FEDERAL COURT OF AUSTRALIA

Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1283

TRADE PRACTICES – misleading and deceptive conduct – “in trade or commerce” – application to Commissioner of Patents for extension of patent term – application alleged to contain misleading and deceptive statements – whether statements made in trade or commerce.

ADMINISTRATIVE LAW – extension of patent term – application for review of decision to grant – standing of applicant – whether person aggrieved – delay in making application – whether disentitling.

PRACTICE AND PROCEDURE – summary judgment – application by defendant – applicable principles.

Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5, 15, 16

Judiciary Act 1903 (Cth) s 39B

Patents Act 1990 (Cth) ss 138(1), 192

Trade Practices Act 1974 (Cth) ss 52, 82, 87

Federal Court of Australia Act 1976 (Cth) s 31A

White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 followed

Glueck v Stang (2008) 76 IPR 75 followed

Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 applied

Village Building Co Ltd v Canberra International Airport (No 2) (2004) 134 FCR 422 cited

RGC Mineral Sands Ltd v Wimmera Industrial Minerals Pty Ltd (No 2) [2000] FCA 22 cited

Assa Abloy Australia Pty Ltd v Australian Lock Co Pty Ltd (2005) 68 IPR 105 applied

Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158 considered

Australian Foreman Stevedores Association v Crone (1988) 20 FCR 377 followed

INTERPHARMA PTY LTD (ACN 099 877 899) v THE COMMISSIONER OF PATENTS and ELI LILLY AND COMPANY; ELI LILLY AND COMPANY and ELI LILLY AUSTRALIA PTY LTD (ACN 000 233 992); INTERPHARMA PTY LTD (ACN 099 877 899)

VID 160 of 2008

SUNDBERG J

21 AUGUST 2008

MELBOURNE

THE COURT ORDERS THAT:

(1)               Paragraphs 1 to 6, 8 and 10 of the Amended Application and paragraphs 7 to 19 of the Amended Statement of Claim be dismissed pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth).

(2)               The applicant’s motion notice of which was filed on 22 July 2008 be dismissed.

(3)               The applicant pay the first respondent’s costs of the motion referred to in order 2 and of the first respondent’s motion notice of which was filed on 22 May 2008.

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

REASONS FOR JUDGMENT

INTRODUCTION

1                     The second respondent (Lilly) is registered as proprietor of Australian Patent No 565856 entitled “difluro nucleoside antivirals”. Lilly is also the patentee of the Austrian equivalent of the Australian Patent. The second cross claimant is the exclusive licensee of the Patent in Australia.

2                     On 14 January 2000 the Commissioner of Patents granted an extension of term of the Patent for a period of five years ending 7 March 2009. On 19 March 2008 the applicant commenced proceedings seeking, amongst other things:

(a)                an order setting aside the Commissioner’s decision to extend the term of the Patent (ss 5, 15 and 16 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) and s 39B of the Judiciary Act 1903 (Cth));

(b)               an order rectifying the Register of Patents by removing all references to any extended term of the Patent (s 192 of the Patents Act 1990 (Cth));

(c)                an order revoking the Patent (s 138(1) of the Patents Act);

(d)               damages pursuant to ss 52, 82 and 87 of the Trade Practices Act 1974 (Cth).

3                     On 12 May 2008 Lilly and the second cross claimant filed a cross claim alleging infringement of the Patent.

4                     The Patent describes and discloses a class of compounds which have an anti‑viral therapeutic effect. The invention described and claimed in the complete specification is a class of compounds being antiviral nucleosides for the treatment of viral infections.

5                     In its application for an extension of the term of the Patent, Lilly relied upon registrations on the Australian Register of Therapeutic Goods (ARTG) for the commercial product Gemcitabine hydrochloride. The registrations state that the approved indication for Gemcitabine hydrochloride is:

(a)                treatment of patients with locally advanced or metastatic non small cell lung cancer, and

(b)               from 4 July 1997, treatment of patients with locally advanced or metastatic non small lung cancer, locally advanced or metastatic adenocarcinoma of the pancreas and 5‑FV refractory pancreatic cancer.

6                     The applicant claims there is a disconformity between the pharmaceutical substance with the indication described in the ARTG registrations and the class of antiviral compounds described and claimed in the specification. This perceived disconformity forms the basis for its application to review the extension of the term and revoke the Patent for lack of fair basis and false suggestion, the Trade Practices Act claim, and its defence to the infringement action pursuant to s 78 of the Patents Act.

THE TWO MOTIONS

7                     Before me are two motions. The first, by Lilly, seeks an order under s 31A of the Federal Court of Australia Act 1976 (Cth) that pars 1 to 6, 8 and 10 of the Amended Application, and pars 7 to 19 of the Amended Statement of Claim be dismissed. The second, by the applicant, seeks leave to amend its Amended Application and Amended Statement of Claim.

8                     Section 31A of the Federal Court of Australia Act is in part as follows:

(2)               The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)               the first party is defending the proceeding or that part of the proceeding; and

(b)               the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3)               For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(a)        hopeless; or

            (b)        bound to fail;

for it to have no reasonable prospect of success.

9                     Lindgren J has recently collected the cases on the meaning and effect of s 31A and comparable provisions: White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 at [58]‑[59], where he considered the test to be whether there are “real” as opposed to “fanciful” or “merely arguable” prospects.

10                  Lilly’s motion gives rise to three issues. The first is the viability of the applicant’s claim to relief under s 52 of the Trade Practices Act. The second is whether the applicant has standing to claim relief under the ADJR Act, s 192 of the Patents Act and s 39B of the Judiciary Act. The third is whether, assuming it has standing, it should be denied relief because of its delay. In a s 31A context, in each case the question is whether the Court is satisfied that there is no reasonable prospect of the applicant succeeding in the relevant claim or issue.

TRADE PRACTICES ACT

11                  The applicant alleges that in applying for an extension of the term of the Patent, Lilly represented to the first respondent (the Commissioner) that the pharmaceutical substance on the ARTG on which it relied was disclosed in claims 1 to 4 and 6 of the Patent. The applicant alleges that these representations were made in trade and commerce and were false.

12                  In Glueck v Stang (2008) 76 IPR 75 the applicant alleged that Novopharm, in trade or commerce, engaged in misleading and deceptive conduct in relation to an application to the Australian Patent Office for the grant of letters patent. At [32] to [33] Lindgren J said:

The course of authority outlined above requires me to hold that the alleged representations by Novopharm to the APO … were not made in trade or commerce. They were not made in the course of a trading or commercial relationship between Novopharm on the one hand, and … the APO … on the other hand. Novopharm had no trading or commercial dealings with the APO …. Nor were they made in the course of the negotiation of contracts …. The alleged representations were made to a government instrumentality pursuant to legislation for the purpose of obtaining an exclusive right or bundle of rights made available by that legislation.

No doubt the alleged representations were made by Novopharm in trade or commerce in a broad non‑s 52 sense. However, in Concrete Constructions the High Court … rejected the view that the expression ‘in trade or commerce’ in s 52 referred to the ‘immense field of activities’ in which corporations may engage in the course of, or for the purposes of, carrying on some overall trading or commercial business ….

13                  The course of authority to which Lindgren J referred consisted of Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, Village Building Co Ltd v Canberra International Airport (No 2) (2004) 134 FCR 422 at [57]‑[58], affirmed on appeal at (2004) 139 FCR 330 at [50]‑[55], and RGC Mineral Sands Ltd v Wimmera Industrial Minerals Pty Ltd (No 2) [2000] FCA 22.

14                  The applicant sought to distinguish the present case from Glueck on the ground that the facts of the two cases were different. That is true, but the proposition derived by Lindgren J from the authorities referred to is applicable here. Essentially that is because of the passage in Concrete Constructions at 604, upon which Glueck was based, in which it was said:

What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it … has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character.

It is that relationship that is absent here. I am not persuaded that Glueck is plainly wrong, and accordingly I should follow it.

15                  The applicant filed material that bore on the activities of the Patent Office. However, no reliance was placed on it in the applicant’s counsel’s submissions, and Lilly’s counsel made no reference to it. I have not carried out my own investigation as to what might have been made of the material.

16                  In my opinion the applicant has no reasonable prospect of succeeding in its s 52 claim.

STANDING

17                  Section 5 of the ADJR Act enables a “person aggrieved” by a decision to which the Act applies to seek an order of review. Section 192(1) of the Patents Act enables a “person aggrieved” by, amongst other things, an entry wrongly existing in the Register of Patents, to apply for an order to rectify the Register. Section 39B of the Judiciary Act does not use the expression “person aggrieved”. It was, however, common ground that if the applicant was not a “person aggrieved” under s 5 of the ADJR Act or s 192, it would lack standing under s 39B.

18                  In Assa Abloy Australia Pty Ltd v Australian Lock Co Pty Ltd (2005) 68 IPR 105 at [19] the Full Court referred to the observations of McLelland J in a trade mark context in Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158 at 193 (Ritz), and said:

[Adapting] that language to the design context, the expression would embrace any person having a real interest in having the entry expunged and thus would include any person who would be or in respect of whom there is a reasonable possibility of his or her being ‘appreciably disadvantaged in a legal or practical sense’ by the entry not being expunged.

19                  The applicant’s claim to be a person aggrieved is put on the following basis:

·                    since its incorporation in 2002 it has been involved in the business of marketing, selling and supplying pharmaceutical products

·                    in October 2007 it applied to the Therapeutic Goods Administration (TGA) to register GEMCITABINE EBEWE, gemcitabine hydrochloride formulation for the treatment of cancer, which is intended to be manufactured by EBEWE Pharma (the product)

·                    it believes it will obtain TGA approval for registration in the third quarter of 2008

·                    it will not import and sell the product until it has received TGA registration and EBEWE Pharma is able to supply the product

·                    Lilly is the registered owner of the Patent and claims that it has the exclusive right to import and sell the product in Australia while the Patent remains in force

·                    Lilly has not authorised the applicant or EBEWE Pharma to exploit the Patent

·                    Lilly has informed the applicant that it will commence legal proceedings for an injunction unless the applicant undertakes that it will not, prior to the expiration of the term of the Patent, import and sell products containing gemcitabine hydrochloride without Lilly’s approval

·                    the applicant has declined to provide the undertaking and denies that the manufacture, importation and sale of the product infringes the Patent

·                    if the product falls within the claims of the Patent (which is denied), the period during which the applicant may be prevented from importing and selling such products in Australia has been prolonged by the extension of the term of the Patent.

20                  As I understand the position, Lilly did not attack that formulation of the applicant’s claim to be a person aggrieved. What it relies on, so as to assert that the applicant’s standing has evaporated, is the decision of an Austrian court on 7 July 2008 enjoining EBEWE Pharma from making and exporting the product. Lilly contends that on the present pleadings the applicant cannot establish an interest in the outcome of the proceeding because, even with the extension of the term in place, it is not in a position to launch a product sourced from EBEWE Pharma in Austria.

21                  It is because of the grant of the Austrian injunction that the applicant, in its motion, seeks to amend its Application to overcome that obstacle. It wants to add the following paragraphs to its claim to be a person aggrieved:

(e)               On 18 April 2008 the Applicant, as the Sponsor, applied to the TGA to register GEMCITABINE EBEWE gemcitabine hydrochloride powder for the treatment of cancer, which is intended to be manufactured, packed and supplied by SC Sindan‑Pharma SRL of …Romania (Sindan‑Pharma) and the manufacturer of the active material gemcitabine hydrochloride is intended to be Shilpa Medicare Limited, India (Shilpa) (Sindan‑Pharma Gemcitabine Hydrochloride powder).

(f)                 The Applicant has not yet obtained TGA approval for registration of Sindan‑Pharma Gemcitabine Hydrochloride powder but believes that it will obtain such approval in late 2008 or early 2009.

(g)               The Applicant has not yet, and will not, import and sell the said Sindan‑Pharma Gemcitabine Hydrochloride powder until such time as:

(i)           it receives TGA registration;

(ii)         Sindan‑Pharma is able to supply the said Sindan‑Pharma Gemcitabine Hydrochloride powder to it.

22                  Lilly opposes the application to amend the pleadings on the ground that it would be futile to grant leave. It relies on three paragraphs of the affidavit of David Gray, the applicant’s Managing Director:

26.              At the time InterPharma became aware of the [extension] Decision on 2 August 2007, it had not applied for Pharmaceutical Benefits Scheme (PBS) listing of Gemcitabine EBEWE. PBS listing is central to the successful marketing of oncology pharmaceutical products in Australia. InterPharma cannot apply for PBS listing of Gemcitabine EBEWE until it has obtained TGA registration of Gemcitabine EBEWE. At the time of swearing this my Affidavit, InterPharma has not obtained TGA registrations of Gemcitabine EBEWE.

27.              It is not possible to apply for PBS listing of any pharmaceutical until TGA registration has been achieved.

…

49.              Upon obtaining TGA registration and obtaining PBS listing of the Gemcitabine EBEWE, InterPharma, (if not restrained by an order of this Court) intends to import, market and sell Gemcitabine EBEWE for the treatment of cancer, which formulations are alleged by Eli Lilly Australia Pty Ltd and Eli Lilly and Company to infringe the Anti‑Viral Patent. If the said formulations do fall within the scope of the claims of the Anti‑Viral Patent (which is denied), then the period during which InterPharma may be prevented from importing, marketing and selling such formulations has been prolonged by the extension of the term of the Anti‑Viral Patent in the Decision.

23                  Lilly notes that while Mr Gray was not in those paragraphs dealing with the Shilpa product, his observations necessarily apply to it. The EBEWE application for TGA approval was filed in October 2007 and, as appears from the applicant’s pleading, approval is not expected until the third quarter of this year. The Sindan‑Pharma application was not lodged until April 2008. Lilly says that no reason is advanced for the belief in [21(f)] that approval will be granted in late 2008, and that it should be inferred that it will be later.

24                  Lilly also relies on the evidence of Mr Grainger that a PBS application typically takes three months to be processed. Mr Granger also said at [32]‑[33]:

the PBS Schedule is published 12 times a year, on the first day of each calendar month. However, if a listing involves a change in the price of other brands (for example, a generic product is listed on the PBS at a lower price and this results in price changes for other brands of that product) then, it may only be listed on the PBS Schedule on one of three dates per year – 1 April, 1 August and 1 December ….

For an application to be listed on one of these dates, it must have been made by, respectively, the 1 January, 1 May and 1 September prior to the associated listing date.

25                  Lilly’s counsel asserted that the Shilpa product would be “listed on the PBS at a lower price”. Accordingly, it was said, if there were to be a TGA approval given in late 2008 or early 2009, the earliest time a PBS application could be lodged would be 1 January 2009, and the earliest the Shilpa product would be listed would be 1 April 2009. That would see it available for commercial use after the expiry of the extended term on 7 March 2009. Accordingly, it was said, the applicant’s commercial activities will not be affected by the extended term, “other reasons having intervened and having nothing to do with the extension of term”.

26                  Counsel for the applicant did not challenge the assertion in [25] that the Shilpa product would be listed at a lower price, with the TGA consequences alleged. Rather they took issue with the contention that obtaining PBS listing is a prerequisite to the launch of a product. They did not accept that Mr Gray was saying that. Rather they contended that he was saying that once TGA registration and PBS listing was obtained, importing, marketing and selling would occur.

27                  I return to the Assa Abloy test recorded at [18]. Adapted to the present case, the question is whether there is a reasonable possibility that the applicant would be disadvantaged in the sense that it would be prevented from exploiting the invention in any of the respects falling within the definition of “exploit” in the Patents Act. That includes a number of things preparatory to placing a product in the marketplace. Matters falling within the concept of “launching” a product include importing, keeping for the purpose of offering for sale, and using. In my view the fair reading of par 49 of Mr Gray’s affidavit is that propounded by the applicant. Nor do I think the use of the word “marketing” in par 26 of that affidavit bears the emphasis Lilly places on it. All Mr Gray is saying is that in order successfully to sell a product, that is to say make money out of it, PBS listing is essential. As appears from [19] and [21], the applicant has pleaded only that it has not yet obtained TGA approval, believes it will obtain it in late 2008 or early 2009, and will not import and sell the product until it receives TGA registration. It does not plead PBS listing as a precondition. The Assa Abloy test speaks of the existence of a reasonable possibility of disadvantage. For the purposes of a s 31A application, I am not satisfied that that possibility does not exist. I am not persuaded that the applicant has no reasonable prospect of successfully prosecuting the ADJR, s 192 and s 39A parts of the proceeding by reason of a lack of standing.

DELAY

28                  Section 11(1)(c) of the ADJR Act provides that an application for an order of review in relation to a written decision “that was furnished to the applicant” must be lodged within the prescribed period or within such further time as the court allows. Under sub‑s (3) the prescribed period is the period commencing on the day on which the decision is made and ending on the 28^th day after the decision is “furnished to the applicant”. Subsection (4) provides that where no period is prescribed, the court may refuse to entertain an application if of the opinion that the application was not made within a reasonable time after the decision was made. In forming an opinion for the purposes of subs (4), the court is to have regard to the time at which the applicant became aware of the making of the decision: subs (5)(a).

29                  In my view delay in relation to the ADJR part of the proceeding is to be determined under s 11(4) and (5) and not under subs (3). In this case the applicant discovered the existence of the decision through its own resources. I agree with Pincus J in Australian Foreman Stevedores Association v Crone (1988) 20 FCR 377 that the expression “furnished to the applicant” contemplates delivery specifically to the applicant by the decision‑maker. Accordingly the matter is to be approached under subss (4) and (5).

30                  It is common ground that the alleged delay in relation to the s 192 and s 39B parts of the case are to be dealt with on the same basis as the ADJR aspect, so that relief may be refused if application was not made within a reasonable time.

31                  A chronology of the relevant events will assist in understanding the parties’ contentions on delay.

32                  Lilly points out that the application was made more than eight years after the extension was granted. However the applicant was not incorporated until March 2002, and blame cannot be attributed to it until after that time. It nevertheless remains a relevant consideration that the extension was granted so long ago. See [39] and [40]. The delay between incorporation and application is six years.

33                  Lilly also notes the nearly five years interval between the signing of the EBEWE Pharma agreement and the application.

34                  There is a more than four year gap between the signing of the agreement and the applicant becoming aware of the patent and extension of term. The only activity in this period is Mr Gray’s evidence that he recalls discussing the patent position with Dr Schnait of EBEWE Pharma “during product development and launch meetings in late 2005 and during 2006/2007”. Dr Schnait told him that Lilly had a patent in Austria for the product but that he could not find any equivalent patents in Australia. I infer from this that the applicant did not undertake its own searches of the patent databases including those in Australia.

35                  It was on 2 August 2007 that the applicant became aware of the extension of the term. It was not until over seven months later that application was made. It was during this interval that the correspondence took place in relation to a “without prejudice” meeting. The correspondence, the meeting and the failure of negotiations account for two of the seven months.

36                  Five months elapsed between the applicant obtaining the complete file from IP Australia and the institution of proceedings, a little less than that between the applicant seeking TGA registration and the proceedings, and a three month interval between Lilly’s infringement claim and the proceedings.

37                  Although I have taken the view that s 11(1)(c) of the ADJR Act is not applicable here, it has relevance notwithstanding that the delay is to be assessed under subss (4) and (5). That is because it prescribes a comparatively short period within which, in the most common situation, an application must be made. In terms of a legislative intention as to what is a reasonable period after an applicant becomes aware of the making of the decision (s 11(5)(a)), there is no great difference between an applicant to whom the Commissioner hands a copy of the decision and one who obtains the decision as a result of its own investigations.

38                  I agree with Lilly that the applicant’s conduct with respect to its investigation of the extension decision demonstrates a marked lack of urgency at every stage. The explanations for the delay cover only comparatively small parts of the overall period between becoming aware of the extension and the institution of proceedings. There is no evidence that the applicant made its own enquiries and searches in relation to an Australian patent. All that appears is very general evidence, purporting to cover a more than two year period, when Mr Gray spoke to Dr Schnait, and apparently relied on that information (from EBEWE) rather than making his own investigations.

39                  Another relevant matter in relation to delay is that the term of a patent is not of interest only to the patentee. As Lilly points out, it is effectively a right in rem, and of significance to all in the patent area who might be interested in trading within or near the subject matter of the patent. For this reason, the Commissioner must publish in the Official Journal a notice that an extension application has been made and is open to public inspection. If an application for extension is accepted, the Commissioner must publish a notice to that effect in the Official Journal. Provision is made for opposition proceedings. If the Commissioner grants an extension, a notice of the grant must be published in the Official Journal. See ss 72, 74(2)(b), 75 and 76(2) of the Patents Act and reg 5.3 of the Patents Regulations 1991.

40                  I agree with Lilly that once the opposition period has expired and an extension is granted, the patentee and third parties are prima facie entitled to proceed on the basis of the extension. Admittedly, one must take into account that the applicant was not incorporated until nearly two years after the extension. Nevertheless, the public interest to which I have referred is relevant notwithstanding that. As a matter of fairness in the administration of the patent system, it would be extraordinary if extensions could be challenged some eight years after grant. Even taking into account the applicant’s date of incorporation, it would still be extraordinary that a challenge could be made six years after that.

CONCLUSION

41                  I am satisfied that the applicant has no reasonable prospect of successfully prosecuting the ADJR, s 192 or s 39B parts of the proceeding because of its delay in instituting the proceeding. Because those parts of the proceeding will not proceed, it would be pointless to allow the amendments sought in the applicant’s notice of motion.

Associate:

Dated:         21 August 2008