FEDERAL COURT OF AUSTRALIA

Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193

ORDERS

THE COURT ORDERS THAT:

1.    The Prospective Applicants be granted leave to appeal.

2.    The appeal be allowed.

3.    Set aside the orders made by the primary judge on 21 March 2017 and in lieu thereof order that the Prospective Respondent give the Prospective Applicants preliminary discovery on terms to be the subject of further orders.

4.    There be remitted to the primary judge for determination:

(a)    the final form of the orders providing for preliminary discovery including any questions of confidentiality; and

(b)    the question of the costs of the application at first instance.

5.    The Respondent to the appeal pay the Appellants’ costs as taxed or agreed.

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

REASONS FOR JUDGMENT

ALLSOP CJ:

1    This is an application for leave to appeal and an appeal (should leave be granted) in respect of orders made refusing preliminary discovery under Pt 7 r 7.23 of the Federal Court Rules 2011 (the Rules) and an accompanying so-called Sabre order in accordance with the principles set out in Sabre Corporation Pty Ltd v Russ Kalvin’s Hair Care Company [1993] FCA 841; 46 FCR 428: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCA 285. It is thus an application in respect of a matter of practice and procedure in the review of which an appellate court should exercise particular caution: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170.

2    I have read the reasons of Perram J and Nicholas J. Subject to what follows, I agree generally with the reasons of their Honours. I express my views fully and separately, in part out of respect for the primary judge whose experience in this field is deep, and in part to highlight the way the existing authorities appear to have been influencing these applications into a form of mini-trial where a form of fact finding takes place, well beyond the mandate of the words of the rule. That is not a conclusion that any of the previous authorities is wrong. No argument took place to that effect. Rather, it is to emphasise at least two things. First, the words of the rule are the framework of analysis for deciding applications under the rule. Secondly, these are summary applications not mini-trials.

3    The applicants, to which I will refer as Pfizer, are relevantly interested in three process patents concerned with systems for the production of proteins and polypeptides in cell culture. The application for preliminary discovery is said to be brought to enable Pfizer to decide whether to bring an action for infringement of three patents against Samsung Bioepis AU Pty Ltd (SBA) and its distributor Merck Sharp & Dohme Pty Ltd (MSD) in respect of a pharmaceutical product called BRENZYS, the active ingredient of which is a protein called etanercept. The patents relate to processes for the production of proteins. Though there is mention in the three patents of etanercept, the patents are not directed specifically to the production of that protein.

4    The application before the primary judge took two days of hearing; the application for leave and the appeal (heard concurrently) also took two days. The application for leave to appeal and the appeal was put by Pfizer as raising important questions as to how r 7.23 applies to process patents and Australia’s international obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). No doubt the nature of a process patent in the pharmaceutical area, in which trade confidentiality is so important, is such that it may well be difficult to know whether a competitor is in some way infringing a patent. That, however, does not place those interested in process patents in any particular category of applicant. Rule 7.23 is a beneficial provision, the purpose of which is to enable a person who believes he, she or it may have a right to seek relief to obtain information to make a responsible decision as to whether to commence proceedings. The more important question is, in my view, the proper approach to preliminary discovery generally. Naturally enough, this will have an impact on important areas of commerce such as pharmaceutical manufacture and the enforcement of patents related thereto.

5    The present form of r 7.23 is as follows:

7.23 Discovery from prospective respondent

(1)    A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:

(a)    reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and

(b)    after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and

(c)    reasonably believes that:

(i)    the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent's control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii)    inspection of the documents by the prospective applicant would assist in making the decision.

(2)    If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).

6    The predecessor rule was O 15A r 6 of the Federal Court Rules 1979 (Cth):

6. Discovery from prospective respondent

Where:

(a)    there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained;

(b)     after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and

(c)    there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision;

the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).

7    The change in wording of the Rules was not explained as the result of any particular desire to widen or vary the operation of the provision. The Explanatory Statement to the 2011 Rules stated the provisions “adopt, simplify and streamline the process and procedures which operated under the former Rules and do not substantially alter existing practice”. That said, the words of the rule should be attended to without paraphrase and redefinition.

8    It is important to approach the task with the fundamentals of the rule in mind. There have been a large number of cases now (both at first instance and Full Court) dealing with and explaining the relevant rule. Those authorities should not be utilised to form a complex matrix of sub-rules for the operation and application of a tolerably straightforward provision. Whilst there was no submission that any of these cases was wrongly decided, there does appear to have been a tendency to create an overly abstracted conceptualisation of refined states of mind which, if the words of the rule are not kept in mind, can lead in application to a misstatement of the essence of the rule, focused as it is upon what may be the position. The foundation of the application in r 7.23(1)(a) is that an applicant (a person or a corporation) reasonably believes that he, she or it may have a right to relief. The belief therefore must be reasonable (expressed in the active voice that someone reasonably believes) and it is about something that may be the case, not is the case. It is unhelpful and likely to mislead to use different words such as “suspicion” or “speculation” to re-express the rule. For instance, it is unhelpful to discuss the theoretical difference between “reasonably believing that one may have a right to relief” and “suspecting that one does have a right to relief” or “suspecting that one may have a right to relief” or “speculating” in these respects. The use of such (different) words and phrases, with subtleties of differences of imprecise meaning, and not found within the rule itself is likely to lead to the proliferation of evidence and of argument, to confusion and to error. One must keep the words of the rule firmly in mind in examining the material that exists in order to come to an evaluation as to whether the relevant person reasonably believes that he or she may have a right to relief. That evaluation may well be one about which reasonable minds may differ.

9    The most appropriate way to approach the appellate task here is to examine the careful and full reasons of the primary judge.

10    The primary judge at [7] of the reasons identified and described the patents as follows:

The potential causes of action in respect of which the applicants seek preliminary discovery are patent infringement claims arising from three standard patents (patents). Patent no. 2005280036 is entitled “Production of TNFR-Ig fusion protein” (036 patent) and is said in the specification to provide an improved system for large scale production of proteins and/or polypeptides in cell culture. Patent no. 2005280034 is entitled “Production of polypeptides” (034 patent). It has substantially the same specification, but differently worded claims. Patent no. 2008242632 is entitled “Use of low temperature and/or low pH in cell culture” (632 patent) and is said to provide methods of improving protein production by cultured cells, especially mammalian cells. Pfizer Ireland is the owner of the 034 and 036 patents. Wyeth LLC, the second applicant, is the owner of the 632 patent. Pfizer submits that the production of documents in accordance with the orders sought will enable them to ascertain whether the BRENZYS Process infringes the claims of the three patents identified.

11    At [8] the primary judge described the body of evidence upon which Pfizer relied:

In support of their application, Pfizer relies first on affidavits from Mr Nicholas Tyacke, who is Pfizer’s solicitor and a partner of DLA Piper Australia. He gives evidence about correspondence between the parties prior to the present application and relevant to the steps taken to obtain the information sought in the current application. Secondly, affidavits from Dr Neysi Ibarra who is the Director and Group Leader of Process Development, Manufacturing Science and Technology of Pfizer Ireland Pharmaceuticals. She gives evidence that she has been provided with the Federal Court expert evidence practice note and complied with its terms. Her evidence is about technical aspects of the patents, the process dependence of biological medicines and her opinion that the BRENZYS Process is likely to take each integer of claim 1 of each of the patents-in-suit. Thirdly, an affidavit from Louis Sebastian Silvestri, who is the Assistant General Counsel of Pfizer Inc., the parent company of each of the prospective applicants. He is the person responsible for making the decision on behalf of Pfizer whether to start a proceeding. He gives evidence as to his belief that Pfizer may have the right to obtain relief for infringement of claim 1 of each of the patents and states that his opinion is based upon the affidavit evidence of Dr Ibarra.

12    For the purposes of the application, Mr Silvestri was the mind of Pfizer. It is his decision whether to bring proceedings. He is a lawyer with experience in intellectual property who has training in science, holding a BSc in Neuroscience from Brown University. He deposed to the belief he had that Pfizer may have the right to obtain relief against SBA, but that he did not have sufficient information to make the decision. He based his belief on an affidavit of Dr Neysi Ibarra affirmed on 5 January 2017.

13    It was therefore crucial to understand Dr Ibarra’s views. If it be the case that Mr Silvestri has based his belief on the belief of another whose view, when analysed at the appropriate level of abstraction, does not permit a conclusion that it was reasonably formed, the application may fail.

14    The evidence led by SBA was described at [10] of the reasons:

In evidence, SBA relies on, first, an affidavit from Mr Benjamin Miller, who is a partner of Ashurst Australia and the solicitor for SBA. He gives evidence critical of the scope of documents being sought in the current application on the basis that most of it, in his view, does not relate to features of the claims of the patents asserted by Pfizer to be material to their prospective case of patent infringement. He does not dispute that documents exist that are relevant to the claim. Secondly, an affidavit of Professor Stephen Mahler who is a bio-engineer who works at the Australian Institute for Bioengineering and Nanotechnology (AIBN) which is part of the University of Queensland. He gives expert evidence about the development and production of biological medicines and responds to the affidavit of Dr Ibarra. Thirdly, an affidavit from Professor Peter Gray who is also a bioengineer who works at AIBN. He also gives evidence relevant to technical aspects of biological medicines and responds to Dr Ibarra. Fourthly, an affidavit from Associate Professor Michael Ward who holds the position of Discipline Leader: Pharmacy Education in the School of Pharmacy and Medical Sciences of the University of South Australia. He gives evidence relating to biological medicinal products and biosimilars and the ENBREL product information. Fifthly, an affidavit from Young-Phil Lee, head of Cell Engineering in SBK and has since 2012 been responsible for the management of analytical works related to biosimilar development for that company. His evidence addresses the substantial investment that has been made in the development of an etanercept biosimilar product, the steps taken for the development, the confidentiality of the manufacturing processes and the timeline of public announcements regarding the development of the BRENZYS product.

15    Pfizer also relied on further affidavits of Dr Ibarra who joined issue with the evidence filed by SBA.

16    In [12] of the reasons, the primary judge set out the issues for determination as follows:

The issues for determination are:

(1)    whether the applicants have a reasonable belief that they have the right to obtain relief for patent infringement from SBA in accordance with FCR 7.23(1)(a);

(2)    whether the applicants have established that after making reasonable inquiries, they do not have sufficient information to decide whether to start proceedings to obtain relief within FCR 7.23(1)(b);

(3)    whether the applicants reasonably believe that SBA has, or is likely to have, in its control documents directly relevant to the right to obtain the relief and that inspection of the documents would assist in making the decision within FCR 7.23(1)(a); and

(4)    whether the Court is satisfied that an order for discovery of the kind sought should be given.

17    It should be noted that (1) misstates the task. The applicants must reasonably believe that they may have, not that they have, the right to obtain relief. It should be said, however, that elsewhere in the reasons the primary judge made clear that he directed himself to the correct question. Nevertheless, as discussed by Perram J, the approach taken to the application by the primary judge, and it should be said the approach the parties took to the application, betrayed a disposition that it was relevant and necessary to find an inference or an inclination of mind that there was infringement by SBA.

18    The technical and regulatory background to the application was clearly discussed by the primary judge at [13] to [34]. The following is substantially taken from these paragraphs.

19    Etanercept is the active ingredient in Pfizer’s product ENBREL. It is also the active ingredient in SBA’s product BRENZYS. ENBREL is a biological medicine (being a medicine whose active substance or substances, here etanercept, are made by a biological process or from a biological source rather than by chemical synthesis) used in treating autoimmune diseases. Until recently, ENBREL was the only product containing etanercept registered on the Australian Register of Therapeutic Goods (ARTG). SBA has caused the Therapeutic Goods Administration (TGA) to register BRENZYS on the ARTG.

20    At [13] and [14], the primary judge introduced the background in terms not said to reflect any misunderstanding:

[13]     …Biological medicines are manufactured in cell culture and include vaccines, gene therapies, and recombinant therapeutic proteins. Recombinant therapeutic proteins are proteins made by genetically engineered living bacterial, animal or plant cells. Biological medicines can consist of relatively small molecules such as human insulin, or large and complex molecules such as mAbs and mAb-soluble receptor therapeutic products (also known as “cepts”). Compared with chemically synthesised small molecule medicines, biological medicines are larger in size and more complex. Cepts are large complex proteins with complicated three dimensional structures. They are inherently difficult to replicate and are sensitive to minor alterations in manufacturing processes and conditions, such as the host cell line, expression vector, master cell line, batch size, cell culture system, harvest process and purification process.

[14]    Biological medicines are produced in living cells such as bacteria, yeast, insect cells and mammalian cells (host cells). This is made possible by the use of recombinant DNA technology. By using expression vectors or plasmids to introduce foreign DNA into host cells, the expression capabilities of the cells are “hijacked” to express the gene (and therefore the protein) of interest. Host cells containing the gene of interest are cultured in bioreactors and scaled up for industrial production, which, in cell culture, act as “cell factories” producing the protein.

21    At [15] of the reasons, the primary judge identified four broad phases in which the development of biological medicines can be conceptualised. The stages, or at least the first three, assumed central importance in the argument. The four phases were as follows:

(a)    cell line development and creation of cell banks (including vector construction and engineering, transfection into the host cell, selection, formation of a stable host pool, and selection of clones);

(b)    upstream bioprocessing;

(c)    downstream bioprocessing; and

(d)    product characterisation and formulation.

22    Simply put, Pfizer submitted that the evidence revealed that the biosimilarity of ENBREL and BRENZYS and the close similarity of the glycosylation profiles of the two products led Dr Ibarra (and so, Mr Silvestri) reasonably to believe that SBA may be using the same process in phase (b) as Pfizer and so may be using the patents. Crucial to this belief were three considerations: first, the close similarity of the two glycosylation profiles; secondly, the likelihood of that close similarity deriving from the similarity of process used by both companies in phase (b); and thirdly, the fact that Dr Ibarra’s view (which she conveyed to Mr Silvestri) was that Pfizer’s process was in accordance with the patents (or one or more of them).

23    SBA in answer, simply put, contended that the close similarity in the glycosylation profile of the two products was a feature of biosimilarity which could have been brought about by matters concerned with phase (a) or phase (c) or phase (b) or a combination of them all and that it was insufficient to lead one reasonably to believe that SBA may be infringing the patents.

24    The discussion of these two competing bodies of contention is at [73] to [97] to which I will come in due course.

25    The primary judge described phase (a) at [16] to [20] as follows:

[16]    Cell line development and creation of cell banks (phase (a)) starts with the insertion of the gene of interest into an expression vector and the transfection of the recombinant vector or plasmid into the host cell. This is done in such a way that the host cell will synthesise useful amounts of the therapeutic protein.

[17]    The particular host cell used will influence the quality attributes of proteins expressed by the cell. That is, the choices made regarding the host cell line and the expression vectors play a role in the quantity and quality of the biological medicines produced. Professor Gray states that even if two biotechnology companies select the same type of cells (e.g., the Chinese Hamster Ovary (CHO) cells, such as DUXB11 or DG44) as the starting point for their cell line development programs, the cell lines ultimately developed through those programs will be expected to differ from one another, including because of differences in the expression vectors and transfection processes employed. Dr Ibarra disputes that proposition at least insofar as it is relevant to the present application.

[18]    Various features may be introduced to drive the expression levels of the gene of interest (and therefore the amount of protein of interest produced by the host cell). These are aimed at maximising the production of mRNA, which are then translated into proteins. Further or alternatively, cell line engineering may also be used to increase the total amount of protein produced in the bioreactor harvest (“protein titre”).

[19]    Following transfection, cells are allowed to grow in cell culture under selection pressure for a period of time, to form a pool of stably transfected cells. Clones are then selected and grown in larger scale to form a “cell line” (that is, a cell culture developed from a single cell and therefore consisting of cells with a uniform genetic make-up). These are then frozen to create a master cell bank (from which working cell banks are derived).

[20]    Cell lines and expression vectors used in the commercial production of biological medicines are typically treated by the companies which develop and use them as proprietary technologies.

26    The dispute between Prof Gray and Dr Ibarra to which the primary judge refers at [17] is further addressed later in the reasons, especially at [96].

27    One aspect of this debate to which I will turn in due course is the extent to which, in an interlocutory application such as this where there may be no cross-examination (as there was not here), it is appropriate to resolve contested scientific issues between skilled witnesses beyond any available view (if it is propounded) that any particular position is not reasonably open.

28    The primary judge described phase (b) at [21] to [24] as follows:

[21]    Upstream bioprocessing (phase (b)) commences once cell line development has been completed.

[22]    Cells are grown in cell culture and progressively scaled up for industrial production. At small-scale, most biologics are produced by a suspension culture of CHO cells in sterile, disposable shake flasks, tubes or plates typically ranging from about 1 mL to 3 L. For scale-up, a bioreactor is inoculated at low density and the cell culture is allowed to grow for a period until the cells reach a certain density and enter the “production phase”, when most of the target protein is produced.

[23]    Factors which need to be taken into account for upstream bioprocess development include: (a) bioreactor mode of operation (batch, fed batch, perfusion etc); (b) the cell culture media composition; (c) nutrient supplementation (“feeding”) protocol for fed-batch; and (d) the bioprocessing or environmental conditions. Further, the processing conditions of any bioreactor will need to take into account various parameters, such as dissolved oxygen concentration (the level of oxygen in the media); osmolality (the solute concentration of the media); pH; temperature; and shear (the process of stirring in a bioreactor generates forces which may shear the cell membranes). The interaction of the factors stated in this paragraph, among other things, will impact on the amount and/or qualities of the proteins produced by the bioreactor.

[24]    It is not in dispute that the methods claimed in the patents relate to the upstream bioprocessing phase.

29    It can be noted that two of the patents (described in shorthand as 034 and 036) go to (b) in [23], and the third (described as 632) concerned with temperature and pH value goes to (d) in [23].

30    The primary judge described phases (c) and (d) at [25] and [26]; and the nature of glycosylation at [27] as follows:

[25]    Downstream bioprocessing (phase (c)) includes all operations occurring after cessation of bioreactor operation, beginning with the harvesting of the bioreactor, and before product characterisation. The goal of downstream processing is to separate contaminants from the active substance (given rise to by the upstream bioprocess) to a predetermined level as described in appropriate regulatory guidelines, as well as to minimise product variants.

[26]    Product characterisation (phase (d)) involves an examination of all of the quality attributes of the biologic product using a battery of methods. Formulation involves preparing the final therapeutic protein in a form suitable for storage, transportation and administration by injection, including addition of excipients in order to stabilise the product.

[27]    Glycosylation is the addition of complex sugar structures to the amino acid backbone of the therapeutic protein (which forms one of the largest and most clinically important categories of biological medicines). The composition of glycosylation can vary without changing the underlying amino acid structure of the protein. Glycosylation patterns can be highly complex and may have an influence on the biological activity of the product.

31    Pfizer’s product ENBREL is the reference medicine against which other products (such as BRENZYS) must establish biosimilarity for regulatory acceptance.

32    Prior to 2007, Pfizer manufactured etanercept using foetal bovine serum. Since 2007, however, it has been manufactured by Pfizer in a serum-free way using chemically defined media that do not contain foetal bovine serum. Importantly, Dr Ibarra gave evidence that this new process was, as far as she knew, the only serum-free process to have been used for the commercial production of etanercept. At [37], the primary judge noted that the relevant production information for the listing of BRENZYS on the ARTG contained the following:

… that etanercept is “produced by recombinant DNA technology in a Chinese hamster ovary (CHO) mammalian expression system”. It also states that etanercept is manufactured using a serum-free process.

Dr Ibarra’s expertise

33    Dr Ibarra has a background of some distinction. She obtained a Bachelor of Science in biochemistry from the University of Havana in 1996. She became a research associate at a biotechnology institute in Havana. From the institute in Havana, in 2001 she was awarded a scholarship by the British Council to attend the University of Birmingham as a visiting research fellow. In 2002, she was awarded a scholarship to pursue a PhD in biological science at the University of Birmingham. In 2006 and 2007, she was a research assistant at the Department of Biochemistry at the University of Oxford. Since 2007, Dr Ibarra has been employed by Wyeth Ireland and then Pfizer Ireland where the responsibilities of her role included close involvement with commercial manufacturing processes and technical support for biological medicines. She has since become Associate Director and then Director and Group Leader of Process Development, Manufacturing Science and Technology.

Two articles of importance: the Cho article and the Schiestl article

34    Two scientific articles loomed importantly in the debate. The first was referred to as the Cho article and was discussed by Dr Ibarra in her first affidavit. The primary judge described it at [41] and described Dr Ibarra’s evidence about it at [42], as follows:

[41]    Dr Ibarra draws attention to an article entitled “Evaluation of the structural, physicochemical, and biological characteristics of SB4, a biosimilar of etanercept” by Cho et al (Cho article). The Cho article records that it was written by employees of SBK or its collaborator, Biogen, and the work was funded by SBK. It refers to a product identified as “SB4” which is accepted by SBA to be the BRENZYS etanercept product. Dr Ibarra notes that the Abstract indicates that SB4 was developed as a biosimilar to ENBREL and refers to extensive structural, physicochemical, and biological testing that was performed using state-of-the-art technologies during a side-by-side comparison of the two products.

[42]    In her evidence in chief at [121], Dr Ibarra notes five relevant matters in relation to the assessment in the Cho article of the similarities between BRENZYS and ENBREL; (a) the amino acid sequences were identical; (b) the characteristics of certain disulfide-linked peptides and their bonds; (c) that a total of 23 peaks corresponding to N-glycan structures were detected by hydrophilic interaction liquid chromatography, and 21 species of N-glycan were identified in SB4. This suggested, according to the authors, that the structure of each N-glycan species on SB4 was identical to that of the corresponding species on the reference product and that there was no N-glycan structure specific only to SB4; (d) that the level of Peak 3 impurity consisting of both aggregates and disulfide-scrambled species, was lower for SB4 than for the reference product; and (e) the overall ability of SB4 to inhibit TNF was similar to that of the reference product. In her reply evidence, Dr Ibarra places significant reliance on (c), to which I refer further below. Matter (d), on its face, is a dissimilarity between BRENZYS and the reference product, while matter (e) simply suggests that the efficacy of both products is ‘similar’. Comparable efficacy is a requirement to establish biosimilarity, and as is addressed below, this is not of itself sufficient to support an inference that the BRENZYS Process takes the integers of the patents.

35    The matter (c) referred to in [42] is the glycosylation profile that came to be at the centre of the debate between Dr Ibarra and the witnesses called by SBA. Put shortly for the moment, Dr Ibarra’s view was that the close similarity of the glycosylation profiles of ENBREL and BRENZYS was a basis to believe that the same upstream bioprocessing process (phase (b)) had been employed by SBA as used by Pfizer.

36    At [43] to [46], the primary judge discussed the views of Prof Mahler who contested Dr Ibarra’s views in para 121 of her affidavit, discussed by the primary judge at [42] of his reasons (see above). After recording that Pfizer accepted in argument that the similarity in features (a) and (b) referred to in [42] was unlikely to bespeak similarity of process, the primary judge said the following at [45] and [46]:

[45]    Professor Mahler developed his observations in this regard by reference to an article entitled “Acceptable changes in quality attributes of glycosylated biopharmaceuticals” in Nature Biotechnology 2011 by Schiestl et al (Schiestl article) which is referred to in the materials annexed to Dr Ibarra’s first affidavit. The changes identified in this article arise from the change in the manufacturing process of ENBREL. The Schiestl article says (emphasis added):

The data [for ENBREL] revealed a highly consistent quality profile for batches having expiry dates until the end of 2009. After this time period, batches with a second and changed quality profile appeared on the market in parallel (Fig. 3). Major differences were found in the glycosylation profile. The amount of variants containing the N-glycan G2F decreased from ~50% in the pre-change to ~30% in the post-change material (Fig. 3b, d and Supplementary Fig. 3b, d). The CEX analysis showed a change of the amount of the basic variants, which corresponds primarily to C-terminal lysine variants from 15-30% in the pre-change to 40-60% in the post-change material (Fig. 3a, c and Supplementary Fig. 3a, c). As for the other products … the pre- and the post-change versions of Enbrel were also marketed under the same label.

…

… the data we present here reveal substantial alterations of the glycosylation profile for all tested products. Different lots of… Enbrel also showed changes of the N- and C-terminal heterogeneity. … Because of the abruptness and the magnitude of the observed alterations, they are most probably caused by changes in the manufacturing processes. As the glycosylation profile is defined by the production cell line, growth conditions and the purification sequence, these findings may reflect changes in one or more of these components. The data indicate the magnitude of changes in quality attributes of marketed products. All tested products remained on the market with unaltered labels in the tested time frame, indicating the observed changes were predicted to not result in an altered clinical profile and are therefore acceptable by the health authorities.

[46]    Professor Mahler agrees with the conclusions expressed in the Schiestl article insofar as they suggest that the changes in the ENBREL product signify a change in the manufacturing process, that the change could be a change in any one of phases (a) (cell line production), (b) (upstream growth conditions) or (c) (downstream processing) and that despite the changes the regulatory authorities were apparently satisfied that the changes did not result in clinically significant differences to the end product.

(Emphasis in the primary judgment)

37    The Schiestl and Prof Mahler’s views are crucial to two aspects of the argument. Pfizer submits that the major differences in the glycosylation profile, referred to in the first quoted paragraphs of Schiestl, is explained by the change in production process (in phase (b)) from the use of bovine serum to a serum-free method. This reinforced the belief that a change in process in phase (b) leads to differences in the glycosylation profile, and similarity in process in phase (b) leads to similarity in glycosylation profile. SBA, on the other hand, emphasised Prof Mahler’s views that the glycosylation profile is defined not just by phase (b) but also by phases (a) and (c). (See the underlined part in the second quoted paragraph in [45].) This was the foundation of his view that similarity in glycosylation profile did not necessarily tell one anything about the process of the upstream bioprocessing process (phase (b)).

38    After a discussion of the cases on preliminary discovery, the primary judge considered the arguments of the parties. Before examining his Honour’s approach, it should be stated that there was no suggestion that the primary judge misstated how Pfizer put its case, which he summarised at [57] as follows:

Pfizer relies on six contentions which it submits, when considered cumulatively, give rise to the conclusion that it has the requisite belief within FCR 7.23(1)(a). I consider each separately below, and then cumulatively when I express my conclusions.

39    The first contention of Pfizer concerned satisfaction of three integers of claim 1 of the 034 and 036 patents, and integer 1 of claim 1 of the 632 patent. The primary judge thought this was neutral (see [58]). This was not contested on appeal.

40    The second contention was said to be the advantage and opportunity by knowledge of the patent, and was put as described by the primary judge at [59]:

Pifzer contends that in the development of the process for making BRENZYS, SBK had incentives, due to the advantages set out in the patents of the claimed processes and the widely recognized importance of those advantages, and the opportunity, given that the patents had been published, to adopt the processes used in the patents.

41    From [60] to [65], the primary judge referred to Dr Ibarra’s and Prof Mahler’s evidence about the patents and their advantages as supporting the proposition that there was an incentive to use them:

[60]    As to the incentive for a party such as SBK to utilise the patents, Pfizer points to the evidence of Dr Ibarra who summarises the effect of the patents. In relation to the 034 and 036 patents, Dr Ibarra says that the process provides an improved system for large-scale production of polypeptides in cell culture, which involves the provision of amino acids, glutamine, asparagine, inorganic ions and concentrations that support relatively high levels of viable cell density and cell production that result in lower accumulation of metabolic waste products. These advantages are, it is said, reflected in the integers of the claims, which provide ranges desirable for media formulations.

[61]    Professor Mahler’s evidence refers to each of the patents. Dr Ibarra in her evidence in reply does not specifically take issue with the Professor’s evidence concerning the effect of the patents. He understands the 034 patent to be concerned with phase (b), upstream processing and in particular “Media Prep” feeding into the large-scale bioreactors. In particular, he understands it to be primarily directed to batch and fed-batch processes with minimal feeds, although perfusion processes are not necessarily excluded. He points out that although the 034 patent teaches that a culture medium with “one, several or all” of the characteristics set out in integers 5 – 9 of claim 1 of the 034 patent may be used to optimise cell growth he observes that the patent does not teach that a culture medium with one or more of those characteristics will necessarily optimize the conditions of cell grown, viability and/or protein production (including etanercept). Professor Mahler developed this point by reference to an example given in the 034 patent of the use of a medium containing glutamine and having a medium characteristic selected from the group selected from the ranges set out in integers 5 – 9 of claim 1. He notes that the example given demonstrated that the medium having none of the characteristics identified within the ranges in the claim demonstrated a growth rate of relevant cells that was similar to that which did fall within the ranges.

[62]    In relation to the 036 patent, Professor Mahler notes that it is generally concerned with the same aspects of the biologics production process as the 034 patent.

[63]    In relation to the 632 patent, the process claimed is said in the specification to produce proteins such as etanercept with less aggregates and fewer misfolded proteins, in circumstances where the presence of such things is said to be undesirable because it may lead to an adverse event upon administration to patients. Dr Ibarra gives evidence that cells grown in cell cultures at temperatures above 30˚C and at a pH above 7 can result in increased cell aggregation and misfolding compared to cells grown in cell cultures within this temperature and pH range.

[64]    In relation to the 632 patent, Professor Mahler expresses the view that it is also generally concerned with phase (b), upstream bioprocessing, but, unlike the other two patents, more particularly with the bioprocessing or environmental conditions, which take into account dissolved oxygen concentration, osmolality, pH, temperature and shear. He notes that there are many steps in the production process which precede and follow those aspects and which collectively impact on the final product.

[65]    Professor Mahler takes issue with a suggestion in Dr Ibarra’s affidavit that if the method claimed in claim 1 of the 632 patent is followed there will necessarily be a reduction in aggregates and fewer misfolded proteins. He says that this is not established, in particular because the cell line used in the experiments in the 632 patent is not disclosed and is likely to be a proprietary master cell line which is not available to the public. Different cell lines will behave somewhat differently under various culture conditions. It does not follow that the results in one may be extrapolated to all other master cell lines.

42    It is to be noted that Prof Mahler’s views in [64] and [65] reinforce his view elsewhere expressed and discussed by the primary judge at [45] of his reasons (see [36] above) that the process used in phase (b) is but one of a number of factors that affect the characteristics of the final product.

43    One can see in this debate about the evidence that the application and its resolution are being directed towards the resolution of scientific issues by reference to competing views of scientists. It is to be noted that Dr Ibarra’s views are, however, not being criticised as ones that cannot reasonably be held by anyone in her position.

44    On appeal it was submitted that the analysis of the patents undertaken revealed an overly detailed analysis by the primary judge going beyond what was necessary and appropriate to assess whether Pfizer reasonably believed that it may have a right to relief. I will say something more as to the correct question to ask and the correct framework of analysis in due course, but at this point, it can be said simply, and in defence of the primary judge, that his Honour was dealing with the arguments that were put to him by the parties.

45    At [66], the primary judge expressed his conclusions about the advantages of the patents as follows:

I accept that the patents point to advantages in the methods to which they refer. I also accept that these advantages are confined to discrete aspects of the phase (b) part of a process that may, but need not necessarily, be used to produce etanercerpt. In the result, I give a little, but not a great deal of weight to any inference arising from the “desirable” aspect of the patents in suit insofar as it is submitted to provide an “incentive” to a third party to following the process described. The patent claims are not specifically directed to etanercept. Absent other evidence to suggest that the processes described may have been used, the fact that these patents exist does little to indicate that the processes described therein have been utilized in the BRENZYS Process. This point rises little above the proposition that “a patent exists, therefore it must be desirable to adopt the features therein”. I accept, however, that the fact that the patents were published before SBK commenced work on the development of BRENZYS indicates that there was an opportunity for SBK to review them. The affidavit of Mr Lee gives some indication of the size and scope of the work conducted by SBK in developing BRENZYS and it is entirely possible that the patents were obtained in searches.

46    The error in this assessment that was asserted in submissions on appeal by Pfizer was the sentence that: “The patent claims are not specifically directed to etanercept”. To the extent that this is to be taken as a statement that the patents do not mention etanercept, it is wrong. It is, however, correct to say that the patents are not process patents directed to the production of the product etanercept, as opposed to patents for the bioprocessing of proteins and polypeptides that can be used in the production of etanercept. There was little doubt that the primary judge understood this distinction.

47    The third contention concerned the fact that a serum-free process is used to produce BRENZYS.

48    The contention was put at a broad level of generality and as one of several cumulative inferences to suggest that the process to produce BRENZYS is similar to the Pfizer process: see [68] of the reasons.

49    The contention in Dr Ibarra’s evidence was referred to by the primary judge at [67] as follows:

The product information for the BRENZYS products states that their active ingredient etanercept is manufactured using a “serum free process”. Dr Ibarra states in her evidence that since 2007 the manufacture of etanercept for the ENBREL products has employed a process that is serum free. Her evidence is that the Pfizer Process is the only serum-free process that she knows of that has been used for the commercial production of etanercept. Whilst the Pfizer Process is not publicly known, the patents in suit provide, in Pfizer’s submission, an opportunity for the manufacturer of a biosimilar to emulate the Pfizer Process by adopting aspects of the method of production described and claimed. In this regard, Pfizer points to evidence that indicates that manufacturers are recommended, so far as possible, to look for guidance in the production of a biosimilar from the processes used by the innovator. Such recommendations are to be found in the World Health Organization Guidelines on evaluation of similar bio-therapeutic products.

50    The primary judge agreed with SBA’s submission that there is no real weight to this contention – the serum-free process is not part of the patents and is not indicative that the patents have been used; a number of patents and papers have been written describing serum-free processes for the production of etanercept and like proteins; and the fact that Dr Ibarra does not know of any commercially used process other than Pfizer’s is hardly surprising, given that competitors will keep their processes confidential.

51    In fairness to Dr Ibarra, these criticisms would appear to over-analyse this contention as a deconstructed element of her overall belief. That serum-free production of the product is not part of the patents is neither here nor there. It is relevant to the similarity of process in phase (b). Further, it may be that there are reasons why her view about not knowing about other (if there are any) commercially used serum-free process is limited by process confidentiality; but that does not mean that it cannot be a factor that reinforces a belief otherwise founded that there may be infringement.

52    The fourth contention was at the heart of the appeal. It concerns biosimilarity and glycosylation profiles and was expressed in [73] in terms that were not said to misstate the submission:

Pfizer contends that as the BRENZYS products have been determined to be biosimilar to the ENBREL products, and given the similarities identified in the Cho article, this suggests (to Dr Ibarra) that the etanercept in the BRENZYS products may be made by a process that is very similar to the process for manufacturing the etanercept in the ENBREL products. This leads to the fifth of Pfizer’s contentions (which I address below), which is closely related to the fourth, which is that the Pfizer Process falls within the claims of each of the patents in issue, and this permits the inference that the BRENZYS Process may fall within the claims.

53    At [75] of the reasons, the primary judge identified the broad parameters of the debate:

There was no dispute on the evidence that the characteristics of a biological medicinal product are a result of the process used to manufacture it. The parties also agree that the quality, safety and efficacy of biological medicines are linked to the process by which they are manufactured and may be influenced by even minor alterations in the manufacturing processes and conditions used. However, they are at odds as to the conclusions that may safely be drawn from these propositions.

54    The essential contention of SBA was that biosimilarity tells one nothing about the particular process of manufacture. This was demonstrated by Pfizer itself producing by two very different methods (bovine serum and serum-free methods) the same biosimilar etanercept. At [78] the primary judge, in discussing the Schiestl article referring to the differences in the glycosylation profile, said the following:

The Schiestl article indicates, amongst other things, that major differences were to be found in the glycosylation profile of the etanercept produced. It also points to the fact (as the underlined passages in the quotation at [45] above indicate) that glycosylation can be brought about in phase (a) (cell line development), phase (b) (upstream processing) and phase (c) (downstream processing) of the production process. Despite these differences, the TGA has continued to accept ENBREL as a product on the ARTG for the same indications as those for which it was registered before the change in process. In the result, Professor Mahler concludes, the new process for making etanercept using the Pfizer Process is “biosimilar” to the process used for producing serum-based media in the old process.

55    Importantly, at this point (at [79] and [80]), the primary judge identified the nature of the debate:

[79]    Taken together, these matters support the view (held by each of Professors Gray and Mahler) that the fact that a product is biosimilar does not inform one as to the process by which it is made.

[80]    Pfizer accepts that SBA’s position represents one available inference, but puts forward another one, which, it submits, is no less available.

56    Thus, what followed was Pfizer’s case that there was an available scientific view that the evidence supported a reasonable belief that it may have a right to relief.

57    Pfizer pointed to the Schiestl article and submitted at [82], [83] and [85] as follows:

[82]    Pfizer submits that Fig. 3d shows that the size of the peaks in the glycosylation profile “pre-change” and “post-change” is significantly different, although the peaks are located broadly similarly. The significant difference in size supports the proposition, it submits, that a significantly different process was used to make ENBREL.

[83]    By contrast, the Cho article demonstrates aspects of physicochemical similarity between the etanercept in ENBREL (as produced by the Pfizer serum-free process) and the etanercept in BRENZYS produced by SBA’s serum-free process. The glycosylation profiles reported in Cho are, the experts on all sides agreed, “very similar”. On page 127 of the Cho article , the authors report:

A total of 23 peaks corresponding to N-glycan structures were detected by hydrophilic interaction liquid chromatography (HILIC) with a fluorescence detector (Fig. 8), and 21 species of N-glycan were identified in SB4 by LC-ESI-MS/MS. Each HILIC peak revealed an identical MS/MS spectrum between SB4 and the reference product [ENBREL]. This result suggested that the structure of each N-glycan species on SB4 was identical to that of the corresponding species on the reference product and that there was no N-glycan structure specific only to SB4. …

…

[85]    Dr Ibarra concludes that the structure of each N-glycan species was identical to the corresponding species on the reference product (that is, ENBREL). The relative closeness of the glycosylation profiles demonstrated in Cho, when contrasted with the differences exhibited in Schiestl, lead to the available inference, Pfizer submits, that the closeness demonstrates a similarity between the process used to make ENBREL and the process used to make BRENZYS.

58    These views of Dr Ibarra form a syllogism that is the foundation of Pfizer’s argument: similarity of process used produces similar, near identical glycosylation profiles and different processes produce different glycosylation profiles.

59    At this point, Professor Gray disagreed with Dr Ibarra. The debate between them was set out at [86] to [88], as follows:

[86]    Professor Gray disagrees with Dr Ibarra’s conclusion. He accepts that the two products were sufficiently similar such that the BRENZYS product has been granted marketing approval by the TGA on the basis of biosimilarity to ENBREL, which indicates to him that the products are expected to have comparable safety and efficacy. But he draws attention to what he describes as minor differences (lower content of high molecular weight aggregates, lower level of impurities and some difference in the glycosylation profiles in the BRENZYS product) as informing him that there will be differences between the processes used in the manufacture of BRENZYS compared to its reference product. Further, Professor Gray notes (as does Professor Mahler and the Schiestl article itself) that the glycosylation profile may be caused by each of phases (a) – (c) of the production process. As I have earlier noted, this distinction has relevance to the present debate because the patents in issue are only directed to aspects of the process that fall within phase (b) (upstream processing).

[87]    Dr Ibarra takes issue with aspects of Professor Gray’s evidence and says first, that the method claims for each of the 034 and 036 patents include a cell culture medium with one or more of five median characteristics which are expressed as ranges. Whilst differences, such as those observed by Professor Gray in the BRENZYS product, may be associated with differences in the manufacturing process (as Professor Gray contends), they do not cause her to alter her view that the process used in making the BRENZYS product may fall within the ranges set out in the claims.

[88]    Secondly, Dr Ibarra contends there is a limited ability to influence glycosylation in the downstream process and that although there is a theoretical possibility that the glycosylation may be influenced in phase (a), cell production, that likelihood is significantly diminished by the fact that both Pfizer and SBK use the CHO mammalian ovary cell line in phase (a). Dr Ibarra’s evidence in reply is that in her experience generally cell lines of a similar type would fall within a predictable range of values and respond to environmental conditions in a generally similar manner (because the vast majority of the cell machinery of the two cell lines will be highly similar). Accordingly, Dr Ibarra’s view is that the most likely source of the glycosylation profile is in the process used in phase (b), which is the phase to which the claims of the patents are directed.

60    The submission of Pfizer, which it is to be recalled, was being put as an available scientific inference was summarised at [89]:

89    Taken as a whole, Pfizer submits that this material leads to the result that the substantially similar glycosylation profiles identified in the Cho article permit the inference of a substantially similar manufacturing process being used in the production of the etanercept in BRENZYS. In this context, Pfizer relies heavily on [21] of Dr Ibarra’s second affidavit which is as follows:

In paragraph 144, Professor Gray cites page 312 of the Schiestl paper for the proposition that “the glycosylation profile is defined by the production cell line, growth conditions and the purification sequence”. I note that the Schiestl paper found “major differences” between the glycosylation profiles of the etanercept for ENBREL® manufactured by the previous serum-based process and the Current Pfizer Process, whereas the glycosylation profiles of SB4 (being the Brenzys Products) and the etanercept in ENBREL®, as compared in the Cho Article, are very similar. In subparagraph 72(c), Professor Gray describes the differences between these glycosylation profiles of etanercept made by the Current Pfizer Process and etanercept in the Brenzys Products as “slight”. In my opinion, based on my experience in the manufacture of biological medicines, differences between manufacturing processes producing the same therapeutic protein, are likely to result in differences between the glycosylation profiles of the two resulting proteins. As there is a limited ability to influence glycosylation in downstream processing, the similarity in glycosylation profiles between the etanercept in the Brenzys Products and the etanercept made by the Current Pfizer Process suggests to me that just as the Current Pfizer Process takes each of the integers of claim 1 of each of the ‘034 and ‘036 Patents, the process for manufacturing the Brenzys Products may take the integers of these claims.

    (Emphasis in the primary judgment)

61    This evidence fixes on the similarity of the glycosylation profiles as central. At [90] the primary judge remarked that the emphasis only emerged in Dr Ibarra’s response to Professors Mahler and Gray.

62    At [91] the primary judge commented on the conclusion of Dr Ibarra on glycosylation profiles and the patent, as follows:

Nothing in the evidence adduced by Dr Ibarra leads to the conclusion that by reason of the similarity of the glycosylation profiles per se one or more integers of the claims in issue are present. Indeed, in annexures NI-12 to NI-14, where Dr Ibarra conducts an integer-by-integer analysis of the claims, no mention is made of the glycosylation profile as being indicative of the presence of any integers.

63    In fairness to Dr Ibarra, I would understand that conclusion to have within it the further step (to which I will come) that the Pfizer product was made using the patents. Further, the criticism in the last sentence of [91] is not, with respect, justified. Annexure N1-12 does refer to the Cho article (in paras 121 of her affidavit) and that this suggests that the BRENZYS etanercept may be made by the same process as etanercept in ENBREL, “being the process claimed in this claim”. The same appears in para 21 of Dr Ibarra’s affidavit of 31 January 2017 in answer to Prof Gray (see [57] above).

64    At [92] the primary judge said:

Further, the logic of Dr Ibarra’s conclusion (that because certain glycosylation profiles are very similar, the BRENZYS Process may be within the claims) is difficult to accept. The claims do not refer to glycosylation at all. No evidence suggests that by following the methods claimed in one or more of the patents, a glycosylation profile will be produced that has any particular characteristics or be similar in one way or another to another produced (by a different organization, under different conditions).

65    With respect, I have difficulty with the third sentence. The evidence (of course, contested by Professors Gray and Mahler) given by Dr Ibarra was that like phase (b) processes produced like glycosylation patterns.

66    The heart of the matter, however, was what was dealt with by the primary judge at [94] to [97] of the reasons:

[94]    Dr Ibarra’s second answer to Professor Gray is that glycosylation may be affected in phase (b) and that because of the common use of CHO mammalian cells it is unlikely to occur in phase (a). That observation does not accord with the teaching of the patents. For instance, in relation to the 632 patent integers 2 and 3 of claim 1 of the 632 patent direct attention to growing cells in a cell culture at a reduced temperature (to a range of 27˚C to less than 30˚C) and a reduced pH (in a range of 6.80 to less than 7.00). However, the examples in the 632 patent indicate that glycosylation is a step which takes place prior to the process steps the subject of the claims. For instance, at [0114] of the 632 patent it says (emphasis added):

… For instance, growing cells at a reduced temperature of 29.5˚C significantly reduced concentration of both misfolded and aggregated TNFR-Fc, while having minimal effects on TBFR-Fc glycosylation.

[95]    Similar observation was made in relation to reduced pH which at [0123] was said to significantly reduce the proportion of misfolded and aggregated TNFR-Fc protein, “while having minimal effects on glycosylation of TNFR-Fc”.

[96]    The consequence is that claim 1 of the 632 patent is directed towards minimising an adverse effect on glycosylation, but not the step of glycosylation itself. The 034 and 036 patents barely refer to glycosylation at all. Each patent assumes, naturally enough, that phase (a) has taken place where, the experts agree, the characteristics of the glycosylation profile may be determined. It is not, in my view, persuasive to dismiss the effects of this phase, on the basis that both Pfizer and the BRENZYS process use CHO mammalian cell line. Not only is cell variation within CHO inevitable (as the evidence indicates), in addition, phases (a) and (c) influence glycosylation.

[97]    Ultimately, Dr Ibarra’s evidence in this respect does not rise above speculation (Pfizer refers to it as an inference) that the similarities observed might mean that the BRENZYS Process is similar to the Pfizer Process. That speculation, in my view, clings tenuously to the coincidences identified in Cho. These coincidences are cogently explained by a far more available inference; that the end products are biosimilar. That fact does not suggest similarity of process.

(Emphasis in the primary judgment)

67    The first basis to reject Dr Ibarra’s views as to the centrality of phase (b) was the teaching of the patents (see [94] and [95] of the reasons). The second basis is to direct attention to the fact that patent 632 is not directed to glycosylation and 034 and 036 barely refer to glycosylation. The third basis is the proposition said to be a natural assumption in the patent conformable with what all the experts (by which I do not take the primary judge to refer to Dr Ibarra, not because she has no expertise, but because she was saying something to the contrary) agree that in phase (a) the characteristics of the glycosylation profile may be determined. The judge said that it was not “persuasive” to dismiss the effects of this phase.

68    A number of things can be said about these three considerations. First, it is not determinative that the claims are not directed to a glycosylation profile. The proposition for which Dr Ibarra and Pfizer contended was a different one and not one dependent on the claims being directed to the glycosylation profile – it was that similar processes in phase (b) lead to similar glycosylation profiles. Secondly, the fact that the patents are not so directed might make one cautious as to the teaching of the patents about glycosylation. Thirdly, and centrally, the primary judge appears to find, and find comfortably, that the characteristics of the glycosylation profile here can be affected by what happens in phases (a), (b) and (c), and thus rejects the fundamental plank of Dr Ibarra’s hypothesis that it is driven here by what happens in phase (b). Her opinion was said not to be “persuasive”.

69    It is at this point that one needs to remind oneself of the nature of the task demanded by r 7.23(1)(a) in circumstances such as this. The relevant question posed by the rule is whether the applicant reasonably believes that it may have the right to obtain relief. It is not whether one scientific view is more or less persuasive than another. In the field of science, expert views may differ about important scientific aspects that can be seen to bear upon a question. If the applicant has a belief that is founded on considerations or views reasonably open (even if contested as incorrect by others) that may well found a conclusion that the applicant has a relevant reasonable belief. On the other hand, if in the application it can be shown that the belief of the applicant appears to be based on considerations or views that are unreasonable, untenable, irrational or baseless, it would be difficult to conclude that the applicant has a reasonable belief. Much will depend on the evidence and the nature of the question in issue. The kind of interlocutory hearing anticipated for the operation of the rule will, however, generally be inapt for the making of final judgments on contested scientific evidence. This is all the more so when, as here, there was no cross-examination.

70    The primary judge’s conclusions about Dr Ibarra’s evidence in this regard are in [97] of the reasons. The primary judge may be seen as concluding that Dr Ibarra’s opinion has been shown to be scientifically speculative. There are four difficulties with any such conclusion that reveal, in my respectful opinion, error by the primary judge. First, it is misleading and distracting to use “speculation” as the relevant enquiry. It is liable to misdirect the enquiry. Secondly, the conclusion rests on a rejection of Dr Ibarra’s evidence and involves the view that, in the circumstances here, Professors Gray and Mahler were to be preferred as to the potential for phases (a) and (c) (and not just phase (b)) to affect the glycosylation profile of the product. There appears to be a real scientific contest about that in the particular circumstances here. There has been no trial of the issue, no cross-examination and the presentation of competing views. Dr Ibarra may be wrong, but it is difficult to see how her views can be put to one side as unreasonable or untenable in a hearing such as took place. Thirdly, the debate was not framed by a question whether Dr Ibarra’s views were untenable or unreasonable. Neither Prof Gray nor Prof Mahler said as such. Competing views were placed before the primary judge who found one view not persuasive. This, with respect, was a misdirected enquiry. Fourthly, biosimilarity may well not “cogently explain” the coincidences. The Schiestl article shows the same product ENBREL was biosimilar when made by bovine serum and later by a serum-free method, but there were significant differences in its glycosylation profiles using the two different processes. These errors were related and combined to permit the primary judge to prefer Professors Gray and Mahler to Dr Ibarra. The correct question was not who was more persuasive or to be preferred, but whether Dr Ibarra’s views so lacked foundation that reliance on them by Mr Silvestri did not demonstrate that he reasonably believed that Pfizer may have a right to obtain relief.

71    The fifth contention concerned whether the Pfizer process fell within the claims of the patents. At [98] the primary judge expressed the issue:

This then leads to the fifth aspect of Pfizer’s submission, which is that the similarities demonstrated in the Cho article permit the inference that the BRENZYS Process is similar to the Pfizer Process and, as the Pfizer Process falls within the relevant claims, it may be inferred that so too does the BRENZYS Process.

72    In argument before the primary judge, senior counsel for Pfizer put the matter as follows in discussion with the primary judge:

HIS HONOUR: As I understand it, the way that the respondent puts it, the underpinning for your entire argument depends on the proposition that the biosimilar was made – or the similarities between the Samsung product and the reference product connotes a similarity of process for the manufacture of the two and that in turn leads to the available inference that the Samsung process infringes the claims. So the argument is contingent on the proposition that the Pfizer process falls within the claims also.

MR MACAW: Yes. Indeed.

HIS HONOUR: There – so do you accept as the foundational proposition that if you don’t make out that as a matter of evidence, you have a problem?

MR MACAW: Yes. Yes, we do. That’s the bridge. Your Honour has identified it precisely, with respect.

HIS HONOUR: Very well.

MR MACAW: That’s the relevance.

HIS HONOUR: Yes.

MR MACAW: And I think we are about to debate the question of admissibility.

HIS HONOUR: Yes.

MR MACAW: If that’s convenient.

HIS HONOUR: Yes, it is.

73    At [101], the linkage of Pfizer’s process and the patents was explained:

Next, Pfizer relies on the evidence of Dr Ibarra that the Pfizer Process falls within the claims in issue. This is a central part of Pfizer’s reasoning, because without it (as I explain further below) there is no basis at all upon which it might be inferred that there is any relationship between the claims asserted and the BRENZYS Process.

74    The essence of Dr Ibarra’s evidence was set out by the primary judge at [103] to [105] as follows:

[103]    In her first affidavit of 5 January 2017, Dr Ibarra said (emphasis added):

45.    As part of my work described above, I have observed that, since 2007, Wyeth Ireland, and then Pfizer Ireland, has manufactured the etanercept for ENBREL® using a serum-free process; that is, a process that uses chemically defined media, and that does not contain foetal bovine serum (the Current Pfizer Process). The Current Pfizer Process has at all times fallen within at least claim 1 of each of the Etanercept Patents.

[104]    Words to similar effect to those underlined appear elsewhere in Dr Ibarra’s first affidavit. On 6 February 2017 Dr Ibarra affirmed a further affidavit during which she said (emphasis added):

9.    I refer to the first two columns of Annexure NI-12 of My First Affidavit, and confirm that I am aware, based upon my personal observations of the Current Pfizer Process in the course of my work, that the Current Pfizer Process has each of the features identified in that table as integers 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, and 12 of claim 1 of the ‘034 Patent.

[105]    Dr Ibarra gave similar evidence for each of the 036 and 632 patents. After objection was taken to that evidence, she affirmed a further affidavit on 8 February 2017 in which she referred to her third affidavit of 6 February 2017, gave some evidence as to how she construed some terms within the patents (by reference to the body of the specification) and then gave evidence as to her opinion as to the presence of certain integers. In the context of the 632 patent, her additional evidence also addressed integer 4 of claim 1 and said:

15.    I am aware, based upon my personal observations of the Current Pfizer Process in the course of my work, that in the Current Pfizer Process, the etanercept for ENBREL® is produced in a cell culture where the cells are grown at a temperature in a range of 27.0˚C to less than 30.0˚C, and at a pH in a range of 6.80 to less than 7.00, and misfolded proteins and/or aggregated proteins are measured at less than 25% (see also page 1143 in the Cho paper annexed as NI-11 to my First Affidavit, which reports 13.5% to 13.6%) of the protein produced.

(Emphasis in the primary judgment)

75    Objection was taken by SBA to the admissibility of Dr Ibarra’s evidence on the basis of a failure to lay a foundation of the evidence: Dasreef Pty Ltd v Hawchar [2011] HCA 21; 243 CLR 588 at 604 [37].

76    Pfizer’s position was summarised by the primary judge at [107] as follows:

Pfizer submits first, that the evidence the subject of the objection was not opinion evidence at all but a statement of fact as to the presence of physical features of the process. Dr Ibarra’s intimate experience with the process as a result of her employment enabled her to state matters of fact. Secondly, that s 76 of the Evidence Act does not apply to applications of the present type because the task of the Court is not to determine questions of fact on a binding basis Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 1560; (2007) 163 FCR 554 (Optiver Australia) per Tamberlin J at [4]. Thirdly, that the Court should, in any event, dispense with the application of s 76 of the Evidence Act pursuant to the operation of s 190 of that Act; citing Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317; (2015) 112 IPR 1 (Dallas Buyers Club) at [96] – [99] and Optiver Australia at [22].

77    The primary judge referred to three cases as to admissibility: Gyles J in C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864, Tamberlin J in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 1560; 163 FCR 554, and Perram J in Dallas Buyers Club LLC v iiNet Ltd [2015] FCA 317; 112 IPR 1. Using these authorities, his Honour had regard to the evidence.

78    How the Evidence Act 1995 (Cth) operates in applications of this kind was, in my view, correctly expressed by Gyles J in C7 at [17], as follows:

…I have not limited myself to considering evidence which is in a form which would be strictly admissible at a final trial. During the hearing I ruled that press reports and other hearsay material were not necessarily excluded on that account. The issue against which the admissibility of evidence is to be tested is whether there is reasonable cause to believe that the applicant may have the right to obtain relief. This does not tender an issue of fact in the usual way.

79    With respect, it is wrong to say the Evidence Act does not apply to an application under r 7.23. It is an interlocutory application in the exercise of federal jurisdiction: Hooper v Kirella Pty Ltd [1999] FCA 1584; 96 FCR 1. The question is the purpose of the evidence that is tendered. As Gyles J said in C7, one needs to know the purpose of the evidence. Newspaper articles might be relevant because reading them was the basis of the belief held by the applicant. Here, Mr Silvestri has relied upon an affidavit of Dr Ibarra. He could have had a report authored by her. No principle of evidence and no section of the Evidence Act requires the material that Mr Silvestri took into account to be in admissible form. Pfizer is entitled to rely on Dr Ibarra’s affidavit as the basis for Mr Silvestri’s belief. It may be reasonable for Mr Silvestri to hold the belief based on knowing that someone in the organisation with the skill and experience of Dr Ibarra holds the opinion that Pfizer’s process was in accordance with the patents.

80    If, on the other hand, Pfizer chooses to seek to prove a fact said to be relevant to its belief that depends for its proof on a matter of expert evidence, I see no reason why the Evidence Act is not relevant. Here, the evidence of Dr Ibarra was admissible as proof of the material upon which Mr Silvestri formed his belief.

81    For the above reasons, in my respectful view, the primary judge approached the matter by asking himself the wrong question. It was not a matter of which body of expert evidence to prefer; rather, it was whether Pfizer reasonably believed that it may have a right to relief. That involved the question whether Dr Ibarra’s views were capable of giving a reasonable basis for a belief about that matter.

82    That being so, it falls for this Court to re-exercise the discretion. The respondent seemed to submit that it wished to make submissions on all aspects of such a re-exercise. That, with respect, is unsatisfactory. Two full days of argument were taken up with this appeal canvassing the detail of the evidence, including the central topic of Pfizer’s failure to produce its own primary material showing that it employed its own patents to produce its product. I do not see that as critical to the application or to the exercise of discretion. It can be accepted that an applicant must show the Court that it has done what it can to find out whether it has a right to relief. Here, that was done, and was not affected by the absence of primary documents to substantiate, in an evidential sense, the opinion of Dr Ibarra, if her opinion was being used as evidence of a fact to which her opinion was directed.

83    It was put that the Pfizer documents may show how close to the boundaries of the patents’ processes Pfizer reaches in the making of ENBREL. This, it was submitted, would tell one of the likely ability to produce etanercept around the margins of the patent and so demonstrate a lessened degree of likelihood that SBA is infringing. The primary judge adverted to this issue at [174] to [176] of the reasons. There the primary judge said the following:

[174]    In the present case, SBA contends that there has been less than full disclosure by Pfizer about the process it uses to manufacture ENBREL. It submits that Dr Ibarra’s opinion that the Pfizer process falls within the asserted claims is central to her reasoning, and yet no evidence of that process has been provided. As a consequence, the Court has no evidence to assess whether or not Dr Ibarra’s opinion is correct or where within the quantitative boundaries described by the claims the Pfizer Process may sit.

[175]    In my view this submission has some force. Whilst I have ruled that Dr Ibarra’s evidence is properly admitted into evidence, the manner of its presentation does pose difficulties. It was clearly open to Pfizer to elucidate the position supporting Dr Ibarra’s conclusion by reference to evidence going to the facts upon which it is based. That is not to say that the facts need to be established to the standard necessary for a final hearing, but at present no facts upon which the conclusions expressed by Dr Ibarra have been provided. This leads to the practical difficulty that SBA is in no position to contest the correctness of the conclusion advanced and that the Court is similarly deprived of the opportunity to consider it. The Court would be expected to exercise the coercive powers of discovery without having any way to consider how the requisite belief may apply to one or all of the patents raised. Whilst the rule is beneficial to an applicant, and necessarily operates asymmetrically (Optiver at [43]), in my view it is not intended to operate without this sort of check. It is not necessary for the applicant to prove its cause of action, but the applicant must place before the Court all of the evidence already available to it relevant to the sufficiency of the information it possesses to enable a decision to be made whether to commence a proceeding; Reeve at [65].

[176]    In the present application Pfizer has not to do so. Accordingly, in the event that I had been satisfied that FCR 7.23(1)(a) had been made out, I would nonetheless have declined to grant the order sought.

84    This is another example, in my view, of the over-refinement of this application. The application is not a contest about whether Dr Ibarra’s views are correct, or about the quantitative boundaries of the claims on the Pfizer process. It is about the existence of a reasonable belief. The evidence did not disclose that Dr Ibarra’s views were not ones capable of being held. There was a basis upon which Mr Silvestri could reasonably believe that Pfizer may have a right to relief. I see no discretionary basis to deny the access to some documents.

85    The respondents should be heard on the form of the orders, in particular the extent of the orders and the identity of the persons who should be shown the documents. This may be a case for the utilization of a report by a suitably qualified person to report to the parties and the Court on the existence or not of a right to relief. The terms and nature of any order would need to protect any legitimate claims for confidentiality. These matters are best dealt with by the primary judge on remittal.

86    For these reasons, I would allow the appeal, set aside the orders made by the primary judge and remit the matter to the primary judge for consideration of the form of orders to be made for the production of documents. I agree with the form of orders proposed by Perram J.

Associate:

Dated:    29 November 2017

REASONS FOR JUDGMENT

PERRAM J:

1. Introduction

87    This is an application by Pfizer Ireland Pharmaceuticals, Wyeth LLC and Pfizer Australia Pty Ltd (together ‘Pfizer’) for leave to appeal from orders made by a judge of the Court dismissing Pfizer’s application for preliminary discovery orders against the Respondent, Samsung Bioepis AU Pty Ltd (‘Samsung’). The application for leave to appeal should be granted and the appeal allowed with costs. The question of the form of the orders should be remitted to the primary judge, along with the issue of costs at first instance.

88    Pfizer is the owner of three process patents:

    Australian Patent No. 2005280034 ‘Production of Polypeptides’ (‘the 034 Patent’);

    Australian Patent No. 2005280036 ‘Production of TNFR-Ig fusion protein’ (‘the 036 Patent’); and

    Australian Patent No. 2008242632 ‘Use of low temperature and/or low pH in cell culture’ (‘the 632 Patent’).

89    Pfizer contends that it reasonably believes that it may have the right to obtain relief in this Court from Samsung. The relief that it has in mind relates to the alleged infringement of the above three patents. Samsung manufactures a drug called BRENZYS (active ingredient, etanercept) and Pfizer says that it reasonably believes that Samsung is using the patents in the production of BRENZYS. Pfizer itself manufactures an etanercept product, ENBREL. It is important to be clear that Pfizer’s complaint is not that it holds a patent for the production of etanercept which BRENZYS infringes. It is that the three patents may be being infringed by Samsung’s method of producing BRENZYS.

90    Rule 7.23 of the Federal Court Rules 2011 (Cth) (‘FCR’) allows this Court to grant a prospective applicant, like Pfizer, preliminary discovery if a number of conditions are met. The principal (but not sole) condition is that the prospective applicant ‘reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent…’ (FCR 7.23(1)(a)). In this case, there was no doubt that the belief was held but the primary judge concluded that it was not reasonably held. One of Pfizer’s senior employees, Mr Silvestri, gave evidence about the existence of the requisite belief. The primary judge reached the conclusion that the belief was not reasonably held because his Honour thought Pfizer’s claims for patent infringement were speculative: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCA 285 at [97], [138], [145] and [153].

2. Etanercept

91    Etanercept is used in the treatment of autoimmune diseases such as rheumatoid arthritis, juvenile rheumatoid arthritis and psoriatic arthritis, plaque psoriasis and ankylosing spondylitis. Etanercept is a biological medicine. There are a range of medicines meeting that description but relevantly, for this case, they include proteins generated by living animal cells (which themselves have been genetically engineered to produce that protein). One class of such proteins includes a group known as ‘cepts’ which are large and complex molecules with complicated three dimensional structures. As the name might suggest, etanercept is a ‘cept’.

92    The production of biological medicines, generally, and cepts, in particular, was agreed by the parties to involve four phases. These were:

Phase One: the development of a cell-line and the creation of cell banks. By way of background, genes are made from DNA and DNA acts as a set of instructions to a cell to produce proteins. It is possible to take a cell and insert into it foreign DNA with the result that it then produces the protein associated with the foreign DNA. This is known as recombinant DNA technology. In phase one, the aim is to produce a bank of cells which will produce the desired protein. Many different types of cell can be used to begin the process. In this case, Chinese hamster ovary cells were used by both Samsung and, as will be seen, also by Pfizer. There are a number of sophisticated steps between the initial insertion of the foreign DNA into the Chinese hamster ovary cells and the final creation of a bank of cells of sufficient quality to enter production; but they do not call for explanation on this appeal. In any event, at the end of phase one there exists a bank of cells which, if cultured, will produce the desired protein. This is called the ‘cell bank’. It is a valuable commercial asset.

Phase Two: Upstream Bioprocessing. In this phase, cells from the cell bank are placed in a culture and grown in some sort of container, often called a bioreactor. There are many different ways this can be done. The bioreactor can be gradually fed nutrients or the nutrients can be loaded all at once; the medium in which the cells are cultured can be altered in various ways; the heat can be turned up or down; and the contents of the reactor can be stirred with fluctuating degrees of vigour. There can be variations also in the pH levels. These differences in process impact on the amount of protein produced in the bioreactor and also, as might be expected, on its characteristics. The detail of this can be postponed for now, but by way of a place marker, it is useful to note that Pfizer’s three patents all relate to ways of carrying out this second phase of upstream bioprocessing.

Phase Three: Downstream Processing. After the bioreactor has ceased generating fresh protein and the processes taking place within it have reached an endpoint it is necessary to harvest its contents and to extract the protein from those contents. The main goal of this third phase is to extract contaminants from the active substance.

Phase Four: Product Characterization. This final phase involves an examination of all of the quality attributes of the biological product using a variety of methods. Following this, the protein is finally put in a form suitable for storage, transportation and, ultimately, administration.

3. The Patents

93    With the knowledge that phase two is effectively the phase in which the genetically modified Chinese hamster ovary cells are cooked in a bioreactor to produce protein, it is useful briefly to describe the processes disclosed in the three patents. I should say, for completeness, that the case was conducted only on the basis of claim 1 of each patent. Claim 1 of the 034 Patent was as follows (with integer numbers added):

‘     A method of producing a polypeptide in a large-scale production cell culture comprising the steps of:

1     providing a cell culture comprising;

2    mammalian cells that contain a gene encoding a polypeptide of interest, which gene is expressed under condition of cell culture; and

3     a medium containing glutamine and having a medium characteristic selected from the group consisting of:

4     (i)    a cumulative amino acid amount per unit volume greater than 70 mM,

5     (ii)    a molar cumulative glutamine to cumulative asparagine ratio of less than 2,

6     (iii)     a molar cumulative glutamine to cumulative total amino acid ratio of less than 0.2,

7     (iv)    a molar cumulative inorganic ion to cumulative total amino acid ratio between 0.4 to 1,

8    (v)    a combined cumulative amount of glutamine and asparagine per unit volume of greater than 16 mM, and combinations thereof;

9    maintaining said culture in an initial growth phase under a first set of culture conditions for a first period of time sufficient to allow said cells to reproduce to a viable cell density within a range of 20% – 80% of the maximal possible viable cell density if said culture were maintained under the first set of culture conditions;

10    changing at least one of the culture conditions, so that a second set of culture conditions is applied;

11     maintaining said culture for a second period of time under the second set of conditions and for a second period of time so that the polypeptide accumulates in the cell culture.’

94    There are some observations which may help to simplify this somewhat. First, this is not a patent for the production of etanercept. It is a patent for a process related to the production of polypeptides. Secondly, a polypeptide is a sequential chain of amino acids linked together via peptide bonds and forms a constituent element of a protein. Thirdly, integers 1-3 describe every process for producing etanercept from gene encoded cells. There was no dispute before us that it was inevitable that howsoever Samsung was creating its etanercept product BRENZYS, in this, its second phase of production, it must have been utilising integers 1-3. It is also, as the primary judge correctly observed at [58] of the judgment below, a neutral matter in the debate. It is neutral in the same way that one ought not to be too surprised that a method for boiling eggs includes water which is boiling.

95    Leaving, therefore, integers 1-3 aside, the interesting features of the 034 Patent are: (a) its specification of a medium containing glutamine (an amino acid) at particular levels and, in particular, specified ratios between glutamine and other constituents; and, (b) the maintenance of the culture for a particular period of time at one set of conditions before changing to a second set of conditions for another period of time. That is to say, the 034 Patent is a process for producing a polypeptide involving the use of a medium with a particular composition treated in two particular ways. Claim 1 of the 036 Patent was essentially the same, although it was concerned not with the creation of a polypeptide but with the production of TNFR-Ig, a protein.

96    The 632 Patent was different to the 034 and 036 Patents. It involved a method of producing a protein in a cell culture. The important aspects of claim 1 were that the culture would be kept at a reduced temperature range of between 27°C to less than 30°C and a reduced pH range of between 6.8 to less than 7.0. The prior art taught that ordinarily cell cultures in such situations would be heated to at least 30°C and kept at a pH of at least 7.0. The advantage of the process disclosed in the 632 Patent was said to be a better quality protein.

97    This quick description of the three patents confirms that they are directed to the second phase described above, that is, upstream bioprocessing. It also demonstrates that the patents are concerned with production processes for proteins and polypeptides generally and not with the production of any particular protein. It is true, as Pfizer feintingly submitted, that the 034 and 036 Patents did, at various points, refer to etanercept but the fact remains that the first claim of each of the three patents does not disclose a process for the production of etanercept specifically.

4. Preliminary Discovery

98    Preliminary discovery is dealt with in Division 7.3 of the FCR. There are two types: preliminary discovery to identify a prospective respondent (FCR 7.22) and preliminary discovery against a prospective respondent to ascertain whether a proceeding can be commenced against that prospective respondent (FCR 7.23). This appeal is concerned with the latter.

99    An important part of the context in which Division 7.3 appears is the requirement of FCR 16.01 that in cases which proceed by way of a pleading, the name of the person preparing the pleading must be stated and, where that person is a lawyer, that lawyer must certify that there is a proper basis ‘for each allegation in the pleading’. So too, where a case proceeds by way of an originating application accompanied by an affidavit, the affidavit must set out the material facts on which the case is based: FCR 8.05(2). In either case, the rules contemplate that a proceeding may only be commenced where a proper basis exists for the making of the allegations. Preliminary discovery is a procedure, therefore, which necessarily exists in a domain where that level of certainty has not been reached.

100    This is illustrated by the terms of the rule itself. FCR 7.23 provides:

‘7.23 Discovery from prospective respondent

(1)    A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:

(a)    reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and

(b)    after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and

(c)    reasonably believes that:

(i)    the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii)    inspection of the documents by the prospective applicant would assist in making the decision.

(2)    If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).’

101    FCR 7.23(1)(b) confirms that the process is not available where sufficient information is available to allow the commencement of a proceeding. The central part of the rule, however, is contained in FCR 7.23(1)(a). Leaving aside that aspect of the rule concerned with whether the prospective respondent’s identity has been ascertained, the rule has two features:

    there must be a reasonable belief as to a particular state of affairs; and

    that state of affairs consists of the possibility (required by the word ‘may’) that the prospective applicant has a right to obtain relief from the prospective respondent.

102    FCR 7.23 replaced Order 15A Rule 6 under the former Federal Court Rules 1979 (Cth). The two rules are not textually identical. Importantly, former Order 15A Rule 6 did not contain a requirement that a belief be held by the prospective applicant. What it said was this:

‘Order 15A Rule 6

6.    Discovery from prospective respondent

Where:

(a)    there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court forma person whose description has been ascertained;

(b)    after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and

(c)    there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision;

the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).’

103    It is apparent that the drafter of FCR 7.23, in an attempt to put the rule in plainer English, has reasoned that where there is a reasonable cause to believe, there must also be a person who holds that belief. Further, whilst the former rule required the belief to relate to a case which did or might exist (‘has or may have the right to obtain relief’) the new rule only requires the belief to relate to a claim which may exist. This was perhaps done on the basis that if the rule was simplified so that it required only a belief which related to a claim which ‘may’ exist, this would necessarily include within its scope that narrower class of case where the belief related to claims which did exist.

104    These observations about the relationship between the new and the old rule might be dismissed as irrelevant except for s 15AC of the Acts Interpretation Act 1901 (Cth) (‘the Interpretation Act’) which provides:

‘15AC Changes to style not to affect meaning

Where:

(a)     an Act has expressed an idea in a particular form of words; and

(b)     a later Act appears to have expressed the same idea in a different form of words for the purpose of using a clearer style;

the ideas shall not be taken to be different merely because different forms of words were used.’

105    The effect of s 59(4) of the Federal Court of Australia Act 1976 (Cth) is that s 13 of the Legislation Act 2003 (Cth) applies to the FCR. This means that s 15AC applies to those rules as if they were an Act. Consequently, it is necessary to consider the Explanatory Statement which accompanied the introduction of the new FCR. It contains this general statement (at p 5):

‘The new Rules do not substantially alter existing practice and procedure but rather explain it in a way that it can be more easily followed and applied. They do contain a number of new provisions and some innovative and streamlined procedural approaches. All provisions have been developed with ease of understanding in mind and so that, individually and collectively, the new Rules speak for themselves.’

106    It also says this about Part 7 (at p 10):

‘The provisions in Divisions 7.1 (Injunctions, Preservation of Property and Receivers), 7.2 (Approval of Agreement for Persons under a Legal Incapacity) and 7.3 (Preliminary Discovery) adopt, simplify and streamline the process and procedures which operated under the former Rules and do not substantially alter existing practice. Divisions 7.4 (Freezing Orders) and 7.5 (Search Orders) are harmonised with the rules of other courts and are substantially identical to the equivalent rules in the former Rules.’

107    Section 15AC and parts of the Explanatory Statement have been used on several occasions to ameliorate what otherwise appear to be drafting infelicities in the new rules: see, most recently, Thomas v Commissioner of Taxation (No 2) [2017] FCAFC 144 at [20]. On other occasions, they have not been able to overcome the plain wording of the new rules: see, e.g., Voxson Pty Ltd v Telstra Corporation Limited (No 7) [2017] FCA 267 at [12]. On this occasion, it is difficult to ignore the plain words of FCR 7.23 which now seem to require the prospective applicant actually to hold a subjective belief that they may have a right to obtain relief. Section 15AC of the Interpretation Act does not permit the Court to ignore words of plain meaning. Accordingly, I would accept as correct the statement of Katzmann J in EBOS Group Pty Ltd v Team Medical Supplies Pty Ltd (No 3) [2012] FCA 48; (2012) 199 FCR 533 at 540 [32] that the prospective applicant must demonstrate both a subjective belief and also show that the belief is a reasonable one objectively viewed. Other judges have since come to the same view: see Objectivision Pty Ltd v Visionsearch Pty Ltd [2014] FCA 1087; (2014) 108 IPR 244 at 255 [34]-[35] per Perry J; see also Poole v Australian Pacific Touring Pty Ltd [2017] FCA 424 (‘Poole’) at [53] per Bromwich J.

108    As I have noted already, it is not the requirement of this rule that there be a reasonable belief that there is a right to obtain relief. This is an important qualification and it colours necessarily the analysis involved in assessing the reasonableness of the belief. FCR 7.23(1) is not about giving preliminary discovery to those who believe they do have a case. Its wording unequivocally shows that it is about those who do not know that they have a case but believe that they may. In terms, it authorises what traditionally have been referred to as fishing expeditions; that is to say, evidentiary adventures in which the goal is not to find proof of a case already known to exist, but instead to ascertain whether a case exists at all.

109    The former Order 15A Rule 6 took effect on 26 April 1988 and as early as 1990 it was held that it authorised ‘fishing’ in this sense. Burchett J observed in Re Paxus Services Ltd v People Bank Pty Ltd [1990] FCA 500; (1990) 99 ALR 728 at 733 [13] that it was ‘no answer to the applicant’s application under rule 6 to say that the proceeding is in the nature of a fishing expedition…’. That statement was, in turn, assumed to be correct by the Full Court in Bailey v Beagle Management Pty Ltd [2001] FCA 60; (2001) 105 FCR 136 at 143 [27].

110    Consistently with this broad view, recent authority in this Court has affirmed that the question is whether there is a belief that a right to obtain relief may exist: see, e.g., Bonham v Iluka Resources Ltd [2017] FCAFC 95 at [49]. And some first instance judges have, with respect, been astute to observe that a belief that a right to obtain relief in fact exists is certainly not what the rule requires: Toll Transport Pty Ltd v Fleiter [2017] FCA 376 at [15] per Logan J; Poole at [39(5)] per Bromwich J.

111    There are, nevertheless, passages in some well-known authorities which, when read out of context, may appear to suggest that the procedure under the former Order 15A required there to be reasonable grounds to believe that the prospective applicant actually had a cause of action.

112    Prominent amongst these is the judgment of Hely J in St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147 (‘St George’). At 155 [29] there is a part of the reasons which says:

‘While St George does not need to go so far as to establish a prima facie case, St George does have to establish that there is reasonable cause to believe that each of the necessary elements of a potential cause of actions exists. The evidence must incline the mind to the view that Rabo and/or Rabo CF deliberately withheld material information from St George.’

(my emphasis)

113    Also relevant is 154 [26(d)]:

‘(d)    belief requires more than mere assertion and more than suspicion or conjecture. Belief is an inclination of the mind towards assenting to, rather than rejecting a proposition. Thus it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question. If there is no reasonable cause to believe that one of the necessary elements of a potential cause of actions exists, that would dispose of the application insofar as it is based on that cause of action: John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679; BC 200403021 at [13], [14], [17] and [73];’

114    These two passages – especially that at 154 [26(d)] – may be apt to suggest that the necessary inquiry is into a belief as to a fact.

115    However, as Nicholas J has been kind enough to point out to me, there are other passages in St George which show that this is not what Hely J intended. At 153-154 [26] his Honour set out a number of principles which included not only (d) (above) but also (c):

‘(c)    the test for determining whether the applicant has “reasonable cause to believe”, as required by subpara (a), is an objective one: Hooper at FCR 11-12 [39]; ALR 367; IPR 30; Malouf v Malouf [1999] FCA 710; BC9902833 at [16]; Quanta Software International Pty Ltd v Computer Management Services Pty Ltd (2000) 175 ALR 536 at 541-2 [24]; 49 IPR 25 at 31; Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 391; BC 9602085 at 23. Further, the words “or may have” cannot be ignored. The applicant does not have to make out a prima facie case: Quanta Software at ALR 541-2 [24]; IPR 31; Paxus Services at ALR 733; IPR 85;’

(emphasis added)

116    Read in light of this statement, it is clear that the passages at 154 [26(d)] and 155 [29] are not to be read as requiring the presence of reasonable grounds for believing in a factual state of affairs.

117    Nevertheless, 154 [26(d)] and 155 [29], when cited out of their context, both have the capacity to cause some confusion. Similar remarks may be made about what fell from Emmett J in John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 (‘John Holland’) where his Honour, at [16] asked himself ‘whether there is reasonable cause to believe that there is a cause of action’ when perhaps it might have been more accurate to ask whether there was such a belief that there might be a cause of action.

118    That the confusion has arisen at some times is clear because the Court has occasionally applied the necessity for the reasonable belief to relate to the existence of a right to obtain relief rather than a possible existence of a right to obtain relief: see, for example, Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 1560; (2007) 163 FCR 554 (‘Optiver’); Higgins v Hancock as Liquidator of Arabella Investments Pty Ltd (in liq) [2011] FCA 1492 at [57]-[59]; Reeve v Aqualast Pty Ltd [2012] FCA 679 at [63(a)] and [65(g)]; United Voice v Accolade Wines Australia Limited [2013] FCA 285 at [9].

119    The practical effect of this misapprehension has been that, in recent times, applications under FCR 7.23 have tended to become in many instances mini-trials because of a perceived need to show the reasonableness of a belief that a right to relief exists rather than might exist. In my opinion, St George does not require this and, to the extent that John Holland does, it is difficult to reconcile with the text of the rule.

120    The following propositions about preliminary discovery applications should be accepted:

(i)    the prospective applicant must prove that it has a belief that it may (not does) have a right to relief;

(ii)    it must demonstrate that the belief is reasonable, either by reference to material known to the person holding the belief or by other material subsequently placed before the Court;

(iii)    the person deposing to the belief need not give evidence of the belief a second time to the extent that additional material is placed before the Court on the issue of the reasonableness of the belief. That belief may be inferred;

(iv)    the question of whether the belief is reasonable requires one to ask whether a person apprised of all of the material before the person holding the belief (or subsequently the Court) could reasonably believe that they may have a right to obtain relief; and

(v)    it is useful to ask whether the material inclines the mind to that proposition but very important to keep at the forefront of the inclining mind the subjunctive nature of the proposition. One may believe that a person may have a case on certain material without one’s mind being in any way inclined to the notion that they do have such a case.

121    In practice, to defeat a claim for preliminary discovery it will be necessary either to show that the subjectively held belief does not exist or, if it does, that there is no reasonable basis for thinking that there may be (not is) such a case. Showing that some aspect of the material on which the belief is based is contestable, or even arguably wrong, will rarely come close to making good such a contention. Many views may be held with which one disagrees, perhaps even strongly, but this does not make such a view one which is necessarily unreasonably held. Nor will it be an answer to an application for preliminary discovery to say that the belief relied upon may involve a degree of speculation. Where the language of FCR 7.23 relates to a belief that a claim may exist, a degree of speculation is unavoidable. The question is not whether the belief involves some degree of speculation (how could it not?); it is whether the belief resulting from that speculation is a reasonable one. Debate on an application will rarely be advanced, therefore, by observing that speculation is involved.

122    There are cases to the contrary. For example, in Specsavers Pty Ltd v Canstar Blue Pty Ltd [2010] FCA 1153 Edmonds J (‘Specsavers’) said at [21] that ‘a claim based on mere speculation is an insufficient basis for a conclusion that there is reasonable cause to believe that the applicant has a right to obtain relief’ (emphasis added). I pause to observe that this enunciation of the rule suffers from the same vice as the other cases to which I have drawn attention in [118] above. However, putting that to one side for present purposes, his Honour then proceeded to cite four examples of speculative applications for preliminary discovery which were dismissed in this Court. For myself, I do not, with respect, read the four examples cited in Specsavers as precluding a degree of speculation on the part of the prospective applicant in such applications. Hence in Strang Aniokaka Ltd v Lihir Gold Ltd (No 2) [2010] FCA 1065 (one of the cases cited by Edmonds J) Rares J said at [117], ‘[t]here must be an element of speculation, conjecture or surmise – if the applicant’s case is too well established, the order will not be made because the applicant has sufficient information to justify commencing proceedings’.

123    It may be that Edmonds J had in mind, by using the phrase ‘mere speculation’, something so speculative as to be unreasonable; but this demonstrates the risks associated with using a composite phrase not anchored to the text of the legislative provision being construed. Indeed, straying from the words of the rule is what has left FCR 7.23 in its current state of flux. Ultimately, a degree of speculation on a preliminary discovery application is an inevitable consequence of the nature of the application itself. However, the concept of speculation operates on a broad spectrum. There will, obviously enough, be cases where the prospective applicant’s claims are so speculative as to warrant the dismissal of the preliminary discovery application. But what must be shown by the prospective respondent to defeat the application in such cases is not the existence of speculative reasoning on the part of the prospective applicant, but rather that the applicant’s belief that there may be a right to obtain relief in the circumstances is not a belief reasonably held.

124    There are three further observations I would make in the present context. First, many, if not most, preliminary discovery applications will rest on case architecture which is circumstantial in nature. In assessing such cases it is to be kept in mind that it is not to be asked whether each integer of the circumstances may prove the case. Rather, it is to be asked whether they do when taken together: Palmer v Dolman [2005] NSWCA 361 at [41].

125    Secondly, it may prove practically difficult to disprove a reasonable belief that a case may exist by seeking to demonstrate that the internal legal mechanics of the suspected case are faulty or contestable. In many cases this will have little impact on the question of whether the belief that a case may exist is reasonably held. More likely fruitful will be arguments to the effect that no reasonable person apprised of what the prospective applicant puts before the Court would think that a right to obtain relief might exist. Couched in those terms the difficulty confronting a prospective respondent on a preliminary discovery application may be clearer.

126    Thirdly, so viewed, it should be apparent that it will be unusual for it to be useful for a prospective respondent to conduct the application as if it were a preliminary trial. The procedure is interlocutory and summary with cross-examination almost never allowed. The Court should not indulge efforts to conduct a prospective respondent’s case as if it were a dress rehearsal for a trial.

5. Pfizer’s case

127    Pfizer’s case on preliminary discovery was that there were grounds to think that Samsung’s etanercept BRENZYS product had been produced using the three patents in the upstream bioprocessing phase. The case had seven elements and, in legal structure, its first six steps constituted a circumstantial case. The seventh element stood alone from the circumstantial case and was a final deductive step. The seven elements were:

(i)    Samsung admitted that it used the first three integers of the 34 and 36 patents and integer 1 of the 632 patent in the second phase of its production of BRENZYS;

(ii)    at the time that Samsung was developing its process for BRENZYS it had access to the three patents so that it had had the opportunity to take advantage of them;

(iii)    both the Pfizer process and the Samsung process were ‘serum free’. This was a reference to the medium in which the cells were placed inside the bioreactor. At one time it had been general practice to use foetal bovine serum as the basis for such media. However, both the Pfizer process, since 2009, and the current Samsung process use an artificial serum not manufactured from an animal product. Senior Counsel for Samsung, Mr Catterns QC, informed the Court from the bar table that this switch to a synthetic medium was related to concerns which existed about Bovine Spongiform Encephalopathy, that is to say, the Mad Cow Disease. There is no doubt that both Samsung’s and Pfizer’s products were serum free in this sense. Dr Ibarra, an employee of Pfizer who gave expert evidence on its behalf, said that until Samsung’s BRENZYS product, Pfizer’s ENBREL product was the only etanercept of which she knew that was produced by a serum free process.

(iv)    both the Pfizer and Samsung products were ‘biosimilar’. Because biological medicines are the result of the complex processes described above, it is possible for the same protein to result from different processes of production. These differences in production processes may result in differences in the final product. It is the first product to reach the market which is approved for regulatory purposes and it is called the reference product. Subsequent production by other manufacturers of the same product but by different processes does not need to be approved afresh by the regulator. But it is required to be biosimilar. This is not a standard of identicality but it does need to be shown that such differences as do exist are not material from a safety or efficacy point of view. It is this which is meant by the concept of biosimilarity.

(v)    both the Pfizer and Samsung product had very similar ‘glycosylation profiles’. This term requires some explanation. The biological drugs produced by the kind of four phase process under consideration usually acquire during their production, complex sugar structures which are inserted onto the amino acid ‘backbone’ of the relevant protein. This process of insertion is called ‘glycosylation’ and is central to the present dispute between the parties. In this case, the glycosylation profile of Pfizer and Samsung’s products was very similar. Pfizer claimed that changes in the process by which a biological medicine was made could impact on the glycosylation profile even where the changed process produced a biosimilar drug. In this regard, Pfizer pointed to its own history of producing etanercept. Prior to 2009, it had made its etanercept product, ENBREL, by means of one process which, as I have said, included the use of foetal bovine serum but since 2009 it had used a different process, which inter alia, did not. The product produced by the new process was biosimilar to the product resulting from the former process but had been accompanied by a change in the glycosylation profile.

(vi)    steps 1-5 just described could reasonably sustain the proposition that Samsung was using the same manufacturing process in its second phase as Pfizer was. Put another way, there was an inference available that both companies were using the same upstream bioprocessing procedures to make their respective etanercept products; and

(vii)    Pfizer then said that the process it used to manufacture its etanercept product involved the use in its second (upstream bioprocessing) phase of processes claimed in each of the three patents. From this it was said to follow that Samsung must be using the processes described in the patents too.

128    These then were the various matters put forward by Pfizer to point to the infringement of the patents. For completeness, it should be noted that before the primary judge this case was pursued as a case involving only five steps. I have arrived at the seven steps described above by breaking down a few of the steps pursued before the primary judge into smaller steps in the interests of clarity. I have omitted, in Samsung’s favour, consideration of Pfizer’s Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 contention which may, on one view, be seen as part of its circumstantial case. In doing so, I have not changed the substance of what was put to the primary judge.

6. The glycosylation debate

129    The primary judge analysed each element of this circumstantial case and came to this view at [153] of the reasons:

‘153     I have examined each of these contentions in detail above (see [73] to [128] above). Each is confronted with significant difficulties. Taken together, as Pfizer urges, I am not satisfied that the evidence warrants the conclusion for which Pfizer contends. To the contrary, I am left with the firm view that this particular chain of inferences does not rise above speculation.’

130    Although Pfizer’s draft notice of appeal contained a large number of arguments, one of its principal focuses was the manner in which the primary judge had dealt with the topic of the glycosylation profiles of BRENZYS and ENBREL. The issue appears to have gathered significance as the hearing progressed. The primary judge observed at [154] that, given its centrality to Pfizer’s case, it was surprising that it did not appear more substantively in its case-in-chief. As will appear shortly when discussing in more detail the glycosylation profiles issue, I am not sure this is necessarily a fair criticism of Pfizer’s position. However, no error is alleged to flow from that feature of [154] and I can pass over it.

131    The evidence about glycosylation was given for Pfizer by Dr Neysi Ibarra who is the Director and Group Leader of Process Development, Manufacturing Science and Technology at Pfizer Ireland Pharmaceuticals (the Prospective Applicant). Her evidence concerned, inter alia, the fact that the nature of biological medicines was a function of the processes by which they were manufactured. There was no dispute on appeal as to her expertise. For Samsung, evidence was adduced, relevantly, from Professors Stephen Mahler and Peter Gray, who are both bioengineers at the Australian Institute for Bioengineering and Nanotechnology at the University of Queensland. The debate between Dr Ibarra and Professors Mahler and Gray went this way:

(i)    Pfizer, through Dr Ibarra, suggested that because Pfizer and Samsung’s products were biosimilar they must have been derived as a result of the same process. In this regard she drew attention to an article entitled ‘Evaluation of the structural, physiochemical, and biological characteristics of SB4, a biosimilar of etanercept’ by Cho et al (‘the Cho article’). There was no dispute that SB4 is a reference to Samsung’s BRENZYS product. The article conducted a side-by-side comparison between the BRENZYS product and Pfizer’s ENBREL. A number of similarities, not presently relevant, were noted. But, as the primary judge observed at [83] of the reasons, it was agreed between the experts that the Cho article showed that the glycosylation profiles of the Pfizer and Samsung products were ‘very similar’. Thus the first move in the glycosylation debate which followed was, therefore, Pfizer’s and it was that the two products had very similar glycosylation profiles. This evidence was given by Dr Ibarra in her first affidavit and did not emerge until late in the case. It was one of a number of similarities she drew to the Court’s attention (including biosimilarity).

(ii)    Samsung responded to this by arguing through the evidence of Professor Mahler that the fact that the two products were biosimilar did not entail that they had been manufactured using the same process. Mention has already been made of the fact that Pfizer itself had changed the process by which it manufactured ENBREL in 2009. This was of some significance as there was another paper which suggested that biosimilar products could result from different manufacturing processes. The article which did so was entitled ‘Acceptable changes in quality attributes of glycosylated biopharmaceuticals’ by Schiestl et al (‘the Schiestl article’). It compared the two etanercept products made by Pfizer before and after 2009. The article made two points relevant to this case:

(a)    the glycosylation profile of the two products was different (even though they were biosimilar); and

(b)    the glycosylation profile was defined by the processes used in each of phases one, two and three (i.e. cell-line production, upstream bioproduction and downstream bioproduction).

(iii)    Professor Mahler reasoned from the Schiestl article that it followed that the biosimilarity of the BRENZYS and ENBREL products did not necessarily imply the presence of the same production process.

(iv)    Pfizer, through Dr Ibarra, then pointed out that the Schiestl article also showed that a different manufacturing process could result in a different glycosylation profile. This mattered because the Cho article was evidence that BRENZYS and ENBREL had very similar glycosylation profiles. These aspects of the Schiestl and Cho articles were then said to support the idea that the same production process had been used. The argument was based not only on the Cho article but also on the Schiestl article.

(v)    Samsung sought to thwart the drawing of that inference with evidence from Professor Gray, also resting on the Schiestl article, that changes in the glycosylation profile of a protein could arise as a result of changes at the level of any of phases one, two or three. Professor Gray also noted that there were some differences between the glycosylation profile of the BRENZYS and ENBREL products although he did not gainsay Cho’s conclusion that they were very similar.

(vi)    Dr Ibarra then denied that this was necessarily so, saying the changes principally arose from phase two.

132    A matter not pursued before this Court, but which appears problematic, is that Professor Gray’s evidence at point (v) that changes in the glycosylation profile of a protein could result from changes in the production process does not seem, directly at least, to address Dr Ibarra’s evidence which was about the similarity of two glycosylation profiles. But neither party made any point about this and it would be unsafe, in relation to a technical topic such as this, to pursue a point which the parties have not.

7. Whether the primary judge erred

133    The primary judge’s reasoning on this topic was twofold. First, his Honour rejected Dr Ibarra’s evidence that the first phase was unlikely to affect the glycosylation profile because, as she had argued, both firms used Chinese hamster ovary cells to produce their cell lines. This his Honour did because it was, in his view, contrary to the teaching in the patents. At [94]-[96] of the reasons, his Honour said this:

‘94     Dr Ibarra’s second answer to Professor Gray is that glycosylation may be affected in phase (b) and that because of the common use of CHO mammalian cells it is unlikely to occur in phase (a). That observation does not accord with the teaching of the patents. For instance, in relation to the 632 patent integers 2 and 3 of claim 1 of the 632 patent direct attention to growing cells in a cell culture at a reduced temperature (to a range of 27˚C to less than 30˚C) and a reduced pH (in a range of 6.80 to less than 7.00). However, the examples in the 632 patent indicate that glycosylation is a step which takes place prior to the process steps the subject of the claims. For instance, at [0114] of the 632 patent it says (emphasis added):

‘…For instance, growing cells at a reduced temperature of 29.5˚C significantly reduced concentration of both misfolded and aggregated TNFR-Fc, while having minimal effects on TBFR-Fc glycosylation.

95     Similar observation was made in relation to reduced pH which at [0123] was said to significantly reduce the proportion of misfolded and aggregated TNFR-Fc protein, “while having minimal effects on glycosylation of TNFR-Fc”.

96    The consequence is that claim 1 of the 632 patent is directed towards minimising an adverse effect on glycosylation, but not the step of glycosylation itself. The 034 and 036 patents barely refer to glycosylation at all. Each patent assumes, naturally enough, that phase (a) has taken place where, the experts agree, the characteristics of the glycosylation profile may be determined. It is not, in my view, persuasive to dismiss the effects of this phase, on the basis that both Pfizer and the BRENZYS process use CHO mammalian cell line. Not only is cell variation within CHO inevitable (as the evidence indicates), in addition, phases (a) and (c) influence glycosylation.’

(underlining in original)

134    With respect to the primary judge, whose experience in patent law is much greater than mine, this involved error. What was before his Honour was a preliminary discovery application. The question was not whether Professor Gray was right and Dr Ibarra was wrong. The question was whether the belief held by Mr Silvestri, the Assistant General Counsel and directing mind of Pfizer, was reasonable (either on what was before him or subsequently, the Court). Ultimately, his Honour dismissed Dr Ibarra’s evidence about glycosylation as mere speculation. This is apparent from [97] of the reasons:

‘97     Ultimately, Dr Ibarra’s evidence in this respect does not rise above speculation (Pfizer refers to it as an inference) that the similarities observed might mean that the BRENZYS Process is similar to the Pfizer Process. That speculation, in my view, clings tenuously to the coincidences identified in Cho. These coincidences are cogently explained by a far more available inference; that the end products are biosimilar. That fact does not suggest similarity of process.’

135    But it was not possible to dismiss Dr Ibarra’s evidence on glycosylation as speculation just because it appeared contrary to the teachings of the three patents. Dr Ibarra was not cross-examined about this, nor generally speaking could she be on such a summary application. Further, Professor Gray was not cross-examined about the differing glycosylation profiles of the two biosimilar Pfizer products (nor could he be). That was evidence which tended to undercut his reasoning that similar glycosylation profiles might be explained by the biosimilarity of the products. The two Pfizer products were biosimilar and yet had different glycosylation profiles.

136    None of this is to express any view on the correctness of these matters in either direction. What they do show, however, is the impossibility of resolving such an issue on a preliminary discovery application. The primary judge, it should be said, was very much alive to this risk. At [56] his Honour said this:

‘56    In the present application, SBA led evidence to challenge the basis upon which Pfizer contended that the requisite objectively held belief arose. To a substantial extent, that evidence raised factual conflicts which it was not possible for me to determine on an application of this kind, there being no cross-examination, among other difficulties. Those difficulties were compounded by the fact that Dr Ibarra gave evidence in reply that generally took issue with the evidence of SBA’s witnesses, and then challenged only specific propositions which were advanced. That had the effect of leaving unclear precisely which matters were the subject of disagreement.’

137    Despite his Honour being aware of the forensic limitations of the process with which he was seized, I am unable to avoid the conclusion that at [94] of the reasons, his Honour seems momentarily to have overlooked his own counsel and entered the fact finding arena. This is hardly surprising, however, given the various statements in John Holland and St George which have the capacity to invite precisely this kind of error.

138    This argument corresponded with Ground 2 (Particular iii) and Ground 5 in Pfizer’s draft notice of appeal. In my opinion, Pfizer has made good these Grounds.

139    I have set out above at [134] of these reasons, [97] of the judgment below. I accept Pfizer’s further submission that this paragraph also discloses error. The gist of the reasoning in the second and third sentences is that the similarity in glycosylation profiles between BRENZYS and ENBREL was more cogently explained by their biosimilarity than by Dr Ibarra’s hypothesis. As Pfizer submitted, that conclusion overlooks the Schiestl article wherein it was noted that two biosimilar products (i.e. Pfizer’s original and current ENBREL products) were biosimilar but nevertheless had different glycosylation profiles. The cogent explanation at [97] of the primary judge’s reasons is not necessarily so cogent at all.

140    Samsung sought to buttress this aspect of his Honour’s reasoning by submitting that the statement at [97] was not a factual conclusion but rather merely an inference. The inference was said to be supported by the quality guideline on biosimilarity issued by the Therapeutic Goods Administration (‘TGA’). As mentioned briefly above at [127(iv)], when a biological medicine is first approved it becomes ‘the reference medical product’ for later versions of the same medicine. In such cases, different production processes for the same protein may lead to slight variations in the resulting end product. The yardstick against which later biosimilar products are measured for safety and related purposes is the initial, or reference, product. In this case, the reference product was Pfizer’s original ENBREL product. The TGA issues guidelines on the topic of biosimilarity. One of the guidelines says this:

‘The presence of glycosylation structures…not observed in the reference medicinal product may raise concerns and would require appropriate justification with particular attention to non-human structures (non-human linkages, sequences or sugars).’

141    This suggests that if a new version of biological medicine were to be produced with a different glycosylation profile this would need to be justified to the regulator. Mr Catterns QC submitted that this demonstrated that producers were encouraged to ensure a new biological medicine had the same glycosylation profile as the reference product. I am not sure it goes that far (as the history of ENBREL’s own glycosylation profile shows). But regardless, the primary judge’s inference that the coincidences in Cho are cogently explained by biosimilarity cannot be correct. The picture is more complex.

142    So far as the submission that [97] of the reasons had involved only the drawing of an inference rather than a finding of fact, this does not appear to provide any reason which would protect it from appellate scrutiny. Whether it was a finding of fact or an inference, it seems to me to have involved error in that it failed to deal with significant evidence to the contrary. Samsung submitted that, even so, it was difficult to see how this might bear upon his Honour’s view that Dr Ibarra’s evidence was no more than mere speculation. I do not accept this submission; it goes directly to its correctness.

143    This argument corresponded with Ground 5 (particular (iii)) which I accept has been substantiated. Subject to the notice of contention, I would grant leave to appeal and allow the appeal on the basis of these arguments. Pfizer had a number of other criticisms of the judgment with which it is not now necessary to deal.

8. The Notice of Contention

144    Turning then to Samsung’s notice of contention, it is necessary to know by way of background that at the hearing Samsung had objected to various portions of Dr Ibarra’s evidence. These portions related to the seventh element of its case wherein she had expressed the view that the process by which Pfizer manufactured its ENBREL product involved, at its second phase, the use of the processes described in the three patents.

145    Samsung said that Dr Ibarra’s evidence that her employer, Pfizer, used the processes described in the three patents to make ENBREL was in the nature of expert evidence and was inadmissible because it did not sufficiently identify the facts and assumptions upon which it was based (see Evidence Act 1995 (Cth) (‘Evidence Act’) s 76; Makita (Australia Pty Ltd v Sprowles [2001] NSWSC 305 (‘Makita’); (2001) 52 NSWLR 705).

146    The primary judge agreed with the submission that Dr Ibarra’s evidence was inadmissible as expert evidence but only if the Evidence Act applied ([114]). His Honour concluded, however, that it did not apply in preliminary discovery applications. In reaching this conclusion he followed observations in this Court at first instance that this was the case (Optiver at 556 [5]); C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 (‘C7’) at [17]). He was also inclined to agree with my conclusion in Dallas Buyers Club LLC v iiNet Ltd [2015] FCA 317; (2015) 112 IPR 1 (‘Dallas Buyers Club’) that the Evidence Act should not be applied to preliminary discovery applications by use of the dispensing power in s 190.

147    Some examples of Dr Ibarra’s evidence about the use by Pfizer of the patents in the manufacture of ENBREL were contained in paragraph 45 of her first affidavit of 5 January 2017 which was in these terms:

‘45.    As part of my work described above, I have observed that, since 2007, Wyeth Ireland, and then Pfizer Ireland, has manufactured the etanercept for ENBREL® using a serum-free process; that is, a process that uses chemically defined media, and that does not contain foetal bovine serum (the Current Pfizer Process). The Current Pfizer Process has at all times fallen within at least claim 1 of each of the Etanercept Patents.’

    (emphasis in original)

148    (This evidence also appeared in other parts of her first affidavit). Then at paragraph 9 of her affidavit of 6 February 2017 she said:

‘9.     I refer to the first two columns of Annexure NI-12 of My First Affidavit, and confirm that I am aware, based upon my personal observations of the Current Pfizer Process in the course of my work, that the Current Pfizer Process has each of the features identified in that table as integers 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, and 12 of claim 1 of the ‘034 Patent.’

149    Equivalent evidence was also given in relation to the 036 and 632 Patents. Dr Ibarra then produced a fourth affidavit of 8 February 2017 in which she explained, in relation to the 632 Patent, as follows:

‘15.     I am aware, based upon my personal observations of the Current Pfizer Process in the course of my work, that in the Current Pfizer Process, the etanercept for ENBREL® is produced in a cell culture where the cells are grown at a temperature in a range of 27.0˚C to less than 30.0˚C, and at a pH in a range of 6.80 to less than 7.00, and misfolded proteins and/or aggregated proteins are measured at less than 25% (see also page 1143 in the Cho paper annexed as NI-11 to my First Affidavit, which reports 13.5% to 13.6%) of the protein produced.’

150    Samsung’s objection went beyond these particular paragraphs and in its entirety was set out in Annexure A to its notice of contention. The above examples are, however, sufficiently representative to deal with the objection. The objection was that evidence of this kind was inadmissible because it was opinion evidence in respect of which Dr Ibarra had failed to identify the facts or assumptions upon which her opinion had been based (citing Makita; see also Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588 at 604 [37]).

151    Section 76(1) of the Evidence Act provides:

‘76 The opinion rule

(1)    Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.

…’

152    Subsection (1) contains a prohibition on the use of an opinion ‘to prove the existence of a fact about the existence of which the opinion was expressed’. If evidence of an opinion is led to prove a fact about which the opinion is not expressed to be, s 76(1) simply does not apply. There is a specific exception in the Evidence Act to this effect contained in s 77. There are many circumstances in which evidence of an opinion might be led to prove a fact which is not expressed in the opinion. For example, a statutory power of a Minister may be made contingent on the existence of a particular opinion held by the Minister or a question may arise in employment litigation as to whether an employee was dismissed because the employer held a particular opinion about the employee. In both cases, the fact to be proved is the mental state of a person consisting of an opinion, but it is the fact of the opinion, and not the opinion as fact, which is being proved in such circumstances. Consequently, and in an orthodox fashion, s 76(1) is not engaged.

153    In this case, Pfizer was not required to prove the fact that the process by which it made its own ENBREL etanercept product involved the use of the three patents. What it needed to prove was that Mr Silvestri’s belief that Pfizer might have a right to obtain relief from Samsung for patent infringement was a reasonable one. The question, therefore, was whether the material before Mr Silvestri or the Court made that belief reasonable. The question of whether Mr Silvestri’s belief was reasonable (either on the material before Mr Silvestri himself or subsequently before the Court) was, it is true, a question of fact. However, the reasonableness of that belief was not what Dr Ibarra’s opinion was about. It was about ENBREL. Section s 76(1) was, in that circumstance, inapplicable to Dr Ibarra’s evidence.

154    Once it is accepted that the fact in issue on a preliminary discovery application is the reasonableness of a belief, this has consequences for a number of exclusionary rules in the Evidence Act. For example, s 59(1) makes inadmissible evidence of a representation made by a person in order ‘to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation’. On a preliminary discovery application, it is quite possible that the prospective applicant’s belief may have been engendered by what others have said. Evidence of those statements is not caught by s 59(1) because they are not led to prove the truth of the fact asserted but rather the fact of the reasonableness of the belief of the person who heard the representation. It is difficult to see, therefore, that hearsay objections will usually have much purchase in preliminary discovery applications (at least on the question of whether there is a reasonable belief held by the prospective applicant). More is this so when the interlocutory nature of the proceedings is brought to account: Evidence Act s 75.

155    The primary judge concluded that Dr Ibarra’s evidence was opinion evidence but admitted it anyway. In doing so, he followed three decisions in this Court which have reached the conclusion that there are difficulties in applying the approach of the Evidence Act to preliminary discovery applications. The first of these is C7 at [17] where Gyles J said:

‘17.    …I should say that I have not limited myself to considering evidence which is in a form which would be strictly admissible at a final trial. During the hearing I ruled that press reports and other hearsay material were not necessarily excluded on that account. The issue against which the admissibility of evidence is to be tested is whether there is reasonable cause to believe that the applicant may have the right to obtain relief. This does not tender an issue of fact in the usual way. Furthermore, the proceeding is, in essence, interlocutory. My approach to the press reports and other hearsay reports (such as judgments of the Court in other cases) is to have regard to them to the extent that they help to fix dates and times of known events, where a sourced fact is reported rather than speculation or opinion, or where, for example, a press release by one of the respondents is reported. Another circumstance where I have had regard to them is where C7 has raised the contents of a press report with a respondent and sought a reaction. A good example of the appropriate use of press reports in this context is the decision of Davies J in Hughes Aircraft Systems International v Civil Aviation Authority (NG 913 of 1994 Fed, 28 June 1995) particularly at pars [8] to [11]. It will become apparent from what follows that I have made limited use of this kind of material.’

156    Tamberlin J applied similar reasoning to conclude in Optiver at 557 [7] that it was ‘not appropriate to strictly apply the laws of evidence as if the application for preliminary discovery involved a final hearing of the issues in the prospective substantive application’. I reached a similar conclusion in Dallas Buyers Club at 23 [99]. To the extent that these decisions suggest that the Evidence Act does not apply to a preliminary discovery application they need to be qualified. Section 4(1) of the Evidence Act relevantly provides:

‘4 Courts and proceedings to which Act applies

(1)    This Act applies to all proceedings in a federal court, including proceedings that:

(a)     relate to bail; or

(b)     are interlocutory proceedings or proceedings of a similar kind; or

(c)     are heard in chambers; or

(d)     subject to subsection (2), relate to sentencing.

…’

157    An application for preliminary discovery is a proceeding in a federal court, so there can be no room for the view that the Act does not apply to such applications. The point, however, is that once the fact in issue in a preliminary discovery application is identified as the reasonableness of the belief of the prospective applicant, the various exclusory provisions of the Act are likely to have a somewhat qualified application. Of course, it is true that even on a preliminary discovery application there may be ordinary facts in issue such as whether, for example, in a case under FCR 7.22, the prospective applicant is able to identify the wrongdoer. In relation to facts of that kind the difficulties just identified do not arise.

158    In any event, on the evidentiary analysis I prefer, the admissibility of Dr Ibarra’s report flows readily. Samsung, however, submitted that before the primary judge the forensic reality was that Pfizer had sought to prove, as a fact, that the Pfizer process used the method of the patents. Regardless of the niceties I have just sought to explain above, Samsung submitted that Pfizer had sought to use Dr Ibarra’s evidence to prove facts.

159    There is some support for Samsung’s submission. It is at T48-49 at first instance where this exchange between the primary judge and then counsel for Pfizer took place:

‘His Honour:    Or if you haven’t – I was going to raise one point. There seems to be a point being raised about the extent to which the Pfizer process is a process which falls within the claims of each of the patents.

Mr Macaw:    Yes, yes.

His Honour:    That’s, in particular, an objection to evidence which no doubt we will come to in a moment, but is there anything that – it may be that I’ve missed your position on that, but – and you’ve addressed it – but I would benefit from a little of your response to that.

Mr Macaw:    The admissibility of the evidence, or the relevance of the point?

His Honour:    Well, the relevance of point.

Mr Macaw:    Yes.

His Honour:    As I understand it, the way that the respondent puts it, the underpinning for your entire argument depends on the proposition that the biosimilar was made – or the similarities between the Samsung product and the reference product connotes a similarity of process for the manufacture of the two and that in turn leads to the available inference that the Samsung process infringes the claims. So the argument is contingent on the proposition that the Pfizer process falls within the claims also.

Mr Macaw:    Yes. Indeed.

His Honour:    There – so do you accept as the foundational proposition that if you don’t make out that as a matter of evidence, you have a problem?

Mr Macaw:    Yes. Yes, we do. That’s the bridge. Your Honour had identified it precisely, with respect.

His Honour:    Very well.

Mr Macaw:    That’s the relevance.’

160    There is force in Samsung’s submission but it needs to be considered in the context of the later debate which then took place about admissibility. This was at T60-61 and involved, inter alia, the contention that the rules of evidence did not apply with the usual strictness to preliminary discovery applications. That discussion cannot be reconciled with the idea that actual facts were being debated.

161    Read in that context, I would read the passage at T48-49 not as an assertion of Dr Ibarra’s evidence as a fact but rather only a pragmatic acceptance that her evidence about Pfizer’s processes was an essential step in the syllogistic structure of its case. But that did not entail that Pfizer was conceding that it was required to prove that fact on the balance of probabilities and I do not think that, read as a whole, this is what Pfizer sought to do

162    It follows that whilst I agree with the primary judge that Dr Ibarra’s evidence was an opinion, it was not inadmissible under s 76(1). Nevertheless, his Honour’s conclusion that the material should be admitted was not erroneous. His Honour arrived at that point by waiving the rules of evidence under s 190 of the Evidence Act. On the view I take, this was not necessary as those rules did not prevent the evidence being adduced. It is not necessary to consider Samsung’s argument that his Honour erred in considering whether to exercise the power in s 190.

9. Result

163    For the reasons already given, there is no doubt that Mr Silvestri’s belief that Pfizer might have a claim against Samsung was reasonably held. It was supported by Dr Ibarra’s evidence which was not shown to have been outlandish or absurd. In principle, therefore, there should be an order for preliminary discovery.

164    I should say for completeness that the primary judge did indicate that had the preconditions to the exercise of the power been established, he would have refused to exercise the discretion in favour of Pfizer. This was on the basis that Pfizer had not revealed the nature of its own production processes so as to allow the testing of the opinion of Dr Ibarra that Pfizer had used the processes in the patents to make ENBREL. The judge recorded Samsung’s submission at [174] of the reasons:

‘174    In the present case, SBA contends that there has been less than full disclosure by Pfizer about the process it uses to manufacture ENBREL. It submits that Dr Ibarra’s opinion that the Pfizer process falls within the asserted claims is central to her reasoning, and yet no evidence of that process has been provided. As a consequence, the Court has no evidence to assess whether or not Dr Ibarra’s opinion is correct or where within the quantitative boundaries described by the claims the Pfizer Process may sit.’

165    His Honour then observed at [175] that the submission ‘has some force’ and that Samsung was thereby denied the opportunity ‘to test the correctness of the conclusion’ (my emphasis). Although it is not necessary to express a view on these obiter remarks, it may be that the focus should not have been on the correctness of Dr Ibarra’s view but instead on the reasonableness of the belief held by Mr Silvestri based on the view that Pfizer may have had a right to obtain relief. Again, the primary judge’s approach seems understandably to have been heavily influenced by John Holland. ‘Testing’ ordinarily has no place in preliminary discovery applications.

166    Samsung sought an opportunity to make further submissions on the form of any orders in the event that the appeal was allowed. In my opinion, it would be best for that issue to be remitted to the primary judge.

167    I would make the following orders:

1.    The Prospective Applicants be granted leave to appeal.

2.    The appeal be allowed.

3.    Set aside the orders made by the primary judge on 21 March 2017 and in lieu thereof order that the Prospective Respondent give the Prospective Applicants preliminary discovery on terms to be the subject of further orders.

4.    There be remitted to the primary judge for determination:

(a)    the final form of the orders providing for preliminary discovery including any questions of confidentiality; and

(b)    the question of the costs of the application at first instance.

5.    The Respondent to the appeal pay the Appellants’ costs as taxed or agreed.

Associate:

Dated:    29 November 2017

REASONS FOR JUDGMENT

NICHOLAS J:

168    I have had the advantage of reading the reasons for judgment of Allsop CJ and Perram J. I agree that leave to appeal should be granted, that the appeal should be allowed, and that the primary judge’s orders should be set aside. I think the preferable approach is to remit the proceeding to the primary judge so that he may hear from the parties in relation to the scope of the preliminary discovery to be ordered and the mechanisms to be adopted for preserving any confidentiality in the material to be produced in accordance with his orders.

169    The background to the application for leave to appeal, including the terms of the applicable rule of court (r 7.23) and its predecessor (O 15A, r 6) and the primary judge’s detailed reasons for dismissing the application for preliminary discovery are set out in the reasons for judgment of both the Chief Justice and Perram J.

170    The former rule used the expression “reasonable cause to believe”. In the context of the former rule these words ensured that an order for preliminary discovery could only be made pursuant to the rule if there existed grounds sufficient to induce in a reasonable person the requisite belief. Previous decisions concerned with the former rule held that the evidence in support of an application for preliminary discovery need not demonstrate that the prospective applicant held the requisite belief: Austrac Operations Pty Ltd (in liq) v New South Wales [2003] FCA 1013 at [10]. However, the language of the current rule makes clear that the prospective applicant must hold the requisite belief at the time of making the application.

171    Leaving that difference aside, there does not appear to me to be any basis for holding that the current rule was intended to change the requirements that must be satisfied before the discretion to make an order for preliminary discovery is enlivened. Nor do I see any basis for concluding that the existing rule was intended to disturb what was, by the time the Federal Court Rules 2011 (Cth) came into operation, the settled principles governing the application of the former rule.

172    In St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 (“St George”) Hely J distilled a number of propositions which he said emerged from the authorities in which the proper application of O 15A, r 6 was considered. The following five propositions, as set out by his Honour, are directly relevant to the present matter:

(a)    the rule is to be beneficially construed, given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the court, exercised in the particular circumstances of each case: Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733; 20 IPR 79 at 85; Minister for Health and Aged Care v Harrington Associates Ltd [1999] FCA 549 at [27];

(b)    each of the elements prescribed in subparas (a), (b) and (c) of the rule must be established: Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 11 [38]; 167 ALR 385 at 367; 47 IPR 21 at 30. Preliminary discovery cannot itself be used to remedy deficiencies in the satisfaction of the conditions themselves: Airservices Australia v Transfield Pty Ltd (1999) 92 FCR 200 at 202–3 [5]; 164 ALR 330 at 332;

(c)    the test for determining whether the applicant has “reasonable cause to believe”, as required by subpara (a), is an objective one: Hooper at FCR 11–12 [39]; ALR 367; IPR 30; Malouf v Malouf [1999] FCA 710 at [16]; Quanta Software International Pty Ltd v Computer Management Services Pty Ltd (2000) 175 ALR 536 at 541–2 [24]; 49 IPR 25 at 31; Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 391 at 23. Further, the words “or may have” cannot be ignored. The applicant does not have to make out a prima facie case: Quanta Software at ALR 541–2 [24]; IPR 31; Paxus Services at ALR 733; IPR 85;

(d)    belief requires more than mere assertion and more than suspicion or conjecture. Belief is an inclination of the mind towards assenting to, rather than rejecting a proposition. Thus it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question. If there is no reasonable cause to believe that one of the necessary elements of a potential cause of action exists, that would dispose of the application insofar as it is based on that cause of action: John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 at [13], [14], [17] and [73];

(e)    while uncertainty as to only one element of a cause of action might be compatible with the “reasonable cause to believe” required by subpara (a), uncertainty as to a number of such elements may be sufficient to undermine the reasonableness of the cause to believe: Glowatzky v Insultech Group Pty Ltd (1997) 39 IPR 215.

173    The central question in St George was whether there was reasonable cause to believe that the first prospective respondent (Rabo) or the second prospective respondent (Rabo CF) deliberately withheld information from the prospective applicant (St George) concerning the parlous financial position of a banking customer.

174    Hely J did not refuse to grant the prospective applicant any preliminary discovery. Rather, his Honour considered that the requirements for preliminary discovery were satisfied in respect of some postulated claims for relief but not others. As to those in respect of which his Honour was not so satisfied, it is apparent that his Honour was of the view that the evidence did not suggest that Rabo or Rabo FC deliberately failed to disclose information known by them to St George. It is tolerably clear from a reading of his Honour’s reasons as a whole that his conclusion was that the evidence did not establish a reasonable basis to believe that St George either was or may be entitled to relief on the basis of any such deliberate withholding of information. As to this, his Honour said at [28] “…at its lowest level, subpara (a) requires that there be reason to believe that the applicant may have the right to obtain relief in this court in relation to those claims”. Referring to the possibility that either Rabo or Rabo FC may have deliberately withheld relevant information from St George, his Honour said at [29]:

If the evidence established that Rabo and/or Rabo CF had relevant information which was withheld from St George, otherwise than inadvertently, then the requirements of subpara (a) of the Rule may well be satisfied in relation to a foreshadowed claim. But the authorities establish that the bare possibility that Rabo and/or Rabo CF may have deliberately withheld material information from St George is insufficient to enliven the operation of the rule. While St George does not need to go so far as to establish a prima facie case, St George does have to establish that there is reasonable cause to believe that each of the necessary elements of a potential cause of action exists. The evidence must incline the mind to the view that Rabo and/or Rabo CF deliberately withheld material information from St George. The threshold test under subpara (a) may be set at quite a low level (Gull Petroleum (WA) Ltd v Tah Land Pty Ltd [2001] FCA 1531; BC200107024) but, as I said earlier, it is not sufficient to point to a mere possibility that St George may have a claim, when that claim is completely dependent on the as yet unknown facts.

The fact that the evidence before his Honour did not eliminate the possibility that Rabo or Rabo FC deliberately withheld information from St George was not sufficient to enliven the discretion to grant preliminary discovery relevant to a claim for relief based on such a hypothesis.

175    Hely J’s reasons at [28]-[29] recognise the nature of belief and the important role it plays in the operation of the rule. Belief is not the same as suspicion. As the High Court explained in George v Rockett (1990) 170 CLR 104 at 115-116:

Suspicion, as Lord Devlin said in Hussien v. Chong Fook Kam [[1970] AC 942 at p 948], “in its ordinary meaning is a state of conjecture or surmise where proof is lacking: ‘I suspect but I cannot prove.’” The facts which can reasonably ground a suspicion may be quite insufficient reasonably to ground a belief, yet some factual basis for the suspicion must be shown. […]

The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.

176    In that case the High Court was concerned with the requirement that a magistrate issuing a search warrant have reasonable grounds for believing that the subject matter of the search warrant would afford evidence of the commission of an offence. Neither the current nor the former rule require anything quite so definite. Nevertheless, in my opinion, a requirement that a person reasonably believe that a particular state of affairs may exist will not be satisfied by evidence that does not incline the mind to the existence of that state of affairs.

177    The function of the words “or may have” in the former rule was to make clear that the relevant belief need not incorporate a firm view that there is a right to relief. This was the view expressed by French J in East Grace Corporation v Xing (No 2) [2005] FCA 1266 at [36], which was later endorsed by a Full Court in Telstra Corporation Limited v Minister for Broadband, Communications and the Digital Economy (2008) 166 FCR 64 at [58]. Consistently with that view, I do not think those words were intended to allow a prospective applicant to obtain an order for preliminary discovery in circumstances where there existed nothing more than a mere possibility that the prospective respondent may have engaged in conduct which, if proven, would entitle the prospective applicant to relief.

178    Hely J’s summary of the relevant principles in St George has been applied in many previous cases both before and after the introduction of the current rule including by Full Courts in Echo Tasmania Pty Ltd v Imperial Chemical Industries PLC [2008] FCAFC 58 and Apache Northwest Pty Ltd v Newcrest Mining Ltd [2009] FCAFC 39; (2009) 182 FCR 124 (“Apache”). His Honour’s decision has also been applied by the New South Wales Court of Appeal in the context of r 5.3(1) of the Uniform Procedural Rules 2005 (NSW); see, for example, Hatfield v TCN Channel Nine Pty Ltd [2010] NSWCA 69. However, as Flick J rightly observed in Apache, there is a danger in too readily applying Hely J’s summary rather than focusing on the words of the rule itself. As his Honour said at [63]:

… Certainly, his Honour would have been the first to agree that it is the terms of r 6 which must be applied. The propositions of his Honour remain a very valuable guide as to those considerations which should be addressed and the manner in which those considerations should be applied when making an order for preliminary discovery. The greater the uncertainty there may be in respect to one or other of the elements of the cause of action being advanced, the greater may be the judicial reluctance to accept that an applicant has a “reasonable cause to believe”; the greater the certainty as to one or other of the principal elements of a cause of action, the less reason there may be to question the reasonableness of an applicant’s belief that he “may have” a cause of action. The rule remains a rule to be “beneficially construed”. To adopt a too inflexible approach to the rule may be to deny the utility of preliminary discovery in those circumstances where it is most needed.

179    The principal submission of the applicants (collectively, “Pfizer”) was that the authorities, including the decision in St George, were misapplied by the primary judge who was said to have directed himself to a higher standard than is required to satisfy the relevant rule. In my opinion, this submission should be accepted.

180    I agree with the Chief Justice that the evidence established that there were reasonable grounds for Pfizer to believe that it may have a right to relief for patent infringement. That the respondent (“SBA”) or its supplier may have used a method within one or more of the broadly defined claims of the patents was more than a mere possibility or mere speculation. Dr Ibarra’s evidence pointed clearly in that direction and provided a rational basis for believing that the relevant methods may have been used to make SBA’s BRENZYS product. I also agree that, given the nature of the proceeding before the primary judge, which was interlocutory in character, and which did not require Pfizer to establish a prima face case of patent infringement, it was not open to his Honour to dispose of Pfizer’s application on the basis that he preferred the evidence of SBA’s expert witnesses to that of Dr Ibarra, or that their evidence was more persuasive than her evidence. Even if the primary judge was of that view, that could not of itself provide the answer to the question whether Pfizer reasonably believed that it may have the right to obtain relief for patent infringement.

181    The only other matter about which I wish to make some additional observations concerns the admissibility of Dr Ibarra’s evidence that Pfizer’s ENBREL product was manufactured using a process falling within the relevant claims of the patents.

182    I agree with the Chief Justice for the reasons he has given that this evidence of Dr Ibarra, which had been relied upon by Mr Silvestri in forming his view, was admissible to establish the grounds for Mr Silvestri’s belief. Having been correctly admitted into evidence, this material was also capable of supporting a finding that there were reasonable grounds to believe that SBA’s BRENZYS product may have been manufactured using one or more of the methods claimed in the patents. Of course, the position would have been different had an order been made under s 136 of the Evidence Act 1995 (Cth) precluding the use of such material for that purpose.

183    Once admitted into evidence, Dr Ibarra’s opinion that Pfizer’s ENBREL product was manufactured in accordance with one or more of the claims of the patents should have been given weight. Her evidence disclosed that she was familiar with the patents and Pfizer’s manufacturing processes, and that she had the necessary technical knowledge and experience to give probative evidence relevant to that topic. Given that her evidence was otherwise admissible, it was not necessary for Pfizer to advance it in a form required to ensure its admissibility at a trial of an infringement proceeding. I also agree with the Chief Justice that the form of Dr Ibarra’s evidence does not provide any basis for refusing to make an order for preliminary discovery in favour of Pfizer on discretionary grounds.

Associate:

Dated:    29 November 2017