SmithKline Beecham PLC v Hexal Australia Pty Ltd - [2002] FCA 1116

FEDERAL COURT OF AUSTRALIA
SmithKline Beecham PLC v Hexal Australia Pty Ltd [2002] FCA 1116
SMITHKLINE BEECHAM PLC v HEXAL AUSTRALIA PTY LTD
V362 OF 2002
HEXAL AUSTRALIA PTY LTD v BEECHAM PLC & Ors
N539 OF 2002
EMMETT J
2 SEPTEMBER 2002
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

V362 OF 2002

BETWEEN:

SMITHKLINE BEECHAM PLC
FIRST APPLICANT

BEECHAM GROUP PLC
SECOND APPLICANT

SMITHKLINE BEECHAM (AUSTRALIA) PTY LTD
THIRD APPLICANT

AND:

HEXAL AUSTRALIA PTY LTD
RESPONDENT

JUDGE:

EMMETT

DATE OF ORDER:

2 SEPTEMBER 2002

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
matters N229/01, V741/01, N553/02 and V362/02 travel together so far as practicable, prior to hearing;
the proceeding be transferred to the New South Wales District Registry of the Court;
the proceeding be transferred to the docket of Emmett J;
the matter proceed, so far as practicable, by way of eCourt;
the respondent's motion filed on 26 July 2002 be otherwise dismissed;
the parties' costs of the motion be their respective costs in the proceedings; and
the matter be stood over for directions on 21 February 2003.
Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N539 OF 2002

BETWEEN:

HEXAL AUSTRALIA PTY LTD
APPLICANT

AND:

BEECHAM PLC
FIRST RESPONDENT

SMITHKLINE BEECHAM PLC
SECOND RESPONDENT

SMITHKLINE BEECHAM (AUSTRALIA) PTY LTD
THIRD RESPONDENT

JUDGE:

EMMETT

DATE OF ORDER:

2 SEPTEMBER 2002

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
matters N229/01, V741/01, N553/02 and V362/02 travel together so far as practicable, prior to hearing;
this proceeding be heard at the same time as proceeding N229/01;
evidence in proceeding N229/01 be evidence in this proceeding;
the respondents' notice of motion filed 5 July 2002 be dismissed without prejudice to the right of the respondents to reventilate the issues raised therein if they should deem that necessary in the future;
the proceeding be transferred to the docket of Emmett J;
the parties file and serve verified lists of documents by 8 November 2002;
the matter proceed, so far as practicable, by way of eCourt;
the parties' costs of the motion be their respective costs in the proceeding; and
the matter be stood over for directions on 21 February 2003.
Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N229 OF 2001

BETWEEN:

ALPHAPHARM PTY LTD
APPLICANT

AND:

BEECHAM PLC
FIRST RESPONDENT

SMITHKLINE BEECHAM PLC
SECOND RESPONDENT

SMITHKLINE BEECHAM (AUSTRALIA) PTY LTD
THIRD RESPONDENT

JUDGE:

EMMETT

DATE OF ORDER:

2 SEPTEMBER 2002

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
matters N229/01, V741/01, N553/02 and V362/02 travel together so far as practicable, prior to hearing;
the proceeding be heard at the same time as proceeding N539/02;
evidence in proceeding N539/02 be evidence in this proceeding;
the parties file and serve verified lists of documents by 8 November 2002;
the costs of the parties of today be their respective costs in the proceeding; and
the proceeding be stood over for directions on 21 February 2003.
Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

V741 OF 2001

BETWEEN:

BEECHAM PLC
FIRST APPLICANT

SMITHKLINE BEECHAM PLC
SECOND APPLICANT

SMITHKLINE BEECHAM (AUSTRALIA) PTY LTD
THIRD APPLICANT

AND:

ALPHAPHARM PTY LTD
RESPONDENT

JUDGE:

EMMETT

DATE OF ORDER:

2 SEPTEMBER 2002

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
matters N229/01, V741/01, N553/02 and V362/02 travel together so far as practicable, prior to hearing;
the parties file and serve verified lists of documents by 8 November 2002;
the costs of the parties of today be their respective costs in the proceeding; and
the proceeding be stood over for directions on 21 February 2003.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N539 OF 2002

BETWEEN:

SMITHKLINE BEECHAM PLC
FIRST APPLICANT

BEECHAM GROUP PLC
SECOND APPLICANT

SMITHKLINE BEECHAM (AUSTRALIA) PTY LTD
THIRD APPLICANT

AND:

HEXAL AUSTRALIA PTY LTD
RESPONDENT

V362 OF 2002

BETWEEN:

HEXAL AUSTRALIA PTY LTD
APPLICANT

AND:

BEECHAM PLC
FIRST RESPONDENT

SMITHKLINE BEECHAM PLC
SECOND RESPONDENT

SMITHKLINE BEECHAM (AUSTRALIA) PTY LTD
THIRD RESPONDENT

JUDGE:

EMMETT

DATE:

2 SEPTEMBER 2002

PLACE:

SYDNEY

REASONS FOR JUDGMENT

I have before me a notice of motion in each of two separate proceedings. In the first, SmithKline Beecham PLC, Beecham Group PLC and SmithKline Beecham (Australia) Pty Ltd (“the Beecham parties”), seek an order that proceeding N539 of 2002 be transferred to the Victoria District Registry of this Court. The applicant in that proceeding is Hexal Australia Pty Limited (“Hexal”). The other motion is by Hexal in proceeding V362 of 2002 in which Hexal seeks an order that that proceeding be transferred to the New South Wales District Registry.
I also have before me, for directions generally, proceedings N229 of 2001 and V741 of 2001. In N229 of 2001 the Beecham parties are respondents and Alphapharm Pty Ltd (“Alphapharm”) is the applicant. In proceeding V741 of 2001 the Beecham parties are the applicants and Alphapharm is the respondent. All of the proceedings are connected because they all relate to Australian Patents 593295 (“the Hemihydrate patent), 697982 (“the Anhydrate patent”) and 701518 (“the Tablet patent”). The inventions of the patents relate to what might briefly be described as antidepressant drugs.
The two proceedings to which Alphapharm is a party are presently in my docket. Alphapharm commenced proceeding N229 of 2001 shortly before the Beecham parties commenced proceeding V741 of 2001, although the Beecham parties had previously sought preliminary discovery in order to determine whether those proceedings should be commenced. The Beecham parties, in proceeding V741 of 2001, seek relief in respect of alleged infringement by Alphapharm of the Hemihydrate patent and the Anhydrate patent as well as the Tablet patent. Alphapharm, on the other hand, seeks orders for the revocation of each of these three patents. Goldberg J made orders that proceeding V741 of 2001 be transferred to the New South Wales District Registry and following that order the two Alphapharm proceedings have been managed by me by means of eCourt.
The two Hexal proceedings mirror the Alphapharm proceedings in proceeding V362 of 2002, the Beecham parties seek orders in respect of alleged infringement by Hexal of the Hemihydrate patent and the Anhydrate patent. In response, in proceeding 539 of 2001, Hexal seeks revocation of the three patents.
Ordinarily, one would expect that infringement and revocation proceedings in relation to the same patent be managed in parallel and by the same judge. But for the fact that Alphapharm and Hexal each seek revocation of the same patent there would be no particular reason why the Hexal proceedings and the Alphapharm proceedings need be linked. The Beecham parties, in fact, seeks transfer of the Hexal revocation proceeding to the Victoria District Registry so that the infringement proceeding against Hexal and Hexal's claim for revocation can be dealt with in the Victoria District Registry by the same judge.
The evidence before me indicates in a general way, to the extent that it is possible to indicate at this stage, that it would probably be more convenient for the Hexal proceedings to be conducted in Melbourne rather than in Sydney. That is because the Beecham parties have a presence in Melbourne and have already retained a number of expert witnesses in connection with the proceedings who are more closely involved with Melbourne than with Sydney. The Beecham parties advanced similar arguments, in relation to the Alphapharm proceedings, although Goldberg J was of the view that it was more appropriate that the two Alphapharm proceedings be managed in Sydney. At this stage, there is no basis for re-examining the decision of Goldberg J, and, as I have said, I have for some twelve months had the management of the Alphapharm proceedings and have made a number of interlocutory decisions by means of eCourt. It is against that background, therefore, that I have to consider the two motions before me today.
It seems clear to me that, all things being equal, the two proceedings relating to the revocation of the same patents should be heard by the same judge. Of course, one does not know until the pleadings are closed and all particulars have been furnished what the issues will be. However, as the pleadings stand at the moment, the particulars of invalidity that have been filed in relation to each of the Alphapharm and Hexal revocation proceedings are identical. I should observe, however, that Alphapharm has purported to file amended particulars of invalidity, although the Beecham parties have taken exception to that course being adopted without the leave of the Court. I have been informed by senior counsel for both of the parties to the Alphapharm proceedings that it is expected that the question of amendment will be brought to a head in the reasonably near future, either by consent orders or by inviting the Court to rule on a more restricted dispute than existed when the amended particulars of invalidity were purportedly filed.
Both Hexal and Alphapharm are represented by experienced legal advisers. There is every reason to think, therefore, that if any ground of invalidity is advanced by one of them, the other would adopt that ground of invalidity. That, of course, involves some degree of speculation at this stage, but having regard to the legal advisers involved, it is speculation that I would be disposed to make.
I shall therefore proceed on the assumption and expectation that the issues that will be raised by both Alphapharm and Hexal in their respective revocation proceedings will be much the same. The possibility of two trials in relation to the same issues with the possibility of inconsistent results or at best different results should be avoided, it therefore seems to me to be appropriate that the revocation proceedings should proceed in tandem and should be heard at the same time. Clearly, from the point of view of the Beecham parties, it would be desirable that only one proceeding be conducted. Both Hexal and Alphapharm have indicated that there would be no objection to an order that the two revocation proceedings be heard together and that evidence in one be evidence in the other. It is therefore appropriate that such an order be made.
The conduct of the hearing, of course, will be something that will require attention when the precise issues have been determined. No doubt there will be witnesses called on behalf of the Beecham parties. Questions will arise as to whether such witnesses should be cross-examined on behalf of each of Alphapharm and Hexal. It may be that, since the issues are identical, in the sense that neither Alphapharm nor Hexal has a different interest in the revocation, cross-examination of witnesses called by the Beecham parties be limited to one senior counsel. Who that should be is something that can be dealt with when the trial is closer. I only mention that matter in order to draw attention to the fact that I have made no decision concerning the way in which the trial will be conducted, other than to direct that the two proceedings be heard together and that the evidence in each of them be evidence in the other.
Once that conclusion is reached, it virtually decides the question raised in the motions. Ordinarily, as I have said, the revocation and infringement proceedings between the same parties would be managed together and in the ordinary course would be heard together. In my view, there is no reason, in my view at this stage, to depart from that rule so far as management is concerned. That is to say, the two Hexal proceedings should be managed by the same judge, although having regard to the complication of the two revocation proceedings, it is likely to be inappropriate that the infringement proceedings be heard at the same time as the revocation proceedings. Given that each of Hexal, Alphapharm and the Beecham parties are competitors of each other in the Australian market, there could be complications in relation to confidential information if the two infringement proceedings were heard at the same time.
On the other hand, I see no impediment to the same judge hearing the two infringement proceedings at different times, albeit within a short time of each other. There may be a further complication if a view were taken concerning the credibility of witnesses who might give evidence in all three proceedings. That is a complication, however, that will need to be considered when we get closer to the stage of trial in any proceeding. With expert evidence, assuming the experts perform the function that an expert should perform, I do not, for myself, see any real problem with forming a view one way or the other as to the weight to be given to a particular witness. I would assume that it would be unlikely that I would form a view as to credibility, other than as to the reasonableness of the arguments and evidence advanced on behalf of particular experts.
If such a complication arises, it can be dealt with after the hearing of the revocation proceedings. It is my intention that the two revocation proceedings should be resolved before the infringement proceedings. If, of course, the revocation proceedings result in revocation, that would obviate the need for any hearing in relation to the infringement suits. In making that observation, I make it clear that I have formed no view at all as to the likely outcome of the revocation proceedings.
It would, of course, be possible for evidence to be taken in Melbourne, if that is convenient for witnesses or in relation to the documentation that is required for the trial. The place where the trials will be conducted is something that will be decided when the issues have been formulated and the nature of the evidence that is going to be given has become clearer. However on balance, having regard to the connection between the two sets of proceedings, namely the fact that each has a revocation suit in relation to the same patents, I consider that it is preferable that proceeding V362 of 2002 be transferred to the New South Wales District Registry and that the two Hexal proceedings be transferred to my docket for management.
I also make clear, however, that while those are the orders that I propose to make, it would be appropriate to indicate that I would not regard it as vexatious for either party to renew the application that is before me today at some later stage, at a time when the issues have become clearer and the nature of the evidence is more certain.
Senior counsel for the Beecham parties and senior counsel for Hexal have indicated that there would be no objection to management proceeding by way of eCourt and, accordingly, I will make appropriate orders that the two proceedings to be transferred to my docket also proceed by way of eCourt. That again will not preclude the parties from arranging for an oral argument at any stage in relation to any issue that arises either in Sydney or Melbourne or by means of video link.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:
Dated: 10 September 2002

Counsel for the Beecham Parties:

Mr A. Archibald QC & Mr B. Caine

Solicitor for the Beecham Parties:

Allens Arthur Robinson

Counsel for Hexal:

Mr P. Jones

Solicitor for Hexal:

Parry Carroll

Date of Hearing:

2 September 2002

Date of Judgment:

2 September 2002

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	V362 OF 2002

BETWEEN:	SMITHKLINE BEECHAM PLC FIRST APPLICANT BEECHAM GROUP PLC SECOND APPLICANT SMITHKLINE BEECHAM (AUSTRALIA) PTY LTD THIRD APPLICANT
AND:	HEXAL AUSTRALIA PTY LTD RESPONDENT
JUDGE:	EMMETT
DATE OF ORDER:	2 SEPTEMBER 2002
WHERE MADE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N539 OF 2002

BETWEEN:	HEXAL AUSTRALIA PTY LTD APPLICANT
AND:	BEECHAM PLC FIRST RESPONDENT SMITHKLINE BEECHAM PLC SECOND RESPONDENT SMITHKLINE BEECHAM (AUSTRALIA) PTY LTD THIRD RESPONDENT
JUDGE:	EMMETT
DATE OF ORDER:	2 SEPTEMBER 2002
WHERE MADE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N229 OF 2001

BETWEEN:	ALPHAPHARM PTY LTD APPLICANT
AND:	BEECHAM PLC FIRST RESPONDENT SMITHKLINE BEECHAM PLC SECOND RESPONDENT SMITHKLINE BEECHAM (AUSTRALIA) PTY LTD THIRD RESPONDENT
JUDGE:	EMMETT
DATE OF ORDER:	2 SEPTEMBER 2002
WHERE MADE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	V741 OF 2001

BETWEEN:	BEECHAM PLC FIRST APPLICANT SMITHKLINE BEECHAM PLC SECOND APPLICANT SMITHKLINE BEECHAM (AUSTRALIA) PTY LTD THIRD APPLICANT
AND:	ALPHAPHARM PTY LTD RESPONDENT
JUDGE:	EMMETT
DATE OF ORDER:	2 SEPTEMBER 2002
WHERE MADE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N539 OF 2002

JUDGE:	EMMETT
DATE:	2 SEPTEMBER 2002
PLACE:	SYDNEY

Counsel for the Beecham Parties:	Mr A. Archibald QC & Mr B. Caine
Solicitor for the Beecham Parties:	Allens Arthur Robinson
Counsel for Hexal:	Mr P. Jones
Solicitor for Hexal:	Parry Carroll
Date of Hearing:	2 September 2002
Date of Judgment:	2 September 2002