) of the reasons for judgment delivered on the date of this order in proceedings VID 195 of 2009, NSD 596 of 2009 and NSD 1124 of 2009 (Proceedings) to any person other than to the external solicitors and counsel for the parties in the Proceedings, including the external solicitors and counsel for the Commonwealth of Australia (despite the discontinuance of its interlocutory application).

2. By 4.00pm on 26 October 2018 any party wishing to claim that any part of the reasons for the judgment should be subject to a further confidentiality order is to notify the Associate to Jagot J and the other parties, as well as the Commonwealth, by email of the claim including:

(a) details of the matter claimed to be confidential;

(b) a short statement of the reasons the matter is said to be confidential; and

(c) a statement identifying whether the claimant consents to the confidentiality claim being determined by Jagot J on the basis of the email or seeks an oral hearing.

3. If no notice by email is received in accordance with order 2, the reasons for judgment will be published forthwith.

4. If notice is received in accordance with order 2, the reasons for judgment will be published forthwith with the claimed confidential matter redacted pending determination of the confidentiality claim.

5. The parties are to confer and, by 4.00pm on 2 November 2018, are to propose in a joint email (including agreed and disagreed matters) to the Associate to Jagot J further directions to enable the matter to be finalised.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Schedule 4 identifies the people who are referred to in these reasons for judgment.Basic facts In this section I record only those facts which set the context for the claims.ARTG registration The ARTG registrations of the generics’ products obtained before the interlocutory injunctions were granted are fundamental to my conclusions. Details about ARTG registration are set out in the statement of agreed facts in Schedule 2 on which the following section is based. A product containing the active pharmaceutical ingredient venlafaxine hydrochloride must be registered on the ARTG before it can be imported into, manufactured or supplied in, or exported from, Australia. Section 9A(1) of the Therapeutic Goods Act provides that:The Secretary is to cause to be maintained a register, to be known as the Australian Register of Therapeutic Goods, for the purpose of compiling information in relation to, and providing for evaluation of, therapeutic goods for use in humans. Section 3(1) of the Therapeutic Goods Act contains definitions, including relevantly, of “sponsor” in relation to therapeutic goods. By s 23, a person may make an application to the Secretary for registration or listing of therapeutic goods. By s 25(3), after an evaluation, the Secretary must decide to register or not to register the goods. Division 1 of Pt 3-2 of the Therapeutic Goods Act provides for a range of civil penalties and criminal offences in relation to therapeutic goods. The person or company holding the registration of a pharmaceutical product registered on the ARTG is called the sponsor of the relevant product. A sponsor may offer to supply, and supply, that therapeutic product to pharmacies, pharmaceutical distributors/wholesalers, government authorities and private or public hospitals in Australia when the product has been registered on the ARTG. To register a therapeutic product on the ARTG the sponsor must obtain approval from the TGA. If a pharmaceutical product is approved by the TGA, the brand name and the active ingredient of the product are entered on the ARTG, along with the name of the sponsor, the approved indication(s), the dosage form and the pack sizes for which the product may be supplied. A sponsor wishing to supply a bioequivalent version (generic product) of a pharmaceutical product which is already registered on the ARTG (originator product) may make an application that does not include all the information that was required of the originator to register the originator’s product. A sponsor of a generic product may rely on the safety and efficacy data submitted by the originator in respect of the originator product if the sponsor of the generic product demonstrates that the generic product is “essentially similar” or bioequivalent to the originator product. In order to demonstrate bioequivalence a sponsor of the generic product should normally conduct clinical bioavailability studies comparing the generic product to the originator product. The sponsor of the generic product is required to conduct such a study or studies with the Australian originator product or demonstrate that the comparator used in the studies against which the generic product is compared is identical to the Australian originator product.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Six claimants sought compensation pursuant to the undertakings. Three claimants were parties to the original proceedings, Sigma, Alphapharm and Generic Health. Where there is no need to distinguish between them I refer to these parties together as the generics. Three claimants were non-parties. Alembic and Pharmathen were manufacturers and suppliers of generic venlafaxine products to the generics. The Commonwealth was also a claimant but it settled its claim after the hearing. The remaining claimants relied on evidence and submissions of the Commonwealth, so it is necessary to refer to these despite the fact that the Commonwealth is no longer a claimant. Where there is no need to distinguish between the respondents I refer to them together as Wyeth. Summary of conclusions I have concluded that orders for compensation should be made in favour of each claimant. My principal conclusions are as follows. Each claimant has been adversely affected by the operation of one or more of the interlocutory injunctions. It is just that Wyeth be ordered to pay compensation to each claimant assessed by reference to the adverse effect of the interlocutory injunction or injunctions upon them. The fact that I granted final injunctions on 8 November 2010 does not mean that the interlocutory injunctions were not wrongly granted. I made final orders on the basis of my conclusion that the method patent was valid. The Full Court held that the method patent was invalid. It follows that the interlocutory injunctions were wrongly granted. The primary adverse effect of the interlocutory injunctions is that they prevented the generics from supplying their generic venlafaxine products to pharmacists until 8 November 2010. On 8 November 2010, when I granted final injunctions on the basis that the method patent was valid, the interlocutory injunctions were discharged and thus ceased to operate from that date. Because I granted final injunctions which also prevented supply of the products, the adverse effects of the operation of the interlocutory injunctions ceased on 8 November 2010. No claims on Wyeth’s undertakings beyond that date can be sustained. The claimed loss of opportunity to obtain a stay of my final orders, which was not pleaded, is not compensable as a matter of principle or fact. The claimants claim for lost opportunities. The primary opportunity was to supply venlafaxine products. Because the opportunity to supply depended on a statutory approval which each of the generics held before the interlocutory injunctions were granted, the interlocutory injunctions necessarily deprived the generics of an opportunity of some value. This loss having been proved on the balance of probabilities, the extent of the generics’ losses is to be assessed by reference to the probabilities and possibilities which should be inferred from the evidence. Only possibilities of a less than 1% likelihood may be disregarded. Only possibilities of a greater than 99% likelihood may be treated as certain. Accordingly, it is necessary to assess the possibilities of any generic having sought and obtained PBS listing of its products to enable supply under the PBS and the possibilities of any generic having supplied its products outside of the PBS on the private market if the interlocutory injunctions had not been granted. For the generics, this is the best way of identifying the adverse effect of the interlocutory injunctions upon them.

Ratio Decidendi

Legal Principle Established

In this section I record only those facts which set the context for the claims.ARTG registration The ARTG registrations of the generics’ products obtained before the interlocutory injunctions were granted are fundamental to my conclusions. Details about ARTG registration are set out in the statement of agreed facts in Schedule 2 on which the following section is based. A product containing the active pharmaceutical ingredient venlafaxine hydrochloride must be registered on the ARTG before it can be imported into, manufactured or supplied in, or exported from, Australia. Section 9A(1) of the Therapeutic Goods Act provides that:The Secretary is to cause to be maintained a register, to be known as the Australian Register of Therapeutic Goods, for the purpose of compiling information in relation to, and providing for evaluation of, therapeutic goods for use in humans. Section 3(1) of the Therapeutic Goods Act contains definitions, including relevantly, of “sponsor” in relation to therapeutic goods. By s 23, a person may make an application to the Secretary for registration or listing of therapeutic goods. By s 25(3), after an evaluation, the Secretary must decide to register or not to register the goods. Division 1 of Pt 3-2 of the Therapeutic Goods Act provides for a range of civil penalties and criminal offences in relation to therapeutic goods. The person or company holding the registration of a pharmaceutical product registered on the ARTG is called the sponsor of the relevant product. A sponsor may offer to supply, and supply, that therapeutic product to pharmacies, pharmaceutical distributors/wholesalers, government authorities and private or public hospitals in Australia when the product has been registered on the ARTG. To register a therapeutic product on the ARTG the sponsor must obtain approval from the TGA. If a pharmaceutical product is approved by the TGA, the brand name and the active ingredient of the product are entered on the ARTG, along with the name of the sponsor, the approved indication(s), the dosage form and the pack sizes for which the product may be supplied. A sponsor wishing to supply a bioequivalent version (generic product) of a pharmaceutical product which is already registered on the ARTG (originator product) may make an application that does not include all the information that was required of the originator to register the originator’s product. A sponsor of a generic product may rely on the safety and efficacy data submitted by the originator in respect of the originator product if the sponsor of the generic product demonstrates that the generic product is “essentially similar” or bioequivalent to the originator product. In order to demonstrate bioequivalence a sponsor of the generic product should normally conduct clinical bioavailability studies comparing the generic product to the originator product. The sponsor of the generic product is required to conduct such a study or studies with the Australian originator product or demonstrate that the comparator used in the studies against which the generic product is compared is identical to the Australian originator product.