Aventis Pharma SA v Pharmaco (NZ) Limited HC Auckland CIV 2010-404-1670

[2010] NZHC 2004

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-001670

BETWEEN  AVENTIS PHARMA SA First Plaintiff

ANDSANOFI-AVENTIS NEW ZEALAND LIMITED

Second Plaintiff

ANDPHARMACO (NZ) LIMITED First Defendant

ANDINTERPHARMA (NZ) LIMITED Second Defendant

CIV-2010-485-000506

AND BETWEEN            INTERPHARMA (NZ) LIMITED Plaintiff

ANDCOMMISSIONER OF PATENTS First Defendant

ANDAVENTIS PHARMA SA Second Defendant

ANDSANOFI-AVENTIS NEW ZEALAND LIMITED

Third Defendant

Hearing:         29 October 2010

Counsel:         B Brown QC and K McHaffie for Plaintiffs

A Brown QC and S Wheeldon for Defendants

Judgment:      3 November 2010

JUDGMENT OF ASHER J

This judgment was delivered by me on Wednesday, 3 November 2010 at 4pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:
B Brown QC, PO Box 5161, Lambton Quay, Wellington 6015. Email:  Brendan[email protected]

A Brown QC, PO Box 2815, Shortland Street, Auckland 1140. Email:  [email protected]

AVENTIS PHARMA SA AND ANOR V PHARMACO (NZ) LIMITED AND ANOR HC AK CIV-2010-404-

001670  3 November 2010

Introduction

[1]      This judgment arises out of a case management conference on two related proceedings.   The first proceeding is an application for judicial review under the Judicature Amendment Act 1972.   Those proceedings were originally filed in the Wellington registry (CIV-2010-0485-506).   The other proceeding is a claim under the Patents Act 1953 (“the Act”) in relation to infringement of New Zealand Patent No. 243469 (CIV-2010-404-1670) filed in Auckland.

[2]      The Wellington proceedings have been transferred to Auckland and there has been a hearing in which interim relief claims in both proceedings were refused.  Both proceedings remain in the Auckland registry and are being case managed.   In the course of case management a contested issue has arisen.  The issue is whether the two sets of proceedings should be heard together.

Background

[3]      Aventis Pharma SA (“Aventis”) owns patent No.243469, relating to a drug known as Docetaxel used in cancer treatments.  Aventis has supplied the drug into the New Zealand market since 1994.   Earlier this year InterPharma (NZ) Ltd (“InterPharma”) entered into a contract with Pharmac, the Government pharmaceutical purchasing agency, to supply Docetaxel EBEWE, a generic of Docetaxel.  Aventis in the patent proceedings alleges that InterPharma has infringed its rights as patentee.  Aventis’ patent expires on 17 July 2012.  InterPharma denies that it is in breach of the patent and has counterclaimed in the patent proceedings on the basis that the Aventis patent is invalid and should be revoked.

[4]      In   the   judicial   review   proceedings,   filed   shortly   before   the   patent proceedings, InterPharma seeks judicial review of a decision by the Commissioner of Patents (“the Commissioner”) to amend the patent.  On 10 November 2009 Aventis had applied to amend its patent.  On 1 March 2010 the Commissioner, who is the first defendant in the judicial review proceedings, allowed an amended specification and claims for patent to be recorded in the register.   In the judicial review claim

InterPharma asserts that the Commissioner was acting ultra vires.  It asserts that in allowing the introduction of a new claim into patent No.243469 there was no disclaimer or explanation as required by the Act, and that the amendments allowed additions to the complete specification and the introduction of a new claim contrary to the Act.  It asserts that allowing the introduction of the amended claim and a new claim was contrary to the Act and the Intellectual Property Office of New Zealand’s own Practice Notes.   It seeks orders quashing the decisions of the Commissioner allowing the amendments.

[5]      The judicial review proceedings will take approximately two days to hear. There has been some debate between counsel as to how long the patent proceedings will take to hear, with estimates varying from five to eight days.   The combined hearing could take approximately two weeks.  The scheduling officer has informed the parties that a two day fixture for the judicial review proceeding could be heard within the first half of next year.  Indeed, I understand that it could be heard this year if counsel are available.   The patent proceeding, because of its length, cannot be heard next year because it will require more than five days.  It is likely to be heard in the middle of 2012.

Respective positions

[6]      Mr Andrew Brown’s essential argument in support of the judicial review proceeding not being effectively merged with the patent proceeding, is that the issues in the two proceedings are largely discrete.  He submits that it is logical to deal with the judicial review proceeding first, because the plaintiff relies on the amended patent in the patent proceeding, which is the subject of the judicial review challenge. He points to the fact that it was only after the amendment to the patent was granted on 1 March 2010 that Aventis’ lawyers issued a cease and desist notice to InterPharma.   He submits that if InterPharma is successful in the judicial review proceedings then the claims based on the amended patent being pursued by Aventis must fail.   If on the other hand InterPharma is unsuccessful in its judicial review proceedings, then  the proceedings  would stand and the infringement proceeding would properly proceed.  He accepts that the patent proceedings should continue to

proceed towards a hearing, at least pending determination in the High Court of the judicial review proceedings.

[7]      Mr Brendan Brown for Aventis in essence submits that there is an overlap between  the  two  proceedings  and  that  InterPharma  would  achieve  an  unfair advantage if it was able to have its case heard first.  He suggested that a procedural tangle could develop which would be in the interests of no party.  He submits that if Aventis lost the initial judicial review proceeding, but was ultimately successful on appeal, it might lose a considerable period of time during the likely stay of the patent proceedings that would follow.   It might therefore, be without remedy for a much longer period of time than if the proceedings had been heard together.

[8]      In submissions both counsel referred to the decision of Harrison J[1] where he declined the competing interlocutory applications brought by both parties.   He considered that damages would be an adequate remedy for Aventis, noting the expiry of its patent on 17 July 2012.  He directed that InterPharma provide a bank guarantee so that it could meet damages of up to a maximum of $2 million with leave reserved to Aventis to apply for an increase in that amount to $5 million.  He also dismissed a claim by InterPharma for interim relief.  He observed:[2]

Both proceedings appear ready for trial.  Contrary to Mr Brendan Brown's prognosis, I am satisfied that the registry should be able to allocate an early fixture of not more than one week if the parties are prepared to take a back- up or stand-by date.   The affidavits filed to date should serve as briefs of evidence at trial.  Little extra needs to be done.

[1] Aventis Pharma SA v Pharmaco (NZ) Ltd HC Auckland CIV-2010-404-1670, 4 June 2010; InterPharma (NZ) Ltd v Commissioner of Patents HC Auckland CIV-2010-485-506, 4 June 2010. 

[2] At [49].

[9]      Neither counsel accepted that this statement was entirely correct.   There is still work to be done on the patent proceedings.  The issue of whether there should be joint trials was not discussed at the earlier hearing.

Discussion

[10]     At issue is a case management direction of considerable importance to the parties.    Under  r  10.12  a  Court  may  order  two  or  more  proceedings  to  be consolidated  or  tried  at  the  same  time.    There  are  specific  grounds  set  out  at r 10.12(b) and r 10.12(c) provides that orders can be made if the Court is satisfied that for some other reason it is desirable to make an order under this rule.

[11]     The starting point is that there are two separate proceedings, which on their face can proceed separately to trial.  If there is an initial presumption, then it is for separate trials for each.  Usually separate proceedings get separate trials.  However, there is no doubt that the trials are separate battles in the same war relating to whether Aventis has the exclusive right to market Docetaxel in New Zealand until 17

July 2012.

[12]     However, there is a fundamental difference between the two proceedings. The judicial review proceedings involve essentially an analysis of issues of vires and process.  Did the Commissioner act lawfully when he granted the amendment to the patent?   The patent proceeding on the other hand involves issues relating to the patent itself, its terms, its validity and any breach of it.

[13]     The Commissioner has in his statement of defence in the judicial review proceedings admitted that patent No.243469 did not comply with the requirement to provide full particulars of the claim as required by the Patent Regulations 1954 and defined in his Practice Note 1975 No.13.   He has also admitted that the Aventis application to amend did not disclose the prior art referred to in its application to amend, and that he did not require disclosure of that prior art before accepting the application for processing.   He accepted that he did not have knowledge of and therefore could not adequately or properly consider the reason for the application claimed in the amendment application.  These would appear to be submissions that are helpful to InterPharma’s claim.

[14]     However,  Aventis  asserts  that  the  judicial  review  proceedings  must  fail because of s 40(2) of the Act which provides:

40   Supplementary provisions as to amendment of specification

…

(2)   Where, after the date of the publication of a complete specification, any amendment of the specification is allowed or approved by the Commissioner or the Court, the right of the patentee or applicant to make the amendment shall not be called in question except on the ground of fraud; and the amendment shall in all Courts and for all purposes be deemed to form part of the specification:

Provided that in construing the specification as amended reference may be made to the specification as originally published.

[15]     There  is  no  allegation  of  fraud.    Therefore  Aventis  submits  the  judicial review proceedings must fail.   InterPharma submits in reply that that this section does not preclude judicial review proceedings.

[16]     The issue is complex.  After hearing extensive argument on the point in the interim injunction proceeding, Harrison J noted that it was a difficult question with the arguments for and against evenly balanced.[3]

[3] At [43].

[17]     While both the judicial review and the patent proceedings will involve the Judge having to familiarise herself or himself with the details of the patent and the amendment, the issues in the judicial review proceedings are different from those in the patent proceeding.   Obviously, there are serious questions to be tried in both proceedings.  Like Harrison J, I make no attempt to assess their respective merits.

[18]    Mr Brendon Brown’s submissions in opposition to the cases proceeding separately emphasised the certainty that the losing party to the judicial review proceedings would appeal, and that there is every chance that as difficult issues of statutory interpretation were involved, that appeal might go to the Supreme Court. He put forward the prospect of delays after any decision of over two years.  In the meantime his client, if it had failed in the initial proceedings, would not be able to market Docetaxel.  He referred to the history of the well known litigation Strathmore

Group Ltd v Fraser,[4]  where an order for a preliminary hearing had unfortunate

results in terms of delay and costs.  That case made it clear that the appeal rights of

the parties must be able to exercised in relation to separate hearings, even if they relate to the same general subject matter.  He submitted that his clients should not be disadvantaged simply because the patent proceedings were going to take longer to hear and therefore involve a greater wait for a hearing date.

[4] Strathmore Group Ltd v Fraser (1992) 4 PRNZ 325.

[19]     Finally, it is to be noted that there is considerable amount to be done before the patent proceeding is ready for trial.   On the other hand the judicial review proceedings appear to be largely ready for trial.

Decision

[20]     I have decided that it is best on balance to allow the two sets of litigation to go down their separate courses and to not direct that they be heard together.  There are a number of reasons for this decision.

[21]     First, the two proceedings involve the discrete and separate issues of judicial review, and enforcement and challenge of a patent.  I am satisfied that there will not be a great deal of overlap of issues of fact and law, and therefore wasted cost.

[22]     Secondly, the judicial review proceeding can be heard within a relatively short timeframe of two days.  It is now ready to be heard.  Apparently, a fixture can be allocated in the first half of next year or, I am told, even this year.  Thus it can be heard at least a year earlier than any fixture that could be allocated for the more lengthy patent proceeding, which is still not ready for hearing.  There are still various interlocutory matters to be completed in relation to that proceeding.

[23]     Thirdly, there is a certain logic in the judicial review proceeding being heard first.   It is not a frivolous claim and if it is successful it will mean that the patent proceeding is at an end.  The amendment to the patent should not have been granted. Putting to  one side the question  of  appeals,  this  early two  day hearing will,  if InterPharma is successful, end the proceedings.   So putting aside the question of appeals, it is logical to have the preliminary and possibly determinative point heard first.  If InterPharma is unsuccessful in the judicial review proceedings, hearing them first will not have delayed anything, as the patent proceedings are to continue in the

meantime with interlocutories being completed and that case being set down for hearing in 2012.

[24]     Assuming  that  there  will  be  appeals,  the  position  then  becomes  more complex.  However, if InterPharma succeeds on the judicial review proceeding and in the appeals that follow, the same desirable result will have been achieved.  There will have been a short hearing which will have determined all issues without a wasted later hearing in relation to the patent and if Aventis succeeds in the judicial review proceedings and all appeals, and then wins the patent case, again it will have lost nothing.

[25]     It is necessary to consider, however, the other scenarios.   If InterPharma succeeded but later lost on appeal, then the patent proceedings would reactivate. Mr Brendan  Brown  argued  that  allowing  the  trials  to  proceed  separately leaves Aventis exposed effectively to the same stay of the patent proceedings denied by Harrison J, should InterPharma initially succeed in the judicial review proceeding. The patent proceedings will then go on hold.  If in those patent proceedings Aventis was ultimately successful it would have suffered considerable losses, and have a significant claim for damages for the period of InterPharma’s sales of the drug in New Zealand.

[26]     However, the Aventis patent has less than two years to run.   The patent proceedings are unlikely to be heard and determined even in this Court in much less than two years.  Aventis having been denied an interim injunction is now looking at a remedy in damages only, even if it wins the patent proceedings.  There is unlikely to be any time left for it to resume its exclusive supply.  Thus, in any event, its only likely remedy if it succeeds, having been refused an interim injunction, is damages. Harrison J has determined that it should be able to recover damages from InterPharma.   Its ability to realise that remedy of damages remains whether the hearing is postponed by an early loss and a later successful appeal, or the cases are heard together.  It is always open to Aventis to apply to the Court to have the amount of the damages guarantee extended further.

[27]     It is necessary to consider yet another scenario where InterPharma initially loses but later wins.  If it initially loses, the patent proceeding will carry on and is likely to be determined at about the same time as any first hearing of an appeal.  If InterPharma had been initially unsuccessful but then succeeded later on appeal, then the parties would be no worse off than if both proceedings were heard together.

[28]     There is also the prospect of InterPharma losing the judicial review round but winning its defence or counterclaim in relation to the patent claim.  In which case again, the parties will be no worse off than if the judicial review and patent proceedings had been heard together.

[29]     Mr Brendan Brown referred in submissions to the danger of different Judges giving different decisions on the same issues, should the cases not be heard together. There is a danger of this, but the overlap in the issues will be limited so that danger is limited.

[30]     Mr Brendan Brown also argued that if his client lost the judicial review proceeding but later won an appeal, it would have been denied the opportunity to establish  a  “bridgehead”  a  presence  in  the  market  before  the  patent  expired. However, the fact that it is unlikely that the patent proceeding will be determined until 2012 means that there will be little opportunity to establish a bridgehead in the market using the monopoly of the patent, even if his client is successful.

[31]     I do not, therefore, on analysis see any great disadvantage to the parties should I allow matters to take their usual course and for the separate judicial review proceedings to be heard separately, which will mean they will be heard first.  I see a possible distinct advantage should the outcome of those proceedings be success in all Courts for InterPharma in that the second proceeding covering the patent will have been avoided.  There is no delay if InterPharma loses the judicial review application. The availability of damages from InterPharma will protect Aventis from prejudice should it initially lose and then later succeed on appeal.

[32]     I direct therefore that the two proceedings be heard separately.  The judicial review proceeding should now be given a fixture.

[33]     I make the following further directions in relation to the proceeding:

Judicial review proceeding:

(a)      That the plaintiff file within seven working days redacted copies of the affidavit of Professor Tucker and Dr Parker in terms of InterPharma’s reply memorandum schedule 1;

(b)InterPharma file within seven working days an updating affidavit as to the position with the comparable patent amendment in Australia;

Patent proceeding:

(a)       Discovery lists to be filed and served by 23 December 2010; (b)           Inspection to be completed by 3 February 2011;

(c)      Any interlocutory applications arising out of discovery and inspection to be filed and served by 17 February 2011;

(d)The matter to be listed for a second case management conference for timetabling and trial orders immediately after 17 February 2011; and

(e)       A fixture to be allocated for the patent proceeding.

[34]     InterPharma  has  been  successful  and  I  award  costs  on  a  2B  basis,  plus reasonable disbursements.

……………………………..

Asher J