FEDERAL COURT OF AUSTRALIA

Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd [2012] FCA 239

THE COURT ORDERS THAT:

1.    The parties are to bring in draft orders giving effect to these reasons.

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

REASONS FOR JUDGMENT

Introduction

1    The applicants seek interim relief to restrain the threatened infringement of two patents.

2    The first applicant, Otsuka Pharmaceutical Co., Ltd, is the patentee of Australian Patent No. 2005201772, titled “Substituted carbostyril derivatives as 5-HT_1A receptor subtype agonists” (the 772 patent) and Australian Patent No. 2002226752, titled in the same way (the 752 patent).

3    These patents claim the use of a carbostyril compound (relevantly, aripiprazole) for the production of a medicament having certain features and a method for treating a patient involving the use of aripiprazole.

4    The complete application for the 772 patent was a divisional application of the complete application for the 752 patent. Both patents claim a priority date of 29 January 2001.

5    Aripiprazole was disclosed in European Patent No. 367,141 titled “Carbostyril Derivatives” (the European patent) and in US Patent No. 5,006,528, a corresponding patent (the US patent). The European patent and the US patent are referred to as prior art in the 772 and 752 patents.

6    Aripiprazole is used for the treatment of schizophrenia and other disorders of the central nervous system said to be associated with the 5-HT_1A receptor.

7    The first applicant has granted the second applicant an exclusive licence to sell pharmaceutical products containing aripiprazole in Australia. The first applicant manufactures and sells aripiprazole (in the form of raw material) to Bristol-Myers Squibb Manufacturing Company, an indirect subsidiary company of the second applicant, Bristol-Myers Squibb Company. Bristol-Myers Squibb Manufacturing Company uses the raw material to produce aripiprazole in a packaged tablet formulation. The second applicant, by its Australian subsidiary Bristol-Myers Squibb Australia Pty Ltd (BMS Australia), markets this packaged tablet formulation in Australia under the name Abilify. Abilify is a prescription medicine and is BMS Australia’s second largest selling branded product range. Its sales of Abilify in 2011 were to the value of approximately AUD28.7 million.

8    A number of Abilify products are registered in the Australian Register of Therapeutic Goods (the ARTG). These products are indicated for:

(a)    the treatment of schizophrenia including maintenance of clinical improvement during continuation therapy;

(b)    acute treatment of manic or mixed episodes associated with Bipolar I Disorder in adults as monotherapy and in combination with lithium or valproate; and

(c)    maintenance treatment of manic or mixed episodes in Bipolar I Disorder in adults as monotherapy.

9    At present, there are four strengths of aripiprazole tablets (10 mg, 15 mg, 20 mg and 30 mg) listed in the Pharmaceutical Benefits Scheme (PBS) Schedule under the Abilify brand.

10    The respondent is a pharmaceutical company that supplies, as its name suggests, generic pharmaceuticals and other products. It commenced operating in 2004. Its business is the supply of low cost, high volume generic medicines to pharmacists and hospitals throughout Australia.

11    The respondent has obtained registration of a number of aripiprazole products in the ARTG. These products are registered under either the ARIPIPRAZOLE GENERICHEALTH label or the ARIPIPRAZOLE GH label (respectively, the GENERICHEALTH and GH products). The GENERICHEALTH products are registered for the same indications as the Abilify products. However, the GH products are registered only for the first of the indications identified in [8] above.

12    The respondent intends to market the GH products in Australia from about 1 April 2012. There are four such products involved (10 mg, 15 mg, 20 mg and 30 mg tablet blister packs). On 29 November 2011 the respondent applied for those products to be listed in the 1 April 2012 edition of the PBS Schedule.

13    The GH products are manufactured by an overseas company. The respondent will import the products and supply them to Australian wholesalers for on-supply to pharmacists and hospitals in Australia. The first shipment is expected to arrive in Australia by no later than 23 March 2012. Upon arrival the products will be shipped to a contracted warehouse.

14    The applicants first became aware of the proposed listing of these products in the PBS Schedule on 15 December 2011 when BMS Australia received a letter from the Department of Health and Ageing providing notification of a proposed 16% price reduction from 1 April 2012 for the Abilify products listed in the PBS Schedule. The price reduction was triggered by an application for listing in the PBS Schedule of a new brand of aripiprazole. In late December the applicants were informed that the respondent was the applicant for the new listing. The applicants then commenced the present proceeding against the respondent on 25 January 2012, claiming interim injunctive relief. The respondent has now cross-claimed seeking revocation of the patents on a number of grounds, some of which were advanced as a reason why interim relief should not be granted.

15    The applicants’ case for interim relief is that, if permitted, the respondent’s intended acts with respect to the GH products will infringe claims 1 and 7 of the 772 patent and claims 1 to 3 and 8 to 10 of the 752 patent and cause irreparable harm to them, manifested in part by an irreversible reduction of 16% in the approved price to pharmacists of the Abilify products currently listed in the PBS Schedule.

16    The respondent does not have PBS listing for the GENERICHEALTH products and has no current intention of marketing those products in Australia. It has offered an undertaking to the Court in relation to the future supply of those products. The undertaking was offered prior to the hearing for interim relief. The terms of that undertaking are acceptable to the applicants. Thus the present application concerns the respondent’s intended acts with respect to the GH products.

17    Following the hearing for interim relief, the respondent offered a further undertaking to the Court. This undertaking relates to the manner in which the GH products will be marketed pending the hearing of the applicants’ claims for final relief. This undertaking is not acceptable to the applicants. The respondent intends to pursue its plans to import and supply its GH products in competition with the Abilify products.

background

Schizophrenia and its treatment

18    Schizophrenia is a serious mental disorder affecting 1% of the population worldwide. It generally comes on in early adulthood. Its main features are disturbances in the ability to experience reality, lack of capacity to engage with others in the outside world, and disturbances in thinking, behaviour and emotional responses.

19    The disorder may run a number of courses, but standard definitions of schizophrenia state that the symptoms must last for at least 6 months for the diagnosis to be made. The condition is chronic in a majority of cases. Its cause is not known.

20    The symptoms of schizophrenia can be classified into a number of separate dimensions. Generally speaking, the four main dimensions of classification are (a) positive symptoms; (b) negative symptoms; (c) cognitive symptoms; and (d) mood symptoms. These dimensions are not universally defined in precisely the same way. For example, some consider cognitive impairment or cognitive symptoms to fall within the category of negative symptoms, while others consider that cognitive impairment constitutes a totally separate symptom category.

21    The positive symptoms of schizophrenia include hallucinations (that is, the perception of a sensory experience in the absence of a source) and delusions (that is, fixed false beliefs not shared by others). The negative symptoms of schizophrenia include the blunting of emotional response, apathy, amotivation and poverty of thinking. The mood symptoms of schizophrenia include anxiety and depression.

22    Cognitive impairment refers to a range of impaired higher cognitive functions, including problems with attention, long term memory, and abstraction and planning. The main manifestations of this impairment with schizophrenia are disturbances in attention, memory and executive function (such as the ability to generate and implement plans). A patient suffering from cognitive impairment will generally exhibit difficulty in thinking and in articulating thoughts. These disturbances can be demonstrated on a range of neuropsychological tests.

23    It has been known since schizophrenia was first identified nearly 100 years ago that cognitive deterioration can occur in patients suffering from the illness. It has also been known since the 1970s that schizophrenia is associated with an increase in the size of the cerebral ventricles (the fluid filled spaces in the brain), reflecting the fact that there is a decrease in brain volume which appears to be the basis for these cognitive disturbances. In this sense, cognitive impairment is understood to be an accompaniment of schizophrenia.

24    The current view, expressed in the literature, is that the majority of all patients with schizophrenia suffer from some degree of cognitive impairment. In some cases this impairment is identifiable when the patient first presents with the illness.

25    The course of schizophrenia can be very variable. Generally speaking a broad distinction is made between “acute” schizophrenia and “chronic” schizophrenia. Chronic schizophrenia includes particularly severe forms of schizophrenia known as “treatment-resistant” and “treatment-refractory” schizophrenia.

26    Acute schizophrenia is that which lasts for more than six months and then remits (that is, the patient recovers). However, acute schizophrenia may relapse from time to time. Where a patient periodically recovers and relapses, the patient is not seen as “deteriorating” but rather as experiencing intermittent episodes of acute schizophrenia.

27    Chronic schizophrenia is schizophrenia that lasts significantly longer than 6 months. A patient suffering from chronic schizophrenia may have his or her positive symptoms under control, but the negative symptoms will persist. Generally speaking, the symptoms of chronic schizophrenia are negative symptoms and cognitive impairment, but there may also be a relapse in positive symptoms from time to time.

28    Treatment-resistant schizophrenia is schizophrenia in which the patient’s positive symptoms (in addition to negative and cognitive symptoms) are unresponsive to antipsychotic medication. Of all patients suffering from schizophrenia, approximately 20% are partially unresponsive and approximately 5% are totally unresponsive to antipsychotic medication as far as their positive symptoms are concerned.

29    Schizophrenia is treated with antipsychotic medications described as being “typical” or “first generation”, and “atypical” or “second generation”.

30    Typical or first generation antipsychotics were developed in the 1950s and throughout the 1960s.

31    Atypical or second generation antipsychotics were developed in the 1980s (with the exception of clozapine). Generally, atypical antipsychotics block serotonin as well as dopamine receptors. They are referred to as “SDAs” (that is, serotonin dopamine antagonists).

32    Second generation antipsychotics have fewer side-effects than first generation antipsychotics, particularly in terms of causing movement disorders in the form of unwanted and uncontrolled movements of arms, legs and facial muscles (such as twitching, restlessness and grimacing). Agents known as anticholinergics are often used with first generation antipsychotics in order to control these movement disorders.

33    Aripiprazole is a second generation antipsychotic, although some regard it to be the first in a new generation of antipsychotics.

34    Currently, second generation antipsychotics are more widely used than first generation antipsychotics in Australia. Professor Singh, a consultant psychiatrist called on behalf of the applicants, gave evidence that it would now be very rare for a new patient presenting with schizophrenia to be commenced on a first generation antipsychotic. A small proportion of patients who have been suffering from schizophrenia for some time and who were originally started on, and have remained stable on, first generation antipsychotics will continue with that therapy. However, Professor Singh gave evidence that most patients that were started on first generation antipsychotics will have been switched to second generation antipsychotics, or are likely to be switched to that therapy.

35    Professor Singh gave evidence that, when treating patients suffering from schizophrenia, he uses a range of antipsychotic medications depending on the needs of the particular patient. He gave evidence that it is possible that certain patients may not respond well to a particular medication that is first prescribed or will experience unacceptable side- effects. He said that it is then common to try prescribing a different medication for these patients. Professor Singh estimated that about 25% of all patients suffering from schizophrenia would be switched from one second generation antipsychotic to another. He said that the majority of patients suffering from chronic schizophrenia will need to switch medications at some stage. This may be because the positive symptoms have not been brought under control or because the negative or cognitive symptoms persist. He also said that it was not uncommon for patients to fail to respond to the second medication and that such patients are then switched to a third medication in order to bring their symptoms under control.

36    Professor Singh gave evidence that practising psychiatrists tend to distinguish between two types of treatment for schizophrenia. The first is “acute” treatment where emphasis is placed on getting the positive symptoms of schizophrenia under control. The second is longer-term treatment in which the aims are to maintain control of the positive symptoms, and to try to counter the negative symptoms and cognitive impairment.

37    Professor McGorry, also a consultant psychiatrist, was called on behalf of the respondent. He expressed general agreement with Professor Singh’s evidence concerning schizophrenia, its symptoms and treatment. He drew attention to the Royal Australian and New Zealand College of Psychiatrists clinical practice guidelines for the treatment of schizophrenia and related disorders. Those guidelines recommend that second generation antipsychotics (namely, risperidone, olanzapine, quetiapine, amisulpride and aripiprazole) should be prescribed as first and second line treatment in first episode psychosis. Initial dosage should be low and increased slowly at spaced intervals only if response is slow or incomplete. The guidelines recommend that patients currently receiving conventional antipsychotic medications in whom there are persistent positive or negative symptoms, or who are experiencing distressing side-effects, should be switched to second generation antipsychotic medication. This may be done in the context of an acute relapse or in a stable but not optimally remitted patient. The guidelines also recommend that clozapine should be “confidently introduced at the earliest opportunity” if evidence of treatment-resistant schizophrenia is present.

38     Professor McGorry said that he followed these guidelines in his clinical practice. He said that he would firstly treat a patient with schizophrenia for at least 6 to 12 months with antipsychotic medication following his or her first psychotic episode. This acute treatment would involve a low dose second generation medication and psychosocial interventions. He gave evidence, however, that about 80% of patients will suffer a relapse of positive symptoms and those with multiple relapses will need to have significant ongoing therapy, including longer term antipsychotic medications, psychosocial case management and a range of other interventions, as needed. He said that the switching of antipsychotic medications is a practice that is employed in an effort to optimise response. He said that it can lead to a worsening as well as an improvement of symptoms during the switch period due to non-response or delayed response to the new drug. Other problems can occur with adverse effects being enhanced. He also gave evidence that the response rate to medication diminishes with the more drugs that are tried. In other words, the chance of responding to the second or third antipsychotic drug is much less than responding to the first drug. He said that it was a matter of personal judgment for the clinician as to how many different drugs should be tried, and in what order those drugs should be tried. He said that this was really a matter of trial and error, as there are no predictors for individual drug response.

The use of aripiprazole in the treatment of schizophrenia

39    Overactivity of dopamine in some parts of the brain is believed by neuroscientists and psychiatrists to be responsible for the positive symptoms of schizophrenia. Dopamine underactivity in other parts of the brain is one of the theories used to explain the negative symptoms of schizophrenia.

40    Dopamine is a chemical neurotransmitter that facilitates the transmission of an electrical signal from one nerve cell to another. When released by one neuron, it lodges in a dopamine receptor and stimulates that receptor. Dopamine receptors are referred to as D₁, D₂, D₃, and so on. Partial dopamine agonism is the tendency to partially stimulate some dopamine receptors. Dopamine antagonism is the blockage of the dopamine receptor so that the neurotransmitter role of dopamine is completely blocked.

41    All antipsychotics have their effects on positive symptoms by blocking dopamine receptors. In short, they act as dopamine antagonists. They also have additional effects on a variety of other receptors. Since dopamine depletion is one explanation that has been given for the occurrence of negative symptoms, a drug which has dopamine antagonist activity would, on theoretical grounds, have an effect of worsening negative symptoms and cognitive symptoms. However, aripiprazole is a partial dopamine agonist at the D₂ receptor.

42     Serotonin is another chemical neurotransmitter. It reacts with serotonin receptors. Serotonin receptors are currently designated from 5-HT_1A up to 5-HT₇. A drug that has partial agonist properties has the tendency to partially stimulate some serotonin receptors. Aripiprazole has partial agonist properties at the 5-HT_1A receptor.

43    Professor Singh expressed the view that he considers aripiprazole’s partial agonist activity at the 5-HT_1A receptor to be advantageous because it may contribute to the cognitive enhancing properties of the drug. He said that this was a view shared among psychiatrists and neuroscientists. He said that aripiprazole was unique in having partial dopamine agonist activity and partial agonist activity at the 5-HT_1A receptor.

44    Professor Singh said that aripiprazole has found its “niche” with clinicians who deal with patients in long term treatment for schizophrenia. He identified certain advantages associated with the use of aripiprazole: (a) it is less sedating than other antipsychotic agents; (b) it leads to increased energy and movement by the patient, particularly when it is first started; (c) it is not an anticholinergic agent (consequently it is not sedating and has little propensity to cause weight gain); and (d) its partial agonist activity at the 5-HT_1A receptor may add to its cognitive enhancing properties.

45    Professor McGorry disagreed with Professor Singh’s view that aripiprazole’s action on the 5-HT_1A receptor may contribute to its cognitive enhancing properties. In his view any such improvement “must remain theoretical at this stage”. He also observed that, on his review of research studies, aripiprazole is not the only antipsychotic medication that affects the 5-HT_1A receptor. He also said that it does not seem to have a more potent effect than other second generation antipsychotics at this receptor site.

46    It is not necessary to resolve this debate at this stage of the proceeding. It is sufficient to note that both Professor Singh and Professor McGorry appear to agree that aripiprazole acts as a partial agonist at the 5-HT_1A receptor. The debate between them appears to be the significance of that activity in improving cognitive impairment.

47    Professor McGorry also gave evidence about his own experience in prescribing aripiprazole. He said that, from his experience, aripiprazole can be used to treat acute episodes of schizophrenia, although he did not believe that it was commonly used in this phase because it was not especially sedative. I infer from this evidence that Professor McGorry sees aripiprazole’s use to be mainly in the treatment of chronic schizophrenia. He said that, in his experience, compared to certain other second generation antipsychotics, aripiprazole has a lower impact on weight gain and is less sedating. He said that these characteristics provide an advantage when treatment is initiated in more stable outpatients either for the first time or through switching, because avoiding sedation is a major advantage and the lesser impact of weight gain in most patients is desirable.

48    Professor McGrorry also disagreed with Professor Singh’s statement that the current best practice for the treatment of cognitive impairment and associated symptoms of schizophrenia is to use a second generation antipsychotic. Professor McGorry said that while it is better to prescribe a second generation antipsychotic than a first generation antipsychotic in continuation therapy as part of the ongoing treatment plan for a patient, second generation antipsychotics were just one component of treatment of a patient whose positive symptoms are under control. He said that second generation antipsychotics are not the most potent intervention for improving cognition, though they can have modest effects. He said that second generation antipsychotics are used with mixed success and that cognitive remediation seems to be a better treatment option, building upon modest improvements associated with drug therapies.

49    Once again, it is not necessary to resolve this debate at this stage of the proceeding. The evidence shows that there is at least agreement between Professor Singh and Professor McGorry that second generation antipsychotic drugs are used in the treatment of cognitive impairment associated with schizophrenia.

50    Professor Singh gave evidence that, if he were presented with a patient suffering from negative and cognitive symptoms of schizophrenia he would, in order to improve that patient’s level of engagement with the outside world (by reducing negative symptoms and/or improving cognitive function):

(a)    Treat the patient with an atypical antipsychotic agent. He said that, in that regard, he would consider using less sedating agents (such as aripiprazole) and, perhaps, also use an antidepressant.

(b)    Stop the use of any anticholinergic agent because anticholinergic agents can impair cognition.

(c)    Consider prescribing aripiprazole because of the particular advantages to which he had referred.

(d)    Consider prescribing aripiprazole because it is a partial dopamine agonist and a partial agonist at the 5-HT_1A receptor.

Bipolar disorder and the use of aripiprazole in its treatment

51    Bipolar disorder, which is also known as manic depression, is a psychiatric illness characterised by recurrent attacks of mania and depression. It is classified as a mood disorder because disturbance in mood is its predominant feature. In bipolar disorder, the main mood disruption is the manic or hypomanic episode (an “upswing” in mood). The other disruption is the depressive episode.

52    Manic episodes in bipolar disorder are characterised by a period of persistent and abnormally elevated, expansive or irritable mood, accompanied by other symptoms.

53    In contrast, depression is a state of low mood. The depressive episodes in bipolar disorder are characterised by symptoms which may include: (a) sadness; (b) isolation and hopelessness; (c) persistent feelings of guilt; (d) apathy; (e) disturbances in sleep and appetite; (f) lack of motivation; and (g) loss of interest in enjoyable activities.

54    Professor Singh gave evidence that the depressive episode experienced by a patient suffering from bipolar disorder is typically more severe than the depression experienced by a patient with a depressive syndrome not associated with bipolar disorder. He said that he considered the depressive phase of bipolar disorder to be equivalent to major depression.

55    Importantly, he gave evidence that drugs which act on the 5-HT_1A receptor, as well as on other 5-HT receptors, are used in, and are considered to be helpful for, the treatment of depression and the treatment of the depressive phase of bipolar disorder.

56    Professor Singh said that, in his own practice, the regimen for treating a patient suffering from bipolar disorder would include the prescription of sedatives, mood stabilisers, antidepressants and antipsychotics, to treat different aspects of the individual patient’s condition. He said that his treatment of a patient presenting with Bipolar I Disorder (a more severe form of the illness in which the patient experiences clear manic swings and typically requires hospitalisation) would more likely involve the prescription of an antipsychotic medication compared with his approach to the treatment of a patient presenting with Bipolar II Disorder (a less severe form of the disorder).

57    He said that if a patient suffering from Bipolar I Disorder presented with an acute manic episode, he would sedate the patient with a sedative or, if the patient was very disturbed, with an antipsychotic and then commence treatment with a mood stabiliser, such as lithium, valproate or carbamazepine. He said that once the mood stabiliser took effect, he would typically withdraw the sedative, antidepressant and antipsychotic treatment and then maintain the patient on the mood stabiliser. However, in the treatment of the depressive episode of Bipolar I Disorder he said there are circumstances in which he would continue to treat the patient with an antidepressant or antipsychotic or both. He said that the more severe the depression is, the more likely it is that an antipsychotic would be used to treat that depression. He said that the antipsychotic would be prescribed as an adjunct to the antidepressant because of its “synergistic” effect to make the antidepressant more effective in treating the patient’s depression. He said that he prescribes aripiprazole in conjunction with an antidepressant in order to treat depressive episodes and mixed episodes of Bipolar I Disorder.

The patents in suit

The 772 patent

58    The complete specification of the 772 patent says that the described invention relates to a method of treating a patient suffering from a disorder of the central nervous system associated with the 5-HT_1A receptor subtype.

59    It teaches the following matters (amongst other things):

(a)    It has been reported that aripiprazole binds with high affinity to D₂ receptors (with which it has partial agonistic activity) and with moderate affinity to D₃ and 5-HT₇ receptors. However, it has not been previously reported that “compounds in the present invention” (relevantly, aripiprazole) have agonistic activity in relation to the 5-HT_1A receptor subtype.

(b)    Serotonin plays a role in several neurological and psychiatric disorders. 5-HT_1A agonists are effective in the treatment of cognitive impairment in Alzheimer’s disease, Parkinson’s disease or senile dementia.

(c)    Schizophrenia has been understood to be caused by hyperactivity in the brain dopaminergic system. For this reason, some drugs were developed with a strong dopaminergic receptor blocking activity. These typical antipsychotic drugs are effective in the treatment of the positive symptoms of schizophrenia.

(d)    A variety of atypical antipsychotic drugs has been developed. These include clozapine, risperidone, olanzapine, and quetiapine. It has been reported that atypical antipsychotic drugs are more effective against the negative symptoms and cognitive impairments associated with schizophrenia than typical antipsychotic drugs. Atypical antipsychotic drugs also have less extrapyramidal side-effects (that is, movement disorders).

(e)    Even though atypical antipsychotic drugs provide a suitable pharmacotherapy for schizophrenia, certain patients are resistant to these drugs. These patients may either not respond or may become refractory. These treatment-resistant patients pose a problem for how a physician may provide an appropriate therapy.

(f)    The symptoms of patients who are treatment-resistant and treatment-refractory schizophrenics involve not only positive symptoms, but also negative symptoms and emotional disorders, as well as cognitive impairment.

(g)    Cognitive impairment exists separately from the psychic symptoms of individuals suffering from schizophrenia. Cognitive impairment may disturb the socially adaptable behaviour of these individuals.

(h)    Clozapine is an antipsychotic drug that is effective against treatment-resistant schizophrenia. Clozapine has been reported to be effective against cognitive impairments in treatment-resistant schizophrenics. It has been reported that clozapine improves cognitive impairment in attention, response time and fluent-speech in treatment-resistant schizophrenics.

(i)    The 5-HT_1A receptor has been demonstrated to play a role in the therapeutic efficacy of clozapine against treatment-resistant schizophrenia and cognitive impairment.

(j)    It is clearly understood that 5-HT_1A receptor agonist activity or 5-HT_1A receptor partial agonist activity plays an important role in treatment-resistant schizophrenia and cognitive impairment.

(k)    Atypical antipsychotic drugs, such as risperidone and olanzapine were marketed after clozapine. It has been reported that these drugs improve treatment-resistant schizophrenia or cognitive impairment in treatment-resistant schizophrenics.

(l)    In contrast to reports that clozapine was moderately effective against treatment-resistant schizophrenia, risperidone and olanzapine were not consistently superior to typical antipsychotic drugs in their effectiveness against treatment-resistant schizophrenia. Thus risperidone and olanzapine bind with lower affinity to human 5-HT_1A receptors. Accordingly these drugs cannot clearly perform activities through human 5-HT_1A receptors at clinically effective doses.

(m)    Clozapine is effective against treatment-resistant schizophrenia, but its use is limited due to its severe side-effect of producing agranulocytosis which requires patients to undergo periodic blood tests. Under these circumstances, the development of a safe antipsychotic drug with potent, full or partial agonist activity at 5-HT_1A receptors is “earnestly desired”.

(n)    The carbostyril compound in the present invention binds with high affinity and displays a potent, partial agonist activity at 5-HT_1A receptors and has higher intrinsic activity than clozapine.

(o)    Therefore, the carbostyril compound of the invention may represent a more potent and highly safe drug for curing treatment-resistant and other forms of schizophrenia, as well as cognitive impairment caused by treatment-resistant and other forms of schizophrenia.

60    Claim 1 of the complete specification is as follows:

Use of a carbostyril compound of [a particular formula], or a pharmaceutically acceptable salt or solvate thereof, for the production of a medicament, effective in the treatment of disorders of the central nervous system associated with 5-HT_1A receptor subtype, which disorder

    (i)    is selected from cognitive impairment caused by treatment-resistant schizophrenia, cognitive impairment caused by inveterate schizophrenia, or cognitive impairment caused by chronic schizophrenia, and

    (ii)    fails [to respond] to antipsychotic drugs selected from chlorpromazine, haloperidol, sulpiride, fluphenazine, perphenazine, thioridazine, pimozide, zotepine, risperidone, olanzapine, quetiapine, or amisulpride.

61    Claims 2 to 6 are dependent, directly or indirectly, on claim 1.

62    Claim 7 of the complete specification is as follows:

A method for treating a patient suffering from disorders of the central nervous system associated with 5-HT_1A receptor sub-type, which disorder

    (i)    selected from cognitive impairment caused by treatment-resistant schizophrenia, cognitive impairment caused by inveterate schizophrenia, or cognitive impairment caused by chronic schizophrenia, and

(ii)    fails [to respond] to antipsychotic drugs selected from chlorpromazine, haloperidol, sulpiride, fluphenazine, perphenazine, thioridazine, pimozide, zotepine, risperidone, olanzapine, quetiapine, or amisulpride,

comprising administering to said patient a therapeutically effective amount of a carbostyril compound of [a particular formula], or a pharmaceutically acceptable salt or solvate thereof.

63    Claims 8 to 12 are dependent, directly or indirectly, on claim 7.

64    Claim 13 of the complete specification is an omnibus claim relating to the use of claim 1 and the method of claim 7.

65    The following should be noted about these claims.

66    First, claim 1 has been drawn in the form of a “Swiss-style” claim. The development of this form of claim was described by Hughes J, in the Federal Court of Canada, in the following way in Eli Lilly Canada Inc v Apotex Inc and the Minister of Health (2008) 75 IPR 625 at [20]:

In Europe, claims that were “susceptible of industrial application” were quite permissible but “methods of treatment of the human body … by surgery or therapy and diagnostic methods” were not, with the saving provision that “substances or compositions, for use in any of these methods” were permitted to be claimed. Thus a new medicine could be claimed, but not a new use for an old medicine. The Swiss developed a way around this issue of claiming a new use for an old medicine by characterising the manufacture of a pill for a new use as something that was “susceptible of industrial application” thus this type of claim became known as a “Swiss claim”.

67    The prevailing view in those jurisdictions in which methods of medical treatment are excluded from patentability appears to be that novelty in respect of an invention claimed in the “Swiss-style” can reside in the newly discovered therapeutic effect of the drug, even though the drug is known and even though a method of treatment, as such, cannot be claimed: Re Eisai’s Application – Second Medical Indication [1985] OJ EPO 64; John Wyeth & Brother Ltd’s Application [1985] RPC 545; Bristol-Myers Squibb Co v Baker Norton Pharmaceuticals Inc [1999] RPC 253; Bristol-Myers Squibb Co v Baker Norton Pharmaceuticals Inc [2001] RPC 1; see also Pharmaceutical Management Agency Ltd v Commissioner of Patents [2000] 2 NZLR 529. Claims in this form have been seen as directed to the manufacture of a product and not to the use of the product for the newly identified purpose.

68    Secondly, claim 7 is directed to a method of treating a patient using, relevantly, aripiprazole. The method can be seen to be qualified by, firstly, the selection of the disorder from the limited range of cognitive impairments identified in subparagraph (i) of the claim and, secondly, by the fact that the treatment of the patient for that disorder has been such that the patient has failed to respond to antipsychotic drugs selected from the identified compounds in subparagraph (ii) of the claim. The evidence shows that the compounds identified in subparagraph (ii) of the claim are either first or second generation antipsychotics. Once again it would seem that novelty in the claimed method is to be found in the asserted newly discovered therapeutic effect.

69    Claim 7 plainly involves the “use of a product”. In that circumstance, the question of infringement is affected by the operation of s 117 of the Patents Act 1990 (Cth) (the Act), which provides:

(1)    If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent.

(2)    A reference in subsection (1) to the use of a product by a person is a reference to:

    (a)    if the product is capable of only one reasonable use, having regard to its nature or design—that use; or

    (b)    if the product is not a staple commercial product—any use of the product, if the supplier had reason to believe that the person would put it to that use; or

    (c)    in any case—the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier.

70    There is an issue in the present case about the scope of operation of s 117 as it applies to the facts of the present case. The applicants contend that aripiprazole is not a “staple commercial product”, with the consequence that they can call in aid s 117(2)(b) of the Act on the operation of s 117(1). Thus if it be shown that the respondent has reason to believe that the GH products would be put to a use that included the method of treatment claimed in claim 7, the supply of those products, without more, would infringe claim 7, even if those products were also used in other cases for a method of treatment falling outside the limitations of claim 7.

The 752 patent

71    The complete specification for the 752 patent also describes the invention as relating to a method of treating a patient suffering from a disorder of the central nervous system associated with the 5-HT_1A receptor subtype. The description of the invention in the complete specification is similar in a number of respects to the description in the complete specification of the 772 patent. The carbostyril compound described in the specification includes aripiprazole.

72    Claim 1 of the patent is as follows:

Use of a carbostyril compound of [a particular formula]; and a pharmaceutically acceptable salt or solvate thereof, for the production of a medicament effective in the treatment of disorders of the central nervous system associated with 5-HT_1A receptor subtype, selected from depression; cognitive impairment caused by Alzheimer’s disease or Parkinson’s disease; autism; Down’s syndrome; attention deficit hyperactivity disorder (ADHD); Alzheimer’s disease; Parkinson’s disease; panic; obsessive compulsive disorder (OCD); sleep disorders; sexual dysfunction; alcohol abuse; drug addiction; emesis; motion sickness; obesity; and migraine.

73    Claim 1 has been drawn in the form of a “Swiss-style” claim.

74    Claims 2 to 7 are dependent, directly or indirectly, on claim 1. Claim 2 claims the use of the compound in claim 1 for the production of a medicament effective in the treatment of depression. Claim 3 claims use of the compound for the production of a medicament effective in the treatment of, amongst other things, major depression.

75    Claim 8 of the patent is as follows:

A method for treating a patient suffering from a disorder of the central nervous system associated with 5-HT_1A receptor subtype selected from depression; cognitive impairment caused by Alzheimer’s disease or Parkinson’s disease; autism; Down’s syndrome; attention deficit hyperactivity disorder (ADHD); Alzheimer’s disease; Parkinson’s disease; panic; obsessive compulsive disorder (OCD); sleep disorders; sexual dysfunction; alcohol abuse; drug addiction; emesis; motion sickness; obesity and migraine, comprising administering to said patient a therapeutically effective amount of carbostyril compound of [a particular formula]; and a pharmaceutically acceptable salt or solvate thereof.

76    Claims 9 to 14 claim methods that are dependent, directly or indirectly, on claim 8. Claim 9 claims the method where the disorder is depression. Claim 10 claims the method for disorders that include major depression.

77    Claims 15 and 16 are omnibus claims referable to the use of the carbostyril compound (claim 15) and the method for treating the disorder of the central nervous system associated with the 5-HT_1A receptor (claim 16).

Principles as to the granting of interlocutory injunctions

78    The principles relating to the grant of interlocutory injunctive relief have been recently discussed in Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156. It is not necessary to recite those principles in detail. It is sufficient to note that, when considering an application for an interlocutory injunction, the Court must address itself to two main inquiries, namely whether the applicant for relief has established a prima facie case in the sense explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622-623, and whether the balance of convenience and justice favours the grant of an injunction or the refusal of that relief.

79    In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 Gummow and Hayne JJ observed that the phrase “prima facie case” does not mean that the applicant for relief must show that it is more probable than not that at trial it will succeed. It is sufficient if the applicant shows a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending trial. How strong that probability needs to be depends upon the nature of the rights that are being asserted and the practical consequences likely to flow from the order that is sought.

80    In Samsung the Full Court (at [61]) discussed the requirement that, in order to obtain an interlocutory injunction, the applicant must demonstrate that, if no injunction is granted, it will suffer irreparable injury for which damages will not be adequate compensation: see in that regard Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153. The Full Court went on to observe that, regardless of whether “irreparable harm” is properly to be considered as a matter to be addressed in the Court’s consideration of the balance of convenience and justice, rather than as a distinct and antecedent consideration, the assessment of prejudice or harm to the applicant, if there is no injunction, and the assessment of prejudice or harm to the defendant, if an injunction is granted, is at the heart of the basket of discretionary considerations which must be addressed and weighed.

81    It is to be borne in mind that, in this discourse, “irreparable harm” does not mean harm that cannot be repaired but harm for which damages would not be adequate compensation: McCarty v The Council of the Municipality of North Sydney (1918) 18 SR (NSW) 210 at 215; R v MacFarlane; Ex Parte O’Flanagan and O’Kelly (1923) 32 CLR 518 at 550. In Samsung the Full Court (at [62]) said that the question of whether damages will be an adequate remedy for the alleged infringement of the applicant’s rights involves an assessment by the Court as to whether, absent an injunction, the applicant would, in all material respects, be in as good a position if confined to a remedy in damages.

82    It is well recognised that the issue of whether the applicant has made out a prima facie case, and the question of the balance of convenience and justice, are related inquiries: Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (2009) 81 IPR 339 at [15]; Samsung at [67]. In short, the apparent strength of the parties’ substantive cases will often be an important consideration to be weighed in the balance: Tidy Tea Ltd & Lyons Tetley Ltd v Unilever Australia Ltd (1995) 32 IPR 405 at 416; Aktiebolaget Hassle v Biochemie Australia Pty Ltd (2003) 57 IPR 1 at [31]; Hexal Australia Pty Ltd v Roche Therapeutics Inc (2005) 66 IPR 325 at [18].

Prima facie case

Threatened infringement of the 772 patent

83    I am satisfied on the evidence before me that the applicants have made out a prima facie case of threatened infringement of the 772 patent that would justify the granting of the interim relief they seek.

84    The evidence, as presently advanced, shows that cognitive impairment is a symptom or domain of schizophrenia, including chronic schizophrenia and treatment-resistant schizophrenia. Chronic schizophrenia is the outcome of the majority of those who suffer the illness. There is evidence that aripiprazole can be used for the production of a medicament that is effective in the treatment of cognitive impairment caused by schizophrenia. There is no dispute that the active ingredient of the GH products is aripiprazole. On the face of the evidence there is some debate between Professor Singh and Professor McGorry, untested in cross-examination, about the degree of efficacy of aripiprazole for that indication but, as I have said, that is not a debate that needs to be resolved at the present time, if at all.

85    The evidence also shows that aripiprazole is recommended for use as, and used for, first and second line treatment as well as later line treatment for patients suffering from schizophrenia. Thus aripiprazole is used as medication for schizophrenics who fail to respond to antipsychotic drugs, including the first generation and other second generation antipsychotics identified in claims 1 and 7 of the 772 patent.

86    The respondent submitted that its intended acts with respect to the GH products could not infringe claim 1 of the 772 patent because it has not itself used aripiprazole for the production of a medicament. It submitted that the definition of “exploit” in Schedule 1 to the Act provides no assistance to the applicants because that definition concerns only inventions that are either products or, alternatively, methods or processes, and claim 1, in the form of a “Swiss-style” claim, does not claim an invention that is a product or a method or process. The applicants dispute that contention.

87    The reach of the definition of “exploit” is a matter that is open to debate. I am not persuaded that, at this stage, I should seek to determine that debate, particularly as it concerns a difficult question about the construction of “Swiss-style” claims. The nature of claims in that form has received little judicial attention in this country, although it has been the subject of some significant debate in other jurisdictions.

88    There are, however, two matters that should be noted at the present time. First, the definition of “exploit” in Schedule 1 to the Act is expressed inclusively, leaving room for argument that the exclusive rights conferred by s 13(1) of the Act upon a patentee are not confined to the specific acts identified in the definition. Secondly, it is by no means clear that the “use” referred to in claim 1 of the 772 patent is not a method or process for the purpose of the definition. In my view it is at least arguable that the intended acts of the respondent with respect to the GH products will be with respect to a product resulting from the use of a method or process of the kind covered by the definition. It is not necessary, however, for me to dwell on these questions because of the conclusion to which I have come concerning the threatened infringement of the 772 patent as it concerns claim 7.

89    The respondent submitted that its intended acts with respect to the GH products could only infringe the 772 patent as it concerns claim 7 if the applicants can sustain a case based on the operation of s 117 of the Act. Here the applicants have pleaded reliance on ss 117(2)(b) and (c). The respondent submitted that, on the present evidence, the applicants are unable to sustain a case on either of those provisions. It submitted that aripiprazole is a “staple commercial product” (with the result that s 117(2)(b) cannot apply) and that it has given no instruction and provided no inducement to persons to use the GH products in accordance with the specific requirements of claim 7 (with the result that s 117(2)(c) cannot apply).

90    The meaning of “staple commercial product” for the purposes of s 117(2)(b) of the Act was discussed in Northern Territory v Collins (2008) 235 CLR 619. That discussion arose in the context of determining whether, by granting certain licences to harvest timber, the Northern Territory had infringed a patented method to produce essential oils. The Northern Territory successfully contended that the timber was a “staple commercial product” within the meaning of s 117(2)(b) of the Act with the result that no assistance could be provided by that provision in the application of s 117(1) to the circumstances of that case.

91    Justice Crennan found (at [145]) that, in its particular statutory context, “staple commercial product” means a product supplied commercially for various uses. In that connection her Honour observed that the relevant enquiry is into whether the supply of the product is commercial and whether the product has various uses. Justice Hayne said (at [43]) that “staple commercial product”, in this context, should not be given a narrow meaning because to do so would expand the classes of supply that are reached by s 117, thereby expanding the rights of the patentee where the act of supply is not otherwise an infringement of the patentee’s monopoly. His Honour (at [41]) adopted the meaning attributed to “staple commercial product” by Crennan J. Justice Heydon (at [57]) expressed agreement with Crennan J’s reasons.

92    In Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 3) (2011) 196 FCR 1 Jagot J applied this meaning of “staple commercial product” to the case of a prescription medicine (Apo-Leflunomide) in the form of 10 mg and 20 mg tablets containing leflunomide as its active ingredient. The product, in that form, was registered in the ARTG for the treatment of psoriatic arthritis and rheumatoid arthritis. Her Honour found (at [270]) that the product, in this form, was not a staple commercial product for the purposes of s 117(2)(b) of the Act. In so finding her Honour reasoned that the relevant product was Apo-Leflunomide. Her Honour found that this product was not “supplied commercially for various uses”. Rather there was only one use for Apo-Leflunomide, which was as a pharmaceutical product for oral administration to treat disease, specifically the medical conditions for which it was registered. The fact that Apo-Leflunomide was indicated for these medical uses did not mean that it was a product that had “various uses”, as discussed in Collins. The applicants relied on this reasoning which, they submitted, should be applied analogously in the present case.

93    In my view such an approach is open on the present evidence. It is, of course, not necessary for me to express a final view on whether the GH products are, or are not, staple commercial products for the purposes of s 117(2)(b) of the Act, and I expressly refrain from expressing such a view. It is sufficient for me to be satisfied, as I am, that there is a prima facie case that the GH products are not staple commercial products for the purposes of s 117(2)(b) of the Act.

94    In this connection the evidence shows that the GH products and the Abilify products are registered in the ARTG for the treatment of schizophrenia including maintenance of clinical improvement during continuation therapy. They are, therefore, interchangeable for this purpose. Significantly, that use is the only indicated use for the GH products. Thus, on the present evidence, the GH products do not have “various uses”. Moreover, there is no evidence before me that the GH products would be traded commercially for various uses.

95    Professor McGorry drew attention to the words “including maintenance of clinical improvement during continuation therapy” as used in the registration for the GH products. He said that the “maintenance of clinical improvement during continuation therapy” means the longer-term treatment of schizophrenia required to maintain control of positive symptoms. He said that continuation therapy is the administration of an antipsychotic medication in a dosage that is as low as possible to maintain the patient’s response or remission from positive symptoms. He said that if this treatment results in any other benefit in treating the negative symptoms and other domains of schizophrenia then “that benefit is viewed by me as a bonus”. Nevertheless, Professor McGorry said that it is “not uncommonly the case” that the negative symptoms and other domains of schizophrenia are treated in continuation therapy with an antipsychotic agent.

96    Professor Singh described the longer-term treatment of patients as being aimed at maintaining the control of positive symptoms and countering negative symptoms and cognitive impairment. Professor Singh thus placed some greater importance on the treatment of negative symptoms and cognitive impairment using antipsychotic drugs in continuation therapy.

97    The evidence presently before me supports the conclusion that the treatment of schizophrenia comprehends the treatment of all of its symptoms and domains, notwithstanding Professor McGorry’s emphasis on the treatment of positive symptoms. Aripiprazole is used for that range of treatment with respect to schizophrenia.

98    I am satisfied that there is a prima facie case on the present state of the evidence that the GH products would be used for purposes that include the treatment of cognitive impairment caused by chronic schizophrenia or treatment-resistant schizophrenia, including where a patient fails to respond to other antipsychotic drugs selected from those identified in claim 7, and that the respondent has reason to believe that the GH products would be put to that use.

99    It follows, in my view, that there is a prima facie case that the respondent’s intended acts will infringe the 772 patent by reason of s 117(1) of the Act.

100    This finding makes it unnecessary, strictly speaking, for me to consider the implications of s 117(2)(c) in relation to the respondent’s intended acts. I will nevertheless deal with that case briefly.

101    Section 117(2)(c) proceeds on the basis of an instruction or an inducement to use a product in a way that would infringe the patent. In this connection the applicants rely upon the Product Information registered with respect to the GH products. I was not taken to any particular part of that Product Information. However, I observe that, relevantly, it simply recites the indication for which the GH products are registered. The Product Information also discloses that aripiprazole can be switched for other antipsychotic drugs and describes how that might be done.

102    Two things should be noted. First, the Product Information does not, in terms, refer to the treatment of cognitive impairment of the kind specifically referred to in claim 7. Secondly, although the Product Information refers to switching, it does not refer to switching because of the patient’s failure to respond to other antipsychotic drugs, let alone those specified in claim 7.

103    It follows that the applicants’ case in this regard must lie, substantially, in some implied disclosure or inducement to use the GH products in accordance with the specific integers of claim 7. There is, however, no evidence that would enable me to conclude, with any reasonable level of confidence, that prescribing doctors would read into the Product Information an instruction that the GH products are to be used or can be used in the method of treatment specifically claimed in claim 7. Certainly the Product Information does not give that instruction or inducement expressly. In this connection, it is not sufficient that prescribing doctors will or might use the GH products for a method of treatment as so claimed. Section 117(2)(c) requires there to be an instruction or inducement.

104    I am not satisfied, therefore, that there is a prima facie case of threatened infringement of the 772 patent arising under s 117(1) of the Act based on the application of s 117(2)(c). Once again, the evidence at trial might support a different conclusion.

Threatened infringement of the 752 patent

105    As I have noted, the GH products are registered only for the treatment of schizophrenia including maintenance of clinical improvement during continuation therapy. Nevertheless the applicants submitted, in apparent reliance on s 117(2)(b) of the Act, that the respondent had reason to believe that the GH products would be used to treat patients suffering from manic or mixed episodes associated with Bipolar I Disorder.

106    This submission rests more in assertion than it does in evidence.

107    Professor Singh’s evidence on the use of aripiprazole, in the form of the Abilify products, in the treatment of depression involved with Bipolar I Disorder stands unchallenged. There was also some evidence about brand substitution by pharmacists in certain circumstances. This evidence was directed to establishing the proposition that there was a real possibility that retail chemists would have a commercial incentive to substitute the GH products for the Abilify products, if circumstances warranted that course. However, that evidence did not engage the proposition that the GH products were registered only for the one indication and not more broadly for the other indications for which the Abilify products are registered. The applicants’ case for infringement of the 752 patent rested on the assertion that retail chemists are likely to engage in brand substitution between the GH products and the Abilify products even for indications for which the GH products were not registered. While I cannot discount the possibility that this might happen, I am not prepared to assume that it is likely to happen in the absence of evidence directed to that proposition. Therefore, in the absence of evidence to the contrary, I should proceed on the basis that retail pharmacists would only dispense the GH products for the indication for which it is registered in the ARTG, and not otherwise.

108    In this connection the applicants sought to call in aid observations made in Apotex Pty Ltd v AstraZeneca AB [2011] FCA 1520 at [16] and [33] based on specific evidence in that case about brand substitution with respect to a particular pharmaceutical product. The need for the applicants to call in aid those observations is telling. It highlights the evidentiary void in the present case. I cannot simply translate the findings of fact in that case to the present case.

109    In the circumstances I am not satisfied that the applicants have demonstrated a prima facie case that the respondent has reason to believe that the GH products would be put to a use other than the use for which those products are registered in the ARTG. It follows that I am not satisfied that the applicants have made out a prima facie case of threatened infringement of the 752 patent under s 117(1) of the Act based on the application of s 117(2)(b).

110    Moreover, I am not satisfied that there is a prima facie case of threatened infringement under s 117(1) of the Act based on the application of s 117(2)(c). I have been unable to see anything expressed in the Product Information by way of instruction or an inducement to use the GH products for the treatment of a patient suffering from a disorder associated with the 5-HT_1A receptor, including depression. I am not persuaded that I should simply assume that prescribing doctors will use the GH products for the method of treatment claimed in claim 8 of the 752 patent when the GH products are not indicated for that treatment by their registration in the ARTG. Although Professor Singh’s evidence on the use of the Abilify products in the treatment of Bipolar I Disorder stands unchallenged, I do not read that evidence as extending to embrace brand substitution by a product for an indication for which it is not registered in the ARTG.

111    That leaves the applicants’ case that claim 1 of the 752 patent will be infringed by the respondent’s intended acts. As I have noted, this claim has been drawn in the form of a “Swiss-style” claim. Subject to certain arguments raised by the respondent with respect to utility, there seems to be no dispute that, in appropriate dosages, the GH products would be effective in the treatment of depression, at least insofar as depression is associated with Bipolar I Disorder. The question is whether the respondent’s intended acts amount to an exploitation of the invention of that claim.

112    I have already made some observations about the meaning of “exploit” as used in s 13(1) of the Act and as defined in Schedule 1 to the Act. It seems to me to be at least arguable that, in the case of claim 1 of the 752 patent, the intended acts of the respondent with respect to the GH products will be with respect to a product resulting from the use of a method or process of the kind covered by the definition and hence an infringement of that claim. However, for the reasons I have expressed above in relation to the possible application of s 117(1) of the Act, I am not prepared to assume that there is any significant likelihood that physicians would prescribe, or that retail chemists would dispense, the GH products for an indication for which they are not registered. For this reason I am not satisfied that the respondent’s intended acts, even if amounting to a prima facie infringement of claim 1 of the 752 patent, would be of sufficient practical significance to amount to injury of a kind that would warrant the grant of interim injunctive relief.

Defences and issues of asserted invalidity

113    The respondent has placed considerable reliance on the so-called “Gillette defence”, namely that if an alleged infringer establishes that its impugned acts were merely those disclosed in a publication which could be relied upon to establish invalidity, then that circumstance provides a complete defence to the allegation of infringement.

114    The “defence” derives its name from Gillette Safety Razor Company v Anglo-American Trading Company Ld (1913) 30 RPC 465 and its content from the observations of Lord Moulton who said (at 480-481):

I am, therefore, of opinion that in this case the Defendants’ right to succeed can be established without an examination of the terms of the Specification of the Plaintiffs’ Letter Patent. I am aware that such a mode of deciding a Patent case is unusual, but from the point of view of the public it is important that this method of viewing their rights should not be overlooked. In practical life it is often the only safeguard to the manufacturer. It is impossible for an ordinary member of the public to keep watch on all the numerous Patents which are taken out and to ascertain the validity and scope of their claims. But he is entitled to feel secure if he knows that that which he is doing differs from that which has been done of old only in non-patentable variations, such as the substitution of mechanical equivalents or changes of material shape or size. The defence that “the alleged “infringement was not novel at the date of the plaintiff’s Letters Patent” is a good defence in law, and it would sometimes obviate the great length and expense of Patent cases if the defendant could and would put forth his case in this form, and thus spare himself the trouble of demonstrating on which horn of the well-known dilemma the plaintiff had impaled himself, invalidity or non-infringement.

115    In advancing this “defence”, the respondent identified the following prior art. There was no issue that each citation was published before the claimed priority date for each of the relevant claims of the patents in suit:

(a)    The European patent.

(b)    The US patent.

(c)    Saha AR, Petrie JL and Ali MW, Safety and efficacy profile of aripiprazole, a novel antipsychotic, (1999) Schizophrenia Research 36(1-3):295.

(d)    Petrie JL, Saha AR and McEvoy JP, Aripiprazole, a new typical antipsychotic: Phase 2 clinical trial result, European Neuropsychopharmacology, Volume 7, Supplement 2, p S227, September 1997.

(e)    Petrie JL, Saha AR, McEvoy JP, Acute and long-term efficacy and safety of aripiprazole: a new typical antipsychotic, (1998) Schizophrenia Research 29(1-2):155.

(f)    Daniel et al, Aripiprazole, a novel antipsychotic: overview of a phase II study result. Abstract from the book of abstracts compiled from the XXIIst CINP Congress: Brussels, Belgium (2000).

116    The respondent’s submissions in relation to the “Gillette defence” were directed essentially to the 772 patent, although it sought to extend the “defence” to infringement of the 752 patent as well. As I have found that the only case that might warrant the grant of interim injunctive relief is the prima facie case of threatened infringement of the 772 patent, I will confine my consideration to the respondent’s challenge to the validity of that claim in respect of the application of the “Gillette defence” and in respect of the other grounds of invalidity on which the respondent relies in the present application.

117    The respondent submitted that the GH products will be offered for the treatment of schizophrenia per se using aripiprazole as disclosed in the European and US patents. It submitted that, as it proposes nothing more than the use of aripiprazole as disclosed by others before the priority date (as represented by the cited prior art, considered separately) it cannot infringe claim 7 of the 772 patent. On the other hand, if its proposed acts result in infringement, then that claim cannot be novel in light of the prior art.

118    In my view there is a real doubt that, under Australian patent law, the “Gillette defence” is a discrete defence existing independently of the ground of invalidity provided by s 138(3)(b) of the Act, read in conjunction with s 18(1)(b)(i) and s 7(1) and the definitions of “prior art base” and “prior art information” in Schedule 1 to the Act. In Woodbridge Foam Corporation v AFCO Automotive Foam Components Pty Ltd (2002) 58 IPR 56 Finkelstein J thought that it might be a discrete defence, and refused to strike-out a pleading raising it. On the other hand, there is much to be said for the view that Lord Moulton’s observations should now been seen as reflecting no more than a process of reasoning that reinforces the counterpoint between infringement and the requirement of a valid claim supporting that infringement. Certainly the emphatic language of s 138(3) of the Act (“… the court may… revoke the patent … on one or more of the following grounds, but on no other ground …”) makes clear that any challenge to validity must be confined to the grounds of invalidity identified in that provision.

119    I propose to deal with the respondent’s present case in this regard as if it were essentially a challenge to the validity of claim 7 of the 772 on the basis that the invention is not novel in light of the cited prior art, considered separately. The challenge brought forward is thus one of “paper anticipation”. In my view it is appropriate to proceed in this way because, in applying the reasoning inherent in the “Gillette defence”, consideration must be given to how the invention is defined in the asserted claim, and whether that invention is disclosed in the cited prior art. Unless the matter is approached in this way, no occasion can arise for the dilemma to which Lord Moulton referred.

120    The respondent also relied on a publication by Serper et al titled Novel Neuroleptics Improve Attentional Functioning in Schizophrenic Patients: Ziprasidone and Aripiprazole, CNS Spectrums 2(8):56-59 (1977). The respondent did not advance this publication as part of its “Gillette defence” although it did rely on it to challenge the validity of claim 7 of the 772 patent on the ground of lack of novelty.

121    There is no doubt that the cited prior art on which the respondent presently relies refers to the use of aripiprazole as an agent in pharmaceutical compositions (including in the form of tablets) for treating schizophrenia.

122    The European and US patents disclose the use of aripiprazole in the form of tablets as an agent for treating schizophrenia, including the negative symptoms of that disorder, such as “emotional depression”.

123    The Saha et al publication discloses the results of a study in which acutely relapsing hospitalised schizophrenic patients were treated with fixed doses of aripiprazole of 2 mg, 10 mg and 30 mg per day. The results were analysed to determine the effect of aripiprazole on the following dimensions of schizophrenia: excitement, depression and cognitive function. Improvement for excitement and depression was shown to be statistically significant when compared to the administration of a placebo. The respondent submitted that this publication discloses use of aripiprazole to treat both positive and negative symptoms of schizophrenia and showed improvement of cognitive function using dosages of aripiprazole covering those of the intended GH products.

124    The Petrie et al (1997) publication discloses treatment of acutely relapsing patients hospitalised for schizophrenia with aripiprazole titrated up from 5 mg to 30 mg in 13 days, and treatment with fixed doses of 2 mg, 10 mg and 30 mg per day for four weeks. The publication discloses that all three doses showed clinical effect in improving the symptoms of acute psychiatric exacerbation of schizophrenia. The publication states:

A favourable safety profile combined with data supporting efficacy in the treatment of positive and negative symptoms of schizophrenia suggests that aripiprazole may represent an important advance in the management of psychotic disorders.

125    The Petrie et al (1998) publication discloses that acutely relapsing patients hospitalised for schizophrenia were treated with a 2 mg, 10 mg or 30 mg dose per day. The 10 mg and 2 mg doses showed effect on many assessments but not all, and the 30 mg dose showed significant effect on all assessments.

126    The Daniel et al publication discloses the results of a study in which acutely relapsing hospitalised schizophrenic patients were treated with 2 mg, 10 mg and 30 mg doses of aripiprazole. All three doses demonstrated significant improvement relative to placebo, with the 30 mg dose the most efficacious. The publication concludes that the results confirm the efficacy of aripiprazole in the treatment of psychotic disorders.

127    The Serper et al publication reports on an investigation of attentional improvement in nine acute schizophrenic patients treated with either ziprasidone or aripiprazole over a four week inpatient period. The results showed that the patients who received these antipsychotic drugs showed significant improvement on immediate recall and reaction time measures compared with 12 patients who received typical antipsychotic drugs over the same time period.

128    The applicants submitted that none of this prior art referred to or specified the combination of integers found in claim 7 of the 772 patent. They submitted that, in particular, none of the publications disclosed the use of aripiprazole in the treatment of cognitive impairment disorders of the central nervous system associated with the 5-HT_1A receptor subtype caused by treatment resistant, inveterate or chronic schizophrenia where the patient has failed to respond to antipsychotic drugs selected from those listed in the relevant claims. Moreover, the applicants submitted that there was no teaching in any of the cited prior art publications that would lead inevitably to treatment in accordance with claim 7 of the 772 patent.

129    They also submitted that there was no reference in the European and United States patents to cognitive impairment as a disorder and that the other publications referred only to the treatment of acute schizophrenia and not chronic or the other forms of schizophrenia referred to in claim 7.

130    In Samsung the Full Court said (at [127]):

It is trite law that, if the alleged paper anticipation is to deprive an invention of novelty, it must clearly disclose each and every essential feature of that invention, as claimed. This principle has its genesis in Lord Westbury’s seminal statement in Hill v Evans (1862) 4 De GF & J 288; (1862) 1A IPR 1 at 7 that “the information as to the alleged invention given by the prior publication must, for the purposes of practical utility, be equal to that given by the subsequent patent”, a statement which Lord Reid described in C. Van der Lely NV v Bamfords Ltd [1963] RPC 61 at 72 as “universally accepted”. The stringency with which the prior disclosure is to be assessed in order to be novelty-destroying has been discussed in a number of decisions in this Court, most notably in Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 and Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 164 ALR 239 and, more recently, in H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151. It is not necessary to set out the discussion in those cases of the relevant principles. It is enough to note that a prior publication will not amount to an anticipation of an invention claimed as a combination if it discloses some, but not all, of the essential features of that combination.

131    There is presently no evidence before me as to how the cited prior art would be read through the eyes of a person skilled in the art. I am left to consider what each of these publications discloses on its face, assisted by the evidence that has been adduced concerning the nature of schizophrenia as an illness and the methods by which it is treated.

132    On the present state of the evidence I am not persuaded that any of the cited publications is necessarily novelty-destroying of the invention claimed in claim 7 of the 772 patent. In expressing this view I appreciate that the respondent’s case challenging the 772 patent on this ground may well be considerably more developed at the time of trial. I also note, however, that the European patent, the Saha et al publication and the Serper et al publication were cited against the 772 patent in a re-examination of that patent conducted under s 97 of the Act. The Commissioner found that those publications did not deprive the 772 patent of validity on lack of novelty grounds. This fact supports, in some real measure, the applicants’ contention that the invention of claim 7 is prima facie novel, at least in light of those publications.

133    Even assuming a prima facie case of invalidity of claim 7 on the ground of lack of novelty, I am not satisfied on the present evidence that that case is sufficiently strong to qualify my conclusion that there is a prima facie case of threatened infringement of the 772 patent: Interpharma Pty Ltd v Commissioner of Patents (2008) 79 IPR 261 at [17]. Nevertheless, the strength of the competing cases, as I perceive them to be, must be taken into account when considering the balance of convenience and justice in either granting or withholding the interim injunctive relief that is sought.

134    The respondent has also advanced a challenge to the validity of claim 7 on other grounds. The respondent alleges that that claim does not claim a manner of manufacture within the meaning of s 6 of the Statute of Monopolies (see s 138(3)(b) and s 18(1)(a) of the Act) or an invention that is useful (see s 138(3)(b) and s 18(1)(c) of the Act).

135    On the question of manner of manufacture, the respondent submitted that, at best, claim 1 of the 772 patent simply requires use of a known substance in the preparation of a known formulation for treatment of a known symptom of schizophrenia in circumstances where the symptom is caused by particular manifestations of that illness and has failed to respond to treatment using other antipsychotic drugs. It submitted that claim 7 simply amounts to a direction as to how to treat a patient in those circumstances. It also submitted that the fact that treatment with aripiprazole may assist cognitive impairment is a “mere discovery” or observation about the inherent effect of a known compound for a known condition.

136    My own reading of the complete specification of the 772 patent suggests that those submissions may be advanced at a level of generality that might mask the importance to be attached to the teachings concerning the action of aripiprazole at the 5-HT_1A receptor and the implications that that action has for the treatment of patients who suffer from cognitive impairment caused by treatment-resistant, inveterate or chronic schizophrenia and who have failed to respond to the administration of other antipsychotic drugs. I am satisfied that, at least prima facie, claim 7 of the 772 patent claims patentable subject matter on the face of the specification.

137    Accordingly, the respondent’s challenge to the validity of claim 7 of the 772 patent on the basis that it does not claim a manner of manufacture does not qualify my overall conclusion that, on the present evidence, the applicant has established a prima facie case of threatened infringement of the 772 patent based on the application of s 117(1) of the Act.

138    The respondent’s challenge to the validity of claim 7 on the ground that the invention, as claimed, is not useful focused essentially on the proposition that the claim is not limited by features that would secure the outcome that the amount of aripiprazole to be administered in the method is effective to treat the disorders identified in the claim.

139    The difficulty with this challenge at the present time is that it is not advanced against any body of evidence that shows that the invention, as claimed, is inutile. I observe that, in any event, the method that is claimed is one limited by result.

140    In this connection there is evidence, particularly from Professor Singh, that aripiprazole is useful, and is used, to treat the disorders referred to in claim 7. Professor Singh, when speaking with reference to the Abilify products, said that a therapeutically effective amount of aripiprazole would be determined by starting a patient on the lower end of the recommended dosage to see what impact that dosage has, and then make changes to the dosage, if necessary, depending on response. I acknowledge that claim 7 does not specify a recommended dose. But Professor Singh’s evidence is consistent with a prescribing practice that would enable the claimed result to be achieved in a patient whose illness is amenable to that form of treatment. There is certainly no evidence that the method claimed does not work for the intended purposes stated in the claim.

141    I am not satisfied on the present evidence that there is a prima facie case that the invention of claim 7 of the 772 patent is not useful. Accordingly, the respondent’s challenge to the validity of claim 7 on this particular basis does not qualify my overall conclusion that, on the present evidence, the applicant has established a prima facie case of threatened infringement of the 772 patent based on the application of s 117(1) of the Act.

142    Having come to these conclusions it is necessary for me to turn to a consideration of the balance of convenience and justice. This consideration concerns, in essence, whether interim injunctive relief should be granted for the threatened infringement of claim 7 of the 772 patent.

The balance of convenience and justice

143    The applicants’ case on the balance of convenience and justice can be summarised as follows.

144    First, the respondent’s intended trade in the GH products is necessarily a new one, which has not yet commenced. On the other hand the trade in the Abilify products has existed for eight years, with first sales commencing in March 2004. The applicants are much more likely to suffer from a disturbance of the status quo than the respondent: Sigma at [59]; Appleton Papers Inc v Tomasetti Paper Pty Ltd [1983] 3 NSWLR 208 at 219; Pharmacia Italia SpA v Interpharma Pty Ltd (2005) 67 IPR 397 at [52].

145    Secondly, the 772 patent has been granted for some years and only by the filing of its cross-claim, in answer to the allegations of infringement, has the respondent sought to challenge the validity of the relevant claims.

146    Thirdly, the respondent has acted with its “eyes wide open”, particularly in light of evidence from its General Manager, Mr De Alwis, that the process usually followed by the respondent before bringing a new generic medicine to market in Australia is to evaluate the legal position, including, in particular, the existence of relevant patent rights. The respondent’s desire to obtain a “first mover advantage” over its generic supplier competitors, to which I will refer below, is one which the respondent seeks to acquire solely at the expense of the applicants’ monopoly rights. Any damage that the respondent contends it would suffer from being denied this “first mover” advantage only arises after its knowledge of those rights.

147    Fourthly, the damage to the applicants if there is no interim injunction (and they succeed at trial) will be significant, unquantifiable and irreparable.

148    Finally, the public interest will be served by the grant of an injunction.

149    The evidence shows that the applicants’ market in Australia for aripiprazole, represented by the Abilify products, is an established one, and significant in terms of sales revenue. I have already noted that these products represent BMS Australia’s second largest selling product range.

150    I accept that there will be a significant and inevitable erosion in the price at which BMS Australia can sell the Abilify products that are listed in the PBS Schedule if the respondent is not restrained in respect of its intended conduct.

151    Much evidence was adduced on how the PBS operates. The National Health Act 1953 (Cth) provides the framework for that scheme. I do not propose to descend to the detail of that framework for the purposes of these reasons. Those details are, of course, well-known to the parties. It is sufficient for me to note that, on the present evidence, I accept that the intended listing of the GH products in the PBS Schedule on 1 April 2012 will cause an immediate price reduction of 16% to the approved “price to pharmacist” of the Abilify products listed in the PBS Schedule. This will result in a corresponding price reduction in BMS Australia’s selling price to wholesalers. I also accept that there is a significant risk that, even if the applicants are successful in obtaining final relief for patent infringement, the price reduction will be irreversible, save for the exercise of a ministerial discretion in BMS Australia’s favour. How that discretion might be exercised is, at the present time, a matter of speculation. I certainly have no reason to assume that that discretion would be exercised in BMS Australia’s favour. There is thus a significant risk that the price reduction will be operative for the remaining term of the 772 patent which expires in 2022.

152    BMS Australia would also be exposed to mandatory price disclosure and reporting obligations to the Australian Government to which it is not presently subject. There is a realistic possibility that, as a consequence of these obligations, further price reductions might be imposed in respect of the relevant products.

153    The possibility exists for BMS Australia to apply for a “brand price premium” in relation to the supply of the Abilify products listed in the PBS. If given, this premium will be paid by patients in addition to the usual co-payment for the prescription product. BMS Australia has not decided whether it would apply for a “brand price premium” if the 16% price reduction is implemented. The application of a “brand price premium” would alleviate to some extent the consequences of the 16% price reduction, but that could well be at the expense of sales volume in the face of more cheaply supplied GH products.

154    So far as the first applicant is concerned, any erosion in sales volume or prices for the Australian Abilify products may well have flow-on effects for it in the form of possible price reductions for the raw material it sells to Bristol-Myers Squibb Manufacturing Company and reduced royalties on Australian product sales to which it is entitled under its arrangements with the BMS companies.

155    I accept that, in this scenario, the losses to the applicants, as patentee and exclusive licensee respectively, will be very significant but also very difficult to quantify.

156    In this connection the evidence establishes that there are four promoted major medications on the Australian market that are indicated for the treatment of schizophrenia: olanzapine, risperidone, quetiapine and aripiprazole. The market for these medications is fluid in the sense that since December 2008 generic versions of risperidone have been available, and the patent for olanzapine has just expired. Thus the possibility exists of new and further competition in the supply of second generation antipsychotics.

157    If the GH products enter the market, as intended, then there is a real risk that other suppliers of generic aripiprazole will follow suit. Although the respondent pointed to some factors that might be said to militate against this risk, its own stated concern that it might lose a “first mover” advantage if an interim injunction is granted shows that even the respondent considers there to be some risk of other generic competition in the supply of aripiprazole. If the respondent is not restrained in the interim, there is every reason to suppose that other intending suppliers of aripiprazole will be encouraged to consider their position, with the possibility that further market entry will take place. If so, there is no reason to suppose that those suppliers would be restrained from supplying their products on the basis of a threatened infringement of the 772 patent. The evidence shows that four other suppliers of generic pharmaceuticals have listings in the ARTG for generic aripiprazole products. One of those suppliers has been restrained on an interim basis from selling its aripiprazole products in Australia. This is because of its threatened infringement of another aripiprazole patent that does not concern the GH products: Bristol-Myers Squibb Company & Anor v Apotex Pty Ltd (NSD 1116 of 2009).

158    This evidence shows that it will be difficult to predict changes to the size of the market and the impact, in terms of dollar value, of these changes if the GH products are permitted to be supplied. While the evidence suggests that the level of generic competition would not be likely to increase the market for aripiprazole as a whole, that competition would have an unpredictable impact on the market shares held by the various brands of aripiprazole in the market. For example, BMS Australia may be forced to drop prices even further in order to protect its market share in the face of any discounts or other incentives that might be offered by the respondent and perhaps other future entrants seeking to supply aripiprazole. I have no reason to doubt that all participants in the market would act competitively by striving to obtain market share, including by way of price competition.

159    Added to this likely future fluidity is the fact that the 772 patent has an unexpired term of approximately 10 years. The difficulty in calculating, in money terms, the likely loss or damage to be suffered by the applicants in the event of an enforced and quite possibly irreversible price reduction in respect of a fluid market over such a lengthy period of time is obvious.

160    The applicants have also called in aid some evidence of likely patient confusion based on the scenario that, if interim injunctive relief is not granted, some patients will be switched from the Abilify products to the GH products, and then switched back to the Abilify products if permanent injunctive relief is granted. It was argued that the likelihood of patient confusion, with an attendant lack of patient compliance with the medication, would be heightened in the present case because the treatment is for patients suffering from a mental illness.

161    I am bound to say that I do not find this evidence (adduced as it was from a deponent apparently exercising business-related functions within BMS Australia) to have any real persuasive force, particularly in the context where the method of claim 7 of the 772 patent is obviously directed to switching patients suffering from schizophrenia from other antipsychotics, and where both Professor Singh and Professor McGorry gave evidence that, in treating schizophrenia, patients are not uncommonly switched from one antipsychotic medication to another, perhaps several times throughout the course of the patient’s treatment. In the absence of more cogent evidence, the increased likelihood of patient confusion by the presence of the GH products seems illusory. In the circumstances, I place little weight on this factor.

162    The respondent’s case on the balance of convenience and justice, as it concerns the applicants’ case on the threatened infringement of claim 7 of the 772 patent, can be summarised as follows.

163    First, the strength of its “Gillette defence” to the allegation of infringement should result in the determination of the present application in its favour.

164    Secondly, even without the “Gillette defence”, there is no prima facie case that it will infringe claim 7 of the 772 patent. The present application should be dismissed on this basis.

165    Thirdly, its case on the invalidity of claim 7 of the 772 patent is very strong. This is to be weighed cumulatively with the strength (or lack thereof) of the applicants’ infringement case.

166    Fourthly, even if there is a prima facie case on the issue of infringement, it is extremely weak and all the more so when weighed with the respondent’s case on invalidity.

167    These submissions are answered, to a large extent, by my conclusion that the applicants have established a prima facie case of infringement of the 772 patent as it concerns claim 7. I accept, however, that it is necessary for me to weigh in the balance the apparent strengths and weaknesses of the parties’ respective cases, along with all other matters that assist to inform me where the balance of convenience and justice lies at the present time.

168    The respondent developed a number of other arguments which, it submitted, showed that the balance of convenience and justice was in favour of withholding interim injunctive relief.

169    The respondent submitted that the applicants have overstated the difficulty of assessing their losses if the respondent is allowed to sell and supply the GH products. It submitted that those losses will be relatively easily quantified. In this connection it also submitted that the applicants’ loss is only reflected in patients being switched from the GH products in the “complex circumstances” prescribed by the integers of claim 7 of the 772 patent. It submitted that the risk of infringement of claim 7 in this regard is “very low” or “extremely low” because there are a number of circumstances in which aripiprazole may be prescribed to treat schizophrenia or, indeed, cognitive impairment caused by treatment-resistant inveterate or chronic schizophrenia, without the claim being infringed. The respondent submitted that, accordingly, the circumstances in which infringement may occur are extremely limited and that any balance of convenience considerations relating to lost sales or an inability to calculate damages must take this into account.

170    For the reasons I have already given, I do not accept that, on the assumption that an entitlement to final injunctive relief is established, the applicants’ losses will be relatively easily quantified if interim injunctive relief is withheld at the present time. In my view the contrary will be the case.

171    I also do not think that the respondent’s submissions concerning the risk of infringement of claim 7 provides any real assistance to it. This is because its alleged liability to final injunctive relief for patent infringement stems from the operation of s 117(1) of the Act and, therefore, indirectly from the actual implementation of the method of treatment claimed in claim 7 of the 772 patent. Even accepting that there will be cases (perhaps many cases) when aripiprazole can be administered as a method of treatment that does not infringe claim 7, I am satisfied that there is a prima facie case that the GH products, if permitted to be supplied, will be administered in a method of treatment that does infringe the claim. When s 117(1) is invoked by reference to s 117(2)(b), any use of the product that would infringe the patent imposes a liability on the supplier by reason of the supply of the product, if the supplier has reason to believe that the product would be put to that use. Thus, in the present case, the respondent’s liability for infringement, if finally established, would be fixed by the fact of its supply of the GH products.

172    So far as the quantification of damages is concerned, considerations of the kind to which the respondent has referred may be in play. But if so, those considerations only operate to further confound the assessment of damages and not to alleviate the burden that would be presented in undertaking that assessment.

173    The respondent also submitted that it would suffer prejudice if an interim injunction were to be granted. This submission was developed in the following ways.

174    The respondent submitted that it would be considerably prejudiced by the delay in getting the GH products to market. It submitted that it might be 12 months before the matter is ready for hearing on a final basis and that, taking into account a reserved judgment and an appeal, the proceeding might not be finally determined for two years.

175    As to that matter, I accept that it will take some time before the proceeding is ready for final hearing. However, it is the respondent who seeks to challenge the validity of the 772 patent. The timing of that challenge has been entirely within its control. Moreover, it raises a large number of grounds of alleged invalidity. I do not criticise it for doing so. But the time that will be necessary to prepare the case for final hearing is very much in its hands and will be substantially dependent on how it chooses to advance the case it wishes to bring. On the other hand, I do not see the case for infringement as raising a significant number of evidentiary issues. The case for infringement has been exposed, substantially, by the present application for interim relief.

176    Nevertheless, I do accept that the grant of interim injunctive relief will have the effect of delaying the respondent in getting the GH products to market if it is ultimately found to be entitled to supply those products lawfully. I accept that the delay may be a reasonably significant one.

177    In that connection the respondent submitted that the grant of an interim injunction would prejudice its ability to exploit a “first mover” advantage. It pointed to the fact that, whilst other suppliers of generic pharmaceuticals have registered aripiprazole in the ARTG, with one exception none has sought to market those products in Australia. It submitted that it is poised to take advantage of being the first supplier of generic aripiprazole. It submitted that this is a rare and valuable opportunity to secure a market position for the GH products with pharmacists, who are often reluctant to stock more than one generic brand of a particular pharmaceutical product, and to cross-promote its other pharmaceutical products using the GH products. It submitted that the longer it can be the sole supplier of generic aripiprazole in Australia, the stronger its market position will be.

178    I accept that the evidence discloses a benefit of being the “first mover” in the sense in which the respondent uses that term. It is clear, however, that that advantage is one that derives from what I have found to be a prima facie case of threatened infringement of the 772 patent. Thus it is an advantage that is sought to be derived at the expense of the applicants’ asserted monopoly rights. I accept the applicants’ submission that, in light of Mr De Alwis’ evidence about the respondent assessing the patent position before bringing a new generic medicine to market in Australia, the “first mover” advantage is one that the respondent seeks to exploit with prior knowledge of the 772 patent. In this sense the respondent has acted with its “eyes wide open”. Indeed, the acts that it has undertaken to date in anticipation of its supply of the GH products in Australia fall to be considered in the same way. This has been so in circumstances where the Abilify products have been on the Australian market for a number of years and the applicants’ monopoly rights have remained uninterrupted and unchallenged, save for the one instance in the other proceeding to which I have referred: see [157] above.

179    Having made these observations I accept that, if final injunctive relief is not granted, the delay in bringing the GH products to market, caused by the granting of interim injunctive relief, is likely to result in loss to the respondent. The respondent submitted that the calculation of this loss will be “almost impossible to measure”. In this connection I accept that there may be difficulties in calculating the respondent’s loss and damage, but those difficulties are not as significant as the difficulties that would be present in calculating the applicants’ loss and damage if interim injunctive relief is not granted. For one thing, if the respondent is correct in contending that the supply of other competing generic aripiprazole products is not imminent, then the assessment of the respondent’s loss or damage would at least take place in a context where that assessment is over a relatively short period of time in a market that is more stable than is likely to be the case were the respondent to supply the GH products on and from 1 April 2012.

180    The respondent pointed to the possibility that the second applicant may itself introduce a generic version of the Abilify products and thus substantially alter the market and reduce the benefits to the respondent upon subsequently entering the market with the GH products. However, the second applicant’s ability to introduce its own “generic” version of aripiprazole is a prospect that is and has been available to it at all times, whether or not interim injunctive relief is granted against the respondent.

181    Finally, the respondent pointed to a number of cases involving the supply of generic pharmaceutical products in which interim injunctive relief has been refused. While providing helpful examples of the application of the principles pertaining to the granting of interim injunctive relief in relation to broadly similar subject matter in a broadly similar context, the outcomes of those cases have limited utility in assisting the determination of the proper exercise of discretion in the present case. At the end of the day I must come to my own evaluation, weighing up the competing circumstances of the parties that have been presented in the evidence, as well as the competing strengths of the parties’ respective cases.

182    Taking into account all the matters to which I have referred, I am of the view that the balance of convenience and justice favours the granting of interim injunctive relief in the present case. The only issue that remains is whether that conclusion is affected by the fact that the respondent has offered certain undertakings.

183    In this connection I have noted that the respondent has offered an undertaking to the Court with respect to the GENERICHEALTH products, which is acceptable to the applicants. That undertaking should be accepted.

184    I have also noted that, following the hearing of the present application for interim injunctive relief, the respondent offered an undertaking to the Court with respect to the marketing of the GH products. In substance that undertaking is not to advertise or promote the GH products specifically for the treatment of the disorders referred to in claim 7 of the 772 patent in circumstances where the patient has failed to respond to at least two of the antipsychotics referred to in that claim. The respondent has also offered an undertaking that, from 1 April 2012, it will send a letter to pharmacists every three months advising that the GH products are not to be substituted for the Abilify products on any non-PBS prescription. Finally, the respondent has offered an undertaking to keep full and proper accounts of all its sales of the GH products. This last-mentioned offer was made prior to the hearing of the application for interim injunctive relief.

185    I am not satisfied that these undertakings should be accepted in lieu of interim injunctive relief that would restrain the respondent from importing and supplying the GH products, or keeping those products for supply in Australia. Although such undertakings may to some extent alleviate the injury that is likely to be suffered through the supply of the GH products, the extent to which they would alleviate that injury is quite uncertain and will never be clear. More fundamentally, the undertakings will not prevent the imposition of the 16% price reduction and the consequences that would ensue for the applicants by reason of that reduction.

disposition

186    I am satisfied therefore that, in the face of the respondent’s intended acts with respect to the GH products, the applicants are entitled to the interim injunctive relief they seek with respect to the GH products, insofar as the applicants’ claims concern the threatened infringement of the 772 patent. That relief should be granted on the giving of the usual undertaking as to damages. The interim relief to which the applicants are entitled includes, until further or other order, the relief sought in paragraph 5 of the originating application.

187    As the applicants have been successful in obtaining that relief, they should have an order for costs in their favour. The appropriate order is that the applicants’ costs of and incidental to the hearing of their claims for interim injunctive relief be their costs in the cause.

188    The parties are to bring in draft orders giving effect to these reasons.

Associate:

Dated:    16 March 2012