FEDERAL COURT OF AUSTRALIA

Apotex Pty Ltd v Les Laboratoires Servier [2012] FCA 359

THE COURT ORDERS THAT:

1.    These reasons be kept confidential to the legal advisers for the parties until further order.

2.    Counsel consult as to any matters within these reasons for which confidentiality is asserted and notify my Associate of any proposed redactions on or before 12 April 2012.

3.    The application to set aside the Notice to Produce be dismissed.

4.    Apotex produce to the Court at the hearing of the application dated 15 March 2012 for leave to serve the Third to Sixth Cross-Respondents out of the jurisdiction:

(a)    the sale or supply agreement for the Generic Perindopril Arginine Products or the active pharmaceutical ingredient perindopril arginine for the Generic Perindopril Arginine Products (the API) between Apotex and any of the Third to Sixth Cross-Respondents, redacted to identify the parties to the agreement;

(b)    the dossier (being the document in “Common Technical Document” format) in support of Apotex Pty Ltd’s application for registration on the Australian Register of Therapeutic Goods (ARTG) of each of APO-Perindopril Arginine, Terry White Chemists Perindopril Arginine, Chemmart Perindopril Arginine, Apotex-Perindopril Arginine and GenRx Perindopril Arginine (the Generic Perindopril Arginine Products) to the extent that reference is made to the Third to Sixth Cross-Respondents;

(c)    a sample invoice for the Generic Perindopril Arginine Products or the API between Apotex and any of the Third to Sixth Cross-Respondents, redacted to identify the manufacturer, importer, supplier and/or sponsor of each product; and

(d)    letters of access in support of the application for registration on the ARTG of each of the Generic Perindopril Arginine Products provided by any of the Third to Sixth Cross-Respondents, redacted to identify the manufacturer, importer, supplier and/or sponsor of each product.

5.    The proceeding be listed for directions at 9:30 a.m. on 20 April 2012.

6.    Apotex’s costs in relation to the notice to produce thrown away to 1 March 2012 be Apotex’s costs in the cause.

7.    Servier pay Apotex’s costs in relation to the notice to produce thrown away from 1 March 2012 to 16 March 2012.

8.    Otherwise, no order is made as to the costs of the application to set aside the notice to produce.

Note:    Settlement and entry of orders is dealt with in Order 39.32 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    The applicant Apotex Pty Ltd (Apotex) brings proceedings against Les Laboratoires Servier for revocation of Australian Patent No 2003200700 (the Servier Patent). I shall refer to Les Laboratoires Servier and its exclusive Australian licensee, Servier Laboratories (Aust) Pty Ltd together as Servier. Servier has filed a cross-claim alleging infringement of the Servier Patent by Apotex and certain other parties as cross-respondents. It is sufficient, for present purposes, to describe those other parties as companies incorporated outside Australia (the Foreign Respondents). It is also sufficient to set out the facts in a summary form.

Factual Background

2    Servier claims, generally, that the Foreign Respondents have been engaged in infringing conduct in the patent area as that term is defined in the Patents Act 1990 (Cth) (the Act) in respect of the Servier Patent. Servier seeks orders by way of injunctions restraining Apotex and the Foreign Respondents, from exploiting the patent, within the meaning of s 13 of the Act. Servier alleges, inter alia, that the Foreign Respondents engaged in direct exploitation, that they authorised other people to exploit the Servier Patent and that they participated in a common design to infringe the Servier Patent, as joint tortfeasors.

3    It is alleged that Apotex and the Foreign Respondents are part of the same corporate group. The identity of the Foreign Respondents is presently confidential. However, it can be said that it is alleged in the statement of cross-claim that each of three of the Foreign Respondents manufacture and supply a generic version of perindopril arginine (Generic Perindopril). Perindopril arginine is the subject of claims of the Servier Patent. On 15 March 2012, Servier filed an application seeking leave to serve the Foreign Respondents out of the jurisdiction in accordance with r 10.43 of the Federal Court Rules 2011 (the Service Application).

4    It is not in issue that Generic Perindopril is within the scope of at least some of the claims of the Servier Patent. Apotex voluntarily indicated that it intended, inter alia, to import and offer for sale Generic Perindopril. Apotex has consented to orders restraining it from doing so until the resolution of these proceedings or until further order. Accordingly, there is no issue as to the existence of a prima facie case on infringement or as to the balance of convenience.

5    Servier served a notice to produce on Apotex (the Notice) on 27 January 2012. Servier seeks the production of what are now revised categories of the documents specified in the Notice. On 3 February 2012, Apotex applied to set aside the Notice.

The basis for the Notice

6    Servier’s present position is that the Notice is only pressed in support of the Service Application. That is the basis on which Servier presently seeks production. Apotex points out, and Servier accepts, that Servier’s position has changed since service of the Notice.

7    Servier served the Notice at the time of filing its application for the interlocutory injunction (Injunction Application) and before filing any evidence in support. Servier did not call on the Notice in respect of that application.

8    Apotex made it clear by proposed orders and an email on 29 March 2012 that they would not oppose an interlocutory injunction and that the documents sought under the Notice were no longer relevant. Even after this, Servier informed the Court that:

… the documents the subject of the notices to produce remain directly relevant to the matters in dispute between the parties. In particular, they relate to Apotex’s pending applications for registration on the ARTG and listing on the PBS as well as matters relevant generally to the strength of the case and the balance of convenience, which need to be weighed by the Court in deciding the terms of the injunction.

9    In light of the fact that Apotex was no longer opposing the grant of an interlocutory injunction, Apotex wrote to Servier on 1 March 2012 that ‘the questions of the strength of the case and the balance of convenience can no longer be relevant in light of the proposed orders…’.

10    Subsequently on 9 March 2012, Servier again informed the Court that the documents the subject of the Notice were relevant to the Injunction Application. Although Servier had advised an alternative basis for the Notice as relevant to the Service Application, it had made it clear that the primary basis was the Injunction Application. On 16 March 2012, when the interlocutory injunction was clearly no longer in issue, Servier acknowledged that although the Notice was originally filed in support of the Injunction Application, its Notice was now pressed only in support of the Service Application.

11    While Servier has shifted the ground on which it claims to be entitled to the documents specified in the Notice, its present position is clear. Servier has confirmed that the categories of documents are now sought as relevant to the Service Application. While its changed position may affect costs, it either has a proper basis for the notice to produce or it does not. The fact that the primary basis has changed is not relevant to the determination of the present application to set the Notice aside.

Is Servier entitled to documents in support of the Service Application?

12    Apotex maintains that:

    Servier is not entitled to any documents in support of the Service Application.

    The categories of documents do not satisfy the apparent relevance test and are akin to a discovery application.

    The Foreign Respondents are not relevant to any real issue in dispute in the proceedings and accordingly, Apotex should not be ordered to produce any documents.

13    Apotex contends that Servier seeks the documents in an attempt to establish a prima facie case against the Foreign Respondents. This, it submits, is impermissible “fishing” and is an attempted substitute for a failure on the part of Servier to seek preliminary discovery before filing the cross-claim commencing proceedings against those respondents.

14    Apotex maintains that, as proceedings have already commenced, Servier is not entitled to preliminary discovery. By commencing proceedings against the Foreign Respondents, Apotex submits that it can be accepted that Servier was of the view that it had sufficient information to establish a prima facie case against the Foreign Respondents, including the identification of the manufacturer or manufacturers of the Generic Perindopril products. Further, Apotex says, Servier is seeking documents to make its case against the Foreign Respondents from Apotex which is, in effect, a third party. Apotex submits that this is inappropriate for preliminary discovery, let alone for a notice to produce.

15    The main contest, Apotex submits, is the validity of the Servier Patent or, potentially, the making of injunctions and declarations as against Apotex. It says that there will be no question of damages, as Apotex will be prevented by the interlocutory injunction from selling Generic Perindopril in Australia until the issues in the proceedings are determined. It follows, according to Apotex, that the Foreign Respondents are not relevant to any issue in the proceedings.

16    Servier emphasises that the cross-claim pleads a case against the Foreign Respondents for direct and indirect infringement. The case for indirect infringement is made on the basis that:

    the Foreign Respondents have infringed, continue to infringe and/or threaten to infringe the Servier Patent by causing, authorising, directing, procuring or inducing Apotex to import and sell Generic Perindopril products in Australia; and

    the Foreign Respondents are jointly liable for any infringement committed by Apotex on the basis of having acted pursuant to a common design with Apotex to import and sell Generic Perindopril products in Australia.

17    Servier identifies the relevant issues for the purposes of the Notice as the pleaded case of authorisation by the Foreign Respondents of infringement in Australia of the Servier Patent and joint tortfeasorship by way of a common design in the course of which a patent infringement is committed. It says that, as in Morton-Norwich Products Inc v Intercen Ltd [1978] RPC 501, supply of the allegedly infringing material in the context of such a common design is sufficient to constitute exploitation of the Servier Patent within s 13 of the Act. Servier has made submissions relevant to its application that leave should be given to serve the Foreign Respondents out of the jurisdiction and identified factors that it says are relevant to establishing a common design.

18    Servier accepts that its case against the Foreign Respondents is necessarily one of inference and says that the Notice can be expected to provide documentary evidence of their involvement in Apotex’s infringing conduct, either by authorising that conduct or as a joint tortfeasor with Apotex. It relies on evidence of the relationship between the Foreign Respondents and Apotex and on information from various websites, in particular concerning the manufacturing activities of some of the Foreign Respondents. Servier submits that the documents sought will be of relevance and importance to the Service Application.

Consideration

19    The Service Application relates to Servier’s cross-claim. It is not the case that the validity of the Servier Patent is the only issue in the proceedings. The Notice is addressed to the issues arising from the cross-claim.

20    Notices to produce are dealt with in the Rules. Rule 20.31 deals with a notice to produce documents mentioned in a pleading or affidavit filed by a second party. Rule 20.32 deals with the production for inspection of a document included in a second party’s list of documents. Rule 20.33 deals with the situation where a non-party ordered to give discovery does not do so. Those rules do not seem to be presently applicable.

21    Rule 30.28 relevantly provides:

(1)    A party may serve on another party a notice, in accordance with Form 61, requiring the party served to produce any document or thing in the party’s control:

(a)    at any trial or hearing in the proceeding; or

(b)    at any hearing before a Registrar or any examiner or other person having authority to take evidence in the proceeding.

(2)    If the document or thing required to be produced under subrule (1) is not produced, the party serving the notice may lead secondary evidence of the contents or nature of the document or thing.

…

22    Servier seeks the production of the documents at the hearing of the Service Application. The Notice seeks documents that are in Apotex’s control. Within the proper scope of a notice to produce, Servier is entitled to production of specified documents under rule 30.28. If the documents are not produced, Servier may avail itself of the right to lead secondary evidence.

23    Servier also relies on r 20.35 of the Rules which relevantly provides:

(1)    A party may apply to the Court for an order that another party produce to the Court a document in the party’s control relating to an issue in the proceeding.

(2)    The Court may inspect a document to decide the validity of an objection to production, including a claim that the document is privileged from production.

24    This rule requires production by a party to the Court of a document relating to an issue in the proceedings. It is not limited to an issue as between the applicant for the order and that party against whom the order is sought. For the purposes of this case, it may extend to a document in Apotex’s control relating to an issue as between Servier and the Foreign Respondents. In any event, the issues relied on by Servier for the purposes of r 20.35 can each be said to include Apotex. For example, Servier relies on the involvement of the manufacturers of Generic Perindopril products in the registration of those products with the TGA as evidence that the manufacturers are knowingly involved in Apotex’s conduct alleged to be infringing conduct.

25    While it is the case that the mere fact of membership of the same global group or a relationship of manufacturer and distributor is not sufficient to support an arguable case of authorisation or joint tortfeasorship (Apotex Pty Ltd v Les Laboratoires Servier (No 4) (2010) 89 IPR 274 at [41]), such facts do relate to these issues which are issues, in the proceedings as pleaded by Servier, for the purposes of r 20.35.

26    Servier has identified provisions within the Rules with which the Notice complies.

Should the Notice be set aside?

27    Both parties relied on the summary of the principles relevant to the setting aside of a notice to produce as set out by Collier J in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) [2012] FCA 61 at [6] (citations omitted):

(a)    The party which has issued a notice to produce bears the onus of establishing that the documents the subject of the notice are sufficiently relevant to justify production.

(b)    Timing of the issue and service of a notice to produce is a relevant factor in respect of any application to set aside the notice.

(c)    It is necessary that the material sought has an apparent relevance to the issues in the principal proceedings. The test of apparent relevance in this context is whether the documents are reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case.

(d)    A notice to produce cannot be used for the purposes of “fishing” or for the purpose of determining a preliminary question as to whether a party has a supportable case.

(e)    A notice to produce may be set aside on the basis that it is unduly burdensome if the width of the categories requested is too broad or the categories are not described with adequate specificity.

28    Servier says that the documents sought are confined and relevant to the Service Application. It has already obtained sufficient information to enable the inference to be drawn that each of the Foreign Respondents is involved in Apotex’s allegedly infringing conduct. Servier submits that the documents sought are confined to those relating to common design of those respondents and cannot be characterised as “fishing”.

29    Servier has adduced evidence of the manufacturing activities of the members of the global corporate structure which includes the Foreign Respondents and Apotex. That evidence, explicitly or by inference, has not been shown to be incapable of arguably supporting Servier’s pleaded case. The documents sought in the Notice support or clarify the inferences such as those identifying the manufacturer of the Generic Perindopril products or active ingredients. Apotex has not sought to have the cross-claim dismissed.

30    I accept that documents identifying the manufacturer, importer, supplier and/or sponsor of Generic Perindopril products to be sold or supplied by Apotex are sufficiently relevant to justify production. Such documents are relevant to the cross-claim and, therefore, relevant to establishing a prima facie case in the cross-claim, which is necessary to obtain leave for service out of the jurisdiction.

31    Servier also relies upon the relevance of the documents sought to other issues in the proceedings, in particular to Apotex’s case on invalidity. To that extent, in my view, the production of such documents for this purpose at this stage of the proceedings is premature and pre-empts the proper presentation of evidence by the parties. It is for Apotex first to adduce the evidence in support of its case of invalidity of the Servier Patent.

32    The timing of the service of the Notice is also relevant. Servier did not seek preliminary discovery. Had it done so, it would have to have had to comply with the requirements of Division 7.3 of the Rules and would only have been entitled to the documents provided for in those Rules. For example, if Servier had applied under r 7.22, it would have been entitled to documents concerning the description of the prospective respondents. The present circumstances are not the occasion for a sweeping notice to produce, akin to discovery. Notices to produce are not a substitute for discovery or for preliminary discovery.

33    However, Servier is entitled to serve a notice on Apotex to produce documents at the hearing of the Service Application. The scope of documents to be produced should be appropriate for the purposes of that application and the stage of the proceedings. To the extent that Servier relies on r 20.35, subrule (2) provides that the Court may inspect the documents produced to the Court to decide the validity of any objection to production.

The categories of documents

34    I have accepted that Servier is entitled to serve the Notice on Apotex for the purposes of the Service Application. I have accepted that the Notice may contain documents sufficiently relevant to the issue of determining the manufacturer, importer, supplier and/or sponsor of Generic Arginine. I now turn to the categories of documents listed in the Notice and whether these should be produced.

35    Justice Collier in Construction Forestry referred to Commissioner for Railways v Small (1938) 38 SR (NSW) 464 and to Australian Competition & Consumer Commission v Shell Co of Australia Ltd [1999] FCA 212 to the effect that a party may not use a subpoena duces tecum for the purposes of “fishing”, to discover whether that party has a case at all. Justice Collier accepted that the same principle applies to notices to produce, in particular to the breadth of documents sought by such means.

36    Servier amended the categories and description of the documents sought by the Notice on 19 March 2012 and then amended the categories further during the hearing of the application to set aside the Notice. The categories presently sought are:

Category 1

The dossier (being the document in “Common Technical Document” format) in support of Apotex Pty Ltd’s application for registration on the Australian Register of Therapeutic Goods (ARTG) of each of APO-Perindopril Arginine, Terry White Chemists Perindopril Arginine, Chemmart Perindopril Arginine, Apotex-Perindopril Arginine and GenRx Perindopril Arginine (the Generic Perindopril Arginine Products) to the extent that reference is made to the Third to Sixth Cross-Respondents.

Category 2

(a)    the sale or supply agreement for the Generic Perindopril Arginine Products or the active pharmaceutical ingredient perindopril arginine for the Generic Perindopril Arginine Products (the API) between Apotex and any of the Third to Sixth Cross-Respondents;

(b)    to the extent not covered by (a), the trading terms of the supply or sale or proposed supply or sale of the Generic Perindopril Arginine Products or the API between Apotex and any of the Third to Sixth Cross-Respondents;

(c)    a sample invoice for the Generic Perindopril Arginine Products or the API between Apotex and any of the Third to Sixth Cross-Respondents;

(d)    warranties or indemnities in respect of the Generic Perindopril Arginine Products or the API between Apotex and any of the Third to Sixth Cross-Respondents;

(e)    letters of access in support of the application for registration on the ARTG of each of the Generic Perindopril Arginine Products provided by any of the Third to Sixth Cross-Respondents.

37    Servier has filed evidence by way of affidavits and annexures in support of its cross-claim. The affidavit of Richard Charles Morgan, one of the solicitors for Servier, annexes documentation from the website of the Therapeutic Goods Administration (TGA). Those pro forma documents provide for information to be provided to the TGA by the manufacturer and by the sponsor of a medicine, including information in the Drug Master File concerning data on manufacture, quality control and stability of that medicine. The TGA documentation also refers to a sponsor declaration which, in turn, must provide written assurance that there is a formal agreement between the active pharmaceutical ingredient manufacturer and the sponsor about the communication of information from the manufacturer. The identity of the manufacturer and of the sponsor would be stated in the completed documentation. The Drug Master File includes letters of access from the manufacturer, which are sought by Servier in Category 2 of the Notice.

38    Apotex points out that the documents sought include confidential information regarding its application for registration for Generic Perindopril products on the Australian Register of Therapeutic Goods (ARTG) and its relationship with each of the Foreign Respondents. In my view, it is not appropriate for a party to file a pleading joining parties out of the jurisdiction and seek leave to serve those parties and then to rely on the existence of the pleading to obtain a wide range of documents that extend beyond those identifiably related to the pleaded issues and which include commercially sensitive material.

39    Servier has limited the Notice to take account of some of Apotex’s concerns with respect to the width of the categories of documents sought and the confidentiality of some of those documents. Servier seeks the documents to the extent that they relate to the manufacturer, importer and/or supplier of the Apotex Generic Perindopril products. Servier has provided no sufficient evidence or explanation as to the relevance of what is still extensive documentation to the Service Application.

40    Apotex relies on Apotex v Servier (No 4) as referred to above at [25] above and submits that documents which record the manufacture and supply relationship between Apotex and any of the Foreign Respondents will not establish a prima facie case of common design. That may be so, but such documents may still be relevant to that issue.

41    The Court may make an order that parts of documents to be produced be masked or that a redacted version of the document be produced (Garnet International Resources Pty Ltd v Barton International Inc [2005] FCA 93). This is appropriate in the present circumstances, given the lack of demonstrated relevance and the commercially sensitive and confidential nature of the documents sought. For example, category 1 as now drafted provides for a redacted version of the dossier in support of Apotex’s application for registration on the ARTG of the Generic Perindopril. Category 1 limits the content to be produced of the “dossier” in support of the registration on the ARTG of the Generic Perindopril products to ‘to the extent that reference is made to the Third to Sixth Cross-Respondents’. This category now effectively seeks from the documents only names, in a context sufficient to understand the capacity in which Foreign Respondents are referred to.

42    Apotex should provide the redacted document in Category 1 to the Court. I do not accept that such production is unduly onerous. The identities of the manufacturer, importer, supplier and/or sponsor of the allegedly infringing products are relevant to the identified issues in the cross-claim.

43    Some of the documents in category 2 are narrow, such as the single sample invoice. Others would appear to form the basis of other ways to identify the parties involved in the sale of the Generic Perindopril products in Australia. However, they would also contain confidential and commercially sensitive information and information not apparently relevant to the Service Application. Apotex points, for example, to category 2(a) which requires Apotex to produce sale or supply agreements with the foreign respondents and category 2(b) which seeks the trading terms of proposed supply or sale. Apotex says that these would not establish a prima facie case of common design and would be highly confidential and commercially sensitive. Apotex also points to category 2(d) which requires Apotex to review any correspondence that it has with any of the Foreign Respondents, in order to identify any documents within that category.

44    As to the documents in category 2:

(a)    I am satisfied that the identity of the parties to the sale or supply agreement are relevant to the issues in the cross-claim relied upon in support of the Service Application. I am not satisfied that the contents of the sale or supply agreement should be produced beyond the identity of the parties to the agreement. Servier has not established why such terms, which are likely to be commercially confidential, should be disclosed to it, as a commercial competitor. Apotex should produce so much of this category of documents as identifies the parties to the agreement.

(b)    Servier has not demonstrated why the trading terms of supply or sale, let alone of proposed supply or sale are relevant to an issue in Service Application. Further, the trading terms are likely to contain material that is highly commercially sensitive and confidential. I am not satisfied that this category of documents should be produced.

(c)    The identity of the parties on a sample invoice is relevant, as is the name of the product; the terms and price details are not. A redacted version of the sample invoice should be produced such that it identifies the manufacturer, importer, supplier and/or sponsor of the product. Production is not onerous.

(d)    The category of “warranties and indemnities” between the parties is not clear and there is no evidence that such documents exist. At this stage of the proceedings this category, it seems to me, falls into the class of “fishing”, is not precise and is oppressive, as it would require Apotex to examine extensive documentation and make a value judgment as to whether or not each document could come within the class. I am not satisfied that this category of documents should be produced.

(e)    Appendix 11 to the Australian Regulatory Guidelines for Prescription Medicines published by the TGA makes reference to a ‘letter of access from the drug substance manufacturer, addressed to the TGA, indicating clearly the product sponsor to which it applies and providing certain other information and assurances required by the TGA’. It is, apparently, a pro forma letter and relevant to the identity of the manufacturer and of the product sponsor. Apotex should produce the letters of access but may redact those letters such that they identify the manufacturer, importer, supplier and/or sponsor of each product.

Costs

45    Apotex seeks costs on the basis that Servier failed to notify it that the relevance of the amended categories was to the Service Application until 16 March 2012, even though Apotex had made it clear on 29 February 2012 that it would not oppose the interlocutory injunction. Apotex says that the fact that Servier proceeded for production in support of its Injunction Application until 16 March entitles Apotex to costs thrown away including those incurred in preparation for a hearing on that basis.

46    Servier submits that Apotex’s costs thrown away to 16 March 2012 be its costs in the cause. Much of the argument in support of Servier’s position relates to the timing of Apotex’s confirmation of its position on the interlocutory injunction and the identification of the products for which Apotex had applied for ARTG registration. In turn, Servier says that this affected its position on whether the Notice was sought in support of the Injunction Application or in support of the Service Application. Servier says that Apotex only provided a form of orders on 16 March 2012 after which Servier was satisfied that the Notice was not necessary for the purposes of its balance of convenience arguments. Servier says that it had prepared on the basis that the Injunction Application would proceed in its entirety, including submissions and evidence on the balance of convenience, and that this would also entail consideration of Apotex’s claim of invalidity.

47    Apotex notified Servier of its consent to an interlocutory injunction well prior to the hearing of the application to set aside the Notice, although, it was not until 1 March 2012 that Apotex clearly stated its position. It was not until 16 March 2012 that Servier notified Apotex that Servier only pressed for production of documents on the alternative basis of the Service Application.

48    During the hearing of the application to set aside the Notice, Servier again amended the categories of documents sought. Apotex has not succeeded in setting the Notice aside in its totality, but has had success in respect of limiting the extent of production of the categories of documents in the Notice.

49    Servier should pay Apotex’s costs thrown away between 1 March 2012 and 16 March 2012. There should be otherwise no order as to the costs of the application to set aside the Notice. The appropriate costs orders are that, for the period up to 1 March 2012 is that Apotex’s costs thrown away are its costs in the cause.

Associate:

Dated:    5 April 2012