Smith Kline & French Laboratories (Australia) Limited & Ors v The Secretary to the Department of Community Services and Health

[1991] HCATrans 106

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S43 of 1991

B e t w e e n -

SMITH KLINE & FRENCH
LABORATORIES (AUSTRALIA) LTD,
SMITH KLINE & FRENCH

LABORATORIES LTD, SMITHKLINE

BEECHAM CORPORATION,

LABORATOIRE SMITH KLINE &
FRENCH SA, SMITH KLINE

DAUELSBERG GmbH

Applicants

and

THE SECRETARY TO THE DEPARTMENT

OF COMMUNITY SERVICES AND

HEALTH

Respondent

Application for injunction

pending determination of

special leave application

Kline 1 26/4/91

MASON CJ

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 26 APRIL 1991, AT 11.34 AM

Copyright in the High Court of Australia

MR J.C. CAMPBELL, QC:  May it please the Court, I appear

with my learned friends, MR M.R. ELLICOTT and

MR L.V. GYLES, for the applicants in this matter.

(instructed by Minter Ellison)

MR D. CATTERNS:  May it please the Court, I appear for the

respondent. (instructed by the Australian

Government Solicitor)

MR J.J. GARNSEY, QC:  May it please the Court, I seek leave

to appear for Alphapharm Pty Limited with

MR P.J. DUNSTAN.	(instructed by Malleson Stephen
Jaques)

HIS HONOUR:  And Alphapharm is a respondent to the

application for special leave?

MR GARNSEY: In other proceedings.

HIS HONOUR: In other proceedings?

MR GARNSEY:  Yes, which were heard at the same time as these

proceedings and in respect of which judgment was

given, both at first instance and on appeal, at the

same time as these proceedings.

HIS HONOUR: Is the application opposed, Mr Garnsey?

MR GARNSEY:  I understand not, Your Honour. I am

instructed, if Your Honour thought it fit, to make

an application for leave to be joined as a

defendant, if that were thought appropriate or as a respondent but, in any event, there are authorities

which establish our - - -

HIS HONOUR:  You mean as a defendant to the main

proceedings?

MR GARNSEY:	Yes, Your Honour.
HIS HONOUR:	We do not need to determine that today, do we?
MR GARNSEY:	No, Your Honour.
HIS HONOUR:	If there is no opposition to your intervening

in relation to the motion that is now before me, I

shall grant leave to intervene.

MR GARNSEY: If Your Ho_nour pleases.

HIS HONOUR:	There is no opposition, Mr Campbell?
MR CAMPBELL:	No, Your Honour.
HIS HONOUR:	Very well, I grant leave to Alphapharm Pty Limited to intervene in the application before me
now. Yes, Mr Campbell.

Kline 2 26/4/91

MR CAMPBELL:  Your Honour, this is an application where we

move on a summons that was filed on 23 April 1991,

a chamber summons where we seek an interlocutory

injunction from the Court which is expressed to
operate until the determination of an application
for special leave and, if special leave be granted,

until the hearing of an appeal, unless the Court

otherwise orders. The order that is sought is one

to restrain the Department of Community Services

and Health from using certain information which has

been identified for the purpose of assessing any

application that might be made by anyone other than

the Smith Kline & French companies.

HIS HONOUR:  Is there any issue about the sample?

MR CAMPBELL:  Yes, there is. The sample has taken an odd

course in both of the cases in the courts below.

It was held by His Honour Mr Justice Gummow that

there was no threat to use the sample and yet in so

doing His Honour Mr Justice Gummow overlooked, we

would submit, an admission in the pleadings. That
was pointed out to the Full Federal Court who

similarly said nothing about it.

HIS HONOUR:  But, Mr Campbell, that kind of issue is hardly

a matter that is going to engage the attention of

the High Court.

MR CAMPBELL: That we understand, as a separate issue.

HIS HONOUR: 

Mr Catterns, is there any problem about use of

the sample pending the hearing of the special leave
application?

MR CATTERNS: 

No, Your Honour.

HIS HONOUR: 

In other words, it will not be used.

MR CATTERNS: That is right, Your Honour.

HIS HONOUR:	You are prepared to give an undertaking to that effect on behalf of - - -
MR CATTERNS:	If Your Honour would just pardon me a moment.

Yes, Your Honour.

HIS HONOUR: 

I note the respondent by its counsel undertakes

not to use the sample for the purpose of evaluating
applications for approval of generic drugs pending
the determination of the special leave application.

Mr Catterns, am I right if I add, and if special

leave is granted, pending the determination of the

appeal?

Kline 

26/4/91

MR CATTERNS: Again, if Your Honour would not mind pardoning

me a moment. Your Honour is right, with respect,

in adding those words.

HIS HONOUR:	I would be right in adding those words?
MR CATTERNS:	Yes, Your Honour.

HIS HONOUR:  Very well, those words are added. Now,

Mr Catterns, is there a problem - and I am not

seeking to force any undertaking upon you - is

there a problem in giving an undertaking pending

the determination of the special leave application,

as distinct from determination of the appeal?

MR CATTERNS:  Your Honour, our attitude is this, if I may

answer Your Honour slightly indirectly. We neither

oppose nor consent to the application. If not

restrained, it just so happens that the Alphapharm

application is at the head of the queue and we

would be starting to process it and we feel we

would have a duty to do so, if not restrained.

HIS HONOUR:  Yes, I see. So you are not willing to offer an

undertaking - - -

MR CATTERNS:  I do not have instructions to offer one, that

is right, Your Honour.

HIS HONOUR:	Very well. Yes, Mr Campbell.
MR CAMPBELL:	Your Honour, the first affidavit on which I

move is one of Alan Lawrence Limbury which is sworn

on 23 April.

HIS HONOUR:	Yes, I have read that affidavit.
MR CAMPBELL:	The next affidavit is one of Frederick John

Amor which was sworn on 22 April.

HIS HONOUR:  I have read that affidavit as well.

MR CAMPBELL:	So far as exhibit FJA2 is concerned, it has been provided to the parties on an undertaking of
confidentiality.  We would seek that Your Honour
make an order that the contents of that not be disclosed other than to solicitors and counsel and not used other than for the purpose of these proceedings.
HIS HONOUR:	Yes, I will make an order in those terms, unless there is any opposition to the making of it.
MR CATTERNS:	No, Your Honour.
MR GARNSEY:	No, Your Honour.
Kline	26/4/91
HIS HONOUR:	Very well, I make an order in those terms.
MR CAMPBELL:	The basis on which the application is made is

that the legal issues that are raised by the application for special leave are of general

importance. There is, Your Honour, a significant

difference of approach that was taken to the law of

confidential information by His Honour

Mr Justice Gummow and by Their Honours in the Full

Federal Court. The approach that was taken by

His Honour Mr Justice Gummow was to say that to ascertain what limitations of confidentiality are

imposed on information one does look at what is the

purpose of disclosing and His Honour found that

there was no purpose that SK&F had that could be called its "sole" purpose, that it was furnished solely to enable the secretary to perform his

functions.	By contrast, the Full Federal
Court - - -

HIS HONOUR:  Now, can we identify that finding in

Mr Justice Gummow's judgment.

MR CAMPBELL:  His Honour started out at page 31 of his

judgment by setting out the tests that he was

seeking to impose for determining whether there was

an equitable obligation of confidence. He sets out

four elements numbered by Roman letters: being

"able to identify with specificity ..... that which

is said to be the information in question", it has
to have "the necessary quality of confidentiality",

"received ..... in such circumstances as to import an

obligation of confidence" and be "actual or

threatened misuse". At the foot of that page he

says he is satisfied that (i) and (ii) are made

out; the real issue in the case concerns (iii). He

sets out the contentions of the parties at pages 32

and 33. He says:

The Secretary's principal submission was

that engagement in the conduct which the

applicants if the SK&F proceedings seek to

have the Court restrain would not breach any

obligation of confidence. The applicants

plead ..... that the Bl data was provided to the consideration and decision upon applications

made by SK&F for permission to -

do various things.

The content of the alleged obligation of

confidence is said to be not to use the

information other than for that sole purpose.

It is alleged that the Department "well knew" of that limited purpose. Alternatively, it is

Kline 26/4/91

submitted that the Department "ought to have

known" of it.

The Secretary and Alphapharm submit that

while SK&F's officers considered at relevant

times that the Bl data was confidential in a
general sense, no-one in the applicants' camp
turned his mind to the question of use by the

Department for the purposes the subject of

this case, until Mr Perrin, the then Managing

Director, turned his mind to the question late in 1986. Further -

HIS HONOUR:  Can I stop you there and can I ask you this:

do you agree with the statement made by

Mr Justice Gummow on page 31 as to the necessary

elements in an action for an injunction to restrain

a breach of the obligation of confidence?

MR CAMPBELL:	Yes.
HIS HONOUR:	So you accept page 31 as a correct statement of

the law?

MR CAMPBELL:  Yes, but there is a need to construe what

counts, in such circumstances, as to import an

obligation of confidence.	The contentions on
page 33 go on:

Further, it is submitted that the applicants

have failed to establish any knowledge or

acceptance on the part of the Department of the "sole purpose" ..... It is then submitted

that it has not been shown that the Department

ought to have ~ad the knowledge.

Then he deals with the facts and if I could then

take Your Honour over to page 40 there is a finding

- at the foot of page 39 it begins:

The conclusion I have reached is that the

Department did not know that the Bl data was

furnished for a purpose which excluded the use

to which the Secretary now seeks to have it

put in evaluating the Alphapharm application.

Then further down on page 40, about point 6 on the

page, he says:

I accept that the position was accurately put
by Dr Hall in his evidence before the

Administrative Appeals Tribunal to the effect

that over these years from 1975 there had been

an understanding, implicit rather than

explicit, between pharmaceutical companies

such as SK&F and the Department that NDF4

information would be kept confidential in the

Kline 6 26/4/91

sense that it would not be disclosed to any

other pharmaceutical company lest use be made

of it to the commercial disadvantage of the

company which had supplied the information.

He goes on to make a finding:

that the Secretary and his officers did not

know that the information was supplied to them

for the sole purpose of evaluating

applications made by SK&F, so as to exclude

any subsequent use by the Department -

Then if Your Honour could turn to page 80, these

are the conclusions that His Honour reaches.

I accept the submissions by the Secretary

and Alphapharm that the SK&F Bl data

concerning cimetidine should be regarded as
having been furnished pursuant to reg. SE so
as to enable the Secretary to perform his

functions under the Regulations and that the applicants in the SK&F proceedings should be

regarded as parties who knew or who ought to

have known that this was the position.

Now, we say there he is getting the test the wrong

way round in that he is looking at the wrong

person's purpose.

I also accept that in exercising his powers

under reg.SE and in relaxing any equivalent

condition imposed upon a non-licensed importer

under sub-reg.SA(4)(a), the Secretary is bound

to have regard to matters going to the

quality, safety and efficacy of the

therapeutic substance in question. Where he

acts directly under reg. SE, these matters

are spelled out by sub-reg. SE(3A).

In paying regard to such matters when

dealing with an application in respect of a

generic product, such as Cimet -

that is the Alphapharm product -

the Secretary may properly have regard to Bl

innovator data held by him in the manner in

which he proposes to use the SK&F Bl

cimetidine data when evaluating the Alphapharm

application. Further, equity would not

attribute to the Secretary any obligation to

the applicants in the SK&F proceedings not to

use the Bl data in this way at a later stage

when he had before him for evaluation a

generic cimetidine product. When furnishing

the Bl data in the period 1975-1987, SK&F was

Kline 7 26/4/91

concerned to obtain the necessary approvals

under the Regulations. It did not direct its

attention to what else might be done

There was an implicit understanding common to SK&F and the Secretary

subsequently with the information by the the Regulations.

concerning non-disclosure to third parties.

That understanding would have required

qualification to deal with the extraordinary

circumstances recognised by Mr Perrin in his

evidence.

There Mr Perrin recognised that there were some

circumstances in which it may be possible to use

the data.

HIS HONOUR:  But does that not amount to a finding by

Mr Justice Gummow that is adverse to you, not only

in respect of what might be described as purpose
from the viewpoint of the Secretary but purpose

from the viewpoint of the applicants?

MR CAMPBELL: That is true, and that finding has not been

followed in the Full Federal Court.

HIS HONOUR:  Your problem is this, is it not, that if you

are to succeed in an appeal to the High Court, you

have to displace that finding by Mr Justice Gummow?

MR CAMPBELL:	We do have to do that, and we would rely upon what the Full Federal Court decided about that.
HIS HONOUR:	But did the Full Federal Court disagree with

Mr Justice Gummow's finding on that point?

MR CAMPBELL:  What was said by the Full Federal Court was

that SK&F had only the purpose of having its

applications approved.

HIS HONOUR:  Repeat that again for me.

MR CAMPBELL:  SK&F had only the purpose of having its

applications approved.

HIS HONOUR:  I am not sure that that is a disagreement with

Mr Justice Gummow's finding. Is there a reasoned

exposition in the judgment of the Full Court of the

Federal Court which involves an explicit

examination and disagreement with Mr Justice Gummow

in relation to that particular finding?

MR CAMPBELL: There is not, but we submit that the Full

Federal Court just approaches the matter from a

completely different direction.

Kline	26/4/91
HIS HONOUR:	Maybe, but that does not really bear on the question I am asking you because either the Full
Court of the Federal Court displaced
Mr Justice Gummow's finding on this point
explicitly or implicitly; if not, you are confronted with a necessity of asking the High
Court to overrule Mr Justice Gummow on a finding of
fact.
MR CAMPBELL:	What the Full Federal Court did was to - it

would be necessary to take Your Honour to the

detail of this - to record the implicit

understanding finding of His Honour

Mr Justice Gummow that I have just read out -

HIS HONOUR:  Can you direct me to the relevant part of the

judgment of the Full Court of the Federal Court.

MR CAMPBELL:  Page 24, Your Honour, and I need to correct

something that I just said. The implicit

understanding finding that is there quoted is a

slightly longer one that Mr Justice Gummow had set

out at page 40 of his judgment which I read to

Your Honour a little earlier.	What they say there
is that:

Gummow J. found that when SK&F furnished

the Bl data ..... it did so on the implicit
understanding that it would be:

" ... kept confidential in the sense that it

would not be disclosed to any other

pharmaceutical company lest use be made of it

to the commercial disadvantage of the company

which had supplied the information".

But if the submission on behalf of the appellants as to the test of the extent of

confidentiality is accepted, that finding as

to what was implied is of no consequence; for

the appellants say that all that counts is the

confider's purpose and that could not have

gone beyond Departmental consideration of its
own applications.

And Their Honours set out various authorities which support that view.

HIS HONOUR:  But then they disagree with that view.

MR CAMPBELL:  Yes. They say:

that suggested test will produce a proper

result, but the circumstances in which

confidential information is supplied may vary

widely. To determine the existence of

confidentiality and its scope, it may be

Kline 9 26/4/91

relevant to consider whether the information

was supplied gratuitously or for a

consideration; whether there is any past

practice of such a kind as to give rise to an

understanding; how sensitive the information

is; whether the confider has any interest in

the purpose for which the information is to be

sued; whether the confider expressly warned

the confidee against a particular disclosure

or use of the information - and, no doubt,

many other matters. Confidential information

is commonly supplied without payment: for

example, by a prospective employee (or his

referee) to support an application for

employment. The understanding ordinarily

would be that the prospective employer would

not disclose the information to any third

party; but it would hardly be expected that

its use would necessarily be confined to the
employment application itself. If that

application were successful, the employee

would not act on the assumption that material

in the relevant file would be destroyed.	He
would surely be inclined to assume that it

might be resorted to later to assist the

employer in making decisions relevant to the

employee - for example, as to whether the

employee (rather than another) should be

promoted, or dismissed.

The test of confider's purpose will not

ordinarily be appropriate where each party's

interest is quite different, and known to be

so.

See, this is where they are on a completely

different tack to Mr Justice Gummow.

Here, the confider's purpose is simple and

narrow, the confidee's much broader. SK&F had

only the purpose of having its applications

approved.

We say that in that context that is an implicit rejection of His Honour Mr Justice Gummow's

finding.

A person supplying confidential information to the government for the purpose of obtaining a licence (or a permission or concession) would

ordinarily assume that the government would
not destroy the application file after the
confider had attained his purpose. The
confider would probably expect that the

information would be kept against the day when

it might be needed to serve the government's

legitimate interests: for example, to provide

Kline 10 26/4/91

a record in case the decision is challenged as

improper; to enable statistical information to

be collected; or, acting directly against the

interests of the confider, to compare the

information supplied with the confider's

subsequent performance, in determining whether

to cancel the licence.

There, we interpolate, how far does the legitimate

purpose go?

Gummow J. referred to the reasons of McHugh

J.A. (as his Honour then was) in Attorney-

General (U.K.) v Heinemann Publishers

Australia Pty Ltd -

which had referred to the way that governments are

treated in a different way to ordinary litigants so

far as the law of confidential information is

concerned. But the quotation is one which is an

incomplete one and we submit that it stops short of

the critical portion of His Honour

Mr Justice McHugh's statement, namely that it is

when the government is a plaintiff that there are

special considerations concerning what obligations

of confidentiality it is able to impose. That just

because private individuals are entitled to be

selfish, they have the full range of equitable
protections available to them in the law of

confidential information, governments do not have

that private interest to advance and therefore, as

a plaintiff, are in a different situation. But it

is not correct to say, we submit, that the

government is in any different situation to the

ordinary citizen when it is the repository of

confidential information, unless a statute has

deliberately put it into a different situation.

Their Honours in the Full Federal Court go on

to refer to the reasonable man test that

Mr Justice Megarry suggested in Coco v A.N. Clark

(Engineers) and say: 

this test does not give guidance as to the

scope of an obligation of confidentiality,

where one exists. Sometimes the obligation

imposes no restriction on use of the

information, as long as the confidee does not
reveal it to third parties. In other

circumstances, the confidee may not be

entitled to use it except for limited purpose.

In considering these problems, and indeed the whole question, it is necessary not to lose

sight of the basis of the obligation to

respect confidences:

Kline 11 26/4/91

"It lies in the notion of an obligation of

conscience arising from the circumstances in
or through which the information was

communicated or obtained".

This is quoted from Moorgate Tobacco Co. Ltd.

v Phillip Morris Ltd (No.2) 156 CLR 414 at 438

per Deane J., with whom the other members of

the Court agreed. A similar broad view has

been taken in the United States: E.I. Dupont

de Nemours Powder Company v. Masland

(1917) 244 U.S. 102: ..... Similar expressions

recur in other cases: Seager v. Copydex

Limited (1967) RPC 349 at 368:

"The law on this subject ... depends on the

broad principle of equity that he who has

received information in confidence shall not

take unfair advantage of it".

To avoid taking unfair advantage of

information does not necessarily mean that the

confidee must not use it except for the

confider's limited purpose. Whether one

adopts the "reas.onable man" test suggested by

Megarry J. or some other, there can be no

breach of the equitable obligation unless the

Court concludes that a confidence reposed has been abused, that unconscientious use has been

made of the information.

Then they apply that test to the facts:

Here, SK&F supplied, in pursuit of its

commercial interests, a mass of information,

part of which was confidential. It did not

trouble to identify that part when furnishing the information. Nor did it, until very late

in the piece, make the assertion that was so

much pressed upon us in this Court, namely

that the Department could not make purely

internal use of the information other than for

SK&F's purposes, not even when public health

and safety made that necessary. In those

circumstances, it appears to us that the

primary Judge was correct in concluding as he

did that no equitable obligation was breached,

except as to the use of the sample for the

government of Papua New Guinea.

Now, that is just a completely different world view, we would submit: the concepts; the structure

- a completely different way to the way that

His Honour Mr Justice Gummow structures the

concepts in his judgment. There is much greater

broadness and much more diffuseness in the approach

that is taken by the Full Federal Court.

Kline 12 26/4/91

HIS HONOUR: 

Well, you prefer Mr Justice Gummow's approach

as a matter of law to the approach taken by the
Full Court of the Federal Court?

MR CAMPBELL: 

We do, but we prefer the approach that has

been taken on the facts by the Full Federal Court

as to what SK&F's purpose was. This is a situation

where, at the time that SK&F confided this

information, each side understood that the

information was being given in confidence. There

is no contest as to that.

HIS HONOUR:  But the contest is as to the scope of the

confidence.

MR CAMPBELL:  Indeed. And the question which arises is

whether, when each side knows that the information

is given in confidence, it is open to the

Department to use information for any purpose other

than that for which the information was consented

to be used or is now consented to be used by the

confider and that is a test which - - -

HIS HONOUR:  But the problem is words can hardly give

precise expression to the difficulty that arises in
circumstances like this when neither party

expressly adverts in discussion or communication to

the eventuality that ultimately arises.

MR CAMPBELL:	Yes.
HIS HONOUR:	And one of the questions, I would have thought,

Mr Campbell, is whether or not cases of this kind

are really capable of resolution by the application

of a formula that is so precise as to enable you to

predicate an answer in its application. These

cases do suggest that it is a matter of looking at
the particular facts and determining whether, in

the light of all the facts, comprehensively

examined, it is proper to say that equity would

impute an obligation of confidence.

MR CAMPBELL: There may be room for argument as to whether

"imputing" is quite the right word because when the parties themselves have contemplated and understood

that the obligation is one of confidence - - -

HIS HONOUR:  That is a different matter. I am talking about

a case where the parties, neither of them, have
adverted to the actual eventuality, so that it is
not possible to say there is evidence of an intent

of either side which respect to that eventuality.

MR CAMPBELL:  Yes. But in a situation such as the present

where the information is information that - again,

it appears to be common ground - is extremely

valuable and was obtained after enormous effort, it

Kline 13 26/4/91

would, we submit, be something that ought to be

realized, that SK&F would not be disclosing its

information for the purpose of assisting a

commercial competitor.

HIS HONOUR:	Yes, I follow what the submission is.
MR CAMPBELL:	The way we put it is that to the extent to

which there has been a purpose disclosed and an

obligation of confidentiality accepted, then the

information can be used for that purpose and cannot

be used for any other purpose; that when one says

information is given in confidence, that that means

that this information is unlike the usual run of

information.	The usual run of information can be
used however the recipient pleases.	When

information is given in confidence, it is given so

that the recipient understands he is not free to

use or pass it on, and it is a question, we submit,

of what the confider has intended or subsequently

consents to that allows that obligation to be

breached.

It is, of course, a different matter if there

is statutory power. Here, we submit that there is

no statutory power on the Department to use what

would otherwise be confidential information.

HIS HONOUR:  It cannot be right to say, can it, it is a

matter of what the confider intended? It must be a

matter of what the confider intended and made

known.

MR CAMPBELL:  To the extent to which there is a permitted

use or purpose, then, yes. To the extent to which

the confider says, "This information is

confidential and I am letting you know it for the

purpose of", for instance, "my employment

application", then, we submit that any other

purpose beyond the permitted purpose is foreclosed

by the very designation of the information as being

confidential.

HIS HONOUR:	But that is a situation in which the confider's intention is made known.
MR CAMPBELL:	Yes. Here, the confider's intention was

clearly that the information would be used for the

purpose of assessing its own application. There

was no express prohibition by SK&F on the information being used internally for the

Department's use. What we say is that it is not

necessary to impose the express prohibition, merely

saying that "the information is confidential and

and we let you know it can be used for this

purpose."

Kline 14 26/4/91

HIS HONOUR:  But you would agree, would you not, it cannot

just rest on the confider's intention, unexpressed?

MR CAMPBELL: It is necessary, we would submit, to expand it

beyond that.

HIS HONOUR:  You see, if you are saying that then it seems

to me that you are at variance with the principles

applied by Mr Justice Gummow with which earlier you

expressed agreement.

MR CAMPBELL: It is not just his intention, no, it also has

to be both known or ought to be known to the

confidee.

HIS HONOUR:  Yes. In other words, the limitation must be

known by the confidee or ought to have been known

by the confidee.

MR CAMPBELL:  Yes, and what we submit is that where one has

a situation where a purpose is known, namely, SK&F

getting its drug on the market, and the information

is designated as confidential, then that has the

effect of foreclosing other potential uses.

HIS HONOUR: Well, it all looks like a question of fact,

does it not, when you analyse it that way?

MR CAMPBELL:	We submit that it is not because there has been a complete difference of approach between
His Honour Mr Justice Gummow and the Full
Federal Court.

HIS HONOUR:  Yes, I am not disputing that. It may well be

that there is a difference in principle in the

approach taken in the two courts, the two levels,

but what I am saying to you is that the outcome, in

terms of the application of the principle for which

you contend, necessarily leads to an issue of fact.

In other words, the real dispute between the

parties, once you determine the appropriate

principle, is an issue of fact on which, according

to you, there has been a disagreement between

Mr Justice Gummow and the Full Court.

MR CAMPBELL:  Yes. We submit that we are content to live

with the Full Court's finding of fact.

HIS HONOUR:  I follow what you say about that.

MR CAMPBELL: There is also, in this case - I suppose there

are three main areas of difficult questions of law.

The first is what is the appropriate test to be

used in the confidential information area: how

does one work out what an obligation of confidence

is and how does one work out its extent? Then

there is the question of the governmental use of

Kline 15 26/4/91

confidential information. There, the case that we

would be seeking to make on the appeal, on the

special leave application and, ultimately, on the

appeal if special leave be granted, was that the

judgment of the Full Federal Court goes far too

wide and, indeed, dangerously wide in the approach

that it takes to governmental use of the

confidential information that is entrusted to it.

That is a matter of the greatest public importance.

The final area concerns the question of the acquisition of property, section Sl(xxxi) of the

Constitution, because there there has been a

finding by His Honour Mr Justice Gummow that

confidential information is capable of being

property under the general law and is also property

for the purposes of section Sl(xxxi). The

Full Federal Court did not overturn either of those findings and their approach to the acquisitions power question was to say "but there has not been

an acquisition" or "there is not proposed to be an

acquisition in the present case."

Their Honours in the Full Federal Court

analysed the judgment of this Court in the

Tasmanian Dam's case and the view that Your Honour

expressed that mere sterilization of an item of

property by a legislation does not amount to an

acquisition. There was a difference between

Your Honour and Mr Justice Deane; Mr Justice Deane

taking the view that if a sterilization went wide

enough -

HIS HONOUR: Yes. Well, I am aware of that.

MR CAMPBELL:  Yes. And it was on that basis that the

Full Federal Court held that there was no

acquisition, but we say that that is really not to

the point in the present case.

HIS HONOUR:  Has a 78B notice been given?

MR CAMPBELL:  A section 78B notice was given initially and

in the Full Court, not concerning today.	We intend
to give one concerning the special leave
application.	The various Attorneys-General have

all declined to appear but are to be kept in touch.

What we say here is that what the Department

is proposing to do is quite unlike the situation in

the Tasmanian Dam's case. The Tasmanian Dam's case

dealt with legislation that said "It is unlawful to

do this, that and the other" on the land in

question. Here, the Department is proposing to actually make use of the information. Now, the essence of confidential information as property is

that it is the ability to stop others making use of

Kline 16 26/4/91

it. Our submission would be that that has got to

be an acquisition; not of the entirety of the

interest but of a part of the interest, and that

that is a matter that needs to be taken into

account in any question of statutory construction.

Those are the types of questions of law that

are raised by the appeal. We say that they are of

general importance and we say that they are serious

and difficult questions of law. We would submit

that the applicant has a sufficient prospect of

success to warrant interlocutory relief in this

Court.

HIS HONOUR: Notwithstanding that you have failed all along

the line up to date?

MR CAMPBELL:  We submit that the way in which we have failed

all along the line has been revealed in the

material I have taken Your Honour to so far, that

His Honour Mr Justice Gumrnow made the wrong finding

about purpose. The Full Federal Court made the

right finding about purpose but applied the wrong

law. We submit, Your Honour, that the statements

that my learned friend, Mr Catterns, made at the

outset show the reality of the threat that there is

to use this information and that if relief is

declined - - -

HIS HONOUR:  Putting aside the sample - you need not trouble

about that, Mr Campbell.

MR CAMPBELL: Certainly.

HIS HONOUR:  And when I say '.'putting aside the sample", that

seems to have gone out of the present contest

anyhow.

MR CAMPBELL:  Yes. But even so far as the information is

concerned, as I -

HIS HONOUR: Well, I think it is clear enough from what

Mr Catterns said that unless restrained, there is a

risk that the information is going to be used.

MR CAMPBELL:  We submit that the matters that are deposed

to in the affidavit of Mr Amor show that if the

information is used, then it will be just

impossible to unscramble - - -

HIS HONOUR: 

Yes. Well, subject to anything that your

opponents may say, I am prepared to accept at this
stage that use of the information will have certain

economic results which are detrimental to the

interests of your clients.

Kline 17 26/4/91

MR CAMPBELL:  We would submit it goes further than -

detrimental use, that it is really impossible to
unscramble the use that there would be of it. It

is also relevant that the form of injunction that

is sought - it is not as though it stops the

Department from evaluating any generic application.

If there were any great urgency then it would be

possible.

HIS HONOUR: All it does is stop them using your

confidential material in evaluating it.

MR CAMPBELL:  Indeed. We have never, at any stage, taken

the attitude that the Department must not evaluate

a competitor.

HIS HONOUR:  No. Well, you could not.

MR CAMPBELL:  No. Those are out submissions, if Your Honour

pleases.

HIS HONOUR: But, before you leave, you would be entitled,

in the event that your prospect of getting an

injunction is denied, to obtain compensation by way

of damages, would you not, for breach of the

equitable obligation of confidentiality, assuming

that you were able to make it out?

MR CAMPBELL:  The difficulty with that lies in

quantification. In theory, the right is there and

it is a right which we sought to preserve before

His Honour Mr Justice Gummow. But the factors that

are referred to by Mr Amor in his affidavit are

such that it would be, we would submit, impossible

to quantify any damages.

HIS HONOUR:	Why is that?
MR CAMPBELL:	Because it depends so much upon an entire

market situation changing. If a generic applicant

were to come on to the market in circumstances

where the confidential information had been used in

evaluating the generic product, then it would be
necessary for us first to work out when the generic
product would have gone on to the market, if at

all, had the confidential information not been used

in the evaluation process. The Department is at

present taking an attitude that it is just not

going to try to evaluate. We have made our

attitude clear, that they are going beyond what the

injunction requires them to do.

Also, apart from having to unscramble that, it

would be difficult, we would submit, to quantify the extent to which SK&F would have made profits

from the sale of either finished drugs or raw

material had the market not been changed because it

Kline 18 26/4/91

would depend on so many factual matters as to just

what sales there would have been, what profits

there would have been. Your Honour will have seen

that it is not as though there is a simple monopoly

that is held by Smith Kline at the moment. There

are other drugs of the same general category which

are on the market that are marketed by major

companies.

HIS HONOUR:  You mean not cimetidine but other drugs that

can perform comparable functions?

MR CAMPBELL:  That is so. They are referred to in

paragraph 16 of Mr Amor's affidavit. It is

referred to as "H2-receptor antagonist".

HIS HONOUR: That means nothing to me at all.

MR CAMPBELL: Basically, it is a drug which plugs into a

particular type of bodily receptor to stop the

secretion of gastric acid. And the way that it

works is by stopping the secretion of gastric acid, then stomach ulcers can heal themselves. And there are other drugs on the market which do not infringe the claims of the cimetidine patent but which are

similar H2-receptor antagonists, namely, those

marketed by Glaxo and Merck. Similarly, it is not

as though H2-receptor antagonists are the only

ulcer treatments on the market. In that situation,

there would be just such a complex factual exercise

that, we submit, it would be impossible to work out

what the damages would be. That is all we wish to

say, if Your Honour pleases.

HIS HONOUR:	Thank you, Mr Campbell. Yes, Mr Catterns?
MR CATTERNS:	Your Honour, unless I can assist the Court, I

have no submissions.

HIS HONOUR:  Yes. Mr Garnsey?

MR GARNSEY:  If Your Honour pleases, in relation to my

learned friend's, Mr Campbell, submissions as to
the important questions before the Court,

Your Honour, the Full Court did consider

Mr Justice Gummow's total findings of fact, as they

made clear on page 20 of the reasons, and ·

specifically said that the court did not propose to

traverse all the arguments which were put as to

those findings. That is the second independent

paragraph.

Some attempt was made to displace

his Honour's conclusions as to the facts. It

is unnecessary to recount the many points

which were made on either side - - -

Kline 19 26/4/91

HIS HONOUR:  What facts are the Full Court referring to

there? Is it possible to identify the facts to

which reference is there made?

MR GARNSEY:	Your Honour, it is the facts relevant to the matters preceding that page and which really go
back almost to page 3 of the judgment.
HIS HONOUR:	Do they include a reference to no limitation on

confider's purpose except for use by third parties?

MR GARNSEY:	Yes, Your Honour.
HIS HONOUR:	Now, whereabouts is the reference?
MR GARNSEY:	Page 15, two lines down:

Subject to some correspondence shortly to be

discussed, the appellants' case did not rest

upon a suggestion that any of the material had

been furnished to the Secretary expressly on

the basis that it would be treated as

confidential; nor was there any evidence that

SK&F pointed out particular material as

confidential, before Dr Brennan's work was

done.

Dr Brennan was the person who decided in respect of

what the claim for confidentiality should be made

in these proceedings. And the first express

communication was on 8 April 1987. That is dealt

with on page 15, over to 16.

HIS HONOUR:  But that reference is not a reference to a

finding of fact made by Mr Justice Gummow, is it?

This is rather a summary of evidence in the case.

MR GARNSEY:  Yes, Your Honour, but from pages 17 through to

20, the Full Court does deal with certain factual

findings of His Honour. On pages 17 to 18 the

reason for the Department refusing to process is

given, that is that the store of knowledge in
evaluators' heads cannot be subdivided.	That

Alphapharm's application was held up because of

that. And then down at the bottom of page 18,

Their Honours say:

There was a considerable amount of other

evidence relevant to the issue as to what SK&F

might reasonably have expected the Department

to do, in order to fulfil its general

obligation to treat the identified Bl material

as confidential.

Then there is a reference to Mr Perrin, and at the

bottom of page 19:

Kline 20 26/4/91

The primary Judge found, on the basis of

Mr Perrin's and much other evidence, that it:

'' ... would be bad scientific practice, and

could be dangerous, to ignore innovator Bl

data -

and then at page 20:

His Honour further held that the

Department did not know that the Bl data was furnished to it by SK&F for a purpose

excluding the evaluation of such applications

as that made by Alphapharm.

Now, although it is not crystal clear, if

Your Honour pleases, in the·preceding pages it

would seem that Their Honours were certainly

turning their minds to His Honour's findings as to

what SK&F intended, as to what it communicated, as
to what it did not communicate and as to what the

Department thought about all that.

HIS HONOUR:  Yes.

MR GARNSEY: So, in my respectful submission, it is not true

to say that the Full Court did not review His

Honour's factual findings in that respect.

HIS HONOUR: But, Mr Garnsey, one would have thought, in the

light of the submissions now made to me by

Mr Campbell, that on the appeal to the Full Court
Mr Justice Gummow's finding on the point that has

been identified as perhaps critical, one in respect

of which the Full Court possibly disagree with him,

would have been the target of the submissions made

by the appellant in the Full Court. One would

therefore have expected to see a focus of attention

on that particular finding of Mr Justice Gummow.

But on the contrary, it does not seem to have been

the focus of specific attention.

MR GARNSEY:	No, Your Honour, that is really my submission.
HIS HONOUR:	Maybe, but what is the explanation for the fact that it was not a focus of attention?
MR GARNSEY:	I do not think it was precisely highlighted in

the extensive written submissions and argument

before the Full Court, Your Honour. That is my

recollection. I have not reviewed them all for the

purpose of answering Your Honour, but that is my

recollection.

HIS HONOUR: Perhaps the moral is that lengthy written

submissions can sometimes be over extensive.

Kline	21	26/4/91
MR GARNSEY:	Yes, Your Honour.	We took that view of my

learned friend Mr Campbell's, but not of our own,

if Your Honour pleases.

HIS HONOUR: 

Yes, it is a common failing.

MR GARNSEY: 

But in respect of the alleged difference in

principle between the Full Federal Court and
His Honour Mr Justice Gummow, an examination of

Mr Justice Gummow's judgment, with respect, does

not suggest that there is really a difference. The

difference lies, if any, in what Your Honour said,

that it is a question of determining the

circumstances of each case and the content of the

obligation which .... to impose arising from them.

Mr Justice Gummow, from pages 48 to 59 of

His Honour's reasons, reviewed many of the matters

which were referred to by the Full Court in the

passage read by my learned friend, Mr Campbell.

Mr Campbell merely referred Your Honour to

His Honour's final conclusions as to

confidentiality in the circumstances, but with
respect, His Honour's treatment as to the law on

those pages, 48 to 59, and then His Honour's

treatment of the statutory and regulatory law
relevant from pages 60 to 79, prior to making those

conclusions, with respect covers the same ground in
substance as the Full Court, although the Full

Court do give, in Their Honours' reasons, various

instances of circumstances in which the content of
the obligation will be tailored in the public

interest which were not referred to by His Honour,

but that, with respect, is not a difference in the

principle.

HIS HONOUR: 

Yes.

MR GARNSEY: Thirdly, Your Honour, as to my friend's

constitutional point, my friend said it is hinged

on the Tasmanian Dam case and the prohibition of

use of confidential information.	My friend has to
get to an obligation of confidence which prohibits

use rather than mere disclosure before the
constitutional point assume significance.

As to the matters going to discretion as to the injunctive relief, we say there is in fact a

weak case shown because there have been two

judgments from four judges, all quite strong and

unambiguous. Secondly, for that reasons there is
no assurance that special leave will be granted.

Thirdly, as to loss or the alleged loss of - - -

HIS HONOUR:  But I was going to say to you, that is not

decisive, is it, Mr Garnsey? A critical question

may be whether or not the refusal to grant an

injunction would result in the destruction of the

Kline 22 26/4/91

subject-matter of the litigation. Now, that partly

turns, I think, on whether or not in a case such as

this compensation would be a sufficient remedy.

MR GARNSEY:  Yes, Your Honour, and there are four matters

that we would point to to say that there is no

indication that compensation would not be adequate.

particular paragraphs 1 to 6 and 16 and 17, they

First, as to the so-called evidence presented by

are couched in terms of "could" with no assurance

that any loss will be suffered. If this were a

case for objection as to evidence, which we did not

seek to take at the time, Your Honour, we would say

they are mere speculative conclusions.

Secondly, there is no suggestion that Smith Kline & French will be prevented from marketing a

product or carrying on its business. The highest they have said is they may have to diminish their

library research services to medical practitioners
and that, again, is possibility.

Thirdly, Alphapharm will undertake to keep accounts and this is a case where, if Smith Kline &

French gets up, it would seem very likely on the

evidence that one could assess any loss to Smith

Kline & French on the basis that Smith Kline &

French would have made all Alphapharm sales, it

being the only product in the market at the time of

this particular pharmaceutical.

HIS HONOUR: 

But do we know whether there are other

applications for generic drugs in a cimetidine
class?

MR GARNSEY: 

I do not have any instructions as to that.

There was, at one time, another generic application

which in fact precipitated the original injunction
which Alphapharm eventually became aware of and led

to these proceedings, but we have not heard of that

particular one proceeding.

HIS HONOUR:  Can you be a little more precise about this

undertaking? What undertaking would you give?

MR GARNSEY:  To keep all such accounts as may be proper and

necessary to enable the sales and receipts of sales

of Alphapharm's cimetidine product to be

ascertained should this be necessary in any inquiry

as to damages or account of profits.

HIS HONOUR:  But the problem about that is, of course, that

the claim may be for compensation, rather than for

an account of profits.

Kline 23 26/4/91

MR GARNSEY:  Looking at the loss to Smith Kline & French,

all that is pointed to is that Alphapharm would get

an advantage in marketing a product either earlier

than it could otherwise do or, in an interim

period, before Smith Kline & French is able to

assert its monopoly in the market again. That is

merely a matter of saying how much time is saved.

One period is finite, the other is a period that can easily be estimated by the Department of

Health. It being a monopoly situation which Smith Kline & French recovers, it can be assumed that all

Alphapharm sales would have been made by Smith

Kline & French, with respect. The only difficulty

is as to the extent of the period but that, with

respect, is not a very great difficulty.

Your Honour, we did give to my friends an

affidavit by Mr MacPhail which I have not sought

leave to rely upon yet which just brings to the Court's attention Smith Kline & French's patent extension application in respect of this product

which is pending in the Supreme Court of New South

Wales.	It was begun in 1987 and is a long way from
hearing.	We would seek to refer to that -

HIS HONOUR:	Have you shown a copy to Mr Campbell?
MR GARNSEY:	Yes, and to my friend.  It is relatively non-

contentious - in fact, completely non-contentious,

if Your Honour pleases.

HIS HONOUR:  Yes, what is the point of all this?

MR GARNSEY: First as to loss, if Your Honour pleases, Smith

Kline & French have an application for patent

extension under way so that if that is granted,

then they will be in the position to recover their

monopoly matters, although there will be a celotex

order presumably which will protect Alphapharm and

other generics who market in the meantime.

Secondly, as to a factor relevant to the public

interest, we say the legislature indicated that fo_r

the relevant periods this was the appropriate

method of continuing a monopoly. Alphapharm has

taken advantage of that. That is continuing in the

Supreme Court of New South Wales and the matter

will be determined in accordance with principles in

the public interest in due course.

Your Honour, going back to damage or loss, the

Department of Health will still take months, if not

years, to process Alphapharm's marketing

application for cimetidine. It is in a position to

start. It has never been suggested that these
matters could be determined in anything less than a

long period extending from many months to years.

Any application for special leave and, if special

Kline 24 26/4/91

leave were granted, any appeal	to this Court would
even with the most pessimistic	estimates be over,
as the evidence suggests, well	before Alphapharm
got its marketing application.	Finally on
loss - - -

HIS HONOUR:	But that is hardly to the point, is it, if in fact that period of time would be less than the
period of time that would be taken if the
Department was unable to use the confidential
information in the Bl data?
MR GARNSEY:	The Department has said that it will not

proceed with the evaluation process at all until

the injunction is lifted.

HIS HONOUR:	Why is that?
MR GARNSEY:	Because it emerges in the evidence the

Department cannot cut up the knowledge inside its

evaluator's heads. It takes the view that to

ensure there is compliance with the injunction that

no use is made, evaluators cannot be put in a

position where they can use their store of

knowledge, which includes things they have learnt

about Smith Kline & French's cimetidine.

HIS HONOUR: That is even a store of knowledge that is in

their head, apart from as it were using the

information by way of going to the documentation

and using it?

MR GARNSEY:  Yes. The Department takes the view that it

cannot exclude from the accumulated knowledge of

these evaluators, who deal with similar drugs all

the time, what has gone in there in the past. It

cannot guarantee that there is not something in the confidential information which is not lodged at the

back of the particular evaluator's head which will

amount to use of that information, so it will not

proceed at all.

HIS HONOUR:  Yes, I follow that, because the Full Court

relied upon that difficulty as one of the reasons

for concluding that there was not an equitable

obligation of confidence.

MR GARNSEY:  Yes, Your Honour. Finally as to balance of

convenience and loss, Alphapharrn is faced with an

absolute barrier to marketing the product whereas

Smith Kline & French is not faced with such a barrier; it can continue to market and take advantage of its now dominant and sole market

position.

Finally as to the balance of convenience, in

our respectful submission, the public interest

Kline 25 26/4/91

requires, first, that persons who have enjoyed a

monopoly through obtaining and exercising a patent

should use the processes made available by the

legislature for extending that monopoly. Secondly,

that from the point of view of safety, the

Department should have access to use the

information. No one is saying it should be

disclosed to any commercial competitor and that has

never been said in this case. The Department

should have unfettered use. Thirdly, the public

should not be deprived of price savings which

competition brings through the pharmaceutical

benefits system and the unnecessary expenditure of

public moneys should not be prolonged. The

innovator drug company has had its reward over the

period and we say the public, through the
pharmaceutical benefits scheme, are entitled to
bring about a situation where the price of this

widely used and very successful drug is lowered.

May it please the Court, unless there are any

other matters, those are our submissions.

HIS HONOUR:	Yes, thank you, Mr Garnsey. Yes, Mr Campbell.
MR CAMPBELL:	Your Honour, the offer that Alphapharm makes

to keep accounts is not anything like sufficient

because it is not as though lost sales are the only

damage that Smith Kline would suffer.	They are in
a situation where the better product of

Alphapharm's is on the market. Alphapharm's

product could be improved by the access to the data. Process of evaluation is something that involves the Department not just sitting in an ivory tower and givtng a tick or a cross to the

application; it involves a process of continual

communication - frequent communication, at any rate, between the applicant and the Department

where requisitions are raised, answered, problems

discussed, and there is a very real risk that

Alphapharm can end up with a better product than it

otherwise would have had.

There is also the question of the price

structure of the market in which cimetidine is
currently sold would be irreparably altered by the

entry of this new product and the whole competitive
structure of the market where cimetidine is just

one of a series of ulcer treatments on the market

would be affected. It is not to the point that it

would take months to actually process the

application because the Department could use the

information come Tuesday if no injunction is

granted and it is the time it is used, the time

when it makes a contribution to the eventual

outcome that the damage begins to be suffered. Of

course, the last remarks that my learned friend has

Kline 26 26/4/91

made about patentees being required to use the

extension procedure is really not to the point. information; it is information which concerns

impurities, which concerns methods of manufacture

and items of that kind.

If the Court pleases.

HIS HONOUR:  I will announce my decision in this matter at

3 o'clock.

AT 12.48 PM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 3.01 PM:

HIS HONOUR: This is an application for an interlocutory

injunction pending the hearing of an application

for special leave to appeal and if special leave to

appeal is granted, pending the determination of the

appeal or until further order.

The application is brought by a group of

companies which I shall designate as SK&F, without

seeking to differentiate between them in terms of
the interest which each of them has in the

subject-matter of these proceedings.

The interlocutory injunction which they seek

is expressed in these terms in the summons:

pending the determination by this Court of the

applicants' application for the grant of

special leave to appeal and, if special leave

to appeal is granted by this Court, pending

the final determination of the appeal or until further order, the respondent by himself, his	servants and agents be restrained from without
the prior written consent of the first applicant using or applying the information,
documents and materials which are identified
as 'Confidential' in Exhibits 6A and 6B in
proceedings numbered G298 of 1990 and G299 of
1990 in the Federal Court of Australia, for any purpose other than the exercise of
decision-making powers vested in him or them
in relation to 'Tagamet' and 'Duractin' brands
of the drug cimetidine.
In form, the injunction thus sought appears to

be similar to the permanent injunction which the

Kline 27 26/4/91

applicants would claim if they succeeded in

obtaining a grant of special leave and the appeal

was successful.

The circumstances in which the applicants

sought relief, including relief by way of

declarations and permanent injunction in the

Federal Court may be shortly stated. The

applicants supplied certain information comprised

in exhibits 6A and 6B in the Federal Court

proceedings and alleged to be confidential to the

respondent with the object of securing governmental

approval of a pharmaceutical of therapeutic

compound cimetidine. Cimetidine has proved to be

of great value in the treatment of gastro-

intestinal ulcers and has been a large revenue

earner for companies in the SK&F group which held the patent for it. The Australian patent expired

on 15 February 1988 but an application for its

extension is pending.

The respondent and his Department are responsible for the grant of approvals to import

and dispose of pharmaceutical and therapeutic

substances. Without the approval of the respondent

such substances would be prohibited imports under

the Customs (Prohibited Imports) Regulations. The

Department requires applicants for permission to import pharmaceutical and therapeutic substances to

provide information in accordance with guidelines
known as the NDF4 guidelines. Section Bl of the
information to be provided requires details of the
chemistry of the active ingredients of the
substance. Bl data includes an outline of the

method of manufacture, a list of known impurities

and methods of directing and eliminating their

presence from the active drug.

Commencing in June 1975 the first applicant

sought permission to import cimetidine and later

sought approval to market the substance. In

connection with these and subsequent applications	the first applicant submitted to the respondent a
considerable amount of information concerning the
substance, including Bl data. The applicants claim
that much of this Bl data thus submitted is
confidential proprietary information belonging to
them and was submitted to the Department solely for
the purpose of enabling the Department to make
decisions about the applicants' brands of cimetidine which are known as 'Tagamet' and
'Duractin'. Pursuant to approvals granted by the
respondent, the applicants have imported cimetidine
and marketed it under the brand names just mentioned.

Kline 28 26/4/91

In July 1988 Alphapharm Pty Limited, which is

a respondent in the principal proceedings and which

has been granted leave to intervene in the

proceedings now before me, applied for governmental

approval of its version of cimetidine, the patent then having expired. Its version of the compound

is called "generic" in the industry to distinguish

it from the initial compound originated by the

innovator. In connection with its applications for

approval Alphapharm provided information in

accordance with the NDF4 guidelines, including Bl data. In evaluating the Alphapharm applications, the respondent wishes to make use of the Bl data

supplied by the applicants and the applicants claim

that such use of their data would be in breach of

an equitable obligation of confidentiality owed by

the respondent to the applicants and that the

breach would have detrimental consequences for the

applicants.

The detrimental consequences would arise in

this way: recourse to the applicants' Bl data

would enable the Department to process applications

by Alphapharm and other companies intending to

market generic versions of cimetidine more

expeditiously and at less expense to the marketers of the generic compounds. It might even result in

their marketing generic compounds in an improved

form. The likelihood is that recourse by the

Department to the applicants' Bl data would expose

them to the rigours of market competition earlier

and on more disadvantageous terms than would be the

case otherwise. Further, it would assist the

applicants' competitors in selling at a lower price

than the applicants' price. By reason of this

circumstance and the likelihood that the Department

would require the applicants, as a condition of

retaining their listing on the Pharmaceutical

Benefits Schedule, to lower their market prices

accordingly, the applicants would sustain financial

detriment if the Department were to use their Bl

data in the manner proposed.

So far the applicants have been protected by

the grant of interlocutory injunctions. At first

instance Gummow J granted such an injunction

pending trial and a further injunction was granted
pending the determination of an appeal to the Full

Court of the Federal Court, the applicants having

failed to make out a case for relief at first
instance and before the Full Court. Following the

dismissal of the applicants' appeal to the Full

Court, Sheppard J granted an interlocutory

injunction up to and including 29 April 1991,

evidently in terms similar to the injunction now

sought.

Kline 29 26/4/91

This Court has jurisdiction to grant

injunctive relief to preserve the subject-matter of

litigation pending the determination of an

application for special leave to appeal or of an

appeal pursuant to the grant of leave. The

jurisdiction is inherent and in my view may be

exercised by a single Justice, as in fact it has

been exercised from time to time. The jurisdiction

is an extraordinary one and will be granted only in

exceptional circumstances.

In this case the respondent has, by its

counsel, given an undertaking that it will not use

the sample provided by the applicants for the

purpose of evaluating applications for approval of

generic versions of cimetidine, pending the
determination of the application for special leave
and, if special leave is granted, pending the
determination of the appeal. Apart from giving

that undertaking, the respondent has not presented

argument against the grant of an injunction,

indicating that it is willing to leave the question

to the Court. However, Alphapharm has opposed the

grant of the injunction sought.

In deciding whether I should exercise the

jurisdiction to grant relief in the present case

the first point to be made is that the applicants

have been unsuccessful all the way along the line;

initially at first instance and unanimously before

the Full Court. Both Gwnmow J and the Full Court

rejected the applicants' case that the

circumstances in which the first applicant came to

deliver its Bl data gave rise to an equitable

obligation of confidence which would prevent the

respondent using the sample and data provided by

the applicants in evaluating applications for

approval of generic versions of cimetidine.

Moreover, Gwnmow J, whose statement of the relevant

legal principles the applicants accept, made

significant findings of fact which are adverse to

the applicant. His Honour found, first:

"that the Department did not know that the Bl

data was furnished for a purpose which

excluded the use to which the Secretary now

seeks to have it put in evaluating the

Alphapharm application."

Second:

"that the Secretary and his officers did not

know that the information was supplied to them

for the sole purpose of evaluating

applications made by SK&F, so as to exclude

any subsequent use by the Department ..... in

the way in which the Department contends it is

Kline 30 26/4/91

at liberty to have recourse in evaluating the

Alphapharm application."

Third:

"that, when SK&F furnished the Bl data between

1975 and 1987, it did so on the implicit

understanding I have described. SK&F did not

furnish the Bl data with any other purpose

which could be described as a 'sole' purpose,

so as to exclude use within the Department in

the course of evaluating other products."

And, fourth, that the circumstances were not such

that the respondent ought to have known of the

limited purpose of the disclosure.

As I read the reasons for judgment of the Full

Court of the Federal Court, I do not understand

their Honours to have departed from these findings

of fact. Their Honours said:

"Some attempt was made to displace his

Honour's conclusions as to the facts. It is unnecessary to recount the many points which

were made on either side, because the case was

plainly one in which his Honour's conclusions

are able to be supported."

Their Honours did not refer to all the

findings which I have set out but they did

specifically refer to the second of those findings

immediately before the paragraph in their judgment

which I have just quoted, and they went on to

examine in some detail arguments designed to show

that Gummow J was wrong on the facts, arguments

which they eventually rejected. In particular,

they quoted the following passage from Gummow J's

judgment:

"The position is if officers of SK&F had

turned their minds to the question over this

period from 1975, they would have said that

they regarded the NDF4 information as

'confidential' in the sense that it was not

to be disclosed to competitors or potential

competitors, without the prior permission of

SK&F. But no one, before the steps taken by

Mr. Perrin which I have described, focused

attention upon the question of use by the the subject of this case."

Following that quotation, their Honours said:

"There is no ground for disturbing this

finding, which accords with common sense."

Kline 31 26/4/91

In the result, it seems to me that the applicants face the very considerable burden of

showing, if they are to succeed in their proposed

appeal, that findings of fact made by the primary

judge and accepted by the Full Court should be

overturned. Add to that the circumstance that the

existence and scope of a confidential obligation is

very much dependent on the particular facts of a

given case and it will be seen that this is not a

case in which it can be said, at this stage, that

the applicants have a strong case for securing a
grant of special leave. In saying that, I

acknowledge that the relevance of some of the

factors to be taken into account in determining the

scope of the respondent's obligation of confidence
in his capacity as a public officer discharging

public responsibilities in the public interest is a

matter of public importance which, in an

appropriate case, might well warrant the grant of

special leave to appeal. But I am not presently

left with a clear impression that this is such a

case.

In that respect, I am by no means persuaded of

the correctness of the applicants' submission that
the Full Court of the Federal Court applied
substantive principles different from those applied

by Gumrnow J. It may be that the Full Court

attached greater significance to the

responsibilities that the Department was called

upon to discharge in the public interest, but that

is a different matter.

The applicants also claim that the courts

below were wrong in rejecting an argument based on

section Sl(xxxi) of the Constitution. That

argument, it seems to me, again depends upon the

contention that the Bl data provided to the

respondent was the subject of an equitable

obligation of confidence and constituted property.

Having regard to what I have already said, I

do not regard this case as one of exceptional
circumstances such as to justify the grant of the
relief sought. The applicants will be left with a
claim for equitable compensation if the injunction

is refused and the appeal were to succeed. I

acknowledge that there would be difficulty in

quantifying the amount of compensation, even taking

into account an undertaking offered by Alphapharrn to

keep accounts and records of sales and receipts in

connection with its generic compound "Cimet", but I

do not think that these difficulties are so great

that it can be said that the refusal of an

injunction would amount to the destruction of the

subject-matter of the litigation. In one sense that

is by the way. Even assuming that the jurisdiction

Kline 32 26/4/91

to grant the relief sought is engaged on the basis that the subject-matter of the litigation would be

destroyed, I do not consider that this is a case in

which interlocutory relief of the kind sought should

be granted.

In passing, I note that Sheppard J granted an

injunction for a very limited period. I should

draw attention to the comments of Brennan Jin

Jennings Construction Ltd v Burgundy Royale

Investments Pty Ltd (No.lJ, (1986) 161 CLR 681, where his Honour said at page 684:

"In future, there should be no inhibition on

the court in which the matter is pending

framing a stay order, if a stay be

appropriate, to avoid the necessity for

application to this Court."

His Honour's remarks in that case apply with equal

force to an application for an interlocutory

injunction pending the determination of a special

leave application and, if special leave is granted,

pending the determination of the appeal.

In the result, the application for an

interlocutory injunction is refused.

MR CATTERNS:	Would Your Honour make an order for costs?
HIS HONOUR:	What do you say about that?
MR CAMPBELL:	I have nothing to say, Your Honour.
HIS HONOUR:	Very well, the application is refused with

costs.

MR GARNSEY:  If Your Honour pleases, if Your Honour is

making an order, would Your Honour make it clear if

that order is to include Alphapharm's costs?

HIS HONOUR:  Do you wish to say anything about that,

Mr Campbell?

MR CAMPBELL:  Your Honour, they were not invited; they came

here at their own risk, we would submit.

MR GARNSEY: With respect, Your Honour, we provided the

substantive opposition.

HIS HONOUR: True. Yes, I will make an order for costs in

favour of the intervener against the applicants,

Mr Campbell, because they had a substantial

interest in the case.

MR CAMPBELL: If Your Honour pleases.

Kline 33 26/4/91

HIS HONOUR: Application for interlocutory injunction

dismissed. Order that the applicant pay the costs of the respondent and of the intervener Alphapharm

Pty Limited.

Court will now adjourn.

AT 3.18 PM THE MATTER WAS ADJOURNED SINE DIE

Kline 26/4/91