FEDERAL COURT OF AUSTRALIA

Bristol-Myers Squibb Company v Apotex Pty Ltd [2015] FCAFC 2

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellants pay the respondent’s costs of the appeal.

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

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the respondents’ costs of the appeal.

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

REASONS FOR JUDGMENT

THE COURT:

1.    THE APPEALS

1    This matter involves two appeals. Apotex Pty Ltd (Apotex), the respondent to the proceeding before the primary judge, contends that his Honour erred in rejecting Apotex’s contentions that Australian Patent No. 2002334413 (the patent) was invalid and should be revoked. Bristol-Myers Squibb Company (BMS) and Otsuka Pharmaceutical Co Ltd (Otsuka), the applicants in the proceeding before the primary judge, contend that his Honour erred in deciding that BMS is not the exclusive licensee of the patent and thus was not entitled to prosecute the proceeding, a decision which is said to have caused the primary judge’s discretion about the costs of the proceeding as between BMS and Apotex to miscarry.

2    The primary judge’s principal reasons for judgment include his decisions about the validity of the patent and the status of BMS (Bristol-Myers Squibb Company v Apotex Pty Ltd (No 5) (2013) 104 IPR 23; [2013] FCA 1114). His Honour’s subsequent reasons deal with the issue of costs (Bristol-Myers Squibb Company v Apotex Pty Ltd (No 6) [2013] FCA 1235).

3    References below are to the principal reasons unless otherwise indicated.

2.    THE PATENT

4    As the primary judge noted in the principal reasons at [1], the patent is entitled “Low hygroscopic aripiprazole drug substance and processes for the preparation thereof”. Aripiprazole is an atypical antipsychotic agent that is useful for the treatment of schizophrenia. Hygroscopicity means the tendency to absorb water (at [13]).

5    The primary judge provided details about the patent at [40] to [71] of the principal reasons. As there described, the patent is a standard patent, granted on a PCT application (PCT/JP02/09858) taken as filed on 25 September 2002 and published as WO 03/026659. The claims of the patent claim priority from three basic applications: Japanese Patent Application No. 2001-290645 filed on 25 September 2001; Japanese Patent Application No. 2001-348276 filed on 14 November 2001; and Canadian Patent Application No. 2379005 filed on 27 March 2002, and thus the earliest priority date of the claims of the patent is 25 September 2001 (at [40]).

6    The primary judge made orders amending the claims of the patent on 13 August 2010. Importantly, for the purposes of Apotex’s appeal, the primary judge published reasons for so doing (Bristol-Myers Squibb Company v Apotex Pty Ltd (2010) 87 IPR 516; [2010] FCA 814 (the amendment reasons)) (at [41] of the primary judgment).

7    The primary judge’s description of the patent is not in dispute and may be adopted. The primary judge said (at [43]-[47]):

The complete specification describes, as background to the invention, two published methods of manufacturing anhydrous crystals of aripiprazole. The term “anhydrous” means that the compound contains no combined water.

The first method is disclosed in Example 1 of Japanese Unexamined Patent Publication No. 191256/1990 (the Japanese unexamined patent publication). It involves reacting 7-(4-bromobutoxy)-3,4-dihydrocarbostyril with 1-(2,3-dichlorophenyl)piperazine to produce raw anhydrous aripiprazole, which is then recrystallised with ethanol. The second method is disclosed in Proceedings of the 4th Japanese-Korean Symposium on Separation Technology (6-8 October 1996) (the Symposium), specifically, in documents referred to in the present case as the Aoki article and the Aoki poster. This method involves heating aripiprazole hydrate at 80°C.

…

The complete specification states that the anhydrous crystals obtained by the two disclosed methods have the disadvantage of being significantly hygroscopic. The complete specification describes this disadvantage as follows:

The hygroscopicity of these crystals makes them difficult to handle since costly and burdensome measures must be taken in order to ensure they are not exposed to moisture during process and formulation. Exposed to moisture, the anhydrous form can take on water and convert to a hydrous form. This presents several disadvantages. First, the hydrous forms of aripiprazole have the disadvantage of being less bioavailable and less dissoluble than the anhydrous forms of aripiprazole. Second, the variation in the amount of hydrous versus anhydrous aripiprazole drug substance from batch to batch could fail to meet specifications set by drug regulatory agencies. Third, the milling may cause the drug substance, Conventional Anhydrous Aripiprazole, to adhere to manufacturing equipment which may further result in processing delay, increased operator involvement, increased cost, increased maintenance and lower production yield. Fourth, in addition to problems caused by introduction of moisture during the processing of these hygroscopic anhydrous crystals, the potential for absorbance of moisture during storage and handling would adversely affect the dissolubility of aripiprazole drug substance. Thus shelf-life of the product could be significantly decreased and/or packaging costs could be significantly increased. It would be highly desirable to discover a form of aripiprazole that possessed low hygroscopicity thereby facilitating pharmaceutical processing and formulation operations required for producing dosage units of an aripiprazole medicinal product having improved shelf-life, suitable dissolubility and suitable bioavailability.

The complete specification says that these anhydrous crystals (which are referred to in other passages of the complete specification as “conventional” anhydrous aripiprazole crystals) (conventional anhydrous aripiprazole crystals) exist as “type-I” crystals and “type-II” crystals. Type-I crystals can be prepared by the methods discussed above. Type-II crystals can be prepared by heating the type-I crystals at 130°C to 140°C for 15 hours. However, by using these methods, type-II crystals having high purity cannot be easily prepared on an industrial scale with good repeatability.

8    The primary judge explained at [48] that, for reasons of convenience because of nomenclature used in an important piece of prior art known as the Aoki article, he would describe the type-I and type-II crystals as type 1 and type 2 crystals, respectively. His description continued in these terms:

49    The complete specification summarises the invention in the following terms:

Thus according to the present invention there is provided a form of aripiprazole having reduced hygroscopicity and which is more amenable to pharmaceutical processing and formulation. The inventors of the present invention have discovered that this reduced-hygroscopic form of Aripiprazole is a crystalline substance defined herein as Anhydrous Aripiprazole Crystals B. A particular process for the preparation of this anhydrous crystalline substance has also been discovered and comprises yet another aspect of the present invention. Particularly, it was discovered as part of the present invention that in order to produce Anhydrous Aripiprazole Crystals B having the desired pharmaceutical properties and utilizing the most efficient process, Hydrate A, as defined herein, would have to serve as the intermediate. It was also discovered that a particular sequence of processing had to be implemented in order to form Hydrate A. It was discovered that the preparation of Hydrate A required milling what is defined herein as Conventional Hydrate. Then, Hydrate A can be transformed into Anhydrous Aripiprazole Crystals B through suitable heating as defined herein. Surprisingly, if the Conventional Hydrate is first heated and then milled, serious agglomeration sets in rendering the processing commercially unsuitable.

Advantageously at least one embodiment of the present invention provides novel anhydrous aripiprazole crystals.

Moreover, another advantage of at least one embodiment of the present invention is that anhydrous aripiprazole crystals which neither easily convert into hydrates nor substantially decrease the original solubility, even when a pharmaceutical composition comprising anhydrous aripiprazole is stored for a long period of time may be provided.

A further advantage of at least one embodiment of the present invention is that preparation methods, in order to obtain anhydrous aripiprazole crystals having high purity in an industrial scale with good repeatability may be provided.

The present inventors have conducted research works aimed to attain the aforementioned advantages. In the course of the research, they have found that the desired anhydrous aripiprazole crystals can be obtained when a well-known anhydrous aripiprazole is heated at a specific temperature. Further, the present inventors have found that the desired anhydrous aripiprazole crystals can be obtained from recrystallization of a well-known anhydrous aripiprazole by using the specific solvents. Moreover, the present inventors found that the desired anhydrous aripiprazole crystals can be obtained by suspending a well-known anhydrous aripiprazole in the specific solvent, and heating the thus obtained suspension.

The present invention is thus completed on the basis of these findings and knowledge.

...

51    Despite what is said in the complete specification, Conventional Hydrate (conventional hydrate) is not defined. However, a process for preparing conventional hydrate is described. The complete specification states that anhydrous aripiprazole crystals obtained from the method in Example 1 of the Japanese unexamined patent publication are dissolved in a hydrous solvent, heated, and then cooled, such that aripiprazole hydrate is precipitated as crystals in the hydrous solvent. The complete specification describes the hydrous solvent in the following terms:

An organic solvent containing water is usually used as the hydrous solvent. The organic solvent should be one which is miscible with water, such as for example an alcohol such as methanol, ethanol, propanol or isopropanol, a ketone such as acetone, an ether such as tetrahydrofuran, dimethylformamide, or a mixture thereof, with ethanol being particularly desirable. The amount of water in the hydrous solvent can be 10-25% by volume of the solvent, or preferably close to 20% by volume.

52    The complete specification discloses a process for manufacturing Hydrate A:

Hydrate A is manufactured by milling Conventional Hydrate. Conventional milling methods can be used to mill Conventional Hydrate. For example, Conventional Hydrate can be milled in a milling machine. A widely used milling machine can be used, such as an atomizer, pin mill, jet mill or ball mill. Of these, the atomizer is preferred.

Regarding the specific milling conditions when using an atomizer, a rotational speed of 5000-15000 rpm could be used for the main axis, for example, with a feed rotation of 10-30 rpm and a screen hole size of 1-5 mm.

The mean particle size of the Aripiprazole Hydrate A obtained by milling should normally be 50 µm or less, preferably 30 µm or less. Mean particle size can be ascertained by the particle size measurement method described hereinafter.

53    The complete specification characterises Hydrate A in the following terms:

Particles of “Hydrate A” as used herein have the physicochemical properties given in (1) - (5) below:

(1)    It has an endothermic curve which is substantially the same as the thermogravimetric/differential thermal analysis (heating rate 5°C/min) endothermic curve shown in Figure 1. Specifically, it is characterized by the appearance of a small peak at about 71°C and a gradual endothermic peak around 60°C to 120°C.

(2)    It has an 1H-NMR spectrum which is substantially the same as the 1H-NMR spectrum (DMSO-d6, TMS) shown in Figure 2. Specifically, it has characteristic peaks at 1.55-1.63 ppm (m, 2H), 1.68-1.78 ppm (m, 2H), 2.35-2.46 ppm (m, 4H), 2.48-2.56 ppm (m, 4H + DMSO), 2.78 ppm (t, J = 7.4 Hz, 2H), 2.97 ppm (brt, J = 4.6 Hz, 4H), 3.92 ppm (t, J = 6.3 Hz, 2H), 6.43 ppm (d, J = 2.4 Hz, 1H), 6.49 ppm (dd, J = 8.4 Hz, J = 2.4 Hz, 1H), 7.04 ppm (d, J = 8.1 Hz, 1H), 7.11-7.17 ppm (m, 1H), 7.28-7.32 ppm (m, 2H) and 10.00 ppm (s, 1H).

(3)    It has a powder x-ray diffraction spectrum which is substantially the same as the powder x-ray diffraction spectrum shown in Figure 3. Specifically, it has characteristic peaks at 20 = 12.6°, 15.4°, 17.3°, 18.0°, 18.6°, 22.5° and 24.8°.

(4)    It has clear infrared absorption bands at 2951, 2822, 1692, 1577, 1447, 1378, 1187, 963 and 784 cm-1 on the IR (KBr) spectrum.

(5)    It has a mean particle size of 50 µm or less.

54    The complete specification characterises Crystals B in the following terms:

“Anhydrous Aripiprazole Crystals B” of the present invention as used herein have the physicochemical properties given in (6) - (12) below.

(6)    They have an 1H-NMR spectrum which is substantially the same as the 1H-NMR spectrum (DMSO-d6, TMS) shown in Figure 4. Specifically, they have characteristic peaks at 1.55-1.63 ppm (m, 2H), 1.68-1.78 ppm (m, 2H), 2.35-2.46 ppm (m, 4H), 2.48-2.56 ppm (m, 4H + DMSO), 2.78 ppm (t, J = 7.4 Hz, 2H), 2.97 ppm (brt, J = 4.6 Hz, 4H), 3.92 ppm (t, J = 6.3 Hz, 2H), 6.43 ppm (d, J = 2.4 Hz, 1H), 6.49 ppm (dd, J = 8.4 Hz, J = 2.4 Hz, 1H), 7.04 ppm (d, J = 8.1 Hz, 1H), 7.11-7.17 ppm (m, 1H), 7.28-7.32 ppm (m, 2H) and 10.00 ppm (s, 1H).

(7)    They have a powder x-ray diffraction spectrum which is substantially the same as the powder x-ray diffraction spectrum shown in Figure 5. Specifically, they have characteristic peaks at 20 = 11.0°, 16.6°, 19.3°, 20.3° and 22.1°.

(8)    They have clear infrared absorption bands at 2945, 2812, 1678, 1627, 1448, 1377, 1173, 960 and 779 cm-1 on the IR (KBr) spectrum.

(9)    They exhibit an endothermic peak near about 141.5°C in thermogravimetric/differential thermal analysis (heating rate 5°C/min).

(10)    They exhibit an endothermic peak near about 140.7°C in differential scanning calorimetry (heating rate 5°C/min).

(11)    Anhydrous Aripiprazole Crystals B of the present invention have low hygroscopicity. For example, Anhydrous Aripiprazole Crystals B of the present invention maintain a water content of 0.4% or less after 24 hours inside a closed container set at a temperature of 60°C and a humidity of 100%. Well-known methods of measuring water content can be used as long as they are methods commonly used for measuring the water content of crystals. For example, a method such as the Karl Fischer method can be used.

(12)    When the small particle size is required for the formulation such as tablet and other solid dose formulations including for example flashmelt formulations, the mean particle size is preferably 50 µm or less.

55    The complete specification discloses the following processes by which Crystals B can be manufactured:

In case of the formulation for which small particle size (less than 50 µm) is required, the milling is necessary for the preparation. However, when a large amount of Conventional Anhydrous Aripiprazole or Anhydrous Crystals B having large particle size is milled, the milled substances adhere with each other in the milling machine. Accordingly, there is a disadvantage that it is difficult to industrially prepare Anhydrous Aripiprazole Crystals B having small particle size.

Under the circumstances, the inventors of the present invention have found that Conventional Hydrate can be easily milled, and Anhydrous Aripiprazole Crystals B having small particle size can be obtained in high yield with good-operability by heating the milled hydrate A thus obtained.

The Anhydrous Aripiprazole Crystals B of the present invention are prepared for example by heating the aforementioned Aripiprazole Hydrate A at 90-125°C. The heating time is generally about 3-50 hours, but cannot be stated unconditionally since it differs depending on heating temperature. The heating time and heating temperature are inversely related, so that for example the heating time will be longer the lower the heating temperature, and shorter the higher the heating temperature. Specifically, if the heating temperature of Aripiprazole Hydrate A is 100°C, the heating time should normally be 18 hours or more or preferably about 24 hours. If the heating temperature of Aripiprazole Hydrate A is 120°C, on the other hand, the heating time can be about 3 hours. The Anhydrous Aripiprazole Crystals B of the present invention can be prepared with certainty by heating Aripiprazole Hydrate A for about 18 hours at 100°C, and then heating it for about 3 hours at 120°C. The Anhydrous Aripiprazole Crystals B of the present invention can also be obtained if the heating time is extended still further, but this may not be economical.

When small particle size is not required for the formulation, e.g., when drug substance is being manufactured for injectable or oral solution formulations, Anhydrous Aripiprazole Crystals B can be also obtained [by] the following process.

The inventors also discovered that it is possible to obtain anhydrous aripiprazole crystals by heating conventional aripiprazole hydrate or conventional anhydrous aripiprazole crystals to a specific temperature but this process does not yield Anhydrous Aripiprazole Crystals B as a crystalline substance suitable for commercial use in the formulation of solid oral dose formulations.

Furthermore, the Anhydrous Aripiprazole Crystals B of the present invention are prepared for example by heating conventional anhydrous aripiprazole crystals at 90-125°C. The heating time is generally about 3-50 hours, but cannot be stated unconditionally since it differs depending on heating temperature. The heating time and heating temperature are inversely related, so that for example the heating time will be longer the lower the heating temperature, and shorter the higher the heating temperature.

Specifically, if the heating temperature of the anhydrous aripiprazole crystals is 100°C, the heating time can be about 4 hours, and if the heating temperature is 120°C the heating time can be about 3 hours.

56    Later, the complete specification discloses processes for preparing conventional (or crude) aripiprazole crystals, conventional anhydrous aripiprazole, and conventional hydrate. It again discloses a process for preparing Crystals B.

57    In relation to the preparation of conventional (or crude) aripiprazole crystals, the complete specification exemplifies, once again, Example 1 of the Japanese unexamined patent publication (although, in more detail). In relation to the preparation of conventional anhydrous aripiprazole crystals, the complete specification merely states that the method is that described in the Symposium (in other words, the Aoki article and the Aoki poster). Despite the different nomenclature used in this part of the complete specification, both described methods result in the production of conventional anhydrous aripiprazole crystals.

58    In relation to the preparation of Crystals B, the complete specification exemplifies the heating of conventional hydrate at 90°C to 125°C in terms closely similar to the penultimate paragraph in the passage quoted in [55] above which concerns the heating of conventional anhydrous aripiprazole crystals.

59    The complete specification provides a number of reference examples. It is necessary to refer to three of them.

60    Reference Example 1 is in the following terms:

19.4 g of 7-(4-chlorobutoxy)-3,4-dihydrocarbostyril and 16.2 g of 1-(2,3-dichlorophenyl) piperadine [sic] 1 hydrochloride were added to 8.39 g of potassium carbonate dissolved in 140 ml of water, and circulated for 3 hours under agitation. After reaction the mixture was cooled and the precipitated crystals filtered out. These crystals were dissolved in 350 ml of ethyl acetate, and about 210 ml of water/ethyl acetate azeotrope removed under reflux. The remaining solution was cooled, and the precipitated crystals filtered out. The resulting crystals were dried for 14 hours at 60°C to produce 20.4 g (74.2%) of raw aripiprazole.

30 g of the raw aripiprazole obtained above was recrystallized from 450 ml of ethanol according to the methods described in Japanese Unexamined Patent Publication No. 191256/1990, and the resulting crystals dried for 40 hours at 80°C to obtain anhydrous aripiprazole crystals. The yield was 29.4 g (98.0%).

The melting point (mp) of these anhydrous aripiprazole crystals was 140°C, matching the melting point of the anhydrous aripiprazole crystals described in Japanese Unexamined Patent Publication No. 191256/1990.

When these crystals were left for 24 hours in a dessicator set at humidity 100%, temperature 60°C, they exhibited hygroscopicity of 3.28% …

61    Reference Example 2 is in the following terms:

6930 g of the intermediate raw aripiprazole obtained in Reference Example 1 was heat dissolved in 138 liters of hydrous ethanol (water content 20%) according to the method presented at the 4th Japanese-Korean Symposium on Separation Technology, gradually (2-3 hours) cooled to room temperature, and then chilled to near 0°C. The precipitated crystals were filtered out, producing about 7200 g of aripiprazole hydrate (wet state).

The wet-state aripiprazole hydrate crystals obtained above were dried for 30 hours at 80°C to obtain 6480 g (93.5%) of conventional anhydrous aripiprazole crystals. The melting point (mp) of these crystals was 139.5°C. These crystals were confirmed by the Karl Fischer method to be anhydrous, with a moisture value of 0.03%.

When left for 24 hours in a closed container set at humidity 100%, temperature 60°C, these crystals exhibited hygroscopicity of 1.78% …

…

63    Reference Example 3 is in the following terms:

820 g of the intermediate wet-state aripiprazole hydrate obtained in Reference Example 2 was dried for 2 hours at 50°C to obtain 780 g of aripiprazole hydrate crystals. These crystals had a moisture value of 3.82% according to the Karl Fischer method. As shown in Figure 6, thermogravimetric/differential thermal analysis revealed endothermic peaks at 75.0, 123.5 and 140.5°C. Because dehydration began near 70°C, there was no clear melting point (mp).

As shown in Figure 7, the powder x-ray diffraction spectrum of aripiprazole hydrate obtained by this method exhibited characteristic peaks at 20 = 12.6°, 15.1°, 17.4°, 18.2°, 18.7°, 24.8° and 27.5°.

The powder x-ray diffraction spectrum of this aripiprazole hydrate was identical to the powder x-ray diffraction spectrum of aripiprazole hydrate presented at the 4th Joint Japanese-Korean Symposium on Isolation Technology.

…

65    After providing the reference examples, the complete specification provides a number of further examples. Examples 1 to 10 are relevant to the present case.

66    Example 1 concerns the production of Hydrate A by milling the aripiprazole hydrate crystals obtained in Reference Example 3.

67    Example 2 concerns the production of Crystals B by drying Hydrate A for 24 hours at 100°C. Examples 3 and 4 also concern the production of Crystals B by heating Hydrate A. In each case, the steps involved the hot-air drying of Hydrate A for 18 hours at 100°C and then heating it for three hours at 120°C.

68    Examples 5 to 10 concern the production of Crystals B by heating conventional anhydrous aripiprazole crystals or conventional hydrate. In each case, the heating was carried out at 100°C (Examples 5, 7, and 9) or at 120°C (Examples 6, 8, and 10) on conventional anhydrous aripiprazole crystals obtained from the method in Reference Example 1 (Examples 5 and 6) and Reference Example 2 (Examples 7 and 8) or on conventional hydrate obtained from the method in Reference Example 3 (Examples 9 and 10). The complete specification says that Examples 5 to 10 are useful for injectable or oral solution formulations but not solid dose formulations because they were made by heating conventional anhydrous crystals or conventional hydrate instead of Hydrate A.

69    In each of Examples 2 to 10, the resulting crystals (that is, Crystals B) were left for 24 hours in a dessicator or closed container set at 100% humidity and 60°C. In each case, the crystals did not exhibit hygroscopicity exceeding 0.40%. Indeed, in each case, the hygroscopicity of these crystals was well below that percentage figure. However, when the resulting crystals of Reference Examples 1 and 2 were tested in the same way, the crystals, in each case, exhibited hygroscopicity well in excess of 0.40%. In the case of Reference Example 1, the hygroscopicity of the crystals was 3.28% and, in the case of Reference Example 2, the hygroscopicity was 1.78%.

70    The complete specification describes a number of other anhydrous aripiprazole crystals, designated respectively as Anhydrous Aripiprazole Crystals C to G. These crystals differ in their characteristics and are not directly relevant to the present case.

9    The primary judge noted that claim 12 of the patent was of “central significance to the case” (at [71]) as a “number of other claims are dependent, directly or indirectly, on claim 12 and are relied on by [BMS and Otsuka] for their case on infringement. Those claims are claims 13, 14, 16, 30, 31, 35, 36, 43, 44, 45, 111, 112, 119, and 123” (at [72]). Claim 12 is in these terms:

Anhydrous Aripiprazole Crystals B wherein said crystals

have low hygroscopicity wherein said low hygroscopicity is a moisture content of 0.40% or less after placing said drug substance for 24 hours in a closed container maintained at a temperature of 60°C and a humidity level of 100%;

have a powder x-ray diffraction spectrum which is substantially the same as the following powder x-ray diffraction spectrum shown in Figure 5;

have particular infrared absorption bands at 2945, 2812, 1678, 1627, 1448, 1377, 1173, 960 and 779 cm-1 on the IR (KBr) spectrum;

exhibit an endothermic peak near about 141.5°C in thermogravimetric/differential thermal analysis (heating rate 5°C/min); and

exhibit an endothermic peak near about 140.7°C in differential scanning calorimetry (heating rate 5°C/min).

10    Subject to one qualification (dealt with below), the primary judge’s descriptions of relevant scientific concepts at [7] to [36], including crystalline compounds, polymorphism, and hydrates, as well as analytical methods including nuclear magnetic resonance (NMR) spectroscopy, power x-ray diffraction (XRPD), infrared (IR) spectroscopy, differential scanning calorimetry (DSC), thermogravimetric analysis (TGA) and differential thermal analysis (DTA), are not in dispute. Those descriptions and abbreviations are adopted in these reasons.

3.    APOTEX’S ARGUMENTS

3.1    Construction of the patent (grounds 1 to 4)

11    According to Apotex, the patent refers to a particular crystalline form, a polymorph. The patent claims the particular crystalline form, Crystals B. This is a compound in a particular crystalline form, not limited to any environment (a particular sample or batch) or to any process of manufacture. Hence, claim 12 refers to “Anhydrous Aripiprazole Crystals B wherein said crystals”, and not an idiosyncratic sample of said crystals, possess or exhibit the defining properties specified. This, it is said, accords with the fact that the definitions at pp 23-24 of the patent characterise the crystals by saying:

“Anhydrous Aripiprazole Crystals B” of the present invention as used herein have the physicochemical properties given in (6) - (12) below.

12    The patent describes numerous ways of making Crystals B but, as Apotex put it, none of the methods claimed is limited to any method having an impact on hygroscopicity and the patent makes no mention of surface properties or adsorbed water. Hygroscopicity is a property of a polymorph and what the patent refers to as Crystals B is a single unique polymorph. Apotex thus submitted:

The proper construction of the Patent is that it describes “an improved form of aripiprazole having reduced hygroscopicity”. That is the polymorph being Crystals B. There are numerous methods described and claimed – but not in suit. This improved form “has” the hygroscopicity of p24 lines 19-29 and claims 12 and 16. There is no suggestion that this is only possessed when it is made a certain way. ...

13    Apotex submitted that the primary judge accepted this construction is his amendment reasons at [17] where he said:

For present purposes I am satisfied on the evidence that a person skilled in organic chemistry in 2002 would have understood, on reading the specification as filed, that properties (7)–(11) are the essential physicochemical properties that define the crystalline form of Crystals B.

14    According to Apotex, the finding at [17] was plainly right as it accorded with the evidence and with the characterisation of anhydrous aripiprazole Crystals B in the specification. The primary judge, however, varied the finding in [17] of the amendment reasons by deleting the words “the crystalline form of” resulting in what Apotex described as a “significant change in the forensic landscape” and, more to the point, a “departure from the discourse of the patent”. In Apotex’s words:

… The patent is plainly about a new crystalline form, or polymorph. The result is that the primary Judge adopted a construction where “something happens that causes the crystals to have the low moisture content that is the characteristic of Crystals B as claimed in claim 12 of the patent”. That “something” was held to overcome the holding that “Crystal B and type 1 crystals have the same crystalline form”.

The “something” to which the primary Judge refers is independent of particle size. Indeed, the smaller particle size of claim 16 is a factor tending to increased hygroscopicity. The only possibility discernible from the primary Judge’s reasons is that the “something” refers to the fact that hygroscopicity is influenced “in subtle ways, by the surface properties of the polymorph in question”. See the surprising statement in [115] that “what that ‘something’ is, is neither here nor there”.

To the contrary, the answer to “what that ‘something’ is”, is highly significant. By his process of reasoning, the primary Judge departed entirely from the description in the specification. This says nothing about “surface properties”. It defines or “characterizes” Crystals B by essential “physiochemical properties” including, uniquely, by its XRPD signature and its hygroscopicity. These properties indeed define its “crystalline form”, as his Honour had originally held.

(Footnotes omitted, emphasis in original.)

15    It may be accepted that the primary judge varied the finding he made in [17] of the amendment reasons in the way Apotex has identified. Consideration of the primary judge’s reasons discloses, however, that the issue at the heart of Apotex’s complaint in this regard is the primary judge’s conclusions about the weight of the evidence rather than any alleged misconstruction of the patent.

16    The primary judge (at [89]) recognised that:

An important aspect of Apotex’s case is its contention that hygroscopicity is an inherent property of a given crystalline form of a given compound. Apotex contended that a given crystalline form of aripiprazole will have, inevitably, a given hygroscopicity so that the disclosure of a particular crystalline form of aripiprazole will also inevitably disclose certain of the physicochemical properties of that form, including its hygroscopicity. More specifically, Apotex contended that, if anhydrous aripiprazole crystals have an XRPD spectrum that is substantially the same as the XRPD spectrum shown in Figure 5 of the complete specification, those crystals will inevitably have low hygroscopicity, namely, a moisture content of 0.40% or less after being placed for 24 hours in a closed container maintained at a temperature of 60°C and a humidity level of 100%.

17    At [90] the primary judge also recognised that Apotex considered [17] of the amendment reasons to be consistent with these propositions. However, as he noted at [91] at the time he prepared the amendment reasons the evidence was far more limited than that now available. As the primary judge put it in [91]:

... had I had the benefit of the present evidence when dealing with the amendment application, I would have expressed myself differently when making my finding about what the person skilled in the art would have understood to be the physicochemical characteristics of Crystals B when reading the complete specification. That would not, however, have led me to reach any different conclusion on the fate of the amendment application.

18    If the primary judge had had the present evidence available he concluded at [119] that the finding at [17] of the amendment reasons:

... would have been better expressed by saying that, at the relevant time, the person skilled in the art would have understood, on reading the complete specification as filed, that properties (7) to (11) are the essential physicochemical properties that define Crystals B.

19    The evidence presently available led the primary judge to this conclusion because, as he explained:

(1)    “Professor Withers gave evidence that the hygroscopicity of a sample of crystals cannot be determined by the XRPD pattern of those crystals alone” (at [94]). He was not cross-examined.

(2)    Dr Rowe, on reading Professor Withers’ evidence, changed his opinion. Dr Rowe initially said that “if the XRPD analysis indicates that a compound is in a particular crystalline form, then the compound will have the physicochemical properties of that particular crystalline form” (at [92]). He subsequently accepted that XRPD data alone does not confirm the hygroscopicity of a sample but maintained that “if the hygroscopicity of a crystalline form identified by XRPD analysis is known, the “inherent hygroscopicity” of the sample will be the same”. This, however, was qualified by his statement that he agreed that “particle size can affect the amount of water a sample adsorbs, because the surface area of a particle can vary with particle size” (at [96]).

(3)    Professor Easton acknowledged that “the form of the material affects various of its properties, including its hygroscopicity” and “hygroscopicity is also determined by characteristics such as crystal size and surface area” (at [98]). Also, when a crystal structure takes up water, there may be a relationship between adsorption and absorption: “when a material converts from an anhydrous form to a hydrate, it generally goes through an adsorption phase first, which will be affected by the smoothness of the crystal surface, including whether there are fractures in it. He said that there has to be a localised restructuring to convert the anhydrous form to the hydrous form, ‘which basically involves one [disassembling] and then another one re-assembling’” (at [99]).

(4)    Professor Prestidge said that “[t]here are subtleties in this field, because you have a bulk crystal and the surface chemistry can be subtly different. So the techniques we use here to characterise the polymorphic form, as in the infrared spectroscopy and the XRPD, they measure bulk properties. Moisture uptake can be controlled by a surface phenomenon which is a little bit more subtle in some ways” (at [101]).

20    The primary judge concluded that this evidence shows that “the hygroscopicity of a crystalline compound is not just a function of its crystalline form, but may be influenced by particle size and, in subtle ways, by the surface properties of the polymorph in question”. Further, that although “Professor Prestidge’s evidence suggests that, as a general statement, water uptake by adsorption is likely to be significantly less than water uptake by absorption, when the particle size is in the tens of microns, such as the crystals claimed in claim 16”, the primary judge did “not think that the possible influence of these factors can simply be ignored” (at [106]).

21    The disclosure in the specification that “type 1 crystals do not have the same hygroscopicity as Crystals B under certain conditions unless the type 1 crystals undergo heating at specific temperatures” caused the primary judge view to reject Apotex’s fundamental contention that “a given crystalline form of aripiprazole will have, inevitably, a given hygroscopicity” (at [109]). On this basis, as the primary said, the specification teaches that “a particular heating step is … required as part of the process for obtaining Crystals B” (at [111]). The primary judge thus rejected Apotex’s characterisation of the invention disclosed as “preventing the conversion of type 1 crystals to monohydrate by milling hydrous crystals to produce Hydrate A and then drying them”. The primary judge described this characterisation as presenting “an incomplete picture of what is disclosed in the complete specification, [which] if not treated with care, serve to distract attention from the full description of the invention and the processes by which Crystals B can be obtained” (at [112]).

22    Accordingly, the primary judge’s acceptance of the proposition that Crystals B and type 1 crystals had the same crystalline form (at [109], [115], [201], [289] and [308]) did not mean, as Apotex contended, that disclosure of type 1 crystals involved disclosure of the invention. Nor did it matter that the “complete specification ‘makes no mention whatsoever of surface properties or adsorbed water’”. The primary judge put it this way at [115]:

If, as Apotex contended, and as I accept, Crystals B and type 1 crystals have the same crystalline form, then the results of these experiments show that by suitable heating, as exemplified in the complete specification, something happens that causes the crystals to have the low moisture content that is characteristic of Crystals B as claimed in claim 12 of the patent. This conclusion is supported by the work disclosed in Otsuka’s internal memoranda and experimental reports to which I have referred. What that “something” is, is neither here nor there. An inventor does not need to know why his or her invention is afforded utility in order for that invention to be patentable. Moreover, it does not matter that the invention can be achieved by various, indeed by many, means. All that a patentee in Otsuka’s position is required to do is to describe the invention fully, including by giving the best method known to the patentee of performing the invention. Apotex has not challenged the validity of the patent on the basis that Otsuka has failed in that requirement.

23    The primary judge also rejected a distinction drawn by Apotex between “the properties of a given crystalline compound, specifically, aripiprazole as Crystals B, and the properties of samples of that compound”, the end point of the distinction being the proposition that the “specification refers to and claims a particular crystalline form of aripiprazole – Crystals B” and not samples of that compound (at [116], emphasis in original). The primary judge responded to this submission at [117] and [118] as follows:

I do not accept that reasoning. In my view, the distinction which Apotex sought to draw is not meaningful in the present context. The complete specification is a practical document giving practical information about the manufacture and use of aripiprazole as a pharmaceutical product. It necessarily refers to the problem of hygroscopicity associated with conventional anhydrous aripiprazole crystals that have been prepared on an industrial scale for pharmaceutical processing and formulation. The complete specification’s description of the invention by reference to examples necessarily involves a consideration of, and comparison between, samples of anhydrous aripiprazole crystals.

More importantly, I do not accept that the complete specification merely refers to and claims a particular crystalline form, or crystalline forms, of aripiprazole. It describes and claims crystalline aripiprazole having certain characteristics. When the complete specification refers to the form of aripiprazole crystals, it is not referring only to their crystalline form but more generally to their form as crystals defined by cumulative characteristics. In the case of Crystals B, one of these characteristics is that the crystals have an XRPD spectrum that is substantially the same as the spectrum disclosed in Figure 5; that is, they have a particular crystalline form. Another characteristic is that, in that crystalline form, the crystals must have low hygroscopicity in a specific sense: their moisture content is 0.40% or less after being placed for 24 hours in a closed container maintained at a temperature of 60°C and a humidity level of 100%.

24    The key to this reasoning is that the patent, properly construed, is not claiming as the invention “a particular crystalline form of aripiprazole – Crystals B” (Apotex’s characterisation) but is claiming “crystalline aripiprazole having certain characteristics” including low hygroscopicity in the specific sense identified. It is this reasoning which explains the primary judge’s observation that, with the evidence now available, he would vary the terms of [17] of the amendment reasons to say “the person skilled in the art would have understood, on reading the complete specification as filed, that properties (7) to (11) are the essential physicochemical properties that define Crystals B” rather than “a person skilled in organic chemistry in 2002 would have understood, on reading the specification as filed, that properties (7)–(11) are the essential physicochemical properties that define the crystalline form of Crystals B”.

25    The real issue, accordingly, is whether the claimed invention is “a particular crystalline form of aripiprazole – Crystals B” (Apotex’s case) or “crystalline aripiprazole having certain characteristics” including low hygroscopicity in the specific sense identified (the primary judge’s conclusion). That question cannot be answered by rhetorical appeals. It must be answered by reference to the terms of the complete specification. It does not matter that the primary judge said one thing in the amendment reasons and another in the principal reasons. He did so because the evidence had changed. It does not matter that the primary judge accepted that Crystals B and type 1 crystals have the same crystalline form. The invention, as characterised by the primary judge, is not the crystalline form of aripiprazole – Crystals B but “crystalline aripiprazole having certain characteristics”. What matters is whether, as Apotex contends, this characterisation meant the primary judge “departed entirely from the description in the specification”.

26    This proposition should not be accepted. The terms of the complete specification support the primary judge’s characterisation of the invention. The invention relates to a form of aripiprazole having reduced hygroscopicity. The form is not just a crystalline substance. Crystals B is a crystalline substance having certain characteristics which result from suitable heating. So much is clear from the summary of the invention quoted at [49] of the primary judge’s reasons, the characterisation of Crystals B at [54], and the processes by which Crystals B can be manufactured at [55]. As BMS and Otsuka submitted, the patent does not teach an inherent hygroscopicity of a crystalline form of aripiprazole; it teaches to the contrary. Claim 12 does not support any contrary characterisation. It claims as Crystals B anhydrous aripiprazole crystals having the specified characteristics which, the specification demonstrates, will result from the preparation processes described including the suitable heating. The fact that the claims are not limited to Crystals B where “something happens” is immaterial. What the specification demonstrates is that something does happen when suitable heating is involved – namely, the creation of Crystals B being anhydrous aripiprazole crystals having the specified characteristics.

27    The primary judge’s acceptance at [115] that knowing what happened was unnecessary is orthodox. Apotex accepts this is so. As such, it is not to the point that the patent does not mention surface properties or adsorbed water as explaining the invention. Equally, no significance can be attached to the fact that when identifying the meaning of a polymorph the primary judge omitted that part which said that polymorphic forms may be hygroscopic (meaning they absorb moisture from the atmosphere). The weight of the evidence before the primary judge was that hygroscopicity is determined not just by the crystalline form but also by characteristics such as crystal size and surface area and subtle surface phenomena.

28    Apotex characterised the primary judge’s conclusions about the weight of the evidence as “magical thinking” coming perilously close to a characterisation of the invention as the product of a process contrary to the observations in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] RPC 9 at [87]-[101]. According to Apotex, the vague and tentative opinions expressed by the experts about surface properties and the like leading to “something” happening as a result of drying were insufficient to displace the clear evidence, including that of Professor Easton on the amendment application, that hygroscopicity is an inherent property of a particular crystalline form. Apotex also submitted that the primary judge’s treatment of Reference Example 1 in the specification (for example, at [113]) was wrong as there was no data available about the amount of residual ethanol in the example which would itself affect hygroscopicity and it was not apparent from the specification that the product was type 1 crystals. Accordingly, the finding that there was a difference between type 1 crystals and Crystals B at [115] could not be sustained. Apotex also said the primary judge was wrong in [114] and [115] of his reasons to use Otsuka’s internal documents to shore up this conclusion.

29    Insofar as the Otsuka internal documents are concerned it is apparent from [114] and [115] of the primary judge’s reasons that Apotex in fact raised those documents as supporting its case, said to relate to the construction of the patent but in fact constituting its fundamental factual assertion that hygroscopicity is a property of a crystalline form and that surface properties and the like are immaterial. The primary judge dealt with those documents principally in order to reject Apotex’s submission and otherwise for the proper purpose of assessing the facts, specifically relating to the impact of heating on hygroscopicity. Despite the alleged error by the primary judge in improperly using the Otsuka internal documents as an aid to construction, Apotex again effectively invited this Court to undertake the same exercise. The invitation should be declined, at least to the extent that the issue in the appeal is said to be one of construction.

30    Otherwise, it is apparent that Apotex’s complaints do not concern the construction of the claims of the patent. They are complaints about factual findings based on the primary judge’s assessment of the weight of the evidence, in particular the finding at [109] rejecting the contention that a given crystalline form of aripiprazole will have an inherent hygroscopicity. However, Apotex’s challenge to the primary judge’s factual findings was based upon an unduly selective analysis of the evidence.

31    The primary judge was correct to weigh the evidence and reach the conclusions he did. Whatever the state of the evidence at the time of the amendment application, the evidence before the primary judge included the opinions of Professor Withers (at [94]), the revised opinions of Dr Rowe (at [96]), the further opinions of Professor Easton (at [97]-[99]) and the opinions of Professor Prestidge (at [100]-[105]). The primary judge was right to conclude that this evidence could not “simply be ignored” (at [106]). Apotex’s fundamental contention about hygroscopicity was disclosed by this evidence to be an inaccurate over-simplification of a complex, not easily explained, and perhaps not that well understood, kinetic process.

32    Insofar as Reference Example 1 is concerned, three points can be made. First, that evidence was admitted as evidence of an experiment (Bristol-Myers Squibb Company v Apotex Pty Ltd (No 4) [2012] FCA 1433). Second, Apotex always contended that Otsuka had used type 1 since January 1996. Apotex’s contention was not that Reference Example 1 did not involve type 1. It was only that type 1 and Crystals B were the same including in terms of hygroscopicity. On this basis Apotex’s criticism of the primary judge having erred by equating Reference Example 1 and type 1 is unfounded. Third, Apotex’s possible residual ethanol argument is mere speculation. Ethanol, an impurity, is not mentioned in the specification. Apotex’s case on the 141 application (see below at [35]) was that a person skilled in the art would remove ethanol as a matter of routine. Otsuka’s internal documents show it was aware of the need to remove ethanol and to test to ensure that impurity did not remain. Reference Example 1 was dried at 80°C for 40 hours, well within the ranges the experts said would remove ethanol which has a boiling point of 78°C.

33    Insofar as the product of a process submission went, it is apparent that this was founded only upon the primary judge’s ultimate finding rejecting Apotex’s inherent hygroscopicity contention, said to constitute “magical thinking” because the explanation by reference to surface properties and the like was somewhat vague and, according to Apotex, “dwarfed” by the inherent hygroscopic properties of the crystalline form. Again, these submissions cannot be accepted given the evidence which was before the primary judge. No error in principle, reasoning or outcome has been demonstrated.

34    For these reasons appeal grounds 1 to 4 should not be accepted.

3.2    The prior art

35    The primary judge described relevant prior art at [120] to [138]. The prior art included three documents publicly available before the priority date of 25 September 2001, identified at [120] as:

•    European Patent Application No. EP367141 A2 entitled “Carbostyril Derivatives” in the name of Otsuka (the 141 application).

•    Aoki S, Bando T and Kobayashi N, “Study on crystal transformation of ARIPIPRAZOL” Proceedings of the Fourth Japanese-Korean Symposium on Separation Technology, 6-8 October 1996 (the Aoki article).

•    Aoki S, “Poster used for a presentation at the Fourth Japan-Korea Symposium on Separation Technology 1996” (the Aoki poster).

36    Example 1 in the 141 application, lines 5 to 15, are as follows:

A suspension of 47 g of 7-(4-bromobutoxy)-3,4-dihydrocarbostyril, 35 g of sodium iodide with 600 ml of acetonitrile was refluxed for 30 minutes. To this suspension was added 40 g of 1-(2,3-dichlorophenyl)-piperazine and 33 ml of triethylamine and the whole mixture was further refluxed for 3 hours. After the solvent was removed by evaporation, the residue thus obtained was dissolved in chloroform, washed with water then dried with anhydrous magnesium sulfate. The solvent was removed by evaporation, and the residue thus [obtained] was recrystallized from ethanol twice, to yield 57.1 g of 7-{4-[4-(2,3-dichlorophenyl)-1-piperazinyl]butoxy}-3,4-dihydrocarbostyril.

Colorless flake crystals

Melting point: 139.0 -139.5° C.

37    As the primary judge explained at [125], other parts of the 141 application provided context relevant to the question whether “they would have influenced the person skilled in the art, beyond the way in which lines 5 to 15 are expressed, to attempt to remove ethanol if found in the crystals after carrying out those particular steps” which is important to the resolution of Apotex’s contention that the 141 application anticipates the invention claimed in claim 12 of the patent. The primary judge identified the other disclosures as follows at [126]:

•    The further instructions in Example 1 show that ethanol was used with the crystals obtained from the process in lines 5 to 15 to prepare each of the four salt forms of aripiprazole.

•    Pharmaceutical testing was carried out on mice using certain of the compounds produced from carrying out the examples. The test compound deriving from Example 1 was administered in its free base (that is, non-salt) form. This indicates that the aripiprazole was not a solvate (specifically, not an ethanolate). In other words, any ethanol remaining the crystals after synthesis was removed.

•    The 141 application does not specify the form in which the test compound obtained from following the directions in lines 5 to 15 of Example 1 was administered. However, Professor Black accepted that a solution would have been used. The 141 application discloses that ethanol is one of the substances that can be used as a binder or as a carrier in various pharmaceutical preparations containing aripiprazole, including in solutions.

•    A pharmaceutical composition for a tablet formulation is disclosed containing aripiprazole (5 mg) in its free base form, combined with starch (132 mg), magnesium stearate (18 mg), and lactose (45 mg). The fact that 5 mg of aripiprazole is specified indicates that aripiprazole is not present in the exemplified formulation as a solvate (specifically, as an ethanolate).

38    The Aoki article “reports on a study that was conducted to examine the effect of grinding on the physicochemical properties of crystalline aripiprazole. The investigation was carried out using XRPD, water content measurement, and DSC” (at [127]). The primary judge said (at [129]):

The Aoki article discloses three different crystalline forms of aripiprazole, which it designates as type 1, type 2, and type 3, respectively. Type 1 crystals are disclosed as anhydrous aripiprazole that has been recrystallised from ethanol solution. The melting point of these crystals is said to be 140°C. The Aoki article discloses that type 1 crystals are converted to type 2 crystals by heating type 1 crystals at 130°C to 140°C for 15 hours. The melting point of the type 2 crystals is said to be 150°C. When these polymorphs are recrystallised from alcoholic solvent in a solution containing water up to 20°C (v/v), the crystals are converted to hydrous crystals (type 3 crystals). The type 3 crystals are converted to type 1 crystals by heating them at 80°C. When heated at this temperature, the resulting type 1 crystals are stable and do not convert to type 2 crystals.

39    The article includes the XRPD patterns for each type of crystal and the effect of grinding which changes the melting point of type 1 crystals and opines that “Type 1 is probably converted to noncrystalline state by grinding” (at [130] to [134]).

40    The Aoki poster “discloses, among other things, the XRPD pattern and DSC measurement of type 1 crystals prepared by dissolving aripiprazole in ethanol under reflux and then cooling the solution to about 5°C”, the primary judge noting that “the XRPD pattern is similar to that shown in Figure 5 of the complete specification and that the DSC thermogram has an endothermic peak at 140°C” (at [138]).

3.3    Apotex’s case of lack of novelty (grounds 5 to 9)

3.3.1    The 141 application

41    Apotex contended that lines 5 to 15 of Example 1 of the 141 application contain clear directions to do or make something that would infringe claim 12 of the patent, if carried out after the grant of the patent. Apotex sought to prove this contention by carrying out an experiment to reproduce that part of Example 1. BMS and Otsuka arranged for another experiment to prove the contrary proposition. The primary judge described the Apotex experiment as the McGeary protocol and experiment (the experiment having been carried out by Associate Professor McGeary pursuant to a protocol he prepared) and the other experiment as the White protocol and experiment (the experiment having been carried out by Associate Professor White pursuant to a protocol he prepared). The primary judge described each protocol and experiment and the related evidence at [145] to [201] and [202] to [243] respectively.

42    The primary judge found that “the white crystals obtained by Associate Professor McGeary as a result of his experiment were Crystals B” (at [201]). He found that “the product obtained by Associate Professor White as a result of his experiment was not Crystals B” (at [243]). At [244] to [279] the primary judge explained why the evidence did not lead him to the conclusion that the 141 application anticipated the invention claimed in the patent. In so doing the primary judge rejected Apotex’s submissions, first, that “it is not open to the applicants to contend that a reproduction of the directions in lines 5 to 15 of Example 1 produced anything other than anhydrous aripiprazole crystals free of ethanol” and, second, that “the 141 application discloses the preparation of anhydrous crystals of aripiprazole from which the person skilled in the art would inevitably remove residual ethanol because aripiprazole in its free base form is disclosed as having been used for testing and for the preparation of a pharmaceutical composition” (at [244]).

43    The primary judge reasoned as follows:

(1)    As a general matter, “[t]he issue is whether the directions of lines 5 to 15 of Example 1 are an anticipatory disclosure of the invention as claimed. The resolution of that issue is not advanced by removing lines 5 to 15 of Example 1 from the context of the 141 application and thereafter viewing them in the context of the complete specification of the patent” (at [246]).

(2)    As to Apotex’s second submission, “[t]he issue in the present case is not how given directions for removing ethanol should be carried out but whether, in carrying out the directions in lines 5 to 15 of Example 1 before the priority date, the person skilled in the art would have proceeded to remove ethanol from the resulting product, either as a matter of course or because of some teaching, recommendation or suggestion in the 141 application: Bristol-Myers Squibb Company v F H Faulding & Co Limited (2000) 97 FCR 524 at [67]” (at [251]).

(3)    While satisfied on the evidence that “when carrying out the directions in lines 5 to 15 of Example 1 of the 141 application, the person skilled in the art would have sought to dry the product of the second recrystallisation in an endeavour to obtain the colourless flake crystals”, there were significant differences between the drying proposals of Associate Professors McGeary and White (at [252]).

(4)    The evidence disclosed that “by following the directions in lines 5 to 15 of Example 1, and drying the crystals to constant weight, which the person skilled in the art would, at least, do, the resultant product is crystals of aripiprazole containing ethanol, most likely as a hemiethanolate” (at [253]). Both Associate Professors McGeary and White obtained aripiprazole crystals as a hemiethanolate when they dried their crystals to constant weight. The difference was Associate Professor White stopped at that point whereas Associate Professor McGeary carried out other additional steps. Apotex correctly identified to the primary judge that, as a result, the real issue was:

... whether, in carrying out the directions of lines 5 to 15 of Example 1 of the 141 application before 25 September 2001, the person skilled in the art would have effectively stopped at step 24 of the White protocol, or gone further to seek to remove ethanol as Associate Professor McGeary sought to do by carrying out step 4.9 of his protocol.

Step 4.9 of the McGeary protocol was as follows (at [148]):

If NMR analysis indicates that traces of solvent remain further drying steps will be undertaken to remove the residual solvent. Further drying will be undertaken in a vacuum desiccator at room temperature. Samples will be taken at appropriate intervals and analysed by NMR for the presence of solvent. The solvent can be so firmly held that it cannot be completely removed in a vacuum desiccator at room temperature. If NMR indicates that traces of solvent remain, I would conclude that some ethanol is bound within the crystals (as opposed to being retained on the surface of the crystals). In this circumstance further drying will be undertaken in an oven at between 80°C and 100°C for an initial overnight period (or equivalent). Samples will be taken at appropriate intervals and analysed by NMR for the presence of solvent.

(5)    The 141 application speaks of the use of aripiprazole pharmacologically in its free base form and there is a “plain disclosure that at least one intended purpose of carrying out the directions of lines 5 to 15 of Example 1 is to obtain anhydrous aripiprazole crystals in their free base form” (at [256]). As such, “the person skilled in the art might well be motivated to carry out the directions in lines 5 to 15 of Example 1 with that end in view and, if so, would take steps, as a matter of course, to remove ethanol from the crystal lattice” and the experiment of Associate Professor White did not go far enough (at [257]).

(6)    The 141 application also “discloses that, by following the directions of lines 5 to 15 of Example 1, the person skilled in the art would obtain aripiprazole which he or she can choose to use in its free base form or in one of the disclosed salt forms” and “makes clear that the path to obtaining both forms includes carrying out the directions in lines 5 to 15 of Example 1” (at [258]). The 141 application, however, is “indifferent” to the choice the person skilled in the art might make to obtain the free base form.

(7)    The evidence showed that to obtain the free base form:

(a)    Associate Professor McGeary proposed that further drying would be undertaken in an oven at between 80°C and 100°C for an initial overnight period (or equivalent) (at [260], [267] and [268]).

(b)    Professor Easton was critical of this and argued that “there was simply no justification for Associate Professor McGeary drying his crystals at a temperature significantly above the boiling point of ethanol”, which the evidence shows is about 78°C (at [265]).

(c)    Professor Black considered Associate Professor McGeary’s approach “a standard approach to removing solvent commonly used in September 2001” (at [269]). He said also, however, that there were other reasonable approaches. If he had been carrying out the White experiment he would have “left the material to dry in the vacuum oven overnight” at about 40°C or considered “increasing the temperature to 50°C or 60°C” (at [271]).

(d)    Dr Rowe said that common drying methods would have been used to remove ethanol being “tray drying (ie, spreading the compound on a tray in a conventional oven) or vacuum drying (drying the compound in a vacuum oven)” and the temperature would be determined empirically although “common drying temperatures are around 50°C in a vacuum oven to remove surface adsorbed water or solvent, 80-90°C in a vacuum oven to remove a solvating compound or 80-85°C when tray drying in an oven” (at [273]).

(8)    Accordingly, the “evidence of the expert witnesses reveals a broad range of drying options by which, in their estimation, ethanol could be removed from the crystals obtained from following the directions in lines 5 to 15 of Example 1” (at [274]).

(9)    While the “McGeary experiment establishes that, by following the directions in lines 5 to 15 of Example 1, crystals having the essential characteristics of Crystals B and, in particular, the characteristic low hygroscopicity of Crystals B can be obtained if further drying is carried out for 24 hours in a vacuum oven at between 92°C and 94°C”, there is “no evidence that shows that, by undertaking a different drying step selected from the range of options that would have been available to the person skilled in the art before 25 September 2001, crystals having that low hygroscopicity could be obtained or, if undertaken before the priority date, would have been obtained” (at [275]). Some evidence, in fact, suggests to the contrary. Reference Example 1 in the complete specification “demonstrates that anhydrous aripiprazole crystals with a melting point of 140°C (matching the melting point of the anhydrous aripiprazole crystals obtained from the method in the Japanese unexamined patent publication corresponding to lines 5 to 15 of Example 1) exhibited unacceptable hygroscopicity of 3.28% after being dried for 40 hours at 80°C” (at [276]).

44    The primary judge thus concluded in these terms at [277]:

In these circumstances, I am not persuaded that, by following the directions of lines 5 to 15 of Example 1 of the 141 application prior to 25 September 2001, the person skilled in the art would inevitably have obtained Crystals B when seeking to obtain anhydrous aripiprazole crystals in their free base form. In the course of following those directions, the person skilled in the art might have obtained Crystals B serendipitously, but it is equally possible that he or she would have obtained conventional anhydrous aripiprazole crystals with unacceptably high hygroscopicity. The 141 application does not teach, recommend or suggest, or otherwise disclose, any particular drying step. Still less is there any disclosure that (a) aripiprazole crystals can exhibit unacceptably high hygroscopicity, or (b) suitable heating can or should be undertaken to avoid obtaining crystals with unacceptably high hygroscopicity. In the words of General Tire [The General Tire & Rubber Company v. The Firestone Tyre and Rubber Company Limited and Others [1972] RPC 457 at 485-486], neither the directions in lines 5 to 15 of Example 1, nor more generally the 141 application, contain clear and unmistakeable directions to do what Otsuka claims to have invented.

45    The 141 application, accordingly, did not anticipate the claims of the patent.

46    Apotex submitted that the primary judge erred in principle. Citing Evans Medical Ltd’s Patent [1998] RPC 517 at 527, Apotex said:

The law of novelty does not … require the Court to “subject the repetition of prior art examples to a tyranny of precision which has little to do with the issue before the court or the the science to which the prior art relates”. What must be proved is “on the balance of probabilities, what would be the result of the carrying out the example in the prior experiment”.

47    Apotex stressed that Associate Professor McGeary carried out the process he said he would have done in respect of Example 1 of the 141 patent before the priority date, and did so without knowledge of the patent, the Aoki article or Aoki poster. In so doing he created Crystals B. Further, the primary judge rejected Associate Professor White’s approach at [257] which did not involve removing ethanol so as to obtain anhydrous aripiprazole crystals in their free base form. Apotex said that:

At that point, the primary judge should have held that Apotex proved its case.

48    According to Apotex, the primary judge’s subsequent analysis, described above, was wrong as the issue of whether the invention as claimed was novel was to be proved on the balance of probabilities. Apotex said:

This must be assessed in the context of the forensic contest at the trial. This context included a successful repetition of Example 1 of the 141 patent, the answer to which was evidence as to the experiment of Professor White. The primary judge set aside the White experiment … There was no evidence, apart from the failed White experiment, that another result was likely. The possibility depends on the erroneous approach … that hygroscopicity is not a physicochemical property of a given crystalline form. But the “subtle influence of surface properties” could not make a sufficient difference”.

49    Apotex submitted that, to the extent the primary judge relied on assertions in the patent as to different results achieved, caution was required. These results and mere speculation by experts about other drying methods to remove ethanol, said Apotex, “should not have been allowed to displace, on the balance of probabilities, the successful experimental proof adduced by Apotex”. Further, prior art may disclose more than one thing. If one of these things has as its inevitable result the production of something within the claims of the patent in suit, that is enough. Apotex cannot be required to negative every conceivable possibility to make good its case.

50    Apart from the criticisms of the use the primary judge made of the examples in the patent (considered and rejected above), Apotex’s submissions tend to assume that the only relevant evidence was the experiments of Associate Professors McGeary and White so that, having rejected the latter as not going far enough, the primary judge was bound to accept the former as sufficient proof on the balance of probabilities. This is not so. As the primary judge’s reasoning discloses there was evidence, including evidence from the experts on which Apotex relied, of a broad range of drying options to remove ethanol (the step Associate Professor White had not undertaken). This expert evidence was based on opinion rather than experimental proof, but it was opinion about matters of routine and commonly held opinion at that. As such, it was hardly mere speculation. The weight of the evidence about a range of drying options was overwhelming. As the primary judge said, the 141 application did not dictate or teach any drying option. Associate Professor McGeary’s drying option, accordingly, was but one of many different approaches that a person skilled in the art might have undertaken had they wished to create the free base form of aripiprazole in accordance with Example 1 of the 141 application. While that option resulted in Crystals B, there was no evidence that any of the other drying options would have done so and an example in the patent suggested to the contrary. This is not to surrender to “a tyranny of precision” (Evans at 527). Nor does it involve mere speculation.

51    The plea not to have to negative every possible option is meaningless in the present context. Apotex’s own evidence included a range of drying options. Apotex cannot make this plea in circumstances where it failed to discharge the onus of proof in respect of options squarely raised by the expert evidence. Apotex bore the onus of proving on the balance of probabilities that carrying out the directions in Example 1 of the 141 application will inevitably result in infringement of the claims of the patent. The evidence showed that one of a large number of different ways of carrying out the directions in Example 1 of the 141 application will result in Crystals B. In other words, the directions in Example 1 of the 141 application were proved to be capable of being carried out in a manner which would infringe the patent but the evidence also both established the existence of many other methods and did not establish that this method was more likely than not to be carried out in preference to the other available methods.

52    The primary judge was thus correct to hold that Apotex had not proved anticipation, consistent with the reasoning in General Tire.

53    It follows that the challenge to the primary judge’s reasoning in respect of the 141 application cannot be accepted.

3.3.2    The Aoki article and poster

54    The primary judge accepted that the Aoki article and poster should be treated as a single source of information for the purposes of s 7(1) of the Patents Act 1990 (Cth) (the 1990 Act) (at [281]).

55    The primary judge explained at [282] that:

The Aoki article discloses the existence of type 1, type 2, and type 3 crystals of aripiprazole. Type 1 and type 2 crystals are anhydrous. Type 3 crystals are hydrous. An XRPD pattern for each crystal type is disclosed in Figure 3 of the Aoki article. The XRPD pattern in Figure 3a is for type 1 crystals. Figure 3a contains only the shape of each pattern.

56    The primary judge noted the evidence.

57    In Dr Rowe’s opinion, based on the XRPD pattern disclosed in Figure 3a of the Aoki article for type 1 crystals being the same shape as the XRPD pattern for Crystals B given in Figure 5 of the complete specification of the patent and the two having the same endothermic peaks the type 1 crystals and Crystals B are “the same crystalline form of aripiprazole” (at [283]).

58    Professor Withers said that “in the absence of a readable °2θ scale or, at the very least, an indicator of where the 10° and 20° °2θ positions are, as well as knowledge of the x-ray wavelength used, it was impossible to say whether the pattern in Figure 3a of the Aoki article and the pattern in Figure 5 of the complete specification are substantially the same” (at [284]).

59    The primary judge preferred Professor Withers’ evidence which he described as “based on greater expertise and more detailed reasoning”, Dr Rowe having apparently assumed that “a correspondence in shape between XRPD patterns necessarily includes a correspondence in value for the peaks shown in the patterns”. Accordingly, the primary judge said that, “[f]or this reason alone, the Aoki article cannot anticipate the invention claimed in claim 12 of the patent” (at [286]).

60    The primary judge was satisfied that the Aoki poster (which provides DSC data and an XRPD pattern for type 1 crystals and, while there is no °2θ scale shown for the XRPD pattern, labels the five strongest peaks with their °2θ positions) discloses type 1 crystals that have the same crystalline form as Crystals B claimed in claim 12 of the patent (at [287]-[289]). However, consistent with his earlier reasoning he rejected Apotex’s argument that “a given crystalline form of aripiprazole will have, inevitably, a given hygroscopicity so that the disclosure of a particular crystalline form of aripiprazole will also inevitably disclose the compound’s hygroscopicity in that form” (at [290]). In particular, the primary judge said that while the Aoki article and poster, in combination, “disclose type 1 crystals having the same crystalline form as Crystals B, the disclosures in those documents, nevertheless, do not anticipate claim 12 of the patent because they do not clearly disclose aripiprazole having the low hygroscopicity that is a characteristic of Crystals B”. This is because (at [293]):

Whether a particular crystalline form of aripiprazole will possess the low hygroscopicity that is a characteristic of Crystals B will depend on whether the crystals have undergone certain processing steps, including suitable heating. The Aoki article and the Aoki poster are silent on whether the type 1 crystals there disclosed have undergone such heating. Moreover, as with the 141 application, the Aoki article and the Aoki poster do not disclose that (a) aripiprazole crystals can exhibit unacceptably high hygroscopicity, or (b) suitable heating should be undertaken to avoid obtaining crystals with unacceptably high hygroscopicity.

61    The primary judge also rejected Apotex’s additional argument that the “Aoki article and the Aoki poster disclose not only the crystalline form of type 1 crystals but also that these crystals are obtained by recrystallisation from ethanol” and, consistent with the McGeary experiment, “if that step was undertaken, the person skilled in the art would obtain crystals having the characteristics of Crystals B as claimed in claim 12 of the patent, just as Associate Professor McGeary had obtained such crystals when carrying out his experiment” (at [294]). The argument failed on the same basis as the McGeary experiment itself did not persuade the primary judge that the 141 application anticipated the claims of the patent. It failed also because, insofar as claim 16 of the patent is concerned, the Aoki article and the Aoki poster do not disclose the mean particle size of type 1 crystals which is not an inherent property of aripiprazole in a given crystalline form (at [296]).

62    Apotex’s arguments on appeal repeat the fundamental proposition that what is disclosed is the same polymorph so that it must follow that the same defining or inherent characteristics, including hygroscopicity, were also disclosed. The argument does not advance beyond that put and rejected above.

63    Insofar as claim 16, which contains the additional integer of particle size, the result follows that for claim 12 and thus it is unnecessary to say more. However, there was a dispute between the parties that should be noted. Apotex submitted that literal disclosure of the additional integer in the prior art is not essential if the person skilled in the art would “add the missing information as a matter of course and without the application of inventive ingenuity or undue experimentation” (Apotex Pty Ltd v Sanofi-Aventis (2009) 82 IPR 416; [2009] FCAFC 134 at [103]-[110] and [123]-[132] citing H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151; [2009] FCAFC 70 [181] and Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 at 531). Because the Aoki article and poster disclose grinding to reduce particle size the skilled reader, submitted Apotex, would grind the crystals to a conventional size as referred to in claim 16.

64    This argument was not put to the primary judge in these terms. The primary judge rejected Apotex’s submissions as put on the basis that the Aoki article and poster say nothing about particle size.

65    BMS and Otsuka submitted that Sanofi and Lundbeck do not purport to expand the principles in Nicaro and should not be read as so doing. Further, there is no case in which a court has read into a piece of prior art a missing essential integer so as to find anticipation. To do so would be inconsistent with Nicaro and ICI Chemicals & Polymers Ltd v The Lubrizol Corporation Inc (2000) 106 FCR 214; [2000] FCA 1349 at [43] and [51].

66    Given the nature of the issue it is not appropriate to consider it further in circumstances where it is unnecessary to do so. Having failed in its case of anticipation on claim 12, Apotex cannot succeed in respect of anticipation of claim 16 by the Aoki article and poster.

67    It follows that appeal grounds 5 to 9 should not be accepted.

3.4    Inventive step (grounds 12 and 13)

68    The primary judge rejected Apotex’s contention of the lack of any inventive step.

69    Sections 7(2) and (3) of the 1990 Act, as they existed at the relevant time, provided that:

7    Novelty and inventive step

...

Inventive Step

(2)    For the purposes of this Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information mentioned in subsection (3).

(3)    The information for the purposes of subsection (2) is:

(a)    any single piece of prior art information; or

(b)    a combination of any 2 or more pieces of prior art information;

being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded as relevant and, in the case of information mentioned in paragraph (b), combined as mentioned in that paragraph.

70    The primary judge accepted that the evidence did not establish that either aripiprazole or the hygroscopicity problem associated with conventional anhydrous aripiprazole crystals were common general knowledge (at [332]). However, his Honour was prepared to assume, in the context of the problem-solution approach to obviousness propounded by Apotex, and in order to evaluate the cogency of Apotex’s obviousness case, that these matters were part of the “starting point” which might be taken as given when assessing obviousness. (The Full Court’s judgment in AstraZenenca AB v Apotex Pty Ltd [2014] FCAFC 99 was not handed down until after the primary judge delivered his judgment.) His Honour doubted whether the 141 application itself could be taken to form part of the starting point, but went on to find that, as at the priority date, the person skilled in the art would reasonably be expected to have ascertained the existence of the 141 application (at [334]), understood it, and regarded it as relevant to aripiprazole (at [337]). Nevertheless, the primary judge reasoned that Apotex’s obviousness case could not succeed. As the primary judge put it at [339]:

Apotex’s submission proceeds on the assumption that the person skilled in the art, on being armed with the 141 application, would be motivated to “remove” ethanol. I have accepted that the person skilled in the art might be motivated to obtain anhydrous aripiprazole crystals in their free base form: see [256] to [257] above. But this would not be to address a problem of significant hygroscopicity. Perhaps more importantly, Apotex’s submission proceeds on the basis that the removal of ethanol to obtain anhydrous aripiprazole crystals in their free base form is equivalent to achieving anhydrous aripiprazole crystals having the characteristic low hygroscopicity of Crystals B. I do not accept that to be the case. Once again, Apotex’s case proceeds on its central contention, which I have rejected, that a given crystalline form of aripiprazole will have, inevitably, a given hygroscopicity. Moreover, as I have found, I am not persuaded that, by following the directions of lines 5 to 15 of Example 1 of the 141 application prior to 25 September 2001, the person skilled in the art would inevitably have obtained Crystals B when seeking to obtain anhydrous aripiprazole crystals in their free base form: see [277] above. In my view, therefore, the 141 application does not advance Apotex’s case on lack of inventive step in any material way.

71    Further, the primary judge said at [340] the question of lack of inventive step asks:

... whether, before 25 September 2001, the person skilled in the art would be directly led as a matter of course to take the steps that result in Crystals B with their characteristic low hygroscopicity, in the expectation that those steps might well produce those crystals: Aktiebolaget Hässle and Another v Alphapharm Pty Limited (2002) 212 CLR 411 at [50]-[53]; Alphapharm Pty Ltd (ACN 002 359 739) v H Lundbeck A/S and Another (2008) 76 IPR 618 at [180]; Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth and Another (2010) 88 IPR 459 at [251]-[252].

72    Contrary to Apotex’s submissions, the primary judge was not positing a test for obviousness in [339]. On a fair reading of the primary judge’s reasons, [339] explains [338] and leads into the primary judge’s conclusion at [340] that the modified Cripps question had to be asked and answered. The fact that, as the primary judge put it at [338], a person skilled in the art “would be no wiser about the postulated problem of significant hygroscopicity” having read the 141 application is important. It meant that, despite the primary judge being willing to assume in Apotex’s favour knowledge of aripiprazole and a problem with hygroscopicity, there remained a logical and evidentiary gap in Apotex’s case on obviousness. Apotex’s case assumes that a person skilled in the art would be motivated to follow the directions in Example 1 of the 141 application and, if the person did so, that like Associate Professor McGeary, that person would obtain Crystals B by routine steps. However, Associate Professor McGeary followed the directions in Example 1 of the 141 application because he was instructed to do so and, as the primary judge found, happened to obtain Crystals B by one of an equally likely number of drying methods none other of which had been proved would result in Crystals B. The primary judge’s observation to this effect in [339] is not to impose a requirement of inevitability onto obviousness. It is to recognise that the evidence as to what Associate Professor McGeary did and the results he obtained cannot satisfy the modified Cripps question. Apotex did not prove that a skilled addressee would take up the 141 application and follow Example 1 merely because it was there. It did not prove that such a person would be directly led as a matter of course to take the steps that produce Crystals B in the expectation that those steps might well produce those crystals. Apotex’s belated submission that the primary judge’s focus on the production of Crystals B (in contrast to a useful result) is inconsistent with the way the matter was put to the primary judge and does not overcome the evidentiary gap.

73    Apotex’s reliance on the finding in [257] (“the person skilled in the art might well be motivated to carry out the directions in lines 5 to 15 of Example 1 with that end in view and, if so, would take steps, as a matter of course, to remove ethanol from the crystal lattice”) to support its case is also misplaced. The end in view which the primary judge had in mind is to obtain anhydrous aripiprazole crystals in their free base form. The context of this finding was the contest between Associate Professors McGeary and White. It had nothing to do with the separate issue whether, faced with the 141 application which says nothing about hygroscopicity, the person skilled in the art would be motivated to do anything at all. As such, Apotex’s submission that the finding in [257] is as good for obviousness as it is for novelty cannot be accepted.

74    It follows that the primary judge was correct to conclude that, even armed with the 141 application, the invention was not obvious. Apart from Apotex having instructed Associate Professor McGeary to do what he did (a circumstance incapable of sustaining a positive answer to the modified Cripps question), all of the evidence pointed to the invention not being obvious. If Dr Rowe had been aware of aripiprazole and the hygroscopicity problem, it would not have occurred to him to do that which the invention involves. Apotex does not challenge the findings of the primary judge about Dr Rowe’s evidence in this regard, which bespoke “no more than the speculative possibility of a solution which is presently unknown and, perhaps, unattainable” (at [346]). Moreover the foundation of the evidence, that Dr Rowe would have “studied the physicochemical properties, including hygroscopicity, of each polymorph” (at [345]) was inconsistent with evidence he had given elsewhere that “in his experience, polymorphs are not considered for their impact on hygroscopicity”. As the primary judge put it at [347], when confronted with the inconsistency, Dr Rowe “effectively resiled from the thrust of his evidence-in-chief quoted above. He confirmed for the purposes of the present case that, as a general rule, polymorphs are not considered for their impact on hygroscopicity”. It emerged also that if “confronted with the problem of hygroscopicity as at September 2001, Dr Rowe’s first approach would have been to consider simple physical means” to address the problem (at [348]). Another approach he would have adopted was to attempt to use a salt form of the compound. The thing that would not have occurred to him would be to “stay within the same polymorph” and to heat it (at [350]).

75    According to the primary judge, in another unchallenged finding, Professor Easton’s evidence also “strongly supports the conclusion that the solution to the unacceptable hygroscopicity of anhydrous aripiprazole crystals was far from obvious” (at [353]), as did Otsuka’s internal research documents (at [354]).

76    It follows that the reasoning in [339] cannot be read as disclosing any error of principle. The findings the primary judge made about novelty by reason of the 141 application and the McGeary experiment do not establish obviousness.

77    Insofar as claim 16 is concerned, Apotex’s arguments also fail for the same reasons.

78    For these reasons appeal grounds 12 and 13 should not be accepted.

3.5    Apotex’s case of false suggestion (grounds 10 and 11)

79    Apotex’s case of false suggestion, as its submissions disclose, depends on the proposition that a given crystalline form of aripiprazole will have, inevitably, a given hygroscopicity. Based on this proposition, Apotex’s case is that the specification and responses to the examiner’s reports falsely suggested that Otsuka had discovered a new crystalline form of aripiprazole. This the primary judge rejected at [308] in concluding that:

As recorded above, I accept that type 1 anhydrous aripiprazole crystals and Crystals B have the same crystalline form. Accordingly, I accept the first part of Apotex’s argument. However, I do not accept that a given crystalline form of aripiprazole will have, inevitably, a given hygroscopicity. It follows that Apotex’s challenge based on false suggestion or misrepresentation cannot succeed. For completeness, I should record that the statements relied on by Apotex do not represent or suggest that Otsuka had discovered a new crystalline form of aripiprazole, only that it had solved the problem of hygroscopicity.

80    The argument involves repetition of matters already considered and rejected. Nothing new is put suggesting any error by the primary judge.

81    It follows that appeal grounds 10 and 11 should not be accepted.

3.6    Fair basis (ground 14)

82    This ground is not pressed in the appeal.

4.    ThE EXCLUSIVE LICENSEE ISSUE

83    In our opinion, the primary judge was correct to hold that BMS was not an exclusive licensee of the patent within the definition of that term in the 1990 Act. The alternative argument of BMS and Otsuka that, in any event, the primary judge’s exercise of the discretion miscarried must also be rejected.

84    It is unnecessary to consider the alternative argument in detail. BMS and Otsuka contend that the primary judge failed to consider Apotex’s conduct on BMS’s standing to sue, in particular its decision not to challenge standing in October 2009 when BMS gave and Apotex accepted the usual undertaking as to damages as the price for interlocutory relief and its inconsistent position during the hearing in November 2013. BMS and Otsuka submitted that Apotex should not be permitted to “approbate and reprobate” on each occasion to its own advantage (Fried v National Australia Bank [2000] FCA 910 at [30]-[33]).

85    The difficulty for this argument is that the primary judge did consider Apotex’s conduct. In the costs reasons at [10] this is made clear. The primary judge considered this a result of pragmatism on Apotex’s behalf because “[h]ad there been resistance to the granting of interlocutory injunctive relief on the basis of BMS’s lack of standing, it is reasonable to infer that that resistance would have been met swiftly by Otsuka’s removal as a respondent and its joinder as an applicant for that relief”. The primary judge was not bound to characterise Apotex’s conduct as a form of approbation and reprobation. It was reasonably open to the primary judge to characterise the conduct as mere pragmatism. It cannot be said that the primary judge failed to consider the relevant facts. Having considered the relevant facts he simply reached a different conclusion from that for which BMS and Otsuka advocated. It cannot be said that in so doing the primary judge reached a conclusion that was not reasonably open or otherwise erred in principle in a manner that would permit appellate intervention (House v The King (1936) 55 CLR 499 at 504-505).

86    In respect of the principal argument, Otsuka is the registered proprietor of the patent. On 23 October 2001, it entered into an agreement with BMS which the parties called a Restated Development and Commercialization Collaboration Agreement (“the Agreement”). The Agreement related to the arrangement between Otsuka and BMS regarding the development and commercialisation of aripiprazole worldwide. The Agreement was amended subsequently, but none of the amendments are relevant for present purposes. Under the Agreement, Otsuka granted to BMS an exclusive licence to advertise, market, promote, sell and distribute the compound aripiprazole in its various forms, and engage in activities related thereto. However, Otsuka reserved to itself the worldwide right to manufacture aripiprazole in its various forms.

87    On 2 October 2009, BMS commenced this proceeding claiming relief for infringement of the patent. Otsuka was not joined as an applicant until 4 December 2009. The primary judge held that BMS was not the exclusive licensee of the patent, and that it had no entitlement to commence or to prosecute its claims for infringement. That conclusion led the primary judge to consider that, other than BMS’s costs of the cross-claim, it was appropriate to order that, as between themselves, BMS and Apotex should bear their own costs.

88    BMS submitted that the primary judge erred in holding that it was not an exclusive licensee within s 120(1) of the 1990 Act with standing to bring infringement proceedings. It relies on the definition of the term “exclusive licensee”, and the word “exploit”, in the 1990 Act (Schedule 1). Those definitions are as follows:

exclusive licensee means a licensee under a licence granted by the patentee and conferring on the licensee, or on the licensee and persons authorised by the licensee, the right to exploit the patented invention throughout the patent area to the exclusion of the patentee and all other persons.

exploit, in relation to an invention, includes:

(a)    where the invention is a product–make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or

(b)    where the invention is a method or process–use the method or process to do any act mentioned in paragraph (a) in respect of a product resulting from such use.

89    BMS accepts that it did not have the right to undertake all of the activities identified in the definition of “exploit”, but submits that that fact is not fatal to a conclusion that it is an exclusive licensee. It points to the use of the word “or” in the list of activities and submits that, where it has an exclusive licence with respect to one or more (but not all) of the activities, it is an exclusive licensee. It submits that its construction is made good by notionally reading the definition of “exploit” into the definition of “exclusive licensee” in lieu of the word “exploit”.

90    BMS relies on three first instance decisions in support of its construction of the term “exclusive licensee”.

91    The first decision is Grant and Another v Australian Temporary Fencing Pty Ltd (2003) 59 IPR 170; [2003] QSC 194 where the issue was, relevantly, whether summary judgment should be granted in favour of an alleged infringer of a patent against a plaintiff who claimed to be an exclusive licensee of the patent under a licence which did not expressly include the right to import. Holmes J decided that summary judgment should not be entered because a person could be an exclusive licensee under the 1990 Act even if he or she did not have the right to carry out some of the activities referred to in the definition of the word “exploit”. Her Honour referred to the definition of “exclusive licensee” under the Patents Act 1952 (Cth) (the 1952 Act) and then said (at 182-183, [41]):

It can be seen that the definition in the 1952 Act is exhaustive, and the rights cumulative: making, using, exercising and vending. That is in contrast with the non-exhaustive definition of “exclusive licensee” under the present legislation, which merely refers to a “right to exploit” and then separately defines “exploit” in an inclusive and distributive way: “make, hire, sell or otherwise dispose … use or import …” (emphasis added). The latter definition is at least open to a construction similar to that given s 101 of the English Patents Act of 1949, as discussed in Ex Parte British Nylon Spinners Ltd and Imperial Chemical Industries Ltd: that because the definition of exclusive licence in that provision referred to a licence conferring “any right in respect of the patented invention” the way was open for a “plurality of exclusive licences”. But more importantly for present purposes, it makes no sense to say that the rights explicitly conferred by a licence must, in order to be exclusive, be an exhaustive list of what is comprised in the right to exploit in the legislation, when the legislation itself is not exhaustive in its definition of the term. Consequently, I reject the argument that the failure to include a right to import (which neither party may have contemplated exercising, before or after the grant of licence) is fatal to exclusivity.

(Footnote omitted).

92    The second decision is Pharmacia Italia SpA and Another v Interpharma Pty Ltd (2005) 67 IPR 397; [2005] FCA 1675 where the issue was, relevantly, whether one of the applicants lacked standing to bring a claim for an interlocutory injunction. The relevant applicant had an exclusive licence to exploit the invention subject to a prior non-exclusive licence to manufacture, use and sell. Sundberg J said that the decision in Grant was correct, but that the issue before him was a different one. Nevertheless, his Honour considered that there was an arguable case of standing and that was sufficient on a claim for interlocutory relief. His Honour said (at 401-402, [21]-[22]):

The facts in this case are not on all fours with those in Grant. In Grant, the argument was that the licence in question was not an exclusive licence under the Act because it conferred no right to import (that is one of the rights to exploit under the Act). That argument was (rightly) rejected. In this case, the argument is that the PP licence is not an exclusive licence under the Act because, though it purports to confer on PP all of the rights to exploit under the Act, some of those rights (that is to make, sell and use doxorubicin) are subject to the rights conferred by the DBL licence.

On the other hand, British Nylon Spinners is distinguishable. First, it turned on the wording of the relevant provision in the 1952 Act. The High Court said (at CLR 340; ALR 611) that “the introduction of the definite article into the definition [at [17]] suggests that the right must be found in a single licensee for it is the right to make, use, exercise and vend the patented invention which the licence must be found to confer”. Second, the High Court was concerned to avoid a particular mischief it anticipated might result if it accepted the contention that it ultimately rejected. That mischief is peculiar to the 1952 Act.

93    The third decision is KD Kanopy Australasia Pty Ltd v Insta Image Pty Ltd (2007) 71 IPR 615; [2007] FCA 481 where the issue was, relevantly, whether the first and second applicants had an exclusive licence such that they were able to maintain a claim for infringement. The primary judge was not referred to this decision. We do not think the decision is of any assistance because the Court did not address the issue. As far as we can see, there was no argument that the first and second applicants were not exclusive licensees because they had been given only the sole exclusive rights to manufacture and distribute. The issue relating to the alleged exclusive licence which was considered by the Court was resolved by a finding of fact that a subsequent oral agreement extinguished a reservation or exception to an exclusive licence in a written agreement.

94    As against the decisions of Grant and Pharmacia Italia SpA, there is the recent decision of Middleton J in Blue Gentian LLC v Product Management Group Pty Ltd [2014] FCA 1331 where his Honour agreed with the approach to the legislative provisions taken by the primary judge in this case.

95    The leading decision on the meaning of “exclusive licensee” under the 1952 Act was Ex parte British Nylon Spinners Limited and Imperial Chemicals Industries Limited; In Re Imperial Chemical Industries Limited’s Patent (1963) 109 CLR 336. Two parties, each of whom claimed to be an exclusive licensee of a patented invention with a certain limited field, made an application under s 95 of the 1952 Act for an extension of the term of the patent. Only a patentee or exclusive licensee could make such an application. Section 6 of the 1952 Act contained a definition of an exclusive licensee in the following terms:

“exclusive licensee” means a licensee under a licence granted by the patentee which confers on the licensee, or on the licensee and persons authorized by him, the right to make, use, exercise and vend the patented invention, throughout Australia, to the exclusion of all other persons, including the patentee;

96    The High Court held that neither party was an exclusive licensee. The Court said (at 340):

In approaching this question it is to be observed that any number of licences may be granted conferring a right to make use exercise and vend a patented invention. Perhaps it may be said that any number of licences may be granted conferring the right to make use exercise and vend a patented invention. But the introduction of the definite article into the definition suggests that the right must be found in a single licensee for it is the right to make use exercise and vend the patented invention which the licence must be found to confer. However this may be, the concluding words of the definition make it clear beyond doubt that the licence must confer that right to the exclusion of all other persons including the patentee. One of several licences which confer upon each of the respective licensees a right to make use exercise and vend a patented invention within a series of limited fields does not, therefore, constitute an exclusive licence. It may be true to say that each of such licensees has the exclusive right within his limited field to make use exercise and vend the patented invention but this is far from saying that each has the right to make use exercise and vend the patented invention throughout Australia to the exclusion of each other.

97    The Court also referred to the position in England under the Patents Act 1949 (UK) where the definition of exclusive licensee in s 101(1) was quite different from the definition in the 1952 Act. It was as follows:

“exclusive licence” means a licence from a patentee which confers on the licensee, or on the licensee and persons authorised by him, to the exclusion of all other persons (including the patentee), any right in respect of the patented invention, and “exclusive licensee” shall be construed accordingly;

98    That definition had led to the observation by Lloyd-Jacob J in In the Matter of Courtaulds Limited’s Application for Extension of the term of Letters Patent No. 511,160 [1956] RPC 208 that there could be a plurality of exclusive licensees in any one patent monopoly.

99    British Nylon Spinners was followed by French J (as his Honour then was) in Uprising Dragon Ltd v Benedict Trading & Shipping Pty Ltd and Others (1985) 16 FCR 93.

100    Although there are differences between the definition of “exclusive licensee” in the 1952 Act and the definition of “exclusive licensee” in the 1990 Act, we think that it is important to note that the one and only material difference is the substitution of the “right to exploit” for “the right to make, use, exercise and vend”. The Court was referred to the Explanatory Memorandum and Second Reading Speech for the Patents Bill 1989. The basis of BMS’s argument really comes from the definition of the word “exploit” and the extrinsic material suggests the non-exhaustive definition of exploit in place of the concept of “make, use, exercise and vend” had nothing to do with changing the law as to exclusive licences. Rather, the extrinsic material suggests that the purpose of the change was to remove language (i.e., “make, use, exercise and vend”) which was considered archaic or obscure, and replace it with words which were considered sensible and clear (see in this context, Northern Territory of Australia v Collins and Another (2008) 235 CLR 619 at 648, [122] per Crennan J). The focus was on those sections (s 69 of the 1952 Act, and s 13 of the 1990 Act) which identified the effect of a patent in terms of the exclusive rights granted to a patentee, not on the law as to when a person had an exclusive licence.

101    This extrinsic material favours the construction preferred by the primary judge, but, of course, it is the words of the 1990 Act which must be used to decide the issue.

102    In reaching his conclusions, the primary judge placed considerable emphasis on s 13(1) of the 1990 Act. This subsection is in the following terms:

13    Exclusive rights given by patent

(1)    Subject to this Act, a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention.

103    The primary judge placed particular emphasis on a construction that produced harmony between s 13(1) of the 1990 Act and the definition of “exclusive licensee”. His Honour said, correctly in our respectful opinion, that the definition of “exclusive licensee” recognised the twin rights in s 13(1) of the 1990 Act, and that the legal effect of the licence must also be to exclude the patentee from exercising the exclusive right under s 13(1) of the 1990 Act to authorise another person to exploit the invention. The primary judge said that an exclusive licence cannot be one that reserves to the patentee, or any other person, any residual right with respect to the exploitation of the invention, and that it followed that there could be only one exclusive licensee.

104    The key to his Honour’s reasoning is that he read “the right to exploit” as a single indivisible right. He said that the word “exploit” was used in the 1990 Act as a hypernym to cover a range of activities (i.e., a superordinate term which encompasses other terms of a less general nature, such as furniture which includes table, chair, etc.). His Honour said (at [436]):

The inclusive nature of the definition employed by the Act, and the exemplification of particular activities to elucidate the meaning of the word, signify that a broad range of activities is intended to be covered. However, s 13(1) of the Act recognises that only two rights are conferred by the patent: the right to exploit the invention and the right to authorise others to exploit the invention. The use of disjunctive language in the definition of “exploit” to identify particular activities falling within the scope of the term does not create separate rights with respect to those activities. It merely recognises that the right to exploit covers a range of activities, any one of which, if undertaken, would amount to the exercise of the right to exploit.

105    We agree with that reasoning. We accept that, as BMS and Otsuka contended, it is possible to read the sections with the distributive definition of “exploit”, but we think the primary judge’s construction is the preferred one. In our opinion, the definition of the word “exploit” describes the content of a right and is not intended to create separate rights in relation to each of the identified activities. Once that conclusion is reached, the balance of the primary judge’s reasoning is entirely consistent with the reasoning of the High Court in British Nylon Spinners, and is, in our respectful opinion, correct. We would add with respect to what Holmes J said in Grant, that we do not agree that there is any relevant similarity between the definition of “exclusive licensee” in the 1990 Act and the definition in the English Act. In the latter Act, there is express reference to “any right in respect of the patented invention”. Furthermore, we do not think any particular significance is to be attached to the fact that the definition of the word “exploit” is inclusive and not exhaustive. The word “exploit” means the activities referred to in the definition, and such other activities as the Court holds (by the ordinary process of construction) fall within the meaning of “exploit”. It is open to the parties to an agreement to identify the right to exploit as the right which is the subject of the licence.

5.    CONCLUSIONS

106    Apotex has not established any error by the primary judge. Accordingly, its appeal should be dismissed and it should pay the costs of BMS and Otsuka of its appeal. The appeal by BMS and Otsuka should also be dismissed and they should pay Apotex’s costs of their appeal.

Associate:

Dated:    22 January 2015