FEDERAL COURT OF AUSTRALIA

Apotex Pty Ltd v ICOS Corporation [2017] FCA 466

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 105(1) of the Patents Act 1990 (Cth) the complete specification of Australian Patent No. 769946 be amended in accordance with the proposed amendments set out at Annexure 1 to the respondent’s interlocutory application dated 11 November 2016 (interlocutory application).

2.    Pursuant to s 105(1) of the Patents Act 1990 (Cth) the complete specification of Australian Patent No. 773666 be amended in accordance with the proposed amendments set out at Annexure 2 to the interlocutory application.

3.    The parties be heard as to the terms of the order as to costs.

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

REASONS FOR JUDGMENT

BESANKO J:

Introduction

1    Eli Lilly and Company (Lilly) is the ultimate holding company of ICOS Corporation (ICOS). The Lilly Group holds a number of patents worldwide that relate to a compound known as tadalafil. Tadalafil is a PDE5 inhibitor and it is useful in the treatment of erectile dysfunction. Tadalafil is sold under the brand name, Cialis.

2    Another compound which is useful in the treatment of erectile dysfunction is sildenafil which is sold under the brand name, Viagra.

3    Three Australian patents relating to tadalafil are of present relevance.

4    The first is the patent relating to the compound itself. It is Australian Patent No. 689205 (the 205 Patent) and it was filed on 19 January 1995 and expires on 23 October 2017. Apotex Pty Ltd (Apotex) has its own generic tadalafil products which are registered on the Australian Register of Therapeutic Goods. Apotex has provided assurances to the Lilly Group in the following terms:

a)    Apotex has no intention of marketing, selling or exploiting in any way the Apotex Products during the term of the ‘205 Patent, and, should Apotex’s intentions change, it will give 3 months’ notice of any actual or threatened exploitation during the term of the ‘205 Patent; and

b)    Apotex has no intention of applying for listing of any of the Apotex Products on the Pharmaceutical Benefits Scheme (PBS) whereby such listing would take effect during the term of the ‘205 Patent, and, should Apotex’s intentions change while the ‘205 Patent remains in force, it will not apply for PBS listing of any of the Apotex Products without giving your clients 3 months’ notice prior to the requested effective PBS listing date.

5    The second Australian patent is titled Beta-carboline drug products and relates to particular formulations of compositions containing tadalafil, including in micronised particle sizes and methods of treatment using such compositions. It is Australian Patent No. 773666 (the 666 Patent).

6    The third Australian patent is titled Unit Dosage Form and relates to a pharmaceutical composition containing particular dosages of tadalafil for oral administration up to a maximum daily dose of 20 mg and methods of treatment for a condition whereby inhibition of PDE5 is desirable, including male erectile dysfunction, using such daily dosages. It is Australian Patent No. 769946 (the 946 Patent). It has a filing date of 26 April 2000, the patent was accepted on 10 December 2003 and the application proceeded to grant on 27 May 2004.

7    Apotex brought a proceeding in this Court on 4 April 2016 in which it claimed that the 666 Patent and the 946 Patent were invalid. The proceeding is listed for trial in June 2017. At the commencement of the proceeding, Apotex also made claims in relation to another patent (Australian Patent No. 776722), but those claims are no longer pursued and need not be considered any further. Apotex provided Particulars of Invalidity and those particulars in relation to the 666 Patent alleged the lack of an inventive step, and in relation to the 946 Patent, the lack of an inventive step and a lack of utility.

8    ICOS has alleged infringement or threatened infringement by Apotex by Notice of Cross-Claim filed on 12 July 2016.

9    On 16 December 2016, Apotex filed an Amended Originating Application, Amended Statement of Claim and Amended Particulars of Invalidity. The Amended Particulars of Invalidity in relation to the 666 Patent allege a lack of novelty and the lack of an inventive step. The same grounds are raised in relation to the 946 Patent with the additional allegation that the patent lacks utility. The lack of utility plea (omitting the particulars) is as follows:

14.    The alleged invention as claimed in each of claims 1-6, 8-17, 19-29 and 31-35 of AU 946 is not a patentable invention within the meaning of section 18(1)(c) of the Act in that it is not useful.

15.    The promise of the alleged invention as claimed in each of claims 1-6, 8-17, 19-29 and 31-35 of AU 946 is that tadalafil can be administered in a unit dose that provides an effective treatment of erectile dysfunction that eliminates, or reduces to clinically insignificant levels, the side effects associated with sildenafil, including:

(a)    facial flushing;

(b)    vision abnormalities; and

(c)    adverse cardiovascular events, including a significant decrease in blood pressure,

when tadalafil is administered alone or in combination with an organic nitrate.

Particulars

…

16.    The alleged invention as claimed in each of claims 1-6, 8-17, 19-29 and 31-35 of AU 946 does not provide an effective treatment of erectile dysfunction that eliminates, or reduces to clinically insignificant levels, the side effects associated with sildenafil because the alleged invention as claimed in each of claims 1-6, 8-17, 19-29 and 31-35 of AU 946 does not eliminate, or alternatively does not reduce to clinically insignificant levels:

(a)    the side effect of a significant decrease in blood pressure when administered in combination with an organic nitrate, and further does not provide any significant improvement as compared to sildenafil with respect to this side effect; and

(b)    the side effects of facial flushing and vision abnormalities when administered alone or in combination with an organic nitrate.

Particulars

…

10    By an interlocutory application dated 11 November 2016, ICOS seeks orders pursuant to s 105(1) of the Patents Act 1990 (Cth) (the Act) that the complete specification of the 666 Patent be amended, and the complete specification of the 946 Patent be amended. Apotex filed a notice on 25 November 2016 setting out its grounds of opposition to the amendments. Those grounds included allegations that ICOS had failed to make full disclosure, that it had unreasonably delayed, that it had not adequately explained the reasons for the proposed amendments, and various grounds said to support an exercise of the discretion to refuse the application to amend.

11    Apotex has withdrawn its opposition to the amendments to the 666 Patent. It maintains its opposition to the amendments to the 946 Patent, although it has narrowed its grounds of opposition to the following:

5.    The Court should refuse the proposed amendments to AU 946 in the exercise of its discretion:

(a)    on the grounds of public policy, in that a patentee ought not be permitted to avoid the consequences of the invention not meeting the promise of the specification by the deletion, after grant of the patent, of the promise;

(b)    …

(c)    where the patentee only seeks to delete the promise over 12 years after the grant of the patent and after having already enjoyed a monopoly for over 17 years out of the 20 year patent term.

The Nature of the Proposed Amendments

12    The proposed amendments to the 666 Patent involve the addition of 15 claims to the existing 23 claims. The existing claims do not include dosages and the amendments introduce dosages of the pharmaceutical composition, methods of treating and uses.

13    I mention in connection with the proposed amendments to the 666 Patent, a decision of the High Court of England and Wales in Actavis Group PTC EHF v ICOS Corporation [2016] EWHC 1955 (Actavis Group v ICOS). The decision in that case was delivered on 10 August 2016 and it concerned the United Kingdom’s equivalents of the 666 Patent and the 946 Patent. ICOS drew attention to the conclusion of Birss J at [344] with respect to claim 7 of the equivalent to the 946 Patent that a 5 mg daily dose of tadalafil involved an inventive step.

14    The proposed amendments to the 946 Patent involve the specification and not the claims, and, speaking broadly for the present, they relate to tadalafil’s efficacy in the treatment of erectile dysfunction without some or all of the side effects which are referred to as vision abnormalities, facial flushing, hypertension and the dangers associated with using a PDE5 inhibitor with an organic nitrate in terms of a significant drop in blood pressure. Some or all of the side effects may be the subject of strict contraindications in the package label or insert.

15    The specification of the 946 Patent refers to sildenafil and its adverse side effects. It is said that prior to the present invention, such side effects were considered inherent in the inhibition of PDE5.

16    The specification provides that tadalafil can be administered in a unit dose that provides an effective treatment without the side effects associated with the presently marketed PDE5 inhibitor, sildenafil. It is proposed to amend that statement by qualifying “without the side effects” so that it states “without all of the side effects”. The specification states that ICOS’ clinical studies reveal that an effective product having a reduced tendency to cause flushing in susceptible individuals can be provided. It is proposed to qualify that statement by adding the words “relative to sildenafil”.

17    The specification provides as follows:

Most unexpectedly, the product also can be administered with clinically insignificant side effects associated with the combined effects of a PDE5 inhibitor and an organic nitrate. Thus, the contraindication once believed necessary for the product containing a PDE5 inhibitor is unnecessary when Compound (I) is administered as a unit dose of about 1 to about 20 mg, as disclosed herein.

18    It is proposed to delete that statement.

19    The specification provides that an advantage of the invention is that it provides an effective therapy for sexual dysfunction in individuals who were previously untreatable or suffered from unacceptable side effects, “including individuals having cardiovascular disease, such as in individuals requiring nitrate therapy, having suffered a myocardial infarction more than three months before the onset of sexual dysfunction therapy, and suffering from class 1 congestive heart failure”. It is proposed to delete that statement.

20    The specification provides that the package insert or label supports the use of the product to treat sexual dysfunction in patients suffering from a retinal disease or in patients who are using organic nitrates. It is proposed to remove the reference to “patients who are using organic nitrates”. The specification provides that the package insert preferably is free of contraindications associated with these conditions, and particularly the administration of the dosage form with an organic nitrate. It is proposed to remove the reference to “the administration of the dosage form with an organic nitrate”. The specification provides that the present invention is based on detailed experiments and clinical trials, and the unexpected observations that side effects previously believed to be indicative of PDE5 inhibition can be reduced to clinically insignificant levels by the selection of a compound and unit dose. It is proposed to amend the statement so that it refers to “some” side effects.

21    The specification provides that the unit dosage form of tadalafil minimises undesirable side effects previously believed unavoidable and those side effects are identified as facial flushing, vision abnormalities and a significant decrease in blood pressure when tadalafil is administered alone or in combination with an organic nitrate. It is proposed to qualify the reference to undesirable side effects by adding the word “some” undesirable side effects and to remove the reference to “facial flushing and a significant decrease in blood pressure when tadalafil is administered alone or in combination with an organic nitrate”.

22    The specification provides for a comparison between the effect of tadalafil on systolic blood pressure compared with sildenafil. It is proposed to remove the statement setting out the contrast with sildenafil.

23    The specification contains a number of examples. In the context of Example 5, the statement is made that tadalafil demonstrated minimal, if any, effect on mean systolic blood pressure. It is proposed to remove the words “if any”. In the context of Example 7, the statement is made that tadalafil minimises or eliminates the occurrence of adverse side effects. It is proposed to qualify that statement by amending it to refer to “some” adverse side effects.

24    The specification provides as follows:

Surprisingly, in addition to treating ED, with at about 1 to about 20 mg unit dose Compound (I), with a minimum adverse side effects, individuals undergoing nitrate therapy also can be treated for ED by the method and composition of the present invention.

25    It is proposed to delete that statement.

26    It is convenient at this point to refer to the decision of the Federal Court of Canada in Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC & Anor 2015 FC 125. I will refer to this decision as the Notice of Compliance or NOC decision for reasons which follow. There is evidence before me as to the nature of the proceeding which was the subject of this decision. The NOC decision concerned the Canadian equivalent of the 946 Patent. The procedure is that a generic manufacturer makes an abbreviated new drug submission with Health Canada seeking a Notice of Compliance or marketing approval for its generic product. The Minister of Health has the power to issue a Notice of Compliance. The generic manufacturer can issue a Notice of Allegation in which it alleges that an existing patent is invalid. The holder of the patent can issue proceedings seeking an order restraining the Minister from issuing a Notice of Compliance. The question for the Court in such proceedings is whether the allegations of invalidity are justified. If it is found that they are, then the application for an order restraining the issue of a Notice of Compliance will be refused. A finding that allegations of invalidity are justified is not an in rem determination of invalidity. A patent remains valid and enforceable unless and until it is successfully challenged in a full action challenging the patent in court at a later date. One of the witnesses, Mr Gary Cox, said that he understood that patent litigation following NOC proceedings is common and patentees have been successful in suing an infringer and maintaining validity of a patent after an unsuccessful NOC proceeding.

27    In the NOC decision, the relevant Lilly company sought an order prohibiting the Minister of Health from issuing a Notice of Compliance to Mylan until the expiry of the Canadian equivalent of the 946 Patent. As I have said, that order will not be made if Mylan’s allegations of invalidity in relation to that patent are held to be justified. The Court found that the allegations were justified on a number of grounds. One of those grounds was that the patent lacked utility as the promise of the patent was neither demonstrated nor soundly predicted at the filing date and was still not met. The Court dismissed the application for an order prohibiting the Minister of Health from issuing a Notice of Compliance. I do not need to identify the reasoning in detail. The thrust of the Court’s reasoning, which is relevant to this application, was that the patent contained promises about the co-administration of tadalafil and nitrates which were not met and are not met.

28    The NOC decision was handed down on 2 February 2015.

The Principles Governing an Application to Amend

29    Section 104 of the Act deals with amendments which may be allowed by the Commissioner of Patents, and s 105 deals with amendments which may be allowed by the Court. At the relevant time, s 105 of the Act was in the following terms:

(1)    In any relevant proceedings in relation to a patent, the court may, on the application of the patentee, by order direct the amendment of the patent, the patent request or the complete specification in the manner specified in the order.

(2)    An order may be made subject to such terms (if any) as to costs, advertisements or otherwise, as the court thinks fit.

(3)    The patentee must give notice of an application for an order to the Commissioner, who is entitled to appear and be heard, and must appear if the court directs.

(4)    A court is not to direct an amendment that is not allowable under section 102.

(5)    The patentee must file a copy of an order within the prescribed period.

(6)    On the filing of a copy of an order, the patent, patent request or complete specification is to be taken to have been amended in the manner specified in the order.

There is no doubt on the authorities that amendments to overcome invalidity may be allowed under s 105 of the Act.

30    I am satisfied on the evidence that the notice requirements in the Act have been met. The Commissioner of Patents has indicated that she has reviewed the amendments to the 666 Patent and the 946 Patent and that she is prima facie satisfied that they meet the requirements of s 102 of the Act (which deals with amendments which are not allowable), and that she does not intend to appear at the hearing.

31    I am satisfied that the amendments do not fall within s 102 of the Act and, accordingly, the issue is whether the amendments should be allowed in the exercise of the Court’s discretion.

32    There is no limit on the purposes for which an amendment may be sought (Les Laboratoires Servier v Apotex Pty Limited [2010] FCAFC 131; (2010) 89 IPR 219 (Les Laboratoires Servier v Apotex (2010)) at [60] per Emmett J). Furthermore, there is no implied limitation in s 105 of the Act as to the orders which may be made (Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2] (2007) 235 CLR 173 at [172]).

33    The Full Court of this Court summarised the relevant principles in relation to an application to amend a patent in Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; (2016) 117 IPR 415 (Les Laboratoires Servier v Apotex (2016)). The Court said (at [243]):

A number of principles have been established and discussed in detail in the authorities in the United Kingdom and in this Court with respect to amendment of granted patents, relevantly and in summary:

•    The discretion exists for the benefit of the patentee.

•    The onus to establish that amendment should be allowed is on the patentee.

•    Generally, a permissible amendment (i.e. one which is permitted under the Act) will be allowed unless there are circumstances which would lead the court to refuse amendment.

•    The patentee must make full disclosure of all relevant matters.

•    The Court’s focus is on a patentee’s conduct, not the merit of an invention.

•    Amendment should be sought promptly and where a patentee delays for an unreasonable period, the patentee has the onus of showing that it delayed on reasonable grounds, such as a belief, on reasonable grounds, that an amendment was not necessary.

•    Unreasonable delay is a circumstance likely to lead to refusal of the amendment.

•    In assessing delay, the time when the patentee was unaware and reasonably did not know of the need for amendment is not taken into account. The relevant delay is from when the patentee knows of the likely invalidity, or has its attention drawn to a defect in the patent, or is advised to strengthen the patent by amendment. That is, amendment will not be permitted in cases where a patentee knows or ought to know that amendment should be sought and fails to do so for a substantial period of time. Thus the reasonableness of the conduct of the patentee is a relevant consideration when assessing delay.

•    Mere delay is not, of itself, sufficient to refuse to exercise the discretion to amend. The fact of delay is, however, relevant to whether the respondent or the general public have suffered detriment.

•    If a patentee seeks to take unfair advantage of the unamended patent, knowing that it requires amendment, then refusal of the amendment is likely.

•    The proportionality of the asserted culpability of the patentee as compared with the effect of loss of protection for the invention should be considered.

34    In Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd [2012] FCA 1510; (2012) 99 IPR 59, Yates J identified the relevant principles in the following way. First, his Honour said that where the matter is one of discretion, the real question is whether there are any circumstances which would lead the Court to refuse the amendments. Secondly, his Honour said that the Court is concerned with the conduct of the patentee and not with the merit of the invention. Thirdly, his Honour said that delay is a circumstance which may lead to a refusal of an amendment application, although mere delay is unlikely to do so. In other words, the Court will consider the reason for any delay. Delay coupled with improper conduct or detriment to a particular person or to the public interest is likely to lead to a refusal of the application to amend. The assertion of unamended claims with knowledge of the need to amend is likely to be disentitling. Although the examples given in the authorities were of objections as a result of prior art, there was no reason why the same principle would not apply where the significant risk of invalidity arose because the claims did not meet the fair basing requirement in s 40(3) of the Act. Finally, his Honour said that the patentee must give full disclosure of all relevant matters bearing on the exercise of the discretion.

35    In Smith Kline & French Laboratories Limited v Evans Medical Limited [1989] 1 FSR 561, Aldous J said in a passage which has been approved in subsequent cases in this country, the following (at 569):

The discretion as to whether or not to allow amendment is a wide one and the cases illustrate some principles which are applicable to the present case. First, the onus to establish that amendment should be allowed is upon the patentee and full disclosure must be made of all relevant matters. If there is a failure to disclose all the relevant matters, amendment will be refused. Secondly, amendment will be allowed provided the amendments are permitted under the Act and no circumstances arise which would lead the court to refuse the amendment. Thirdly, it is in the public interest that amendment is sought promptly. Thus, in cases where a patentee delays for an unreasonable period before seeking amendment, it will not be allowed unless the patentee shows reasonable grounds for his delay. Such includes cases where a patentee believed that amendment was not necessary and had reasonable grounds for that belief. Fourthly, a patentee who seeks to obtain an unfair advantage from a patent, which he knows or should have known should be amended, will not be allowed to amend. Such a case is where a patentee threatens an infringer with his unamended patent after he knows or should have known of the need to amend. Fifthly, the court is concerned with the conduct of the patentee and not with the merit of the invention.

(Les Laboratoires Servier v Apotex (2010) at [58] per Emmett J; at [76] per Kenny and Stone JJ; Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Limited [1997] FCA 1063; (1997) AIPC 91-366 (Wimmera Industrial Minerals v RGC Mineral Sands)).

36    Matters which have been referred to in other cases may be used as guidelines, but they are not treated as fixed rules applied as of course in every case (Wimmera Industrial Minerals v RGC Mineral Sands at 39,790; Les Laboratoires Servier v Apotex (2010) at [56] per Emmett J).

The Principles Relating to a Lack of Utility

37    It is convenient to summarise in a general way, the principles relevant to a plea that an invention lacks utility. At the relevant time, s 18(1)(c) of the Act provided that a patentable invention was one which was useful. If that requirement is not met, then the patent was susceptible to being revoked on that ground.

38    In Artcraft Urban Group Pty Ltd v Streetworx Pty Ltd [2016] FCAFC 29; (2016) 117 IPR 210, Greenwood J said the following (at [119] and [120]):

It is “no objection” to the validity of an innovation patent granted under the Act that it is “commercially impracticable”. The utility of the patent depends upon whether, by following the teaching of the specification, the result claimed is produced: Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171 at 187 [24], Brennan CJ, Gaudron, McHugh and Gummow JJ adopting and citing Lane Fox v Kensington & Knightsbridge Electric Lighting Co [1892] 3 Ch 424 at 430-431.

The “basic principle” of inutility is that if an invention “does what it is intended by the patentee to do, and the end attained is itself useful, the invention is a useful invention”: Fawcett v Homan (1896) 13 RPC 398, Lindley LJ at 405, adopted by Gummow J as a correct statement of principle in Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 96 (“Rehm”). What the invention is “intended” to do is a matter to be gathered from “title and the whole of the specification”: Rehm, Gummow J at 96.

39    In Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd [2014] FCA 1366; (2014) 110 IPR 82, Beach J discussed a plea of a lack of utility and said (at [340]):

Generally, three questions may be posed. What has the patentee promised for the invention as described in the relevant claim? Is the promise useful? Has that promise been met?

40    An issue which has arisen is whether a patent is liable to be revoked for a lack of utility where some, but not all, of the promises of the invention have not been met.

41    Dr Bodkin in his work, Patent Law in Australia, (2nd ed, Thomson Reuters, 2014) at [6050] describes the two main issues as involving a determination of what the patentee has promised the invention will do and the question of what constitutes a failure of the invention to do what the patentee has promised.

42    In In the Matter of Alsop’s Patent (1907) 24 RPC 733 (In the Matter of Alsop’s Patent), Parker J considered whether the failure of one of a number of promises was sufficient to invalidate a patent and the difference between the failure of one of two or more promised results and the failure of one or more additional purposes following from the results. His Lordship said (at 753):

… Similarly if the patentee claims for a process producing two results combined and only one of these results is in fact produced by the process, there is a partial failure of consideration, just as there is in the case of a Patent containing one valid and one invalid Claim; and such partial failure of consideration is sufficient to avoid the Patent, “If” said Mr. Justice Buller in Turner v. Winter (1 Webst. P.C. 82) “the Patentee says that by one process he can produce three things and he fails in any one, the consideration of his merit, and for which the Patent was granted, fails, and the Crown has been deceived in the grant.”

…

But it may well be that an invention, which is void because it does not produce the result, or one of the results, claimed, may nevertheless be useful as producing other results. Further, there may be cases in which the result which the patentee claims to have produced can in fact be produced, but the patentee has gone on to detail the useful purposes to which such result can be applied, and that in fact the result produced cannot be applied to one or more of such purposes. In such a case I do not think the Patent is necessarily void, provided there are purposes for which the result is useful. If it be avoided it can only be because it contains a misrepresentation so material that it can be said the Crown has been deceived. The importance of drawing a distinction between what the patentee claims to have effected by the invention for which he claims protection, and a statement of the additional purposes to which the invention can be applied, is well illustrated by the case of Lyon v. Goddard (10 R.P.C. 121 and 334, and 11 R.P.C. 354).

43    In Ronneby Road Pty Ltd v ESCO Corporation [2016] FCA 588 (Ronneby Road v ESCO), Jessup J also addressed this issue. His Honour was considering an appeal from a decision of a delegate of the Commissioner of Patents to reject the opposition of Ronneby to the grant of a standard patent in the name of ESCO. One of the issues before his Honour concerned the utility of the invention. His Honour discussed the position where not all of the promised results were attained by the invention. His Honour referred to In the Matter of Alsop’s Patent at 752-753 and Flour Oxidising Company Ltd v Hutchinson (1909) 26 RPC 597 at 629 per Warrington J. His Honour noted that those cases were decided under the common law and “it may be a question whether they state the correct law under the ‘so far as claimed in any claim’ approach taken by s 18(1) of the Act” (at [75]). His Honour decided that he should follow the decision of Windeyer J in Pracdes Pty Ltd v Stanilite Electronics Pty Ltd (1995) 35 IPR 259 (Pracdes v Stanilite Electronics (No 1)) to the effect that the failure of one of the promised results, even though others were attained, meant that there was a ground for revocation.

44    After Pracdes v Stanilite Electronics (No 1), the holder of the patent sought to amend the specification to replace the phrase “and thereby largely avoid the above disadvantages” with the phrase “and thereby largely avoid most, if not all, of the above disadvantages”. Windeyer J allowed the amendment (Pracdes Pty Ltd v Stanilite Electronics Pty Ltd (1995) 35 IPR 277 (Pracdes v Stanilite Electronics (No 2)). His Honour said that it was significant that there was no intention to mislead and, although the application for amendment was late, there was no evidence that the defendant relied on the wording in infringing the patent as it then stood. His Honour said that a finding of false suggestion, which his Honour had made in that case, was a serious matter to be taken into account in exercising the discretion to amend, but it did not mean that an amendment should not be allowed.

The Evidence

45    ICOS relied on three affidavits sworn by Mr Gary Baxter Cox, lawyer and patent attorney, an affidavit sworn by Dr Mark Jordan Stewart, patent attorney, an affidavit sworn by Mr Danny L Wood, patent attorney, and an affidavit sworn by Dr Malcolm Ian Mitchell, formerly Medical Director at Lilly. None of these witnesses were required for cross-examination.

46    Mr Cox is and has been a principal of Wrays Patent & Trademark Attorneys for about 20 years and Wrays Lawyers for about four years. He is the chairman of Wrays, Patent Attorneys and Wrays Lawyers (Wrays). He has practised in the area of intellectual property and, in particular, patent litigation for approximately 20 years. He has conducted numerous complex trials before the Court concerning the infringement and validity of pharmaceutical patents.

47    On 15 January 2016, Ms Arleen Palmberg, Lilly’s assistant general counsel, engaged Wrays to advise Lilly in respect of a potential dispute with Apotex concerning Lilly’s sale of Cialis. On 12 February 2016, Ms Palmberg sent a copy of the NOC decision to Mr Cox by email. Mr Cox outlines the details of that proceeding in his affidavits.

48    Mr Todd Shand is a registered patent attorney and a principal of Wrays Patent Attorneys. Between 12 February 2016 and 24 February 2016, he raised with Mr Cox the possibility of amending the 946 Patent in light of the findings in the NOC decision and the benefits to ICOS of doing so.

49    On 24 February 2016, Mr Cox and other members of the Wrays team discussed a number of matters with Ms Palmberg, including the NOC decision. During the course of the telephone conversation, Mr Cox raised for the first time with Ms Palmberg the possibility of amending the 946 Patent in light of the findings in respect of utility in the NOC decision. Thereafter, Mr Cox’s attention was directed towards considering infringement and invalidity issues with respect to the 666 Patent, the 946 Patent and the 722 Patent.

50    As I have said, Apotex commenced its proceeding on 4 April 2016. On the following day, ICOS retained Wrays Lawyers to act as its legal representative.

51    On 15 April 2016, there was a further discussion about the NOC decision between the Wrays team and Ms Palmberg and, on this occasion, Lilly’s external Canadian lawyers. I have already summarised the nature of the NOC proceeding. Thereafter, Mr Cox took steps to clarify with Apotex the precise way in which it put its case with respect to the alleged lack of utility. I do not need to detail those steps.

52    Wrays became aware of the decision in Actavis Group v ICOS shortly after it was handed down on 10 August 2016 and, unprompted by ICOS or Lilly, Wrays gave consideration to whether the validity of the 666 Patent could be strengthened by amendment.

53    On 31 August 2016, Mr Cox and other members of the Wrays team had a telephone conversation with Dr Mitchell. Mr Cox understood from that conversation that tadalafil could be safely administered to patients who were also being given organic nitrates.

54    By late August or early September 2016, Mr Cox had formed the opinion that ICOS may benefit from amending the 946 Patent to remove statements in the specification concerning the side effect profile of tadalafil when co-administered with organic nitrates. He had a number of communications with Ms Palmberg during September 2016. On 23 September 2016, he had a telephone conference with Ms Palmberg and Dr Stewart. He explained the rationale for the proposed amendments to the 946 Patent. Mr Cox said that it was his understanding that Dr Stewart believed that ICOS could successfully defend Apotex’s utility case without the amendments by relying upon clinical results and evidence to be adduced from clinicians. However, Dr Stewart accepted that the amendments, if allowed, would strengthen ICOS’ position because the utility issues would be avoided altogether. Mr Cox also explained to Dr Stewart that there was some uncertainty as a result of the decision in Ronneby Road v ESCO, as to whether by Australian law, a claimed invention must satisfy all or only one of the promises made in a patent specification in order to be valid. Dr Stewart instructed Wrays to proceed with the application for the amendments.

55    In relation to the 666 Patent, Mr Cox believed that the validity of the patent could be strengthened by inserting dependent claims that included integers relating to specific doses or dose ranges of tadalafil. Mr Cox believed and continues to believe that the existing claims of the patent are valid without any amendment. However, he formed a view that the addition of further dependent claims featuring doses of tadalafil could only strengthen the validity of the patent and, in particular, the claim that it involved an inventive step. As with the 946 Patent, Wrays received instructions to proceed with the proposed amendments on 23 September 2016.

56    Dr Stewart joined Lilly in 1997 and since 2010, has been a senior director in the Patent Division at Lilly. Dr Stewart has qualifications in science and law and has been a patent attorney since 1998. Between 2010 and 2015, Dr Stewart’s primary responsibilities included overseeing various patent litigation and patent procurement activities in the United States and Europe. This has included patent infringement and validity challenges in a number of different courts in Europe and the United States, and patent preparation and prosecution, and offensive and defensive opposition proceedings. In 2015, Dr Stewart’s responsibilities expanded to include patent litigation matters all over the world.

57    Since 2014, Dr Stewart has overseen all patent litigation in relation to Cialis in all jurisdictions in the world. He states that internal Lilly patent counsel who support or who have had responsibility for patent litigation in relation to Cialis in various jurisdictions in the world report to him.

58    Dr Stewart has the authority to decide whether or not to apply for any amendment to the 666 Patent or the 946 Patent. He states that he is not aware of any similar amendments to those proposed by ICOS in respect of the 666 Patent and the 946 Patent having been considered or applied for in respect of any equivalent patents in other jurisdictions. He said that had that occurred, he would have been aware of it and he would have consulted with the responsible attorney with respect to those matters.

59    Dr Stewart first became aware of possible amendments to the 666 Patent and the 946 Patent during a discussion with Ms Palmberg in about August 2016. He understood from his discussion with Ms Palmberg, that it was Wrays which first proposed the idea of applying to amend the two patents. He had not previously given the matter any consideration. He received an email from Ms Palmberg on 20 September 2016. He states that at that time he considered that ICOS could successfully defend a challenge to the 946 Patent on the basis of utility without there being any amendment to the patent. He did not have any comments to make in relation to the proposed amendments to the 666 Patent.

60    Dr Stewart was aware of the NOC decision. He was aware of the nature of the proceeding and he was aware that regardless of the outcome of the NOC proceeding, a patent will remain valid and enforceable unless and until it is successfully challenged in revocation proceedings in court at a later date. It did not occur to him to amend the Canadian equivalent to the 946 Patent or any other patent that was equivalent to it. Dr Stewart considered the proposed amendments on 21 September 2016 and had a telephone conference with Wrays and Ms Palmberg on 22 September 2016. Dr Stewart explained the rationale for the amendments. It is convenient to set out his explanation in full:

25.    Based upon my telephone conversation with Mr Cox, my understanding of the rationale for the proposed amendments to the 666 Patent was that although Wrays thought that the existing claims of the 666 Patent would survive Apotex’s challenge to those claims being obvious, the proposed amendments may strengthen ICOS’s defence to Apotex’s obviousness claim. In particular, I understood that Wrays thought that in light of the findings in the UK decision in Actavis v ICOS (Actavis Group PTC ehf v ICOS Corporation [2015] EWHC 1955 (Pat)) concerning the inventiveness of the 5mg dose of tadalafil, ICOS’ defence to Apotex’s obviousness attack could be strengthened by adding narrower dependent claims that included integers relating to specific doses or dose ranges of tadalafil. I oversaw and attended the trial in the UK and read the Actavis v ICOS decision shortly after it was handed down.

26.    Based upon my telephone conversation with Mr Cox, my understanding of the rationale for the proposed amendments to the 946 Patent was that the amendments would avoid the need for Apotex’s utility challenge, or at least a substantial part of that challenge, to be heard and determined and thereby would save Lilly time and resources in having to answer that case. I also recall Mr Cox mentioning that there may be some uncertainty under Australian law as to whether or not all promises in a specification had to be met by the claimed invention. I recall expressing my view that ICOS could successfully defend a utility challenge in respect of the co-administration of tadalafil with organic nitrates by relying upon clinical data and expert evidence to be adduced from clinicians. Nevertheless, while I believed (and still believe) that the statements sought to be deleted from the 946 Patent could be supported by clinical evidence, once I understood Wrays’ reasons for proposing the amendments to the 946 Patent, I was content for ICOS to pursue amendments to that patent in the form proposed by Wrays.

61    Mr Wood has been employed by Lilly as a patent attorney since 2003. He has qualifications in science and law, and he was registered as a patent attorney in 2003. Since about May 2006, Mr Wood has been the Lilly patent attorney with responsibility for the portfolio of patents relating to tadalafil. Mr Wood states that his role is to support Dr Stewart who has general oversight of patent litigation relating to the tadalafil portfolio in the United States and various other parts of the world.

62    Mr Wood first became aware of the possibility that the 666 Patent and the 946 Patent might be amended after receiving an email from Ms Palmberg on 20 September 2016. Mr Wood said that he was not aware of any amendments of the nature proposed with respect to the 666 Patent being proposed or considered in relation to any patents which are equivalent to that patent in the United States or in any other jurisdictions around the world. His position is such that he would have been informed if such amendments had been proposed or considered. He makes the same observations with respect to the proposed amendments to the 946 Patent.

63    Dr Mitchell joined the Lilly ICOS team working on the development of tadalafil in July 1998. ICOS had applied to the US Food and Drug Administration (FDA) for the Investigational New Drug (IND) designation for tadalafil before he joined the team. The IND was transferred from ICOS to Lilly ICOS at some point in 1999.

64    Dr Mitchell said that he was responsible for overseeing the clinical pharmacology studies required to support the registration of tadalafil. One such category of studies examined the interaction of tadalafil with nitrates. He was responsible for all the nitrate studies other than the first one which was designated “LVAB”. All the other nitrate studies, namely LVBY, LVCM, LVCP and LVDN were performed under Dr Mitchell’s supervision, and the study protocols were devised by him, either alone or in collaboration with others.

65    Dr Mitchell’s view has been and still is that, based on the nitrate studies, the contraindication with nitrates for tadalafil is not warranted. His view, which is based on the results of the nitrate studies and data generated since, is that tadalafil can safely be used by most patients taking nitrate therapy and that it is generally safe for patients to be prescribed tadalafil while on nitrate therapy. Furthermore, he is aware of clinicians who safely prescribe tadalafil and nitrates together.

66    Finally, Apotex relied on correspondence that passed between the delegate of the Commissioner of Patents and Wrays in 2003 with respect to the 946 Patent. The delegate raised objections on the basis of a lack of novelty and a lack of an inventive step, and in response, Wrays made certain statements about the advantages of the invention in terms of its ability to eliminate or reduce side effects. Although there is little express reference to what is said to be the advantage in terms of the co-administration of tadalafil and organic nitrates, Apotex submits that in the context of what is said in the specification, the following statements by Wrays in the correspondence would be understood as referring to that advantage:

(1)    “the presently claimed invention (a) effectively treats sexual dysfunction using a low dose of a particular PDE5 inhibitor, (b) eliminates or reduces various adverse side effects associated with current PDE5 inhibitor therapy used to treat sexual dysfunction (eg VIAGRA®) and (c) increases the population treatable for sexual dysfunction using a PDE5 inhibitor”;

(2)    “Clinical studies have shown that the presently claimed unit dosage composition is an effective product having a reduced tendency to cause flushing or visual abnormalities in susceptible individuals”;

(3)    “The present invention therefore, is an improvement over the main commercial PDE5 inhibitor treatment for sexual dysfunction, i.e., VIAGRA®”;

(4)    A person skilled in the art would not have been motivated from ‘675 and ‘978 to provide a unit dose composition as recited in the present claims with any expectation that the unit dosage composition would provide such unexpected results in the treatment of sexual dysfunction...The present invention, therefore, not only is novel and inventive over ‘675 and ‘978, but also satisfies unmet needs in the art”;

(5)    “… we note that neither specification contains any further reference to the advantages of dosage forms in the 0.1-20 mg range, nor do they provide any examples of dosage forms within this range, and we respectfully submit that the present invention constitutes a selection invention within the criteria listed in I.G. Farbenindustrie AG's Patents (1930) RPC 289”; and

(6)    “… the selection of the compound and dosage range is based on ‘detailed experiments and clinical trials’ and it is at least implicit that the selected range represents a lower threshold at the compound is dosage form [sic] of treating the relevant disease states, and an upper threshold at which, whilst the compound is obviously capable of treating the desired disease states, the undesired side effects can no longer be considered clinically insignificant. Thus it can be said that the present invention satisfies the second and third criteria set down in the I.G. Farbenindustrie case in that the whole of the selected members possess the advantages in question, and that the advantages in questions are peculiar to the selected group.”

Whether the Amendments to the 946 Patent should be allowed

67    I am satisfied that ICOS has given full disclosure of all relevant matters bearing on the exercise of the discretion.

68    Dr Stewart gave the instructions for the application to amend to be made and he has explained his reasons for giving those instructions. He has produced the confidential emails involving Wrays and personnel within Lilly which led to the making of the decision.

69    Mr Wood has explained Lilly’s patent drafting practices and he has stated that no similar amendments have been considered or made to any patents equivalent to the 946 Patent in any jurisdiction in the world.

70    Dr Mitchell has produced the reports for nitrate studies which were one category of studies required to support the registration of tadalafil and he has provided his comments on the reports. He has also explained the interactions between Lilly and the FDA in respect of the nitrate contraindication.

71    Mr Cox has explained that it was the firm Wrays which advanced the idea of amending the 946 Patent and it was Wrays who prepared and drafted the proposed amendments. Mr Cox has described his communications with Lilly/ICOS about the proposed amendments and the circumstances in which he received instructions from Dr Stewart to make the application for the amendments.

72    In accordance with the Court order, ICOS has provided verified discovery which has included emails between Wrays and Lilly, emails between internal Lilly patent counsel and Lilly’s clinical study reports. ICOS has not maintained a claim for privilege in respect of these documents. ICOS has confirmed that there are no file notes of certain conversations referred to in the affidavit evidence filed and served by ICOS.

73    Apotex did not suggest that ICOS had not made full disclosure of all relevant matters bearing on the exercise of the discretion.

74    As far as delay is concerned, the now abandoned ground of opposition filed by Apotex concerning delay, identified delay from the date when the NOC decision was handed down. I think that is correct in the sense that there is no earlier date that suggests itself. The first part of this period is from February 2015 when the NOC decision was handed down and February 2016 when the NOC decision was provided to Wrays. I am satisfied that there is no relevant delay with respect to this period. I am satisfied that the nature of the NOC proceedings were such that it could not be said that Lilly or ICOS knew, or ought reasonably to have known, of the need to amend the 946 Patent. The second period is the period from February 2016 when Wrays became aware of the NOC decision to the date upon which ICOS filed its application to amend (i.e., 11 November 2016). I am satisfied, having regard to the evidence of Mr Cox, that ICOS’ conduct during this period was reasonable and that there was no relevant delay in relation to this period.

75    There is no evidence that Apotex will suffer any prejudice if the amendments are allowed, other than the possible effect on one of its grounds of invalidity. Apotex has given an undertaking not to market, sell or exploit its generic tadalafil products during the term of the compound patent. In addition, this application has been made before trial and not after it. Finally, no third party has sought to oppose the application to amend.

76    I do not understand Apotex to suggest that ICOS should never have made the statements in the 946 Patent about the co-administration of tadalafil and organic nitrates, or that it always knew that they could not be defended. That is not how it put its opposition. Depending on the issues at trial, that issue or related issues may become relevant, but they do not arise on this application.

77    It is to be noted that there is no plea at the moment of false suggestion which is a ground for revocation of a patent under s 138(3) of the Act. In a case of false suggestion, there is no need to establish that the patentee or a person who made a statement had an intention to deceive. However, the false suggestion or representation needs to be a material inducing factor to the grant of the patent (Prestige Group (Australia) Pty Ltd v Dart Industries Inc (1990) 26 FCR 197).

78    The relevance of a possible allegation of false suggestion is that Apotex contends that if the amendment is allowed, it will apply to amend its Particulars of Invalidity to include a plea of false suggestion. It states that it has not pleaded false suggestion to this point because the matters which would be raised under that plea can be raised under its plea of a lack of utility. That will not be the case if the amendments are allowed. Apotex submits that, insofar as the rationale for the amendments is the saving of time at trial, there will be no saving of time because it will amend to plead false suggestion. There are two answers to Apotex’s submission. The rationale for the amendments is not only the saving of time, but also the avoidance of the risk of the plea of a lack of utility being upheld. Furthermore, I think it is appropriate on this application to proceed by reference to the pleadings as they presently stand.

79    The amendments relate to the statements concerning the co-administration of tadalafil and organic nitrates and the side effect of facial flushing. The focus of Apotex’s submissions was on the statements concerning the co-administration of tadalafil and organic nitrates. Apotex submits that should these statements concerning the co-administration of tadalafil and organic nitrates remain in the specification, be construed as promises, and it be found that they have not been met, then, on the authorities of In the Matter of Alsop’s Patent, Pracdes v Stanilite Electronics (No 1), and Ronneby Road v ESCO, inutility would be made out even if the other promises were met. Apotex relied on this matter and submitted that ICOS was seeking to withdraw part of the consideration for the grant of the patent. Furthermore, the application to amend has been made 12 years after the grant of the patent and after the patentee had already enjoyed a monopoly for over 17 years out of the 20 year patent term.

80    With these matters in mind, Apotex then identified four matters which it submitted were relevant to the exercise of the discretion and which favoured a refusal of the amendments. As will be seen, in one way or another each of the matters (or at least the last three of them) bears upon the importance of the statements about the co-administration of tadalafil and organic nitrates to the grant of the patent. Apotex accepted that there was no “bright line” test and that none of the matters it identified were decisive. It was the accumulated effect of all matters which should lead, so Apotex submits, to the refusal of the amendments. Apotex’s approach reflects the legal principle identified above (at [36]).

81    First, Apotex directs attention to the nature of the proposed amendments. The nature of the amendments sought by ICOS is a matter which I take into account. In Les Laboratoires Servier v Apotex (2016), the Full Court said that the nature of the amendment and the ground of invalidity sought to be overcome by it are matters to be taken into consideration when exercising the discretion. The Court said (at [245]):

In the present case, the amendment is not a narrowing amendment to defeat a piece of prior art. It is to remedy the failure to comply with an obligation that crystallised on the filing of the patent application or, in the alternative, on the grant of the patent.

In that case, the Court refused to interfere with the primary judge’s exercise of discretion to refuse the application to amend. Apotex submitted that the amendments sought in this case are similar to those which were sought in Les Laboratoires Servier v Apotex (2016). The amendments do not involve a narrowing of the claims so as to avoid an argument based on a piece of prior art. Rather, they involve the removal of statements about the co-administration of tadalafil and organic nitrates. Apotex submitted that the obligation to make promises that were met or could be met crystallised on the filing of the patent application or, in the alternative, on the grant of the patent. In response, ICOS made the point, correctly in my view, that unlike best method and sufficiency, the patentee under the law at the time was not required to make statements as to the utility of the invention. The nature of the amendments is a matter I take into account.

82    Secondly, Apotex submits that ICOS’ conduct in relying on statements about the co-administration of tadalafil and organic nitrates in correspondence with the Commissioner of Patents before grant is a matter to be taken into account. In other words, ICOS’ deployment of the statements which are set out above (at [66]) is a reason not to allow the amendments. ICOS submits that the statements relate to facial flushing and vision abnormalities and should not be construed as referring to the co-administration of tadalafil and organic nitrates. It further submits that, in view of Apotex’s foreshadowed plea of false suggestion, I should not embark on a consideration of the materiality of the statements even if they are taken to refer to the co-administration of tadalafil and organic nitrates.

83    I am not satisfied on the evidence and submissions as they presently are that the statements, even if taken to refer to the co-administration of tadalafil and organic nitrates, were material in overcoming the objections raised by the delegate. Nor, even if they were material, am I satisfied as to the extent to which they were material. That may be established by Apotex at trial should it raise a plea of false suggestion. Furthermore, even if that was the case, it would be but one factor to be considered in the exercise of the discretion and perhaps not a particularly weighty one in light of the fact that the statements were already in the specification.

84    Thirdly, Apotex submits that the amendments sought by ICOS involve the removal of the main promises in the patent. Apotex submits that this feature distinguishes the case from Pracdes v Stanilite Electronics (No 2) where the unmet promise was one of six promises made in the specification. It is true that the statements about the co-administration of tadalafil and organic nitrates are an important aspect of the specification. However, it is not the only advantage identified. The difference between this case and Pracdes is one of degree, not nature.

85    Finally, and this is closely related to the two previous submissions, Apotex submits that the 946 Patent is a selection patent and that the advantages of the selected members is critical to the validity of the patent.

86    In In the Matter of I.G. Farbenindustrie AG’s Patents (1930) RPC 289 at 322-323, Maugham J said the following:

Three general propositions may, however, I think be asserted as true: – First, a selection patent to be valid must be based on some substantial advantage to be secured by the use of the selected members. (The phrase will be understood to include the case of a substantial disadvantage to be thereby avoided.) Secondly, the whole of the selected members must possess the advantage in question. Thirdly, the selection must be in respect of a quality of a special character which can fairly be said to be peculiar to the selected group. … I will add that this condition must not be assimilated with the doctrine of utility as applied to an originating patent. In such a patent there may well be invention without utility. In a selection patent the condition that there must be a substantial advantage attributable to the use of the selected members is inherent in the so-called invention.

87    The nature of the 946 Patent is likely to be debated at trial. Even if the patent is a selection patent and the amendments are allowed, a number of advantages or benefits attending the invention remain in the specification.

88    I have decided that the amendments to the 946 Patent should be allowed. As I have said, ICOS has made full disclosure and there has been no unreasonable delay. It is not a case where the patentee knew or ought to have known of the need to amend and yet delayed. There is no evidence of prejudice in the sense I have described (at [75]). I have taken the matters identified by Apotex into account, but I am not satisfied that they warrant a refusal of the application to amend. Insofar as another case involving the exercise of the discretion in s 105 of the Act may support the exercise of the discretion in this case, Pracdes v Stanilite Electronics (No 2) supports an exercise of the discretion in favour of allowing the amendments.

Whether the Amendments to the 666 Patent should be allowed

89    There has been full disclosure in relation to these amendments. The application to amend was prompted by the decision in Actavis Group v ICOS and there has been no unreasonable delay since the handing down of that decision. The amendments will be allowed.

Conclusions

90    I will make orders as follows:

1.    Pursuant to s 105(1) of the Patents Act 1990 (Cth) the complete specification of Australian Patent. No 769946 be amended in accordance with the proposed amendments set out at Annexure 1 to the respondent’s interlocutory application dated 11 November 2016 (interlocutory application).

2.    Pursuant to s 105(1) of the Patents Act 1990 (Cth) the complete specification of Australian Patent No. 773666 be amended in accordance with the proposed amendments set out at Annexure 2 to the interlocutory application.

91    It was agreed, as I understand it, that ICOS would pay Apotex’s costs. I will hear the parties as to the precise terms of the order for costs.

Associate:    

Dated:    9 May 2017