FEDERAL COURT OF AUSTRALIA

Novartis AG v Hospira Pty Limited [2012] FCA 1055

THE COURT ORDERS THAT:

1.    The parties provide to my Associate by 4.00 pm on 5 October 2012 drafts of the orders and undertakings each proposes, unless the form of relief can be agreed in the meantime.

2.    Leave be granted to the parties to approach my Associate to have the matters relisted for further argument, as might be necessary, on that question.

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

THE COURT ORDERS THAT:

1.    The parties provide to my Associate by 4.00 pm on 5 October 2012 drafts of the orders and undertakings each proposes, unless the form of relief can be agreed in the meantime.

2.    Leave be granted to the parties to approach my Associate to have the matters relisted for further argument, as might be necessary, on that question.

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

REASONS FOR JUDGMENT

1    In these proceedings the applicants seek interlocutory injunctive relief to restrain the respondent’s alleged threatened infringement of claims 2, 3, 4 and 5 of Australian Patent No. 2001261283 entitled “Use of Zolendronate [sic] for the manufacture of a medicament for the treatment of bone metabolism diseases” (the 283 patent) and of claim 4 of Australian Patent No. 2001274109 entitled “Method of administering bisphosphonates” (the 109 patent).

2    Two proceedings have been commenced. The first, NSD 1048 of 2012, concerns the threatened infringement of the 283 patent. The second, NSD 1207 of 2012, concerns the threatened infringement of the 109 patent. The claims for interlocutory injunctive relief made in the originating application filed in each proceeding were heard together. Affidavit evidence was filed and relied upon in each proceeding.

3    The first applicant, Novartis AG, is the patentee of the 283 and 109 patents. The second applicant, Novartis Pharmaceuticals Australia Pty Limited, is the exclusive licensee of each patent. In general terms, the patents relate to the use of zoledronic acid – a bisphosphonate – in methods of treatment of diseases or conditions affecting the bone, and in the preparation of medicaments used to treat those diseases and conditions.

4    The second applicant markets, sells and supplies two products. The first is called Zometa which is a zoledronic acid 4mg/5ml concentrated injection vial with diluent ampoule indicated for the prevention of skeletal-related events in patients with advanced malignancies involving bone, and the treatment of tumour-induced hypercalcaemia. Zometa is listed on the Pharmaceutical Benefits Schedule (the PBS). Zometa is always dispensed by hospital pharmacies and administered in a hospital setting.

5    The second is called Aclasta which is a zoledronic acid 5mg/100ml injection solution vial indicated for, amongst other things, the treatment of osteoporosis. Aclasta is also listed on the PBS. It can be administered in a hospital setting, in the consultation rooms of a prescribing doctor, or at a specialist infusion centre. Approximately 15% of the second applicant’s sales of Aclasta are to hospitals and approximately 35% of sales are to retail pharmacies, both through wholesalers. The remaining 50% of sales are made through a wholesaler to Lifescreen Australia Pty Limited which operates infusion centres through the Aclasta Infusion Management Service established by the second applicant. This service provides a streamlined and convenient infusion and support service for doctors wishing to have their patients receive an Aclasta infusion generally at a specialist infusion centre or at the prescribing doctor’s rooms. In rare cases the infusion can take place at the patient’s home.

6    The claims for interlocutory injunctive relief have been brought because the respondent, Hospira Pty Limited, proposes to launch three products in Australia containing zoledronic acid. These products are identified as the respondent’s DBL zoledronic acid, concentrated injection, 4mg/5ml product and its DBL zoledronic acid, intravenous infusion, 4mg/100ml product (conveniently referred to as the respondent’s oncology products), and its OsteoZol 5mg/100ml intravenous infusion product (conveniently referred to as its osteoporosis product).

7    The first of the oncology products (that is, the concentrated injection product) has been registered on the Australian Register of Therapeutic Goods (the ARTG) and the respondent has applied for, but not yet obtained, its listing on the PBS. The other two products are not currently registered on the ARTG, although an application for registration has been made in each case.

8    In February 2012 the respondent informed the applicants that it proposed to launch its oncology products and its osteoporosis product after 20 November 2012. The significance of this date lies in the fact that it marks the expiration of the last Australian patent held by the first applicant which claims zoledronic acid per se: Australian Patent No. 607722.

Background

9    The applicants provided a succinct statement of the background facts as they concern bone remodelling and the use of bisphosphonates in the treatment of diseases and conditions of the bone. This statement draws on the affidavit evidence of the experts relied upon by their respective parties. Its accuracy was not called into question by the respondent. It is convenient to set out that statement as it appears in the applicants’ written submissions:

11.    Bone undergoes constant remodelling, which maintains the mechanical integrity of bone, repairs damage to bone and also serves to change the bone architecture to meet mechanical needs. The process of remodelling involves a balance between bone resorption and bone formation with the aim of maintaining optimal bone strength and shape (Diamond para 8.8).

12.    Under normal physiological conditions in remodelling, old bone is removed (resorbed) by cells called osteoclasts and replaced by new bone by cells called osteoblasts at the same location. This turnover occurs in focal and discrete packets throughout the skeleton (called bone remodelling units). Normally the remodelling rate is between 2% and 10% of the skeletal mass per year and the bone remodelling cycle is on average 3-4 months. In normal remodelling the amount of bone formed equals the amount destroyed. If more bone is destroyed than formed, bone loss occurs (Diamond paras 8.4-8.12).

13.    Metabolic bone diseases are disorders affecting the bone remodelling mechanism, such as osteoporosis and tumour induced bone disorders (malignancy related bone disorders) (Reid para 26, Murray para 14).

14.    Osteoporosis is a universal systemic condition, inter alia, arising in later life as a result of continuous decrease in bone mass and found in older people and post menopausal women (Reid para 27, Diamond para 8.25).

15.    Tumour induced bone disease includes osteolytic metastases and hypercalcaemia caused by the erosion of bone by the tumour, or by the abnormal action of osteoclasts on the bone as a result of substances secreted by a tumour (Murray para 19).

16.    Bisphosphonates inhibit bone resorption. As at May 2000, bisphosphonates were used to treat conditions such as osteoporosis, tumour induced hypercalcaemia, multiple myeloma and bone metastases. Commercially available bisphosphonates used in Australia included:

(a)    etidronate and alendronate (Fosamax) orally to treat osteoporosis;

(b)    clodronate, orally to treat prolonged hypercalcaemia;

(c)    pamidronate (APD), intravenous infusion to treat patients with malignancy related bone disease (Murray para 19, 20).

17.    The standard treatment of patients with malignancy related bone disease at Peter MacCallum Cancer Centre as at May 2000 was 90mg pamidronate infused over 4 hours (Murray para 22).

18.    Some bisphosphonates can cause renal adverse events. As at May 2000, renal adverse events had been reported with the intravenous administration of etidronate, clodronate, pamidronate and tiludronate (Diamond para 9.30). As at May 2000, it was known that when pamidronate was infused over 30 minutes renal adverse effects occurred (Diamond para 9.33). Renal side effects were exacerbated if the dose was given in a concentrated form (eg. bolus injection) or over a short infusion time (Murray para 25).

19.    As at 2000, bisphosphonates used to treat osteoporosis included:

(i)    etidronate given as an oral dose daily for 14 days followed by 76 days of calcium supplements, repeated over a period of 2 years or more (Reid para 30, Hosking para 12.14);

(ii)    alendronate given as an oral daily dose and then later an oral weekly dose (Hosking para 12.14 and 12.15, Reid para 31). Each of these drugs had a fasting dosing regimen which was inconvenient to patients.

20.    Large studies of one week per month oral dosing of tiludronate and cyclical three monthly infusion of risedronate to treat osteoporosis published in 2000, failed to show beneficial effects. Similarly, studies with 3 monthly ibandronate failed to demonstrate efficacy in preventing fractures (Reid para 32).

The patents in suit

The 283 patent

10    The application for the 283 patent was filed on 9 May 2001. The patent claims a priority date of 19 May 2000 based on the filing of United Kingdom Patent Application GB0012209 entitled “Organic Compounds” (the GB priority document).

11    The complete specification describes the invention as relating to a method of intravenously administering a bisphosphonate, specifically zoledronic acid, to a patient in need of bisphosphonate treatment.

12    Page 1 of the complete specification includes the following statement:

Bisphosphonates are widely used to inhibit osteoclast activity in a variety of both benign and malignant diseases that involve excessive or inappropriate bone resorption. These pyrophosphate analogues not only reduce the occurrence of skeletal related events but they also provide patients with clinical benefit and improved survival. Bisphosphonates are able to prevent bone resorption in vivo; the therapeutic efficacy of bisphosphonates has been demonstrated in the treatment of osteoporosis, osteopenia, Paget’s disease of bone, tumour-induced hypercalcemia (TIH) and, more recently, bone metastases (BM) and multiple myeloma (MM) (for review see Fleisch H 1997 Bisphosphonates clinical. In Bisphosphonates in Bone Disease. From the Laboratory to the Patient. Eds: The Parthenon Publishing Group, New York/London pp 68-163).

13    The complete specification goes on to describe zoledronic acid as a third generation bisphosphonate which, in animal models, shows high affinity to the mineralised bone matrix and inhibits osteoclastic bone resorption more effectively than earlier generation bisphosphonates at doses that do not affect bone formation and mineralisation and have no appreciable effect on renal function. The complete specification states that this results in an improved ratio of antiresorptive versus renal effects.

14    Page 2 of the complete specification contains the following statement:

It has been found that an intravenously administered 4mg dose of zoledronic acid infused over an interval of approximately 15 minutes showed 1) improved clinical practicality, 2) potentially more reproducible infusion rate when using 100 ml over 15 min vs. lower volume infused over shorter period, 3) shows comparable efficacy to the current standard treatment, Aredia® (disodium pamidronate) 90 mg dosed over a period of 2-4 hours, and 4) 4 mg/15 minutes shows improved renal safety versus 4 mg/5 minutes and higher zoledronic acid dose/15 minutes. Thus in one embodiment, the invention is directed to a method of administering 2-(imidazol-1yl)-1-hydroxyethane-1,1-diphosphonic acid (zoledronic acid, zoledronate) to a patient in need of bisphosphonate treatment comprising intravenously administering 4mg of 2-(imidazol-1yl)-1-hydroxyethane-1,1-diphosphonic acid or a pharmaceutically acceptable salt thereof over a period of 15 minutes to a patient in need of said treatment.

15     The complete specification then describes other embodiments of the invention, including a method of treatment of bone metabolism diseases, such as tumour-induced hypercalcaemia; a method of treatment of bone metastases; and a method of treatment or prevention of multiple myeloma.

16    These embodiments are reflected in claims 2 to 5 of the patent, which are in the following terms:

2.    A method of treatment of bone metabolism diseases, said method comprising intravenously administering 4 mg of 2-(imidazol-1yl)-1-hydroxyethane-1,1-diphosphonic acid [zoledronic acid] or a pharmaceutically acceptable salt thereof over a period of 15 minutes to a patient in need of said treatment.

3.    A method according to claim 2 wherein said bone metabolism disease is tumour induced hypercalcemia.

4.    A method of treatment of bone metastases, said method comprising intravenously administering 4 mg of [zoledronic acid] or a pharmaceutically acceptable salt thereof over a period of 15 minutes to a patient in need of said treatment.

5.    A method of treatment of multiple myeloma, said method comprising intravenously administering 4 mg of [zoledronic acid] or a pharmaceutically acceptable salt thereof over a period of 15 minutes to a patient in need of said treatment.

17     It is to be noted that these claims all concern the administration to a patient of zoledronic acid over a period of 15 minutes.

The 109 patent

18    The application for the 109 patent was filed on 18 June 2001. The patent claims a priority date of 20 June 2000.

19    The complete specification describes the invention as relating to bisphosphonates and, in particular, to the pharmaceutical use of bisphosphonates in the treatment of conditions of abnormally increased bone turnover, such as osteoporosis.

20    After referring to the wide use of bisphosphonates to inhibit osteoclast activity in a variety of both benign and malignant diseases in which bone resorption is increased, the complete specification goes on to describe how bisphosphonates have been proposed for use in the treatment of osteoporosis.

21    In that connection, the complete specification cites US Patent No. 4,812,304 in which a method was proposed for treating or preventing osteoporosis in humans involving the administration of a bone cell activating compound and a bone resorption inhibiting polyphosphonate according to a regime consisting of one or more cycles in which the bone cell activating compound was administered from about one day to about five days followed by the administration from about 10 to 20 days of the polyphosphonate, followed by a rest period of about 70 days to about 180 days.

22    The complete specification also cites US Patent No. 4,761,406 which proposes a method for treating osteoporosis in humans and lower animals by administering a bone resorption inhibiting polyphosphonate according to a schedule where the polyphosphonate is administered daily over a period of about one to about 90 days, followed by a rest period from about 50 days to about 120 days. The cycle is then repeated two or more times to achieve a net increase in bone mass.

23    Page 2 of the specification contains the following statement:

Surprisingly we have now found that bisphosphonates, in particular more potent nitrogen-containing bisphosphonates, can be used for prolonged inhibition of bone resorption in conditions of abnormally increased bone turnover by intermittent administration, wherein the periods between bisphosphonate administrations are longer than was previously considered appropriate to achieve satisfactory treatment. In particular and contrary to expectation we have found that satisfactory treatment results can be obtained even when the dosing intervals greatly exceed the natural bone remodelling cycle.

24     The complete specification contains the following consistory clauses:

Accordingly the present invention provides a method for the treatment of conditions of abnormally increased bone turnover in a patient in need of such treatment which comprises intermittently administering an effective amount of a bisphosphonate to the patient, wherein the period between administrations of bisphosphonate is at least about 6 months.

The invention further provides use of a bisphosphonate in the preparation of a medicament for the treatment of conditions of abnormally increased bone turnover in which the bisphosphonate is administered intermittently and in which the period between administrations of bisphosphonate is at least about 6 months.

25    The complete specification states that the conditions of abnormally increased bone turnover which may be treated in accordance with the invention include not only various forms of osteoporosis but also the treatment or prevention of bone loss associated with a number of other conditions, including joint prosthesis loosening.

26    The complete specification makes clear that the use of the terms “treatment” and “treat” in its description refer to both prophylactic or preventative treatment, as well as curative or disease modifying treatment.

27    The complete specification states that, in accordance with the present invention, the bisphosphonate dosing interval is at least about six months or less frequently (conveniently, once a year) or at any interval in between. It states that the bisphosphonates used in the present invention include zoledronic acid.

28    Example 5 in the complete specification describes a dose-ranging, safety and efficacy trial with intravenous bolus injections of zoledronate in the treatment of post-menopausal osteoporosis. The description in this example includes a report on the measurement of bone mineral density (BMD) measured in relation to patients who received zoledronate and patients who received a placebo. In that connection the complete specification states:

The BMD data indicate that zoledronic acid dose administration as infrequent as every 6 or 12 months can safely result in a statistically significant and medically relevant bone mass increase. It is believed that these data further indicate that a continued preservation of new bone beyond one year, without additional dose administration, is likely or that further bone mass increase is possible. It is also believed that re-treatment in additional cycles of every 6 month, 12 month or less frequent dose administration will lead to further BMD increase. A reduction of risk of osteoporotic fracture is expected to accompany the bone mass increases.

29    Claim 1 of the patent is as follows:

A method for the treatment of conditions of abnormally increased bone turnover in a patient in need of such treatment which comprises intermittently administering an effective amount of 1-hydroxy-2-(imidazol-1-yl)ethane-1,1-diphosphonic acid, or a pharmaceutically acceptable salt thereof, or any hydrate thereof to the patient, wherein the period between administrations is at least about 6 months.

30    Claim 2 of the patent claims use of zoledronic acid or one of its pharmaceutically acceptable salts or one of its hydrates in the preparation of a medicament for the treatment of conditions of abnormally increased bone turnover where the active ingredient is administered intermittently and in which the period of treatment between administrations is at least about six months.

31    Claim 4 of the patent – specifically relevant for present purposes – is as follows:

A method according to claim 1 or use according to claim 2, for the prophylactic treatment of osteoporosis wherein the period between administrations is about once per year or less frequent.

Principles as to the granting of interlocutory injunctions

32    The principles relating to the grant of interlocutory injunctive relief were discussed in Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257 at [52]-[74]. The Full Court identified two main inquiries to be addressed, namely whether the applicant for relief has established a prima facie case in the sense explained in Beecham Group Limited v Bristol Laboratories Pty Limited (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.

33    In this connection the expression “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: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65]. How strong that probability needs to be depends upon the nature of the rights being asserted and the practical consequences likely to flow from the order that is sought: Beecham at 622.

34    In Samsung the Full Court considered whether, in order to obtain an interlocutory injunction, the applicant must demonstrate that, if no injunction is granted, it will suffer “irreparable injury” or “irreparable harm”. The Full Court concluded that the assessment of “irreparable injury” or “irreparable harm” was best considered as part of the “basket of discretionary considerations” which should be addressed and weighed as part of the Court’s consideration of the balance of convenience and justice: see at [61]-[63]. In this context “irreparable injury” or “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 the applicant would, in all material respects, be in as good a position if it were confined to its damages remedy, as it would be if an injunction were to be granted.

35    In this connection the respondent prayed in aid the observations of Robert Walker J in Peaudouce SA v Kimberly-Clark Ltd [1996] FSR 680 at 699:

The test is whether damages are an adequate remedy, not a perfect remedy. Any assessment of damages which depends – in the words of Lord Diplock in Mallett v McMonagle [1970] AC 166, 176 – on what will be or what would have been is bound to have an element of the imponderable and any appearance of precision is likely to be illusory…

36    A question arose in the course of argument as to whether this statement is at variance with what the Full Court had held in Samsung. I doubt that it is. In any event, I am bound by the test stated by the Full Court in Samsung.

Prima facie case of Infringement

37    The respondent did not dispute the existence of its threatened conduct in relation to its oncology products and its osteoporosis product. It also accepted for the purposes of the present applications for interlocutory injunctive relief that there was a prima facie case of infringement (in the requisite sense) of each patent. In light of the evidence adduced on that question in each case, the respondent’s concession was justified and appropriate.

38    In this connection the applicants’ claims for final relief, in each case, are based, in part, on the application 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.

39    In Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (No 2) (2012) 290 ALR 1; (2012) 96 IPR 185 Keane CJ (at [49]) summarised the liability created by s 117 as follows:

Section 117 may be said to have been designed to capture those who supply a product to persons whose use of a product infringes a patent as infringers themselves. The operative provision of s 117 is s 117(1). The extent of the operation of s 117(1) is informed by the terms of s 117(2)…

40    In the same case, Bennett and Yates JJ (at [133]) said:

The prefatory condition in s 117(1) — “(i)f the use of a product by a person would infringe a patent” — requires particular attention. The “use” to which it refers is given meaning and content by s 117(2), which directs attention to the circumstances posited by each of paras (a)–(c). Each of these paragraphs is directed to a discrete inquiry that is to be undertaken to determine whether there is a “use of a product by a person” within the stated requirements. If so, it is that “use” by that “person” which gives content to the prefatory condition in s 117(1). Section 117(1) then proceeds by asking whether that use by that person would infringe the patent in suit. If so, s 117(1) is then meaningfully engaged with the consequence that the supply of the product, by one person to another, will itself be an infringement of the patent, unless the supplier is the patentee or a licensee of the patent.

41    In the present case the applicants placed reliance on s 117(2)(b) and s 117(2)(c), having regard to the product information sheets (PI) that the respondent proposes to supply with its oncology products and its osteoporosis product.

42    In relation to the PI for its oncology products, the following indications for use are stated:

•    Prevention of skeletal-related events (pathological fracture, spinal cord compression, radiation to bone or surgery to bone) in patients with advanced malignancies involving bone.

•    Treatment of tumour-induced hypercalcaemia.

43    The recommended dose in each case is 4mg of zoledronic acid given as an intravenous infusion lasting no less than 15 minutes.

44    The evidence is that bone metabolism diseases, as that term is used in claim 2 of the 283 patent, encompass malignancy related conditions such as multiple myeloma, hypercalcaemia and bone metastases.

45    Put simply, the applicants’ case in relation to the respondent’s oncology products is that neither of these products is a “staple commercial product”: Northern Territory of Australia v Collins (2008) 235 CLR 619 at [41]-[43], [57] and [145]; Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 3) (2011) 196 FCR 1 at [270]; Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd [2012] FCA 239 at [90]-[93]. By supplying each product with its corresponding PI, the respondent must have reason to believe that the products would be put to use in accordance with what is stated therein. Such use would involve a method of treatment as claimed in one or more of claims 2, 3, 4 and 5 of the 283 patent, and thereby infringe those claims correspondingly. Moreover, for the purposes of s 117(2)(c) of the Act, each PI constitutes an instruction given by the respondent for the use of the product in question. Once again, each product, so used, would infringe one or more of claims 2, 3, 4 and 5 of the 283 patent. Therefore, by dint of s 117(1) of the Act, the supply of each product by the respondent would be an infringement of the 283 patent, because the respondent is not the patentee or licensee of that patent.

46    In relation to the PI for its osteoporosis product, the following indications for use are stated:

•    Treatment of osteoporosis in postmenopausal women to reduce the incidence of hip, vertebral and non-vertebral fractures. Treatment of osteoporosis in patients over 50 years of age with a history of at least one low trauma hip fracture, to reduce the incidence of further fractures.

•    To increase bone mineral density in men with osteoporosis.

•    To increase bone mineral density in patients with osteoporosis associated with long term glucocorticoid use.

•    To prevent glucocorticoid-induced bone mineral density loss.

•    Treatment of Paget’s disease of bone.

47    The applicant contends that these indications involve the prophylactic treatment of osteoporosis. The recommended dose of the respondent’s osteoporosis product involves a single intravenous infusion of 5mg of zoledronic acid administered once a year. It can be taken that 5mg of zoledronic acid is an effective amount for the prophylactic treatment of osteoporosis because that is the amount used in the Aclasta product which has been approved by the TGA for treatment of osteoporosis. For the purposes of claim 4 of the 109 patent, 5mg of the respondent’s osteoporosis product can be taken to be “an effective amount” of zoledronic acid which is to be administered about once per year or less frequently.

48    In the case of the 109 patent, s 117 is attracted in the same way as it is in the case of the 283 patent. The supply of the respondent’s osteoporosis product with its PI gives the respondent reason to believe that the product will be administered to patients to treat the indications in the manner set out therein: s 117(2)(b). The administration of the respondent’s osteoporosis product to patients will be in accordance with instructions given by the respondent by means of the PI: s 117(2)(c). Thus, once again, by dint of s 117(1) of the Act, the supply by the respondent of its osteoporosis product would be an infringement of the 109 patent because the respondent is not the patentee or licensee of that patent.

49    The respondent did not contest the applicants’ contentions concerning the manner in which s 117(1) of the Act was engaged in respect of each of the patents in the present case. In the absence of any contest, the applicants’ contentions should be accepted for the purpose of determining its claimed entitlement to interlocutory injunctive relief.

50    It is in these circumstances that the applicants submitted that they have established a strong prima facie case that the supply by the respondent of its oncology products will infringe claims 2, 3, 4 and 5 of the 283 patent, and that the supply by the respondent of its osteoporosis product will infringe claim 4 of the 109 patent.

51    In a proceeding for patent infringement it is quite often the case that the validity of the claims in suit is challenged. The granting of a patent does not guarantee its validity: s 20 of the Act. However, it is not for those claiming infringement to prove the validity of the claims they allege to have been infringed. Registration of the patent is, of itself, prima facie evidence of validity. It is for those asserting invalidity to establish it as a triable issue: AB Hassle v Pharmacia (Australia) Pty Ltd (1995) 33 IPR 63 at 69-70; Interpharma Pty Ltd v Commissioner of Patents (2008) 79 IPR 261 at [17]; Medrad Inc v Alpine Medical Pty Ltd (2009) 82 IPR 101 at [39]-[45].

52    In Interpharma Jessup J at [17] discussed the interplay between the inquiry as to the existence of a prima facie case for interlocutory injunctive relief and the alleged invalidity of the claims in respect of which infringement is alleged. His Honour observed that the answer to the inquiry will be formed, in part, by the apparent strength of the defence based on invalidity. His Honour said that it is not enough for a respondent to merely point to a prima facie case or serious question or triable issue concerning the validity of the claims in suit. In days long gone by, this may have been enough to refuse the grant of interlocutory relief unless the applicant for relief could show a strong case on validity: see, for example, the observations in Beecham at 623-624. However, that approach no longer pertains for the reasons summarised by Kenny J in Medrad at [39]-[45]. The case for the invalidity of the claims must be one of sufficient strength that it qualifies what would otherwise be a finding that the applicant has established a prima facie case in the requisite sense. As Jessup J (at [17]) observed in Interpharma:

…It is the applicant’s title to interlocutory relief which is under consideration, and the bottom-line question, as it were, is whether the applicant has a serious question, or a probability of success, not whether the respondent does in relation to some point of defence raised or foreshadowed.

53    For its part, the respondent contended that it has a complete defence to the applicants’ allegations of infringement because each of the relevant claims in the patents is invalid. It submitted that the “bottom-line question”, for the purposes of the present applications, is whether the applicants have a prima facie case of the appropriate strength in light of the evidence on the question of infringement and its counter-claim of invalidity. It submitted that the apparent strength or weakness of the applicants’ case for final relief at trial is a relevant consideration in considering the balance of convenience and justice and that where there is a prima facie case that is relatively weak, the balance would need to weigh far more heavily in favour of an applicant for relief than it would otherwise have before the Court would grant that relief.

54    Thus it can be seen that, leaving aside other considerations going to the balance of convenience, the respondent, although not contesting the existence of a prima facie case of infringement of each patent, nevertheless relies on the asserted strength of its own case on invalidity as one of the discretionary considerations affecting where the balance of convenience and justice lies.

55    I now turn to consider the matters advanced by the respondent in that regard.

The respondent’s challenge on invalidity

Overview

56    For the purposes of the present applications, the respondent confined its attack on the validity of the relevant claims to the ground identified in s 138(3)(b) of the Act as informed by s 18(1)(b). It contended that the claims were not novel and, separately, did not involve an inventive step, when compared with the prior art base as it existed before the priority date in respect of those claims.

The 283 patent

57    In relation to the 283 patent the respondent contended that claims 2, 3, 4 and 5 were not novel in light of the publication of:

(a)    Berenson et al, Proceedings of ASCO 19:209a (2000) (Berenson 2000), except for claim 5;

(b)    Sorbera LA et al, Drugs of the Future (2000) 25(3) (Sorbera 2000); and

(c)    Body JJ, Clinical Research Update, Cancer 80(8): 1699-1701 (1997) (Body 1997), except for claims 3 and 5.

58    The respondent also contended that the priority date of the claims is, in any event, the filing date of the complete specification (9 May 2001) because they are not fairly based on matter disclosed in the GB priority document and thus cannot be afforded the priority given by reg 3.12(1)(b) of the Patents Regulations 1991 (Cth) (the Regulations) (which would be 19 May 2000). It followed, on the respondent’s argument, that claims 2 and 3 of the 283 patent were also not novel because of matters stated in a Zometa product information sheet published on 26 November 2000. The product information sheet states:

Treatment of malignant hypercalcaemia (HCM).

Dosage/method of administration

Dosage in adults and elderly patients:

In malignant hypercalcaemia (albumin-corrected serum calcium level ≥ 3.0 mmol/l or 12 mg/dl), 4 mg Zometa is given in 50 ml 0.9% sodium chloride solution or 5% glucose solution in a 15-minute intravenous infusion…

59    As I have already noted, it is clear on the evidence that tumour-induced hypercalcaemia is a “bone metabolism disease”. Claim 3 certainly treats it as such by claiming dependency on claim 2. Further, there seems little doubt, at least for present purposes, that “Zometa”, as referred to in the information sheet, is zoledronic acid. Importantly, the method of administering 4mg of Zometa in a 15-minute intravenous infusion is stated. Thus, for present purposes, it is plainly arguable that the disclosure in the Zometa information sheet would anticipate claims 2 and 3 of the 283 patent. The question for present purposes is whether those claims have their asserted priority date of 19 May 2000 (thereby rendering the disclosure in the Zometa product information sheet irrelevant) or whether they have the deferred priority date of 9 May 2001 (exposing them to invalidity by reason of the prior publication of the Zometa product information sheet).

60    The concept of “fair basis” is well-understood. It is not necessary for me, for the purposes of these applications, to engage in any extended discussion of the considerations which inform the inquiry required by reg 3.12(1)(b). The relevant authorities make clear that what is required is “a real and reasonably clear disclosure” in the document on which the comparison is based, whether the document be the body of the specification (when the comparison is for s 40(3) purposes) or the document from which priority is claimed: Lockwood Security Products Pty Limited v Doric Products Pty Limited (2004) 217 CLR 274 at [69]; Synthetic Turf Development Pty Ltd v Sports Technology International Pty Ltd (2005) 67 IPR 475 at [26]. It is to be noted, however, that, for s 40(3) purposes, the comparison is expressed to be with “the matter described in the specification” whereas, for priority purposes, the comparison is expressed to be “matter disclosed in” the relevant priority document. In Leonardis v Sartas No 1 Pty Ltd (1996) 67 FCR 126 at 139 the Full Court drew attention to that distinction and observed that the absence of the definite article (in the provisions of regs 3.12(1)(b) and (c)) plainly suggests that the fair basis in question need not relate to all the matters disclosed in the priority document. There may also be significance to be attributed to the choice of the word “described” in s 40(3) and the word “disclosed” in relation to the priority provisions.

61    In CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 281 the Full Court noted Fullagar J’s emphasis in Société des Usines Chimiques Rhône-Poulenc v Commissioner of Patents (1958) 100 CLR 5 at 11 that disclosure without claim is enough. In other words, it is wrong to proceed as if testing for infringement and to seek to isolate in the relevant priority document essential features of an invention that is there disclosed and to then seek correspondence between those features and the essential features of the invention as claimed in the claim under consideration. The Full Court also said that it would not be applying the statute to ask whether the earlier document fairly described the essential features of the invention as claimed in the claim under consideration.

62    A real and reasonably clear disclosure requires no more than that the alleged invention as claimed is disclosed in a general sense in the relevant document: Lockwood at [69]; Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 95; (1988) 11 IPR 289 at 304. As was emphasised in Lockwood at [54], the statutory language points to a comparison between the claims and what is described; it does not call for any inquiry into an inventive step or inventive merit or a technical contribution to the art.

63    The respondent sought to call in aid certain observations made by Gibbs J in F Hoffman-La Roche & Co Aktiengesellschaft v Commissioner of Patents (1971) 123 CLR 529 at 540-543, particularly the following observation at 542-543, when dealing with the question of whether certain claims were fairly based on matter disclosed in an alleged priority document:

…It is crucial, in my view, that it is not suggested that the compounds the subject of proposed claims 2, 3 and 4 have been selected because they have any special utility. If a basic application disclosed a large class of compounds, all of which were claimed to be of pharmaceutical utility, and it were found that the claim was false, in that only some of the compounds were useful, or it appeared that some of the compounds had a particular and peculiar value, there would be much to be said for the view that a claim limited to those compounds selected for their utility or special value would not be fairly based on matter disclosed in the basic application, at least if the basic application did not itself provide a guide to that selection, and a fresh inventive step were necessary to enable it to be made. Here however a large class of compounds is disclosed, and clearly disclosed, in the basic application, and proposed claims 2, 3 and 4 in the complete specification are for compounds forming part of that class, but not selected because they alone are useful or because they have utility greater than that of other members of the class.

[Emphasis by the respondent]

64    These observations – which raise the prospect of inventive selection being priority-defeating – appear to sit somewhat discordantly with what has been said in later cases, particularly in Lockwood at [50] and [68]-[69]. Whilst a decision of a single justice of the High Court is deserving of close and respectful consideration, I am not bound by the observations quoted above. This is because, first, they are obiter dicta and, secondly, the decision in F Hoffman-La Roche is not binding on me as a matter of precedent in any event: Bone v Commissioner of Stamp Duties [1972] 2 NSWLR 651 at 654 and 664; Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 at 504. For the purposes of the present applications I consider myself to be bound by the statements of principle in Lockwood and will proceed accordingly.

65    The respondent contended that there is no real or reasonably clear disclosure in the GB priority document of a method that involves infusing 4mg of zoledronic acid over 15 minutes.

66    Although I have no fixed view on the matter, I am satisfied that there is a strongly arguable case that the GB priority document does in fact contain such a disclosure, for the following reasons.

67    The GB priority document identifies zoledronic acid and discloses that it has been shown in clinical tests to be a potent inhibiter of osteoclastic bone resorption leading to an effective reduction of calcium in blood levels. The GB priority document describes various aspects of the invention that is said to be disclosed. One aspect is a method of administering a therapeutically effective dose of zoledronic acid to a patient over a period less than 20 minutes. The period of “up to 15 minutes” is specifically exemplified. Another described aspect is the provision of a pharmaceutical composition said to be “adapted for the above-mentioned method”. A unit dose of 4mg of zoledronate is specifically exemplified. An example is given of a clinical trial for tumour-induced hypercalcaemia in which 4mg and 8mg equivalents of zoledronic acid (delivered as a sodium salt of that acid) were diluted with 50ml of an intravenous infusion solution and then delivered to a patient over a 5-minute period, once a day. The GB priority document discloses that this period may be extended to 15 minutes if desired. The GB priority document also discloses that the method can be used for treating and preventing bone metabolism diseases including tumour-induced hypercalcaemia.

68    I am therefore satisfied that, for the purpose of the present applications, there is a strongly arguable case that, relevantly, claims 2 and 3 of the 283 patent are entitled to claim priority from the GB priority document and that their validity is not challenged by the Zometa product information sheet.

69    Insofar as the other prior art documents are concerned, I make the following observations.

70    Berenson 2000 reports on two safety and pharmacokinetic studies conducted in cancer patients with bone metastases. One study included the administration by intravenous transfusion of 4mg of zoledronic acid over 15 minutes. There is no apparent direction in that publication to infuse 4mg of zoledronic acid over 15 minutes for any particular therapeutic outcome. Moreover, there is no evidence presently before me that the studies were conducted to test efficacy. Similarly there is no evidence presently before me that efficacy is reported in the publication, although, in the course of oral submissions, the respondent suggested that some statements might be so understood.

71    It can be accepted for present purposes that Berenson 2000 literally discloses the use of 4mg of zoledronic acid administered by intravenous transfusion over 15 minutes to patients with bone metastases. The applicants, however, emphasised the context in which and purposes for which zoledronic acid was administered, namely for determining the safety and pharmacokinetics of that administration and not its efficacy. The applicants submitted that a mere literal disclosure was not sufficient to anticipate claims 2, 3 and 4, as the respondent has contended.

72    In Bristol-Myers Squibb Company v F H Faulding & Co Limited (2000) 97 FCR 524 a similar question arose. The specific question in that case was whether claimed methods of administering taxol to a patient suffering from cancer were anticipated by a series of reports of Phase I clinical trials using that substance. These reports disclosed that, in the course of the trials, doses of taxol had been administered literally according to the claims in suit. The issue was whether disclosure of that kind deprived the claimed invention of novelty. At [61] to [66] Black CJ and Lehane J reviewed a number of authorities and (at [67]) said:

What all those authorities contemplate, in our view, is that a prior publication, if it is to destroy novelty, must give a direction or make a recommendation or suggestion which will result, if the skilled reader follows it, in the claimed invention. A direction, recommendation or suggestion may often, of course, be implicit in what is described and commonly the only question may be whether the publication describes with sufficient clarity the claimed invention or, in the case of a combination, each integer of it. But in this case medical practitioners hardly needed to be told that it was possible to infuse a particular dose of taxol over three hours, or how to do it. Nor, equally obviously, is that the point of the claims. The claims of the earlier of the petty patents are for a method for administration of taxol to a patient suffering from cancer; the claims of the later one are for a method of treating cancer. In each case the method involves a particular regimen for the infusion of taxol. The context was that great difficulties had been encountered in using taxol, despite its known anti-carcinogenic properties, in the treatment of cancer, because of the drug's side effects. Each of the trials reported in the articles referred to was an investigation directed towards finding a solution of the difficulties: directed, particularly, to ascertaining safe dosage levels. But, though methods falling within the claims of the patents were used in each trial, none of the reports can be said to teach (a word which in this context encompasses direct, recommend and suggest) that which the petty patents claim.

73    At [68] their Honours concluded:

… The question is still, what does the prior publication teach? Each of the reports taught, no doubt, some useful things relating to the administration of taxol. But none of them taught the method of the claims.

74    The applicants submitted that the same conclusion is warranted in the present case.

75    The applicants also advanced the proposition in oral submissions that the validity of the claims of the 283 patent might not be affected by Berenson 2000 because of the operation of s 24(1) of the Act and regs 2.2 and 2.3 of the Regulations. In particular the applicants referred to the possibility that Berenson 2000 was a publication by at least some of the inventors that was read before a learned society or published by such a society with their consent. I place no weight on that submission. I do not consider that, in its present state, the evidence permits me to draw any conclusion, provisional or otherwise, about whether the applicants have the benefit of those provisions.

76    Sorbera 2000 reports on clinical trials using a range of doses of zoledronic acid from 0.024mg to 8mg, infused over various periods, for the treatment of various bone metabolism diseases. The results of these trials are reported in various boxes which disclose the methods of treatment given. The document discloses that zoledronic acid was administered only as a 5-minute infusion or as a 30-minute infusion. Box 6 reports on a Phase 1 trial of zoledronic acid in patients with osteolytic bone metastases. Various doses were given intravenously, ranging from 0.1mg to 8.0mg. Zoledronic acid was reported as safe and effective in these patients. Importantly the subtext to Box 6 states that the zoledronic acid was administered as a “5-30 min infusion once monthly for 3 months”. When dealing with that trial, the publication states:

A phase I trial in 59 patients with osteolytic bone metastases (e.g., multiple myeloma, breast cancer) showed that zoledronate may be safely administered as short monthly i.v. infusions (0.1, 0.2, 0.4, 0.8, 1.5, 2, 4 and 8 mg for 3 months). Thirty-minute infusions of the low doses (0.1-0.2 mg) were well tolerated although higher doses were well tolerated when given as 5-min infusions…

77    The respondent relied on the evidence of Dr Hosking that the subtext to Box 6 revealed a time period of 5 to 30 minutes. However, the above quoted passage clearly indicates that only 5-minute and 30-minute infusions were given and that 4mg of zoledronic acid was given as a 5-minute infusion. It is not of course necessary for me to resolve any debate on the evidence. It is sufficient for me to note that there is, to say the least, a real and substantial doubt that this publication discloses a method of treatment in which 4mg of zoledronic acid was administered intravenously over a period of 15 minutes or at least discloses that method with sufficient clarity and precision so as to be novelty-destroying.

78    Body 1997 reports on two Phase I clinical trials using zoledronic acid. The first involved dosages in the range of 1.2 and 2.4mg for an average 60kg individual. The publication discloses that this dosage was administered as a single 20-minute infusion. The second clinical trial was with patients with lytic bone metastases. The abstract states that zoledronic acid was given as monthly short infusions (5-30 minutes) at doses between 0.1-8.0mg. However, when this trial is discussed in more detail in the publication, the following is stated:

An open-label dose-ranging trial of rapid (5-minute) intravenous infusions of zoledronate then was conducted in normocalcemic patients with osteolytic bone metastases (ref. 4 and Novartis, personal communication). Evaluated doses ranged from 0.1-8 mg (0.1, 0.2, 0.4, 0.8, 1.5, 2, 4 and 8 mg) and the infusions were repeated 3 times at 4-week intervals. The study included 58 patients, 6-10 per dose level, mainly with multiple myeloma (n = 36) or breast carcinoma (n = 19)…

79    The respondent once again called in aid evidence given by Dr Hosking that this publication discloses that zoledronic acid was given over 5 to 30 minutes at monthly intervals. However, the more detailed description quoted above plainly indicates that the period of infusion was, specifically, 5 minutes. The applicants’ witness, Dr Murray, saw the document as only disclosing a 5-minute infusion in relation to this trial. There is, therefore, a real and substantial doubt that this publication discloses a method of treatment in which 4mg of zoledronic acid was administered intravenously over a 15-minute period or at least discloses that method with sufficient clarity and precision so as to be novelty-destroying.

80    On the present state of the evidence I am not persuaded that any of the three publications necessarily anticipates the relevant claims of the 283 patent. I have referred to some of the matters of substance which would militate against a finding that one or more of them does anticipate one or more of the relevant claims. I accept that, at a final hearing, the debate on these matters may well be subjected to greater scrutiny by the parties. However, at the present time, I am not persuaded that, on novelty grounds, the prima facie case of infringement of the 283 patent established by the applicants is a weak one, as the respondent has contended.

81    The respondent’s challenge to the validity of the claims on the basis that they do not involve an inventive step has two aspects. First, the respondent contended that the claims do not involve an inventive step when seen against the backdrop of the common general knowledge of the person skilled in the art. Secondly, the respondent contended that the claims do not involve an inventive step when seen against the backdrop of the common general knowledge combined with Berenson 2000, Sorbera 2000 and Body 1997, considered separately: see s 7(2) and (3) of the Act.

82    The issue presented on this aspect of the respondent’s case on invalidity is whether the person skilled in the art would be directly led as a matter of course to try the claimed invention in the expectation that it might well produce a useful alternative to, or better method of treatment than, the existing methods of treatment using bisphosphonates: Aktiebolaget Hässle v Alphapharm Pty Limited (2002) 212 CLR 411 at [53].

83    The gravamen of the respondent’s case on obviousness in respect of claims 2, 3, 4 and 5 of the 283 patent was that, given what was commonly known by the person skilled in the art about the administration of bisphosphonates, and zoledronic acid in particular (especially its relative potency over other bisphosphonates which would suggest that it could be administered in lower doses over shorter periods of time than other bisphosphonates), then, if toxicity is a problem, the person skilled in the art would have been directly led as a matter of course to conduct a dosing trial which would include the administration of 4mg of zoledronic acid in an intravenous infusion over 15 minutes in the expectation that it might well provide a therapeutic result for patients in need of bisphosphonate treatment.

84    The applicants contended that the respondent’s approach proceeds upon an incorrect application of principle and, in any event, is based on propositions which are, at least, controversial.

85    As to the first of these matters, the applicants submitted that the respondent’s approach to determining obviousness advocates a “worthwhile to try” approach which was rejected in Hässle: see Hässle at [66]-[76].

86    As to the second of these matters, the applicants submitted that:

(a)    It does not follow from higher potency that shorter infusion would be appropriate because the infusion period would depend upon toxicity which was unknown for zoledronic acid, and renal side effects were known to be a difficulty with the infusion of bisphosphonates over shorter infusion times (for example, with 30 minutes for pamidronate).

(b)    The proposition that the duration of infusion and the inter-dose interval could be predicted from drug potency is negated by the data on pamidronate, ibandronate, risedronate, alendronate, clodronate and zoledronate.

(c)    The potential significance of differences in affinity of bisphosphonates for bone was not known and did not become a feature of the literature until four to five years after the priority date.

(d)    Neither an efficacious dose of a new bisphosphonate like zoledronic acid nor its adverse effect profile could be predicted. They could only be ascertained by testing.

87    For its part the respondent submitted that the applicants’ evidence relevant to this issue, and led through Dr Murray, raised the bar too high and showed that the applicants themselves were proceeding on an incorrect application of principle.

88    There are difficulties in attempting to deal, in the context of an application for interlocutory injunctive relief, with competing factual propositions of the kind advanced by the parties in the present case. Such propositions have not been tested as they would be at a hearing for final relief; nor have they been subjected to the stringency of analysis that one would expect at such a hearing. The best that one can reasonably do is to acknowledge that the present state of the evidence clearly discloses a substantial legal and factual dispute between the parties which is inconclusive.

89    For example, Dr Hosking’s evidence, on which the respondent specifically relied, rises no higher than that it was “not unexpected” that zoledronic acid administered over 15 minutes offers a safety advantage in terms of renal tolerability over shorter infusion times. This statement does not appear to say anything about therapeutic efficacy. In its present form that evidence is also retrospective in character. Dr Hosking’s evidence was also that, if faced with the problem of renal tolerability, he would expect endocrinologists to investigate longer infusion times with the expectation of increased renal safety. This evidence, on its face, says nothing specifically about what the longer infusion times would be.

90    I would add that, in light of the particular issues raised by the applicants as to why the invention as claimed is not obvious, I do not think that the respondent’s reliance on the three publications, assuming them to satisfy the requirements of s 7(3) of the Act, materially advances its position for the purposes of challenging the strength of the prima facie case established by the applicants.

91    In sum, I am not persuaded that, on obviousness grounds, the prima facie case of infringement of the 283 patent established by the applicants is a weak one, as the respondent has contended.

92    I should add that the applicants placed reliance on the fact that the 283 patent had undergone re-examination under s 97 of the Act and that the Commissioner of Patents had concluded that, first, claims 1 to 15 were fairly based on the GB priority document and that, secondly, the invention as claimed in each of those claims was both novel and inventive. The prior art considered by the Commissioner in reaching those conclusions included Sorbera 2000 and Body 1997.

93    The respondent submitted that, in undertaking a re-examination under s 97, the prior art base on which the Commissioner relies is limited by s 98(2) of the Act. In any event, the Commissioner did not consider Berenson 2000. Moreover, a re-examination is not conducted in the same way as contested proceedings in this Court.

94    I accept those submissions. Nevertheless, re-examination under the Act is conducted by an expert body and the conclusions expressed in the Commissioner’s report provide, at this level of inquiry, some measure of support for the validity of the claims presently relevant, at least in so far as the correct priority date of the claims, and the challenge to them on novelty grounds based on Sorbera 2000 and Body 1997, are concerned. Having said that, I have reached my provisional views about the respondent’s limited challenge to validity independently of the conclusions expressed by the Commissioner.

The 109 patent

95    The respondent contended that claim 4 of the 109 patent was not novel in light of the publication of PCT Patent Application No. WO 95/30421 in the name of Ciba-Geigy AG (the C-G application). This application relates to the use of certain methanebisphosphonic acid derivatives to prevent prosthesis loosening and prosthesis migration. The specification discloses that, in the orthopaedic field in general, there is a strong prejudice against using bisphosphonates. It discloses that there is increasing evidence that some bisphosphonates may inhibit bone formation and mineralisation. However it also discloses that, surprisingly, it has now been found that certain methanebisphosphonic acid derivatives are useful for the cost-effective prevention or treatment of complications in joint replacement, especially hip replacement. In particular the specification discloses that in vivo experiments in treated animals (sheep) demonstrated that the bisphosphonates according to the invention were effective in preventing prosthesis loosening. Zoledronic acid is exemplified as one of the useful bisphosphonates. It is referred to as an “especially preferred embodiment of the invention”.

96    The specification discloses that the dosage of the active ingredient may depend on various factors. Normally the dosage is such that a single dose of from about 0.002-3.40mg/kg, especially 0.01-2.40mg/kg is administered to a subject weighing approximately 75kg. The specification continues:

The dose mentioned above – either administered as a single dose (which is preferred) or in several partial doses – may be repeated, for example once daily, once weekly, once every month, once every three months, once every six months or once a year. In other words, the pharmaceutical compositions may be administered in regimens ranging from continuous daily therapy to intermittent cyclical therapy.

Preferably, the methanebisphosphonic acid derivatives are administered in doses which are in the same order of magnitude as those used in the treatment of the diseases classically treated with methanebisphosphonic acid derivatives, such as Paget’s disease, tumour-induced hypercalcaemia or osteoporosis. In other words, preferably the methanebisphosphonic acid derivatives are administered in doses which would likewise be therapeutically effective in the treatment of Paget’s disease, tumour-induced hypercalcaemia or osteoporosis, i.e. preferably they are administered in doses which would likewise effectively inhibit bone resorption.

97    The respondent contended that the treatment disclosed in the C-G application necessarily comprised a prophylactic treatment of osteoporosis. It relied on Dr Hosking’s evidence that, although the C-G application does not expressly disclose the administration of zoledronic acid for the prophylactic treatment of osteoporosis, the administration of zoledronic acid for the prevention and treatment of prosthesis loosening would also prevent bone loss in those at risk of osteoporosis.

98    On the other hand, the applicants contended that the C-G application does not only not expressly disclose the method as one that can be used for osteoporosis, it does not direct, recommend or suggest that the method should be used for anything but prosthesis loosening or migration. In that connection the applicants tendered the following evidence from Professor Reid:

In paragraph 15.4, and subsequent paragraphs, Dr Hosking discusses a previous patent which describes the use of bisphosphonates, including zoledronate, in the treatment of prosthesis loosening. This patent envisages the administration of a bisphosphonate immediately after implantation of the prosthesis. In this situation, bone turnover will be focally increased at the site of the implant, and will lead to the selective uptake of bisphosphonate at this site. Therefore, a much more prolonged duration of activity could be expected, compared with conditions in which bone turnover is diffusely increased (such as osteoporosis or tumour-induced hypercalcaemia) which will result in a more diffuse uptake of bisphosphonate, and therefore a less prolonged duration of effect. Because of these fundamental biological differences between a joint implant and a diffuse skeletal condition such as osteoporosis, a practitioner would not expect that such intermittent administration would also be effective in osteoporosis or tumour-induced bone disease. The 109 Patent does not suggest that it would. It confines any suggested use to the treatment of prosthesis loosening.

99    Once again, on the present state of the evidence, I am not persuaded that the C-G application necessarily anticipates claim 4 of the 109 patent. In my view there is much to commend the position advanced by the applicants that the C-G application simply does not direct, recommend or suggest that the disclosed method be used for the prophylactic treatment of osteoporosis. In this connection, I do not read Dr Hosking’s evidence as rising any higher than his opinion that the disclosed method would also prevent bone loss in those at risk of osteoporosis. I do not read his evidence as stating that the C-G application directs, recommends or suggests implicitly that the disclosed method be so used. Therefore, I am not persuaded that, on novelty grounds, the prima facie case of infringement of the 109 patent established by the applicants is a weak one, as the respondent has contended.

100    The respondent’s case on obviousness in respect of claim 4 of the 109 patent was advanced along similar lines as the case advanced on obviousness in respect of the 283 patent.

101    In substance its case, expressed principally through the evidence of Dr Diamond, was that zoledronic acid was known to be useful in the treatment of osteoporosis. It was also known to be more potent than other known bisphosphonates. Low doses of zoledronic acid were known to be effective or it would be expected that lower doses than the other known bisphosphonates would be required for treatment. Dr Diamond said that dose finding and scheduling studies are part of the clinical trial process. He said that he would be confident that the clinical trial process could determine the dosages and administration schedule that would give the “best efficacy” for zoledronic acid in respect of the prevention of osteoporosis, whilst maintaining patient safety. In this connection he said that, in respect of the dosing and scheduling of bisphosphonates, typically (a) the lowest dose necessary to achieve a therapeutic result is preferred; (b) shorter periods of administration are preferred; (c) longer durations between administration are preferred; and (d) a reproducible and precise flow rate for the administration of the drug is preferred.

102    The respondent contended that clinicians as at May 2000 would have, in light of the common general knowledge, intermittently administered zoledronic acid for the treatment of bone metabolism diseases where the period between administrations was anywhere up to two years, in the expectation that it would work for some patients.

103    The applicants contended that the efficacy of treatment of osteoporosis with long administration intervals using zoledronic acid was surprising. In this connection it called in aid the evidence given by the respondent’s witness Dr Hosking who said that the appropriate dose and frequency of administration of this bisphosphonate for the treatment of osteoporosis was something that was being actively investigated before May 2000. In his affidavit Dr Hosking quoted Part 3.10 of Fleisch, Bisphosphonates in Bone Disease (2000), which stated:

… we do not yet know whether we have found the optimal regimen for the various compounds available. This is especially the case in treatment of osteoporosis. How can the intravenous versus the oral therapy be compared? Is there an advantage to the use of an intermittent therapy? Are the newly proposed regimens of a weekly tablet, or of a 3-monthly injection, just the first step in a new evolution? Could one use longer intervals, possibly even once yearly treatment? Which are in the different cases the optimal regimens for the various bisphosphonates?

104    Dr Hosking also referred to the disclosure in the 109 patent (quoted above at [23]) to the effect that, surprisingly, it has now been found that bisphosphonates, in particular more potent nitrogen-containing bisphosphonates, can be used for prolonged inhibition of bone resorption by intermittent administration for periods longer than was previously considered appropriate to achieve satisfactory treatment. Dr Hosking said that this was consistent with his understanding of bisphosphonates prior to May 2000. The applicants relied on this evidence as showing that the invention claimed in claim 4 of the 109 patent was not obvious.

105    The applicants also contended that Professor Reid’s evidence gave a powerful indication that the claimed invention was not obvious. His evidence was that, as at 2000, bisphosphonates were thought to have a transient effect so that, although they remained in the bone, they did not remain metabolically active. He said that the prevailing thinking was that inter-dose intervals at three months were ineffective and that the data on elimination kinetics indicated that bisphosphonates should be given at least weekly to maintain a suppression of bone turnover.

106    Professor Reid gave this evidence:

…It is notable that in this detailed consideration of intermittent bisphosphonate dosing, by a group of very erudite individuals, there is no real consideration that different bisphosphonates might have substantially different durations of action that are independent of administered dose. It was not thought that dosing longer than the 3 month bone remodelling cycle would be effective…

107    Professor Reid also gave this evidence:

The viability of intermittent administration was at that time been [sic] investigated in the zoledronate phase 2 osteoporosis programme. Phase 2 studies typically assess a range of doses with the intention of identifying sub-maximal and supra-maximal doses, so that the appropriate dose can be selected for the subsequent phase 3 programme. Thus, the range of doses and dose intervals chosen for that programme indicate the boundaries within which the inventors believed sub-maximal and supra-maximal efficacy would be identified. In one sense this trial failed, in that all the non-placebo doses were comparably effective. As a senior investigator in that study, I can affirm that the expectation of the study designers was that annual dosing of zoledronate would prove to be sub-optimal, and that either a three-monthly or possibly a six-monthly dose interval would be chosen to carry into phase 3 (probably 3-monthly). This expectation is further evidenced in the protocol itself, by the fact that the extension to that study (which patients entered before the results of the core trial was known) involved the three-monthly administration of zoledronate 1 mg. As investigators, we were astonished at the success of the annual dose, and I well remember the excitement and disbelief at the meeting at which we first saw those results. As the author of the paper describing that trial, one of my principal challenges was to provide a biological explanation for the success of the annual dose – we state in the paper:

    “..how a single infusion of zoledronic acid suppresses bone turnover for so long remains to be determined. It has been thought that bisphosphonates are located exclusively on osteoclastic surfaces and that short-term exposure inhibits activity in a single generation of basic multicellular units in bone. The life span of the basic multicellular unit (about three months) then determines the duration of action of the drug.”

[Footnotes omitted]

108    Once again, there are difficulties in dealing with, at this stage, the competing factual propositions advanced by the parties. I accept, however, that Professor Reid’s untested evidence points away from a finding that the invention as claimed in claim 4 of the 109 patent does not involve an inventive step. On the current state of the evidence, I am not persuaded that, on obviousness grounds, the prima facie case of infringement of the 109 patent established by the applicants is a weak one, as the respondent has contended.

the balance of convenience and justice

109    The applicants’ case on the balance of convenience and justice is that they are more likely to suffer from a disturbance of the status quo than the respondent is from its preservation. The key points of their submission in this regard are as follows:

    The second applicant’s position in the market is a long-established one. The second applicant has sold Zometa in Australia since June 2003 and Aclasta since December 2008.

    The respondent’s products are not on the market. It does not have product registration for its osteoporosis product and one of its oncology products.

    The respondent has acted with its “eyes wide open”. It knew of the patents and the need to revoke them (because it would infringe them) before it could launch any of its oncology products or its osteoporosis product.

    Their cases for infringement are very strong and the respondent’s cases on invalidity are very weak.

    The damage to the applicants, if interlocutory injunctive relief is not granted, will be significant, unquantifiable and irreversible. In all material respects, the applicants would not be in as good a position if they were confined to a remedy in damages as they would be if interlocutory injunctive relief were to be granted.

110    The last-mentioned submission requires further elaboration. It is not in dispute that, if either of the respondent’s oncology products is listed on the PBS, the second applicant will suffer an immediate and likely irreversible 16% statutory price reduction for its Zometa product which is also likely to cause an irreversible 16% statutory price reduction for its Aclasta product. Similarly, it is not in dispute that, if the respondent’s osteoporosis product is listed on the PBS, the second applicant will suffer an immediate and likely irreversible 16% statutory price reduction for its Aclasta product which is also likely to cause an irreversible 16% statutory price reduction for its Zometa product.

111    The applicants submitted that, in these circumstances, it is likely that the respondent would offer its products at prices discounted from the then PBS list prices in order to capture market share. This discounting is likely to be aggressive, as the respondent’s own evidence acknowledged. There is also a real and not insignificant likelihood that other generic entrants would follow the respondent into the market for the supply of zoledronic acid. This would likely lead to further discounting. The second applicant would need to reduce its own prices to retain market share.

112    A further consequence of the respondent listing its oncology products or osteoporosis product on the PBS would be that zoledronic acid would be moved from formulary 1 (F1) for single brands to formulary 2 (F2) for multiple brands. This would trigger a price disclosure regime for the second applicant’s Zometa and Aclasta products and any generic zoledronic acid products that are supplied to private hospitals, retail pharmacies and infusion centres. This could well lead to a further reduction in the PBS subsidised price for the Zometa and Aclasta products, given the extent of price competition (including from other suppliers of generic products) that is likely to ensue if the respondent is permitted to enter the market with its products. In this connection, if the weighted average disclosed price of all brands of a pharmaceutical product having the same active ingredient (here, zoledronic acid) is more than 10% lower than the price at which the current level of reimbursement is set for PBS purposes, the Commonwealth will reset the reimbursement price to a new and lower level. This adjustment occurs 12 to 18 months after the first relevant generic product obtains PBS listing. One aspect of the price disclosure regime is that it does not apply to the supply to public hospitals. This is significant because 70% of the second applicant’s supply of Zometa is to public hospitals. Accordingly, it will be difficult for the applicants to ascertain the level of discounting in the public hospital segment of the market in the absence of compulsory price disclosure information.

113    The applicants submitted that, if no interlocutory injunctive relief is granted, the price consequences for the Zometa and Aclasta products are likely to be irreversible even if final injunctive relief issues against the respondent. This is because restoration of the 16% price reduction, and restoration to the F1 formulary, lies in ministerial discretion. That discretion has not been exercised favourably to date and there is no reason to think that it would be exercised favourably in the present case. In any event, the second applicant is likely to be then subject to contractual constraints, as well as commercial imperatives, that would either preclude or inhibit it from raising prices to pre-respondent-launch levels.

114    The evidence before me shows that, in dollar amounts alone, a 16% price reduction would cause a combined loss of tens of millions of dollars to the second applicant over the remaining life of each patent, which is approximately nine years. This loss assumes that current sales levels are maintained over the remaining terms. The true loss would need to take account of the impact of aggressive price-discounting and the loss of market share consequent upon new entry. A loss of revenue to the second applicant will result in a loss of royalty income for the first applicant.

115    The applicants submitted that the second applicant’s loss of revenue would diminish its capacity to support its oncology and osteoporosis businesses in Australia generally, through diminished patient support and education programs, and the funding of clinical trials.

116    The applicants also pointed to the likelihood of a loss of “brand equity” in the Zometa and Aclasta brands by forced discounting in order to try to retain market share.

117    As I have noted, the respondent’s starting point was that the applicants’ cases were weak and the balance of convenience and justice would need to weigh far more heavily in favour of the applicants than it otherwise would before the Court would grant interlocutory injunctive relief.

118    It was in that context that the respondent submitted that damages would be an adequate remedy for the applicants should, absent interlocutory injunctive relief, it be found that the applicants are entitled to final injunctive relief restraining the respondent from exploiting its oncology products or its osteoporosis product. The respondent pointed to the simple equation that any sales of zoledronic acid made by a competitor of the second applicant would have been sales of Zometa or Aclasta made by the second applicant at a known price had there been no generic competition. It submitted that, for the purposes of determining damages, the Court would have the benefit of comprehensive data collected by all market players in respect of known and observed events. In this connection it has proffered an undertaking that it will, until final determination of the proceedings, keep all necessary accounts of sales made by it in Australia of any product containing zoledronic acid.

119    It submitted that the injury sustained by the applicants would be susceptible to an assessment of damages using orthodox techniques. The respondent submitted that, in their submissions, the applicants had exaggerated the difficulty in quantifying any remediable loss and damage they might suffer. The respondent also submitted that an award of damages need not be a perfect remedy, only an adequate one.

120    Although it can be accepted that, in this scenario, data on sales would be available for the closed period from the time when the respondent’s products enter the market until the time when final injunctive relief is granted, the respondent’s submission does not fully grasp the difficulty of assessing damages, particularly in the form of future loss and damage over the somewhat lengthy remaining terms of the patents. Such future loss and damage may well be affected by the influence of presently-unknown external factors, such as new compounds or new methods of treatment affecting prices and sales levels existing at the time that damages come to be assessed. The difficulties in quantifying future loss and damage are not necessarily obviated by simply having historical sales derived from the closed period. The present case is far removed from the position in Interpharma Pty Ltd v Aventis Pharma SA [2011] FCA 32 at [15] where the remaining term of the patent in suit was approximately 18 months, compared with the nearly nine years in the present case. The respondent’s submission also fails to recognise that if the applicants are subjected to additional generic competition in the interim, it is also likely that they will be subjected to the cost, inconvenience and risk of litigation against multiple respondents to recover the loss and damage they will have suffered.

121    The respondent, quite properly, sought to contrast its own position with that of the applicants. It submitted that if interlocutory injunctive relief were to be imposed on it in circumstances where it ultimately succeeded at the hearing for final relief, it would be impossible to accurately estimate the loss and damage it would suffer. For one thing, such an inquiry would not be based on historical data. It would be necessary to erect a hypothetical market in an attempt to reflect events that would or might have occurred had a “dynamic” market been permitted.

122    I accept that, in this scenario, it would be difficult to calculate the loss and damage that would be suffered by the respondent. However, I am not persuaded that it would be necessarily more difficult to calculate the respondent’s loss and damage compared to the applicants’ loss and damage absent interlocutory injunctive relief. I do not see the respective positions of the opposing parties to be significantly different in this regard, although it must be accepted that, in the case of the applicants, historical sales data would be available.

123    The respondent also submitted that the granting of interim injunctive relief would be likely to deprive it of being the “first mover” in the supply of generic zoledronic acid. The evidence before me is that the first generic entrant into a market quickly secures a substantial market share and profit advantage over later entrants. The respondent submitted that should an interlocutory injunction be granted the benefit that would accrue to it as the first mover would likely be lost (if the applicants introduced their own generic product or another supplier preceded the respondent) or at the least diluted (if by the time the respondent came to enter the market, other suppliers of generic products arrived with it).

124    I accept that the granting of interlocutory injunctive relief may deny the advantage which currently presents itself to the respondent as the first mover in the supply of generic zoledronic acid. I also accept that the advantage can be a valuable one. There are, however, a number of things to be said about the circumstances in which the respondent seeks to obtain that advantage.

125    First, it is one to be gained in the face of the applicants’ prima facie case that the respondent’s supply would constitute an infringement under s 117 of the Act. It is therefore an advantage that is sought to be gained at the expense of the applicants’ prima facie rights.

126    Secondly, at the present time, the respondent’s apparent first mover advantage is a limited one in the sense that it has not obtained registration on the ARTG for its osteoporosis product. Its evidence is that it expects to obtain that registration sometime before 22 November 2012. If so, it would then be necessary for it to apply to have that product listed on the PBS. Provided it made application for such a listing by 1 December 2012, the first date it could obtain that listing would be 1 April 2013.

127    Similarly, the respondent has not yet obtained registration on the ARTG for one of its oncology products, namely the 4mg/100ml product. Once again, the respondent’s evidence is that it expects registration of that product to be obtained sometime before 22 November 2012. Importantly, the respondent’s evidence is that it expects this product to be a more attractive and popular one compared to the 4mg/5ml product, because it has the advantage of being a “ready-to-use” product. However, it would also need to obtain PBS listing of that product. If it applied for PBS listing by 1 December 2012, the first date it could obtain that listing would be 1 April 2013.

128    Thirdly, although the applicants have stated that the second applicant does not intend to pursue its own listing of a generic zoledronic product on the PBS, that is only because, to do so, would involve triggering the statutory 16% price reduction – the very consequence that the applicants seek to avoid. The second applicant had already taken steps to list a 4mg/100ml product but, on realising that its listing would trigger the statutory price reduction, it did not proceed with it. I do not understand the applicants to contend that the second applicant would not seek PBS listing of a generic zoledronic acid product if a competitor triggered the statutory price reduction. Thus, if it were in the second applicant’s commercial interests to do so, I have little doubt that it would respond very rapidly to quell any advantage that the respondent might seek to gain as the first mover, which may well include the tactical deployment by the second applicant of its own generic zoledronic acid product.

129    Fourthly, the applicants have stated that they are prepared to offer an undertaking to the Court to the effect that, should they be informed or become aware of any other party seeking to exploit in Australia a pharmaceutical product other than Zometa or Aclasta, which includes zoledronic acid as the active ingredient, they will forthwith take all reasonable steps to prevent such exploitation, including, if necessary, commencing proceedings in the Court to seek interlocutory injunctive relief to restrain that exploitation.

130    Although it would be in the interests of the applicant to take such steps in any event, the giving of an undertaking to do so would provide some measure of protection that would ensure that, at least, the respondent is not supplanted as a first mover.

131    The respondent also submitted that I should take into account the damage that interlocutory injunctive relief would cause to third parties. It submitted, in essence, that such relief would cause significant financial loss to hospitals, hospital pharmacies and retail pharmacies which would be deprived of the opportunity to purchase zoledronic acid products at competitive prices. The respondent also submitted that such relief would see the PBS list price for the Zometa and Aclasta products maintained at current levels and thus cause loss to the Commonwealth.

132    The simple answer to these submissions is that the applicants are entitled to assert and maintain the rights for which the Act provides. The “damage” to which the respondent refers is no more than the benefit that others might seek to obtain by depriving the applicants of the prima facie rights they have established.

133    In all the circumstances I am of the view that it is appropriate to grant interlocutory injunctive relief of the kind the applicants seek. The applicants’ cases on infringement are challenged only by the respondent’s contention that each case is weak by reason of its present challenge to the validity of the relevant claims. As I have stated, I am not persuaded that, on that basis, the applicants’ cases are weak. In weighing the balance of convenience and justice I must take into account the strength of the applicants’ cases as I perceive them to be based on the current state of the evidence, recognising that a fuller testing of all the issues on the evidence that ultimately may be adduced at a final hearing may reveal a different legal position. At the present time, however, I am satisfied that the strength of the applicants’ cases on infringement supports the granting of interlocutory injunctive relief.

134    Further, the second applicant’s position in the market with its Zometa and Aclasta products is an established one. The respondent has not entered the market for the supply of zoledronic acid products. Although it has ARTG registration for one of its products, it does not have registration for its other two products and it is not presently in a position to enter the market with those products. These considerations weigh in favour of the granting of interlocutory injunctive relief.

135    Further, assuming the applicants to be entitled to final injunctive relief, I am not satisfied that, if interlocutory injunctive relief is not granted, damages would be an adequate remedy such as to place the applicants in as good a position as if interlocutory injunctive relief had been granted. There is little doubt that, if not restrained, the respondent will seek to enter the market with products listed on the PBS with the consequence that the second applicant will face an immediate, and in all likelihood irreversible, price reduction for its Zometa and Aclasta products. There is a real and significant risk that other generic suppliers would follow suit. The second applicant would lose revenue by reason of lost volumes and likely reduced prices. Such loss is, of course, compensable by an award of damages, but the calculation of damages, although not impossible, may well be difficult and problematic, particularly in relation to the calculation of future loss over the remaining terms of the patents. Moreover, if other generic suppliers do enter the market with competitive products, the applicants will be exposed to the cost, inconvenience and risk of multiple proceedings to recover their loss and damage. These considerations weigh in favour of the granting of interlocutory injunctive relief.

136    I accept that any significant loss of revenue for the second applicant is likely to adversely affect its ability to fund other commercial activities relating to the promotion and development of its products. This in turn may also adversely affect its so-called “brand equity” in the Zometa and Aclasta brands. The extent of that adverse affect was not fully explored in submissions and the evidence is not such that the impact is readily capable of estimation. However, I accept that such an impact is likely to be real and not insignificant. I consider these matters to be relevant considerations in weighing the balance of convenience and justice. They support, in some measure, the granting of interlocutory injunctive relief.

137    I also accept that the granting of interlocutory injunctive relief will adversely affect the respondent. It will be prevented, for a limited period, possibly some 18 months, from supplying the products it wishes to supply. Should it ultimately be found that it has suffered loss and damage as a consequence, it will be compensated by recourse to the usual undertaking as to damages. I accept, in that regard, that the calculation of the respondent’s loss and damage will be difficult and problematic, for the reasons advanced by the respondent in submissions. However, I am not satisfied that those difficulties and problems would be any greater than those involved in calculating the applicants’ damages, if their entitlement is established. Thus, although the difficulties and problems in calculating the respondent’s loss and damage would weigh against the granting of interlocutory injunctive relief, the applicants’ own difficulties and problems in this regard are countervailing.

138     I also accept that the respondent would be deprived of its present first mover advantage. However, for the reasons I have expressed, I consider that advantage to be a qualified one. In my view this consideration should be given some weight. I do not think, however, that, in all the circumstances, it weighs as heavily in the balance as the respondent has contended.

139    As to the question of damage to third parties if interlocutory injunctive relief is granted, I am not persuaded that the considerations advanced in the present case should deflect the balance where it otherwise lies.

140    For these reasons I am satisfied that, overall, the balance of convenience and justice weighs in favour of the granting of interlocutory injunctive relief.

disposition

141    The parties have indicated that they wish to be heard on the form of the orders to be made and the undertakings to be given. For this reason, I will order the parties to provide to my Associate by 4.00 pm on 5 October 2012 drafts of the orders and undertakings each proposes, unless the form of relief can be agreed in the meantime. I will also grant leave to the parties to approach my Associate to have the matters relisted for further argument, as might be necessary, on that question.

Associate:

Dated:    28 September 2012