FEDERAL COURT OF AUSTRALIA

InterPharma Pty Ltd v Hospira, Inc (No 3) [2017] FCA 1536

ORDERS

PENAL NOTICE

TO: INTERPHARMA PTY LTD (ACN 099 877 899)

IF YOU (being the person bound by this order):

(A)    Refuse or neglect to do any act within the time specified in this order for the doing of the act; or

(B)    Disobey the Order by doing an act which the order requires you not to do,

You will be liable to imprisonment, sequestration of property or other punishment.

Any other person who knows of this order and does anything which helps or permits you to breach the terms of this order may be similarly punished.

UPON the Cross-claimants jointly and severally undertaking to the Court by their counsel:

(a)    to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of Order 1 below or any continuation (with or without variation) thereof; and

(b)    to pay the compensation referred to in paragraph (a), above, to the person there referred to; and

(c)    to prosecute the claim for final relief as set out in the Notice of Cross-claim dated 18 August 2017 expeditiously.

THE COURT ORDERS THAT:

1.    Until the hearing and determination of this proceeding or further order, the Cross-respondent, by itself, its directors, officers, servants, agents or howsoever otherwise, be restrained from engaging or threatening to engage in the following acts within the patent area (as that term is defined in the Patents Act 1990 (Cth)) without the licence or authority of the Cross-claimants:

(a)    making, marketing, selling, supplying or otherwise disposing of any medicament for use in intensive care unit sedation containing dexmedetomidine or a pharmaceutically acceptable salt thereof (Generic Dexmedetomidine Product);

(b)    offering to make, sell, supply or otherwise dispose of any Generic Dexmedetomidine Product;

(c)    using or importing any Generic Dexmedetomidine Product; or

(d)    authorising, inducing, procuring or joining in a common design with any other person to do any of the acts referred to in sub-paragraphs (a) to (c) above.

2.    The Cross-respondent’s interlocutory application dated 17 October 2017 be dismissed.

3.    The Cross-respondent have liberty to apply, on reasonable notice, to vary the terms of Order 1 in accordance with the email dated 29 November 2017 from Stephens Lawyers & Consultants set out in [207] of the reasons for judgment published today.

4.    If the Cross-respondent make such an application (as contemplated in Order 3), then the parties are to consult about further orders for the filing of affidavits and written submissions and such other orders as appear to them appropriate for the determination of that application and, having done so, notify the Court accordingly.

5.    The proceeding be listed for a case management hearing on 2 February 2018 at 9:30 am.

6.    The trial of the matter be fixed for 2 May 2018, commencing at 10:15 am, with an estimate of 5 days.

7.    On or before 5 January 2018, the parties each file and serve submissions on costs (limited to 2 pages) setting out the costs orders for which they contend and why, unless within that time they have filed proposed orders as to costs to which they each consent.

8.    Any orders as to costs be made on the papers and without another oral hearing.

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

REASONS FOR JUDGMENT

1    On 8 August 2017, InterPharma Pty Ltd (InterPharma) commenced a proceeding against Hospira, Inc and Orion Corporation seeking a declaration that all the claims of Australian Patent No 754484 titled “Use of dexmedetomidine for ICU sedation” (Patent) are invalid, and an order for revocation of the Patent under s 138 of the Patents Act 1990 (Cth) (Patents Act). InterPharma seeks revocation of the Patent on various grounds.

2    On 18 August 2017, Hospira, Inc and Pfizer Australia Pty Ltd (collectively, Pfizer) instituted a cross-claim, seeking to restrain InterPharma from marketing its generic dexmedetomidine hydrochloride product, as well as seeking declaratory and interlocutory injunctive relief. In the circumstances that arose at that time, Pfizer subsequently applied for an interim injunction, which was heard on 7 September 2017: see InterPharma Pty Ltd v Hospira, Inc [2017] FCA 1075. On 11 September 2017, the Court granted Pfizer interim injunctive relief until the hearing and determination of the interlocutory injunction application.

3    These reasons concern Pfizer’s application for an interlocutory injunction, and also InterPharma’s interlocutory application, filed on 17 October 2017, to set aside the interim injunctive orders. InterPharma submitted that this latter application was “principally relevant to the status quo existing prior to the interlocutory injunction hearing”. Both applications were heard on the same day.

4    By its application, having offered the usual undertaking as to damages, Pfizer seeks in effect to continue the injunction pending the hearing and determination of the proceedings or further order. It may be accepted that the burden rests on Pfizer to show that the interlocutory injunctive relief should be granted until trial: Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730 at 731 and Clough v Oil & Natural Gas Corporation Ltd [No 3] [2007] FCA 2082 at [15].

5    In support of its application for an interlocutory injunction, Pfizer relies on the affidavits filed by it in support of its application for an interim injunction. Since the determination of its interim injunction application on 11 September 2017, however, Pfizer has filed the following further affidavits, upon which it now also relies: affidavits of Jonathan Leigh Kelp sworn on 27 September 2017 and 27 October 2017; the third and fourth affidavits of Nicholas Peter Goodwin affirmed on 28 September 2017 and 13 November 2017; an affidavit of Rinaldo Bellomo affirmed on 27 October 2017; a second affidavit of Stephen John Munro affirmed on 10 November 2017; an affidavit of Owain Rhys Stone sworn on 13 November 2017 (including his report marked annexure ORS-1); and a second affidavit of Shyama Usha Jayaswal affirmed on 22 November 2017.

6    In support of its interlocutory application of 17 October 2017, InterPharma relied on an affidavit of Julian Ronald Stephens sworn that day.

7    In response to Pfizer’s interlocutory injunction application, InterPharma relied on the affidavits filed in response to Pfizer’s interim injunction application and, additionally, on a third affidavit of Drew Williams affirmed on 27 October 2017; affidavits of Professor Yahya Shehabi affirmed on 16 September 2017 and on 10 November 2017; an affidavit of Katarina Klaric sworn on 22 September 2017; an affidavit of Tony Samuel affirmed on 18 October 2017 (including his report marked exhibit TS-1); an affidavit of David Moore affirmed on 30 October 2017 (including his report marked exhibit DM-1); and a third affidavit of Julian Ronald Stephens sworn on 10 November 2017.

8    InterPharma also relied on the affidavit of Carolyn Stewart affirmed on 10 November 2017 as secondary evidence of the nature and contents of signed informed consent forms in respect of the Precedex® clinical trials W97-245 and W97-246 (Precedex® Trials Consent Forms). Pfizer accepted that it was open to InterPharma to do so, pursuant to rule 30.28(2) of the Federal Court Rules 2011 (Cth) (Rules). This was because, despite its searches, Pfizer had been unable to produce the Precedex® Trials Consent Forms pursuant to InterPharma’s notice to produce served on Pfizer on 27 October 2017 under rule 30.28(1) of the Rules.

9    In response to that notice to produce, Pfizer did, however, produce at the hearing a confidential Sales Forecast (Sales Forecast), said by Pfizer to be indicative of the other documents likely to be held by it that would meet the relevant description in the 27 October 2017 notice to produce. The Sales Forecast was admitted into evidence as “Confidential Exhibit InterPharma 1”.

10    For the reasons stated below, I would grant the interlocutory injunctive relief sought by Pfizer and dismiss InterPharma’s interlocutory application of 17 October 2017.

The Parties

11    Up until 16 August 2017, Hospira, Inc and Orion Corporation were the patentees of the Patent. On 17 August 2017, Orion Corporation assigned its right, title and interest in the Patent to Hospira, Inc. On the same day, Hospira, Inc purported to grant an exclusive licence under the Patent to Pfizer Australia Pty Ltd. On 20 September 2017, the Court ordered, by consent, that Orion Corporation be removed as a party to the proceeding.

12    Pharmaceutical products have been imported into, and distributed in, Australia under the brand name “Precedex®” since around 2003 by Pfizer Australia Pty Ltd, or its predecessors. The sole active ingredient of Precedex® is dexmedetomidine hydrochloride. The Precedex® products include concentrates and, since 2016, dilute or ‘ready to use’ vials.

13    InterPharma carries on business as an importer and distributor of generic pharmaceutical products for sale in Australia. InterPharma is at present the only generic pharmaceutical company with a listing for a generic dexmedetomidine product on the Australian Register of Therapeutic Goods (ARTG).

the ARTG

14    A pharmaceutical product may not be marketed, supplied, offered for sale, sold or distributed within Australia unless it is listed on the ARTG under the Therapeutic Goods Act 1989 (Cth). An ARTG listing depends on satisfying the Therapeutic Goods Administration (TGA) as to the safety, quality and efficacy of the drug. Precedex® has been listed on the ARTG since at least 2002. Precedex® is not listed on the Commonwealth Pharmaceutical Benefits Scheme.

15    Each ARTG listing must also specify the indications for which the product can be used. There are currently two specified indications for Precedex®:

(a)    “for sedation of initially intubated patients during treatment in an intensive care setting” (ICU sedation indication); and

(b)    “for sedation of non-intubated patients prior to and/or during surgical and other procedures” (procedural sedation indication).

16    The Product Information (PI) for Precedex® filed with the TGA instructs, with respect to the ICU sedation indication, that for adult patients, Precedex® “is generally initiated with a loading infusion of 1(one) microgram/kg over 10 to 20 minutes, if needed. The use of Precedex® by continuous infusion in these patients should not exceed 24 hours.” The PI further instructs that a maintenance dose of Precedex® is generally required for ICU sedation.

17    A generic product may be listed on the ARTG on the basis of established bioequivalence with an ARTG listed original product, for the same indications. On 13 July 2017, InterPharma was recorded as sponsor of an ARTG listing for a family of products branded ‘Dexmedetomidine Ever Pharma’ (Generic Products), which, like Precedex®, contain dexmedetomidine hydrochloride as their sole active ingredient. The reported indications on the ARTG for the Generic Products were based on those reported for Precedex®, and their PI is the same as for Precedex®.

Legal principles on an application for interlocutory relief

18    In Samsung Electronics Company Ltd v Apple Inc [2011] FCAFC 156; 217 FCR 238 (Samsung) at [44], [48]-[49], Dowsett, Foster and Yates JJ said:

This Court’s power to grant injunctive relief in patent infringement cases is conferred by s 122 of the Patents Act 1990 (Cth). The power to grant interlocutory relief is conferred by s 23 of the Federal Court of Australia Act 1976 (Cth). Although both provisions confer power in very general terms, the power to grant interlocutory relief is limited by the purpose for which it is conferred.

...

Section 122(1) of the Patents Act empowers the Court to restrain an infringement of an Australian registered patent, “subject to such terms, if any, as the court thinks fit”. At [31] in Cardile [v LED Builders Pty Ltd [1999] HCA 18; 198 CLR 380], the plurality also said that regard must be had to the existence of a legal or equitable right which the injunction protects against invasion or threatened invasion. Their Honours then cited with approval the observation made by Ashburner in his book: The Principles of Equity (2nd ed, 1933) at p 335 that:

The power of the court to grant an injunction is limited by the nature of the act of which it is sought to restrain.

... In our view, the task ... was not simply to grant or refuse an injunction. The task was to protect the Court’s process from frustration, as best as could be done in the circumstances, following the guidelines laid down by the High Court in the cases ... An “all or nothing” outcome was unlikely to produce that result.

19    In Australian Broadcasting Corporation v O’Neill [2006] HCA 46; 227 CLR 57 (O’Neill), Gummow and Hayne JJ stated at [65]:

The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd [(1968) 118 CLR 618]. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued [(1968) 118 CLR 618 at 622-623]:

The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.

By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument [(1968) 118 CLR 618 at 620]. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal [(1968) 118 CLR 618 at 622]:

How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.

20    Briefly stated, before granting an interlocutory injunction, the Court must be satisfied that Pfizer has shown that:

(a)    there is a prima facie case such that, if the evidence remains the same, there is a probability that Pfizer will succeed at trial; and

(b)    the balance of convenience favours the grant of an interlocutory injunction.

See O’Neill at [19] (Gleeson CJ and Crennan J), [65]-[72] (Gummow and Hayne JJ); and Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59; 311 ALR 632; 106 IPR 218 (Warner-Lambert v Apotex) at [68]-[69] (Allsop CJ, Jagot and Nicholas JJ). These issues are related.

21    As Jessup J observed in Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1498; 79 IPR 261 (Interpharma v Commissioner of Patents) at [17], “[a]nother layer of complication is added to the deliberative exercise in cases in which the respondent (that is, the non-moving party) goes further than a denial of the applicant’s case for relief, and pleads a positive point of defence”, as in this case, where InterPharma asserts that the Patent is invalid. At some point in the relevant two-stage enquiry (see [20] above), the Court must make some assessment of the strength of the case on validity. In a patent case, it has been said that the fact of registration is prima facie evidence of validity: see, for example, Interpharma v Commissioner of Patents at [17]; Novartis AG v Hospira Pty Ltd [2012] FCA 1055; 98 IPR 185 (Novartis v Hospira) at [51].  It is, in any event, for InterPharma, as the respondent to the interlocutory injunction application, to show that want of validity is a triable question: AB Hassle v Pharmacia (Australia) Pty Ltd (1995) 33 IPR 63 at 69; Interpharma v Commissioner of Patents at [17]; Medrad Inc v Alpine Medical Pty Ltd [2009] FCA 949; 82 IPR 101 (Medrad) at [39]-[45]; and Novartis v Hospira at [51].

22    Even if InterPharma establishes that validity is a triable issue, it does not follow that interlocutory injunctive relief will always be refused. As Yates J explained in Novartis v Hospira at [52]:

In Interpharma [v Commissioner of Patents] 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 [Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618] 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 [v Commissioner of Patents]:

…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.

23    For its part, InterPharma has contended that it has a complete defence to Pfizer’s allegations of infringement because each of the relevant claims of the Patent is invalid. In substance, for the purposes of Pfizer’s present application, InterPharma emphasised that the apparent weakness of Pfizer’s case for final relief at trial is a relevant consideration in considering the balance of convenience and justice of the case, and that since Pfizer’s prima facie case was relatively weak, before the Court would grant the relief Pfizer sought, the balance would need to weigh far more heavily in favour of Pfizer than it would otherwise have. In this regard, InterPharma relied on the observations of the Full Court of this Court in Warner-Lambert v Apotex at [70] that:

Whether an applicant for an interlocutory injunction has made out a prima facie case and whether the balance of convenience favours the grant of such relief are related questions. It will often be necessary to give close attention to the strength of a party’s case when assessing the risk of doing an injustice to either party by the granting or withholding of interlocutory relief especially if the outcome of the interlocutory application is likely to have the practical effect of determining the substance of the matter in issue or if other remedies, including an award of damages, or an award of compensation pursuant to the usual undertaking, are likely to be inadequate.

24    Thus it can be seen that, leaving aside other considerations going to the balance of convenience, InterPharma, although not strongly contesting the existence of a prima facie case of infringement of the Patent, nonetheless relied on the asserted strength of its own case on invalidity as one of the discretionary considerations affecting where the balance of convenience and justice of the case lies.

25    Considerations affecting the balance of convenience and the justice of the case will depend on the circumstances of the particular case. They will include the likely harm to the applicant for the interlocutory injunction if relief is refused weighed against the harm that an enjoined party (or third parties) might likely suffer if the relief is granted: Samsung at [59].

26    There is also the question whether damages will be an adequate remedy for any such harm. On occasion, the adequacy of damages question has been treated as separate to that concerning the balance of convenience. This is not the preferred analysis in this Court. In Samsung at [63], Dowsett, Foster and Yates JJ held that:

The interaction between the Court’s assessment of the likely harm to the plaintiff, if no injunction is granted, and its assessment of the adequacy of damages as a remedy, will always be an important factor in the Court’s determination of where the balance of convenience and justice lies. To elevate these matters into a separate and antecedent inquiry as part of a requirement in every case that the plaintiff establish “irreparable injury” is, in our judgment, to adopt too rigid an approach. These matters are best left to be considered as part of the Court’s assessment of the balance of convenience and justice even though they will inevitably fall to be considered in most cases and will almost always be important considerations to be taken into account.

27    In Generic Health Pty Ltd v Otsuka Pharmaceuticals Co Ltd [2013] FCAFC 17; 296 ALR 50; 100 IPR 240 at [28] (Generic Health v Otsuka Pharmaceuticals), Emmett J said that “whether damages will be an adequate remedy for the alleged infringement of an applicant’s rights involves an assessment by the court as to whether, absent an injunction, the applicant would, in material respects, be in as good a position as if confined to a remedy in damages”. Greenwood J approved the same approach, at [241]-[244]. As we will see, Pfizer contended that, if InterPharma were to enter the market with its Generic Products, the evidence was to the effect that there would be uncertainty in the quantification of damages suffered by Pfizer and that damages would not an adequate remedy. InterPharma contended, however, that, if it were excluded from the market until the final determination of the proceedings, damages assessable under Pfizer’s undertaking would be even more difficult to assess (assuming that it were ultimately to succeed on its case of invalidity). These submissions are explored in more detail below.

28    Pfizer also submitted that a factor favouring the grant of an injunction in this case was that InterPharma had proceeded with its “eyes wide open” to the existence of the Patent and the fact that its proposed conduct would infringe, or that there was a significant risk that it would infringe the Patent. In this connection, Pfizer relied on the decision of the Full Court of this Court in Samsung at [50], [191]-196] and on Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2009] FCA 595; 81 IPR 339 at [61]-[62] (Sigma Pharmaceuticals (Australia) v Wyeth). Citing Smith & Nephew Pty Ltd v Wake Forest University Health Sciences [2009] FCAFC 142; 82 IPR 467 at [51]-[52] (Smith & Nephew v Wake Forest University Health Sciences), InterPharma accepted that the fact that a new entrant to the market is “prepared to take the risk of being restrained with its eyes wide open” was a factor to be considered, but emphasised that there was no obligation on the new market entrant to “clear the way” by seeking patent revocation.

29    It may be accepted that a willingness to enter a market with “eyes wide open” to the fact that the new entrant’s proposed conduct will infringe an existing Patent is a factor to be considered in assessing whether the balance of convenience favours the grant of an interlocutory injunction. This is the case, unless there is no reasonable expectation in the circumstances that the alleged infringer should have stopped its allegedly infringing activity. This seems to be the position reached by the Full Court in Samsung at [191]-[196]. After referring to Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 626; Smith & Nephew v Wake Forest University Health Sciences at [51]-[52], Miller R, Burkill G, Birss C, Campbell D, Terrell on the Law of Patents (17th edn, Sweet & Maxwell Ltd, 2010) at 18–51, the Full Court said, at [196]:

Certainly, the cases suggest that knowledge of the infringed right is relevant to the exercise of the discretion to enjoin conduct. Some of the cases, like Beecham, seem to involve alleged threats to an advantage acquired by the alleged infringer with relevant knowledge. Other cases suggest a wider relevance. Some of the cases have been cited earlier in these reasons. See, for example, Martin Engineering [Company v Trison Holdings Pty Ltd (1988) 81 ALR 543; 11 IPR 611], Sigma Pharmaceuticals [(Australia) Pty Ltd v Wyeth [2009] FCA 595; 81 IPR 339], Interpharma [Pty Ltd v Commissioner of Patents (2008) 79 IPR 261] and Tidy Tea [Ltd v Unilever Australia Ltd (1995) 32 IPR 405]. Where, however, there is a finding that the alleged infringer should not reasonably have been expected to stop the relevant activity, knowledge seems to be irrelevant. In the course of argument on appeal, it was suggested that knowledge may have been relevant to Samsung’s failure to commence preparing for a final hearing at an earlier time. However we have already demonstrated that the state of Samsung’s preparation for trial was not raised for formal examination, and that there were other reasons for its refusal of an early final hearing of part of the case. Finally, in the present case, the most compelling features are the assessments of the strengths and weaknesses of the respective cases and the equality of likely detriment. Other considerations pale into insignificance beside those matters.

30    InterPharma contended that it should not have been reasonably expected to clear the way and that its failure to do so was irrelevant. Pfizer contended that InterPharma was aware well in advance of it seeking to enter the market that it would, or that there was a significant risk that it would, infringe the Patent. These competing considerations are considered in more detail below.

the patent

31    The Patent claims an earliest priority date of 1 April 1998 (the priority date) and is due to expire on 31 March 2019.

32    The application for the Patent was filed on 31 March 1999. It is not disputed that the issues of infringement and validity are therefore to be determined under the Patents Act in the form in which it stood prior to the Patents Amendment Act 2001 (Cth) and the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth).

33    As its title indicates, the Patent relates to the use of dexmedetomidine (or a pharmaceutically acceptable salt thereof) for ICU sedation. The Patent explains that:

In addition to the actual sedation of a patient in the ICU, the word sedation in the ICU context also includes the treatment of conditions that affect patient comfort, such as pain and anxiety.

34    The Patent continues:

Accordingly, the present invention relates to a method of sedating a patient while in the ICU by administering dexmedetomidine or a pharmaceutically acceptable salt thereof. Particularly, the present invention relates to a method of sedating a patient while in the ICU by administering dexmedetomidine or a pharmaceutically acceptable salt thereof, wherein dexmedetomidine is essentially the sole active agent, or the sole active agent administered for this purpose.

35    Under the heading “Summary of the Invention”, the Patent stated that it had been “unexpectedly found that dexmedetomidine or a pharmaceutically acceptable salt thereof is an ideal sedative agent to be administered to a patient in the ICU to achieve patient comfort”.

36    The independent claims of the Patent are:

Claim 1: “Use of dexmedetomidine or a pharmaceutically acceptable salt thereof in the manufacture of a medicament for use in intensive care unit sedation”;

Claim 13: “A method of sedating a patient in an intensive care unit, wherein said method comprises administering dexmedetomidine or a pharmaceutically acceptable salt thereof to a patient in need thereof”;

Claim 15: “A method of sedating an intensive care unit patient, comprising administering a pharmaceutical composition to the patient, wherein the pharmaceutical composition comprises an active agent and an inactive agent, wherein the active agent consists of dexmedetomidine or a pharmaceutically acceptable salt thereof”; and

Claim 26: “Use of dexmedetomidine or a pharmaceutically acceptable salt thereof in the intensive care unit sedation”.

37    Claim 1 is in the “Swiss-style” form or is a “Swiss type” claim. In Otsuka Pharmaceutical Co Ltd v Generic Health Pty Ltd (No 4) [2015] FCA 634; 113 IPR 191 (Otsuka Pharmaceutical v Generic Health (No 4)), Yates J explained that claims of this kind should be characterised as method or process claims (at [120]). In particular, although this type of claim is to a method of manufacture of the medicament, the novelty of the claim arises from the new therapeutic use to which the medicament is applied.

38    Claims 13, 15 and 26 are method of treatment claims.

prima facie case

Skilled addressee

39    The Patent relates to the field of intensive care medicine. The identity of the skilled addressee to whom the Patent is addressed is not in contest. Pfizer submitted, and InterPharma did not dispute, that the skilled addressee is an intensive care specialist, who was engaged in clinical practice and research in the field of intensive care medicine at the priority date.

40    For present purposes, it may be accepted that intensive care medicine (or critical care medicine) is typically conducted in an ICU and involves the assessment, stabilisation and ongoing care of patients requiring artificial advanced life support and/or advanced monitoring as a result of life threatening illnesses, conditions, injuries or complications. It may also be accepted that intensive care specialists are the specialist doctors who look after patients in an ICU and that, prior to the establishment of the Australian and New Zealand College of Intensive Care Medicine (CICM) in 2008, intensive care specialists typically had a background either as a general physician or as an anaesthetist, as well as additional specialist intensive care training.

41    Pfizer relied on the affidavit of Professor Rinaldo Bellomo affirmed on 27 October 2017. Professor Bellomo is Director of Intensive Care Research at the Austin Hospital. He is an intensive care specialist, who has been delivering intensive care medicine to patients in Australia for more than 25 years. He came to intensive care medicine from a general physician’s background. He has also been engaged in clinical research in the intensive care field throughout his career.

42    InterPharma relied on the affidavits of Professor Yahya Shehabi affirmed on 16 September 2017 and 10 November 2017. Professor Shehabi is a Director of Research, Critical Care and Perioperative Medicine at Monash Health and Professor of Medicine at both the School of Clinical Sciences, Monash University and the Clinical School of Medicine, University of New South Wales. Professor Shehabi has been a practicing specialist in intensive care and anaesthesia in Australia for more than 25 years. During this time, he has been involved in research work in the field, including studies and clinical trials in relation to sedative practices in the ICU and the use of different sedation agents.

Infringement

43    As stated above, InterPharma’s Generic Products have received approval from the TGA and were entered in the ARTG on 13 July 2017. The PI for these Generic Products is the same as that for Pfizer’s Precedex®.

44    As InterPharma states in written submissions filed before the hearing, Pfizer apparently confined its infringement evidence to claims 1, 13, 15 and 26. In her first affidavit Ms Jayaswal affirmed that in her opinion:

(a)    importing or offering to sell the Generic Products (which are manufactured using dexmedetomidine as a hydrochloride salt, and have regulatory approval for the ICU sedation indication) will fall within the scope of claim 1 of the Patent; and

(b)    use of the Generic Products for the ICU sedation indication will fall within the scope of claims 13, 15 and 26 of the Patent and thus the supply of the Generic Products for that use will infringe those claims of the Patent pursuant to s 117 of the Patents Act.

45    Subject to the validity issues, for the purposes of the interlocutory proceeding, InterPharma conceded that there is a strong prima facie case that importation and sale of the Generic Products for the ICU sedation indication falls directly within claim 1 and indirectly, by reason of s 117 of the Patents Act, within claims 13 and 26. As InterPharma observed, claims 1, 13 and 26 are closely related, claiming respectively:

(a)    a method of using dexmedetomidine in the manufacture of a medicament for use for ICU sedation (claim 1);

(b)    a method of sedating a patient in an ICU comprising administering dexmedetomidine to a patient in need thereof (claim 13); and

(c)    the use of dexmedetomidine in the ICU sedation (claim 26).

46    In written submissions filed before the hearing, Pfizer also contended that InterPharma had “in effect” admitted infringement of claims 2, 14 and 27 of the Patent. Pfizer challenged InterPharma’s denial of infringement pursuant to s 117(2)(c) as “wholly without merit” and described as “unpersuasive” InterPharma’s denial of the direct infringement of claims 3 to 12 and indirect infringement of claims 16 to 25 and 28 to 39. Having regard to InterPharma’s concession, for the purpose of deciding this interlocutory injunction application, it is unnecessary to consider the parties’ competing positions with respect to these claims.

47    Noting that claim 15 was similar to claim 13 except that the claimed method comprises administering a pharmaceutical composition which comprises an active and an inactive agent, wherein the active agent consists of dexmedetomidine, InterPharma denied that the importation and sale of the Generic Products fell indirectly within claim 15. InterPharma submitted that the opinions expressed by Ms Jayaswal fell well short of establishing that InterPharma has reason to believe (as this expression is understood in s 117(2)(b)) that its Generic Products supplied for the ICU sedation indication would be used as part of the claimed method. For the purpose of determining Pfizer’s current application, it is, however, unnecessary to consider this submission further.

48    Having regard to the current evidence and InterPharma’s concession, it may readily be accepted that Pfizer has established that, as against InterPharma, it has a prima facie case of threatened infringement of the Patent, such that, if the evidence remains the same, there is a probability that Pfizer will succeed on its cross-claim at trial (at least so far as claims 1, 13 and 26 of the Patent are concerned), subject, of course, to InterPharma’s invalidity defences.

Case for invalidity

49    InterPharma submitted that the evidence now before the Court establishes a strong prima facie case of invalidity of claims 1, 13, 15 and 26 (the Relevant Claims). Notwithstanding [47] above, claim 15 is therefore within the following analysis. For the purposes of the interlocutory proceeding, InterPharma relies on the following grounds of invalidity:

(a)    that the invention as claimed is not an “invention” within the meaning of s 18(1)(a) of the Patents Act or is not a manner of manufacture within the meaning of s 6 of the Statute of Monopolies (manner of manufacture ground);

(b)    that the claimed invention is not a patentable invention within the meaning of s 18(1)(b) of the Patents Act because when compared with the prior art base as it existed before the priority date of the claim it is not novel (novelty ground);

(c)    that the claimed invention is not a patentable invention within the meaning of s 18(1)(b) of the Patents Act because when compared with the prior art base as it existed before the priority date it does not involve an inventive step (inventive step ground); and

(d)    that the claimed invention does not comply with s 40(3) of the Patents Act in that it is not fairly based on the matter described in the specification of the Patent, and in particular the specification does not provide a real and reasonably clear disclosure of the invention as claimed, or alternatively the invention as claimed travels beyond the invention disclosed in the specification (fair basis ground).

Manner of manufacture ground

50    Section 18(1)(a) of the Patents Act requires that a “patentable invention”, so far as claimed in any claim, must be a “manner of manufacture” within s 6 of the Statute of Monopolies 1623 (Imp), according to the applicable principles: Merck and Co Inc v Arrow Pharmaceuticals Ltd [2006] FCAFC 91; 154 FCR 31 (Merck) at [63]. As the Court there said, this requirement will not be met if, on the face of the specification, the subject matter lacks the necessary quality of inventiveness under the Statute of Monopolies and is not new. The Court explained (at [63]) that “[a] new use of an old substance is not an invention if its known properties make it suitable for that use — in such a case the new purpose is ‘no more than analogous to the purposes for which the utility of the substance is already known’”. However, “there will be an invention if the new use consists in taking advantage of a hitherto unknown or unsuspected property of the substance”: Merck at [63]. In this connection, there is a relevant distinction between an unknown use of a known thing, and a use that is either known or analogous to what is known: Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd [2013] HCA 50; 253 CLR 284 at [235] (Crennan and Kiefel JJ).

51    InterPharma referred to Bristol-Myers Squibb Co v Baker Norton Pharmaceuticals Inc [1999] RPC 253 to illustrate how it said these principles should be applied in the present case. At issue in that case was a claim to the use of a known substance (taxol) in a particular dosage range over a certain period, “as a means for treating cancer and simultaneously reducing neutropenia” (at [70]). The prior use of that substance in the claimed manner to treat cancer was known, but it was not known that it also reduced neutropenia. In finding that the claim lacked novelty, Jacob J held (at [59]) that the claim was “not a case of second medical use at all. The use is the same. All you have new in the patent is more information about that use.” Jacob J also said (at [59]):

One can imagine cases where [a particular compound] was used for one purpose or the other. The purposes do not necessarily overlap. That is simply not the case here. All you have is more information about the old use. In due course no doubt more information about the exact mode of action of taxol will emerge. No-one could obtain a patent for its use simply by adding ‘for’ at the end of the claim and then adding the newly discovered details of the exact mode of action.

52    Jacob J also cited with approval (at [60]) an observation of the Court of Appeal of the Hague in Bristol-Myers Squibb Company v Yew Tree Pharmaceuticals BV [2000] ENPR 26, concerning the corresponding Dutch patent. The Court of Appeal of the Hague stated (at [10.1]) that:

[I]t must be contended that there is not a single person skilled in the art/doctor in the present technical field who would think that this was a matter of a second medical indication in the sense of use of a substance for another therapeutic purpose (e.g. for treating another disease or for prevention instead of cure).

53    As InterPharma noted, in his Honour’s separate judgment (agreeing in the result) in Otsuka Pharmaceutical Co Ltd v Generic Health Pty Ltd (No 2) [2016] FCAFC 111; 120 IPR 431 at [177], Beach J agreed with these statements of Jacob J. Beach J reiterated (at [176]) that novelty is not conferred merely by: (a) providing more information about an old use; (b) explaining the scientific theory for the mechanism which underlines a use already described in the prior art; or (c) claiming a narrower use of an old product, where that narrower use fits within the broader use for the old product already described in the prior art.

54    A manner of manufacture ground is not, however, the same as a novelty ground or an inventive step ground. The manner of (new) manufacture requirement calls for an anterior, rather than subsequent, inquiry: see D’Arcy v Myriad Genetics Inc [2015] HCA 35; 258 CLR 334 at [12], [18]-[37] (D’Arcy v Myriad Genetics). In some cases, as in this case, a manner of manufacture objection has been said to turn on an admission in the specification that there is no patentable invention.

55    The majority referred to this possibility in D’Arcy v Myriad Genetics. Citing Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2] [2007] HCA 21; 235 CLR 173 (Lockwood) at [106], the majority in D’Arcy v Myriad Genetics said (at [12]):

The definition of “invention” has been used in Commonwealth patent statutes since federation. It allows for exclusion from the class of “invention”, and therefore from the class of “patentable invention”, anything which is not, on the face of the specification, a proper subject of letters patent according to traditional principles.  That anterior exclusion may be based upon an admission, on the face of the specification, which makes clear that the invention claimed is not novel or does not involve an inventive step.

(Citations omitted)

56    In Lockwood at [106] the Court referred, with approval, to the statement of Clauson J in Chapman and Cook and Lectro Linx Ltd v Deltavis Ltd (1930) 47 RPC 163 at 173 that:

[I]f a Patentee, though entirely erroneously, does state by way of what I may call recital in his Specification that a particular form of thing is common and then by some oversight or some mistake claims a monopoly in that particular form of thing he will have, so to speak, recited himself out of Court and I venture to doubt whether he could possibly maintain any claim to a monopoly in a thing which he has recognised to be something which existed.

57    The Court in Lockwood continued (at [106]-[108]):

Chapman may be understood as a case which exemplifies a specification showing “on its face” that an invention did not involve an inventive step. The expression derives from Commissioner of Patents v Microcell Ltd [(1958) 102 CLR 232], which stands for a narrow proposition that a Commissioner of Patents, or his or her delegate, may refuse an application for patent protection where a specification “on its face” shows the invention claimed is not a manner of new manufacture. This may arise, for example, from admissions concerning novelty. The decision in Microcell has not always been properly understood; it does not involve a separate ground of invalidity or a discrete “threshold” test.

It is also possible to imagine, as Lord Hoffmann did in Biogen Inc v Medeva Plc [[1997] RPC 1] that there may be cases where the alleged subject matter is “so obviously not an invention that it is tempting to take an axe to the problem by dismissing the claim”. Such cases are likely to be rare.

Although it is not usual for an express admission to be made in a specification that a crucial integer in a combination patent is common general knowledge, when such an admission is made, a court is entitled to treat the admission as part of the evidence to be considered on the issue of obviousness. An admission in a specification that some integers of a combination are common general knowledge can be considered together with witnesses’ evidence as to whether the remaining integers are also common general knowledge. However, admissions of mixed fact and law will not necessarily be conclusive on the issue of common general knowledge. Nor will they oust the trial judge’s function of weighing all the evidence.

(Citations omitted; emphasis added)

58    InterPharma’s argument as to invalidity on the manner of manufacture ground turned on the disclosure about United States Patent No. 4,910,214 dated 20 March 1990 (US 214) in the specification of the Patent.

59    In discussing the background to the invention in the specification, the Patent “specifically incorporated by reference in their entirety” the US Patents to which it referred. This included US 214. The specification of the Patent stated a number of things about US 214, including that that “[d]exmedetomidine is described in [US 214] as an α2-receptor agonist for generation sedation/analgesia and the treatment of hypertension or anxiety”, and that US 214 discusses “parenteral, intravenous, and oral ways of administration”.

60    InterPharma’s contention was that the Relevant Claims of the Patent, all of which concerned the use of dexmedetomidine for the sedation of patients receiving intensive care, were not for a previously unknown medical use of a known compound but for a previously claimed medical use (sedation) as applied to a sub-set of hospital patients defined by the setting in which they were cared for.

61    In written submissions, InterPharma also said that its case on the manner of manufacture ground was consistent with:

(a)    the fact that the application made by Abbott Laboratories (Abbott) (NDA-21-038) to the United States Food and Drug Administration (FDA) for approval of Precedex® expressly referred to US 214; and

(b)    that an extension of the term of US 214 was obtained on the basis of delays in obtaining regulatory approval for Precedex®.

This aspect of InterPharma’s argument was neither developed in writing nor at the hearing. I put it aside here. Amongst other things, the significance of the documents to which InterPharma referred in this context was unclear.

62    Relying on Professor Bellomo’s evidence, Pfizer responded that ICU patients were a unique class of patients; that their sedation was complex; and that it could not be assumed that a drug that is appropriate for non-ICU patients will also be appropriate for ICU patients. Pfizer submitted that US 214 did not disclose the use of dexmedetomidine in ICU sedation and that the use of dexmedetomidine for ICU sedation was not a “known or analogous use” of dexmedetomidine.

US Patent 214

63    US 214 is titled “Optical isomer of an imidazole derivative medetomidine as an alpha-2-receptor agonist”. Professor Bellomo stated (and I provisionally accept) that US 214 “reports on in vitro studies and animal studies with mice using medetomidine and its two enantiomers as well as other reference compounds”. Professor Bellomo’s evidence was to the effect that US 214 discloses the separation of medetomidine into its d-enantiomer and its l-enantiomer and that the sedative/analgesic effects of medetomidine are confined to the d-enantiomer.

64    US 214 does not mention the treatment of patients in ICU. As Pfizer’s submissions indicated, Professor Bellomo’s evidence was that ICU patients were a unique class with special needs. He stated that:

[I]t cannot be assumed that a drug that is appropriate for non-ICU subjects will also be appropriate for ICU patients and that data generated from non-ICU subjects can be extrapolated to ICU patients. If a drug has been used in non-ICU subjects, additional caution, beyond that which is often exercised in other disciplines, must be exercised before that drug can be adopted in the ICU.

65    Referring to disclosures in US 214 about the anti-hypertensive and bradycardia effects of the d-enantiomer, Professor Bellomo added that, as an ICU specialist in April 1998, he would have been concerned about “these characteristics of the d-enantiomer and these findings would [have] discourage[d] [him] from using dexmedetomidine in the ICU”. He stated that, as a result of reading US 214, he would not have had any expectation that dexmedetomidine would have been useful as a sedative in the ICU.

66    In his affidavit in reply, Professor Shehabi’s evidence was that before 1998 he would not have been discouraged from considering the use of dexmedetomidine for ICU sedation merely because it has anti-hypertensive and bradycardia effects, although he observed that “[a]s with any drug, I would expect it to be subject to future testing and evaluation before being used”.

67    At the hearing, Ms Rofe QC, for InterPharma, also referred to what Ms Klaric described in her affidavit as an Abbott Laboratories information document referring to US 214 and to an exhibited document headed “Filing Meeting (2/3/99)”, as well as to what Ms Stewart described in her affidavit as a “Statistical Review and Evaluation for NDA 21-038”, discussed further below. These documents were also said to bear on the novelty ground.

68    The contention that the use of dexmedetomidine in sedating non-ICU and ICU patients is in truth the same use is an attractive one, at least at this stage of the proceeding when there has been little, if any, examination of the significance of US 214 and the parties’ arguments have proceeded at a relatively superficial level. Much will ultimately depend on the evidence at trial, particularly of Professors Bellomo and Shehabi, and possibly others, including as to how the notion of ‘use’ is to be understood in this context. It may appear at trial that Professor Shehabi’s somewhat guarded statement that he would require further testing and evaluation before using dexmedetomidine to sedate ICU patients may, on closer examination, support Professor Bellomo’s apparent position that patients in ICU should not be characterised for relevant purposes as a subset of all patients to be sedated. In this event, it may be that the evidence ultimately supports the proposition that the use of dexmedetomidine to sedate ICU patients is a relevantly different use to the use of dexmedetomidine to sedate non-ICU patients, and that InterPharma’s manner of manufacture ground fails because the use of the drug to sedate ICU patients should properly be described as a new use for a known compound, as opposed to a known or analogous use. Alternatively, it may be that it will ultimately be seen that there is little relevant difference between the opinions of Professors Bellomo and Shehabi, in that both opinions are merely expressive of the same need for further information about the suitability of dexmedetomidine for use in ICU sedation. If this were so, the present case may be considered analogous to Bristol-Myers Squibb Co v Baker Norton Pharmaceuticals Inc [1999] RPC 253, and the use of dexmedetomidine to sedate ICU and non-ICU patients would be held to be the same use (i.e., sedation). In this event, InterPharma’s case for invalidity would succeed on the manner of manufacture ground.

69    Having regard to the foregoing, I accept therefore that InterPharma has raised a clear triable issue under its manner of manufacture ground. No more can be said at this interlocutory stage.

The novelty ground

70    Section 18(1)(b)(i) of the Patents Act provides that an invention is a patentable invention if the invention, so far as claimed in any claim, when compared with the prior art base as it existed before the priority date of that claim, is novel. The basic test for anticipation for lack of novelty is the reverse infringement test. A prior publication must itself disclose all of the claimed integers: AstraZeneca AB v Apotex Pty Ltd [2014] FCAFC 99; 107 IPR 177; 226 FCR 324 (AstraZeneca FCAFC) at [350]-[352]; and ICI Chemicals & Polymers Ltd v The Lubrizol Corporation Inc [2000] FCA 1349; 106 FCR 214 at [43].

71    In Samsung at [127], a Full Court of this Court said:

It is trite law that, if the alleged paper anticipation is to deprive an invention of novelty, it must clearly disclose each and every essential feature of that invention, as claimed. This principle has its genesis in Lord Westbury’s seminal statement in Hill v Evans (1862) 4 De GF & J 288; 1A IPR 1 at 7 that “the information as to the alleged invention given by the prior publication must, for the purposes of practical utility, be equal to that given by the subsequent patent”, a statement which Lord Reid described in C Van der Lely NV v Bamfords Ltd [1963] RPC 61 at 72; (1962) 1A IPR 86 at 90 as “universally accepted”. The stringency with which the prior disclosure is to be assessed in order to be novelty-destroying has been discussed in a number of decisions in this Court … It is enough to note that a prior publication will not amount to an anticipation of an invention claimed as a combination if it discloses some, but not all, of the essential features of that combination.

72    The question is whether the alleged anticipation is within the scope of the claim: see Meyers Taylor Pty Ltd v Vicarr Industries Limited (1977) 137 CLR 228 at 235 (Aickin J). As Bennett J (with whom Middleton J agreed) stated in H Lundbeck A/S v Alphapharm Pty Ltd [2009] FCAFC 70; 177 FCR 151 (H Lundbeck) at [180], “[w]here the prior publication discloses exactly what is claimed, there is anticipation”.

73    The more difficult question is the extent to which less-than-complete disclosure of the claim can constitute an anticipation of a process or product to deprive the claimed invention of novelty. There will be anticipation where the disclosure is not complete but it is sufficient to enable the skilled addressee, in the ordinary course and without invention, to add what is missing in the prior publication to obtain the claimed invention: see H Lundbeck at [181]. Again to adopt the words of Bennett J in H Lundbeck (at [190]):

[T]he Court, armed with the evidence of the skilled addressee as to terms of art and the nature and extent of the disclosure in the prior art document, must determine whether the prior disclosure is sufficient to enable the skilled addressee to perceive, understand and, where appropriate, apply the prior disclosure necessarily to obtain the invention.

See also Apotex Pty Ltd v Sanofi-Aventis [2009] FCAFC 134; 82 IPR 416 at [104] (Bennett and Middleton JJ).

74    The ‘planting the flag’ metaphor in General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1972] RPC 457 at 485 is a well-known and at times useful one. It has been employed from time to time in this Court: see, for example, AstraZeneca FCAFC at [294]. The sufficiency of disclosure is a critical inquiry in assessing whether the prior art anticipates a claimed invention. In AstraZeneca FCAFC at [302] the Full Court remarked that “[i]t is only after the stage of assessing the sufficiency of disclosure – which involves a determination about whether a prior document has ‘planted the flag’ as opposed to having provided merely ‘a signpost, however clear, upon the road’ or, perhaps, something less – that the notion of reverse infringement comes into play as the final and resolving step of the required analysis”. As Yates J said in Vehicle Monitoring Systems Pty Limited v Sarb Management Group Pty Ltd (trading as Database Consultants Australia) (No 2) [2013] FCA 395; 101 IPR 496 at [180], “[i]n order for a publication to be anticipatory, it is not sufficient that the person skilled in the art, on reading it, would think that a feature, not disclosed by the publication itself, might be a good idea”, citing Ramset Fasteners (Australia) Pty Ltd v Advanced Building Systems Pty Ltd [1999] FCA 898; 44 IPR 481 at [23]-[25].

75    For interlocutory purposes, InterPharma’s novelty ground relied on the disclosures in:

(a)    US 214;

(b)    an article published in 1995 in the Journal of the American Society of Anesthesiologists, of which Dr Talke was the lead author, entitled “Effects of perioperative dexmedetomidine infusion in patients undergoing vascular surgery” (Talke Article); or

(c)    the Precedex® Trials Consent Forms.

US 214

76    Professor Bellomo’s evidence was that he “would not have had any expectation”, as a result of reading US 214, that dexmedetomidine would be useful as a sedative in an ICU, because US 214 did not mention treatment of ICU patients and concluded that dexmedetomidine has anti-hypertensive and bradycardia effects. His opinion was that drugs that significantly affect blood pressure and heart rate were not appropriate for ICU use because “almost all ICU patients have unstable vital functions”. He stated that he would therefore have been discouraged from using dexmedetomidine in the ICU. Whilst Professor Shehabi stated that he would not have been discouraged from considering the use of dexmedetomidine for ICU sedation merely because it has anti-hypertensive and bradycardia effects, he apparently recognised that there would be a need for further testing and evaluation before dexmedetomidine could be used for ICU sedation.

77    I am not persuaded that the evidence as it stands “establishes a strong prima facie case of anticipation of the Relevant Claims by the disclosure and claims of” US 214, as InterPharma submitted. This evidence does not sufficiently indicate that the disclosure in US 214 was “sufficient to enable the skilled addressee, in the ordinary course and without invention, to add what is missing in the prior publication to obtain the claimed invention”: see H Lundbeck at [181].

The Talke Article

78    Of the Talke Article, Professor Shehabi said:

In summary, I consider that the Talke 1995 Article described sedation of patients following cardiac surgery in ICU by continuous infusion of dexmedetomidine using a computerised pump ... and discloses all of the integers of all the non-loading dose or maintenance dose claims of Patent 484.

79    Professor Bellomo’s opinion was to the contrary. He considered that the Talke Article did not disclose all of the integers of all the non-loading dose or maintenance dose claims of the Patent.

80    Professor Bellomo disagreed with Professor Shehabi’s conclusion about the disclosures of the Talke Article in two material respects. First, he did not agree that the disclosures in the Talke Article described the sedation of patients in ICU. In his opinion, “given the type of surgery conducted on these patients, it is possible that none of them were transferred to the ICU postoperatively”. Professor Bellomo drew attention to the fact that the Talke Article did not mention the ICU or state that any patients were in the ICU. He considered that only some of the patients within the Talke Article study – those undergoing aortic surgery – may have been transferred to the ICU postoperatively. He stated that in April 1998, as today, not all aortic surgery patients would have been transferred into the ICU postoperatively. He considered that it was impossible to determine from the information in the Talke Article if any of the aortic surgery patients were transferred to the ICU.

81    Secondly, Professor Bellomo’s opinion was that the Talke Article did not show that dexmedetomidine had a sedative effect, or one that could be considered useful in an ICU setting. In this regard, Professor Bellomo stated that the Talke Article “only shows sedation in the 1 hour period prior to induction of anaesthesia”. He added:

Prior to induction of anaesthesia, none of these patients would have been in the ICU. The only information provided regarding sedation with dexmedetomidine postoperatively is that dexmedetomidine, although being infused continuously, did not sedate patients in the day after surgery.

82    Professor Bellomo’s evidence was that the sedative properties of dexmedetomidine could only be assessed in the hour prior to inducing anaesthesia, and in the post-operative period after the anaesthesia has worn off, because outside these time periods the sedative effect could not be separated from the anaesthetic. He also considered that the sedative effect observed before surgery may have been due to another drug (lorazepam) having been administered the night before surgery to patients in the Talke Article study, or the combination of lorazepam and dexmedetomidine. Further, in his opinion, since the Talke article stated that no sedative effect was observed the day after surgery, this suggested that dexmedetomidine would not be useful as a sedative in the ICU, as ICU sedatives need to provide a sedative effect for the entire time they are administered.

83    InterPharma challenged the basis for Professor Bellomo’s opinion. InterPharma argued that there was no bright line between “intensive” care in an ICU and “high” post-operative care outside an ICU. InterPharma relied on Professor Shehabi’s evidence that, in the 1990s, most aortic surgery was done by open technique, and that for this reason most aortic surgery patients would receive “intensive care” post-surgery. InterPharma also referred to the fact that the Talke Article study was conducted in the United States, where most aortic surgery patients would probably have been cared for in a post-anaesthesia recovery unit, which, in Professor Shehabi’s opinion, was a surrogate or de facto form of intensive care. InterPharma drew attention to Professor Shehabi’s view that, in Australia, aortic surgery patients would end up in substance receiving intensive care, regardless of whether the unit is called an ‘intensive care unit’. InterPharma contended that the evidence established a strong prima facie case of anticipation by the Talke Article before 1 April 1998. InterPharma referred to Professor Shehabi’s evidence that although the primary focus of the Talke Article was on the haemodynamic profile of patients infused with dexmedetomidine perioperatively, its secondary findings were as to the sedative and analgesic effects of dexmedetomidine.

84    It is, it seems to me, important to note that Professor Shehabi went on to opine that, in the light of the authors’ findings in the Talke Article as to the sedative and analgesic effects of dexmedetomidine, the “next logical step” would be to design a further study. Professor Shehabi’s evidence was, at best, that the Talke Article disclosed that the dexmedetomidine infusion “may have had a sedative effect” and that this possibility would have supported further investigative work. This falls short of anticipation of the use of dexmedetomidine for the sedation of ICU patients. Even if no bright line definition of the ICU is practicable, I am not persuaded, on the current evidence, that there is sufficient disclosure in the Talke Article of the use of dexmedetomidine in the ICU or in a surrogate for the ICU to justify InterPharma’s submission that there is a strong prima facie case that the Talke Article anticipates the Relevant Claims.

Precedex® Trials Consent Forms

85    As noted above, InterPharma’s novelty ground also relied on the Precedex® Trials Consent Forms. InterPharma contended that Precedex® Trials Consent Forms supplied to patients in 1997 disclosed all of the integers of the Relevant Claims. The Forms related to the trials having study numbers ‘W97-245’ and ‘W97-246’, which were Trial 1 and Trial 2 of Example 3 in the Patent. InterPharma submitted that it might be inferred from the study numbers that the forms related to trials commencing in 1997; and that the Forms were provided to patients participating in the trials before the trials commenced and, in any event, before the Patent’s priority date of 1 April 1998.

86    As noted previously, at the hearing Ms Rofe QC, for InterPharma, referred to what Ms Klaric described in her affidavit as the Abbott Laboratories information document referring to US 214 and to the exhibited document headed “Filing Meeting (2/3/99)”, as well as to what Ms Stewart described in her affidavit as a “Statistical Review and Evaluation for NDA 21-038”. Ms Rofe QC submitted that the relevant trials were “not merely speculative trials. They’re quite far down the scheme of things”.

87    For present purposes it may be accepted that the Precedex® Trials Consent Forms were supplied to patients before April 1998. Further, it appears from Ms Stewart’s evidence that patients receiving the Precedex® Trials Consent Forms would have been able to discuss their treatments with their doctors, family or anyone else as they saw fit: see below.

88    As already mentioned, Ms Stewart, who had had long experience with clinical trials, gave secondary evidence touching the contents of the Precedex® Trials Consent Forms, including that:

(a)    the information typically included in a patient information and consent form for a clinical trial at the relevant time included an explanation of the purposes of the research, and the procedures to be followed, including any which were experimental;

(b)    based on the information given by Abbott to the FDA concerning its dexmedetomidine trials, she would have expected the Precedex® Trials Consent Forms to have included, relevantly, statements to the effect that:

    the patient was being invited to participate in the research study because he or she will be admitted to an ICU following surgery and will require sedation for the purpose of administering mechanical ventilation; and

    in the research study, dexmedetomidine was being tested to find out if it is safe and effective in achieving sedation in patients who are admitted to ICU for the administration of mechanical ventilation following surgery;

(c)    further, on the same basis, she would have expected the Precedex® Trials Consent Forms to contain information about how dexmedetomidine would be administered, including the range of doses and that a loading and maintenance dose would be administered, and the period in which the patient would receive dexmedetomidine; and

(d)    she would have expected the Precedex® Trials Consent Forms to have been signed by the patient or their legally acceptable representative on or before admission to the hospital for the surgery.

89    InterPharma submitted that the evidence on which it relied established a strong prima facie case of anticipation of the Relevant Claims since the evidence as to the contents of the Precedex® Consent Forms was that they disclosed the administration of dexmedetomidine to patients for ICU sedation, and that patients were administered dosages in a particular range, and over a particular period.

90    Pfizer submitted, however, that it might rely on the period of grace afforded by s 24(1) of the Patents Act and regs 2.2(2)(d) and 2.3(1)(c) of the Patents Regulations 1991 (Cth) (the Regulations). As the following discussion shows, however, ultimately Mr Cordiner QC, for Pfizer, properly accepted that there was at best a triable issue as to whether or not Pfizer could rely on this period of grace.

91    At the relevant time, s 24(1) provided:

(1)    For the purpose of deciding whether an invention is novel or involves an inventive step, the person making the decision must disregard:

(a)    any information made publicly available, through any publication or use of the invention in the prescribed circumstances, by or with the consent of the nominated person or patentee, or the predecessor in title of the nominated person or patentee; and…

…

but only if a patent application for the invention is made within the prescribed period.

92    Regulations 2.2 and 2.3 of the Regulations in force at the relevant time provided:

2.2    Publication or use: prescribed circumstances and periods

...

(2)    For the purposes of paragraph 24(1)(a) of the Act (“validity not affected by certain     publication or use”), the following circumstances are prescribed:

…

(d)    the working in public of the invention within the period of 12 months before the priority date of a claim for the invention:

(i)    for the purposes of reasonable trial; and

(ii)    if, because of the nature of the invention, it is reasonably necessary for the working to be in public.

…

2.3     Prescribed periods: publication or use affecting validity

(1)    For the purposes of subsection 24(1)(a) of the Act (“validity not affected by certain publication or use”), in the case of information of the kind referred to in paragraph 24(1)(a) of the Act, the prescribed period is:

...

(c)    in the case of the circumstance mentioned in paragraph 2.2(2)(d) — 12 months from the start of the first public working of the invention referred to in that paragraph.

93    Pfizer submitted that any prior art information made publicly available by way of patient information and consent forms after 1 April 1997 (being 12 months before the priority date of the claims) would constitute a working in public of the invention for the purposes of reasonable trial under r 2.2(2)(d) of the Regulations. Pfizer claimed that it was entitled to rely on the 12 month period of grace afforded by s 24(1) and regs 2.2(2)(d) and 2.3(1)(c) because:

(a)    a US provisional patent application for the invention was made on 1 April 1998; and

(b)    the Patent Cooperation Treaty (PCT) application WO99/49854 for the Patent (treated as a complete     application under the Patents Act by virtue of s 88(1)) was filed on 31 March 1999.

94    InterPharma argued, however, that the period of grace provisions could not assist Pfizer because they required not only a protected disclosure, but also the filing of a “patent application” within the “prescribed period”, relevantly here, 12 months from the publication of the Precedex® Trials Consent Forms. This submission turned very largely on the definition of “patent application” in the Patents Act.

95    At the relevant time, the expression, “patent application” was relevantly defined in the Patents Act as “an application for a standard patent”, and a “standard patent” was relevantly defined as “letters patent for an invention granted under this Act”. It followed, so InterPharma contended, that the definition excluded a foreign application. InterPharma also referred to other aspects of the Regulations and the Patents Act consistent with this proposition. In response, Pfizer noted that a “patent application” in s 24(1) includes a provisional patent application: see NSI Dental Pty Ltd v University of Melbourne [2006] FCA 1216; 69 IPR 542 at [125]; and Mack Innovations (Australia) Pty Ltd v Rotorco Pty Ltd [2010] QSC 138; [2011] 2 Qld R 217; 239 FLR 79 at [15]. Citing Mont Adventure Equipment Pty Ltd v Phoenix Leisure Group Pty Ltd [2009] FCAFC 84; 81 IPR 505; 176 FCR 575 at [14], Pfizer argued that the expression “patent application” should also be held to include a foreign provisional patent application, since the contrary interpretation would, so it said, give rise to unreasonable results, including that a PCT application (claiming priority from a foreign provisional application) would be treated differently to an Australian application (claiming priority from a provisional application) with respect to the application of a grace period, contrary to s 89 of the Patents Act. On this basis Pfizer contended that any prior art information made publicly available by way of patient information and consent forms dated 1 April 1997 or after will be disregarded at trial for the purpose of deciding whether the claimed invention is novel and involves an inventive step.

96    As Pfizer acknowledged, however, in Apotex Pty Ltd v AstraZeneca AB (No 4) [2013] FCA 162; 100 IPR 285, Jagot J held (at [371]) that “patent application for the invention” in s 24(1) of the Patents Act did not include a foreign application. Her Honour held that that the meaning of the expression was clear and “confined by the definition”. In light of that decision, Mr Cordiner QC, for Pfizer, properly conceded that whether Pfizer could rely on the period of grace claimed by it under s 24(1) of the Patents Act and regs 2.2(2)(d) and 2.3(1)(c) of the Regulations was at best a triable issue, for determination following trial.

97    Leaving aside the period of grace issue, there remains the question whether InterPharma has, as it submitted, established a strong prima facie case of anticipation of the Relevant Claims on the basis of the disclosure in the Precedex® Trials Consent Forms. Pfizer contended that, even if some patient information and consent forms were publicly available before 1 April 1997, “InterPharma's case is put no higher than to assert, without reference to the documents themselves, that those forms would have ‘words to the effect’ of: ‘… [i]n this research study, the study drug (dexmedetomidine) is being tested to find out if it is safe and effective in achieving sedation in patients who are admitted to the ICU…’”.

98    An evident difficulty for InterPharma is that there is no direct evidence of the Precedex® Trials Consent Forms, and there are, moreover, some apparent difficulties with Ms Stewart’s evidence, including that mentioned by Mr Cordiner QC, for Pfizer. For example, at [21(b)] of her affidavit, Ms Stewart stated that “the type of information that would have typically been in Participant Information and Consent Forms used for clinical trials/studies during the period 1995 to 1997/1998” included “[a] description of any foreseeable risk or discomforts to the subject”. In her evidence at [32], as to what she would have expected the Precedex® Trials Consent Forms to have included, she omitted this aspect, without explanation. This may be important because the inclusion or omission of this information may bear on whether the Precedex® Trials Consent Forms are in fact to be held anticipatory in the relevant sense, as illustrated by Bristol-Myers Squibb Company v FH Faulding & Co Ltd [2000] FCA 316; 97 FCR 524 (Bristol-Myers) and Merck & Co Inc v Arrow Pharmaceuticals Ltd [2006] FCAFC 91; 154 FCR 31 (Merck).

99    In Bristol-Myers, Black CJ and Lehane J considered the issue of anticipation with respect to several prior art documents comprising reports of a clinical trial of taxol. Whilst the reports of the clinical trials disclosed the process of administration of taxol for the treatment of cancer, which was the subject of the patent in suit, they also identified problems of toxicity and hypersensitivity. After considering the authorities, Black CJ and Lehane J stated (at [67]-[68]), with respect to the reports of those trials:

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 … 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.

Senior counsel for the respondent acknowledged that not every prior published description of a method falling within the claims would amount to an anticipation. He accepted that a mere speculation as to whether the method subsequently claimed would work would not, of itself, destroy novelty. With somewhat greater hesitation, he accepted that a mere proposal for a trial of the method claimed might not be an anticipation. But he submitted that, in any event, the circumstance that the methods of administration described in the articles had been put into effect in the Phase I trials necessarily meant that the reports anticipated the claims. He referred, in this context, to the decision of the House of Lords in Bristol-Myers Co v Beecham Group [1974] AC 646; [1975] RPC 127. But there are several difficulties with that. Prior use, even if unwitting, of a chemical compound subsequently claimed is, as the authorities made clear, a different thing altogether: there is, of course, no question of what the use teaches. Secondly, the particular use (reported in the publications relied on here) cannot itself be relied upon as an anticipation (and it was not relied on), because it took place outside Australia; but, that being so, the fact that actual use is reported in a prior publication cannot, in principle, make any difference. 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.

Their Honours concluded, therefore, that the reports of the trials were not relevantly anticipatory of the invention as claimed.

100    Bristol-Myers can be contrasted with Merck. In Merck the Court held that the disclosure in the articles in the Lunar News was anticipatory and defeated the novelty of the invention as claimed. The only qualification in the prior art disclosure of the claimed method of treatment was that it “needs to be tested”. The Court held that the disclosure was anticipatory despite the qualification, on the basis that it was a “matter of notoriety that prolonged testing for the purpose of regulatory approval must occur between the stage of patent application and commercial marketing” (at [108]).

101    As Pfizer submitted, the prior disclosure in Merck was not in the nature of a hypothesis that needed to be tested to establish if it was at all well founded, but in the nature of a statement that the disclosed method would work but needed to be tested for the purpose of obtaining regulatory approval.  Ms Rofe QC, for InterPharma, contended in effect that the relevant trials were in the latter category and that the Precedex® Trials Consent Forms to which they related were therefore anticipatory of the Relevant Claims.

102    The differences between the parties’ present positions are clear. On the present state of the evidence, I accept that, with respect to the Precedex® Trials Consent Forms, InterPharma has raised a clear triable issue under the novelty ground. No more can usefully be said at this interlocutory stage. As the foregoing discussion indicates, there are a number of sub-issues that will arise for determination before InterPharma can succeed in showing that the Precedex® Trials Consent Forms are properly to be regarded as anticipatory of the invention as claimed in the Patent. Indeed, this question may ultimately come down to a factual judgment as to whether or not these Forms disclose no more than that there was an investigation on foot as to whether or not dexmedetomidine would work in ICU sedation following the trial.

The inventive step ground

103    Section 18(1)(b)(ii) of the Patents Act provides that an invention is a patentable invention if the invention, when compared with the prior art base, involves an inventive step. Section 7 as in force at the relevant time, relevantly provided:

(2)    For the purposes of this Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with either of the kinds of information mentioned in subsection (3), each of which must be considered separately.

(3)    For the purposes of subsection (2), the kinds of information are:

(a)    prior art information made publicly available in a single document or through doing a single act; and

(b)    prior art information made publicly available in 2 or more related documents, or through doing 2 or more related acts, if the relationship between the documents or acts is such that a person skilled in the relevant art in the patent area would treat them as a single source of that information;

being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art in the patent area.

104    The term “prior art information” was defined in Sch 1 of the Act, by reference to the “prior art base”. The term “prior art base” was also defined in Sch 1. The parties were content to treat the “patent area” as Australia.

105    For present purposes, it may be accepted that, as InterPharma submitted in its written submissions, to establish lack of inventive step, it must be shown that the invention as claimed would have been obvious to a person skilled in the art before the priority date of the Patent (1 April 1998) in light of the common general knowledge, whether considered alone or in combination with a single disclosure which the skilled person could, before the priority date, be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art: AstraZeneca AB v Apotex Pty Ltd [2015] HCA 30; 257 CLR 356 (AstraZeneca HCA) at [18] (French CJ).

106    As French CJ observed in AstraZeneca HCA at [15] with respect to obviousness:

Relevant content was given to the term “obvious” by Aickin J in Wellcome Foundation Ltd [v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 at 286], posing as the test:

“whether the hypothetical addressee faced with the same problem would have taken as a matter of routine whatever steps might have led from the prior art to the invention, whether they be the steps of the inventor or not.”

The idea of steps taken “as a matter of routine” did not, as was pointed out in [Aktiebolaget Hässle v Alphapharm Pty Limited (2002) 212 CLR 411 at [58] (AB Hässle)], include “a course of action which was complex and detailed, as well as laborious, with a good deal of trial and error, with dead ends and the retracing of steps”. The question posed in AB Hässle was whether, in relation to a particular patent, putative experiments, leading from the relevant prior art base to the invention as claimed, are part of the inventive step claimed or are “of a routine character” to be tried “as a matter of course”.  That way of approaching the matter was said to have an affinity with the question posed by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [[1970] RPC 157 at 187-188].  The question, stripped of references specific to the case before Graham J, can be framed as follows:

“Would the notional research group at the relevant date, in all the circumstances, which include a knowledge of all the relevant prior art and of the facts of the nature and success of [the existing compound], directly be led as a matter of course to try [the claimed inventive step] in the expectation that it might well produce a useful alternative to or better drug than [the existing compound]?”

That question does not import, as a criterion of obviousness, that the inventive step claimed would be perceived by the hypothetical addressee as “worth a try” or “obvious to try”. As was said in AB Hässle, the adoption of a criterion of validity expressed in those terms begs the question presented by the statute.

(Citations omitted)

107    In Minnesota Mining and Manufacturing Company v Beiersdorf (Australia) Limited [1980] HCA 9; 144 CLR 253 at 292, Aickin J said, in a well-known passage, that “[t]he notion of common general knowledge itself involves the use of that which is known or used by those in the relevant trade. It forms the background knowledge and experience which is available to all in the trade in considering the making of new products, or the making of improvements in old, and it must be treated as being used by an individual as a general body of knowledge”. In order to be properly characterised as “common general knowledge” in the relevant field, there must be evidence that information had been “assimilated” into common general knowledge: see Aktiebolaget Hässle v Alphapharm Pty Limited [2002] HCA 59; 212 CLR 411 (AB Hässle) at [57].

108    Further, as French CJ said in AstraZeneca HCA at [23]:

There was a tendency in AstraZeneca’s arguments to confer upon the “person skilled in the relevant art” more human characteristics of volitional and purposive action than are necessary for its function. The notional person is not an avatar for expert witnesses whose testimony is accepted by the court. It is a pale shadow of a real person — a tool of analysis which guides the court in determining, by reference to expert and other evidence, whether an invention as claimed does not involve an inventive step.

109    Before a prior art document can be used for the purpose of s 7(2) of the Patents Act, it must meet the requirements of s 7(3). The prior art information referred to in s 7(3) is information which is not part of the common general knowledge: AstraZeneca HCA at [68] (Kiefel J). Such information can only be taken into account if the skilled addressee could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and, regarded it as relevant to work in the art: AstraZeneca HCA at [68] (Kiefel J), citing Lockwood at [132]. “Ascertained” in this context means “discovered or found out” and “understood” means that, having discovered the information, the person would have “comprehended it” or “appreciated its meaning or import”: AstraZeneca HCA at [18] (French CJ) and [68] (Kiefel J). The idea of being relevant to work in the relevant art is directed to publicly available information “which the skilled person could be expected to have regarded as relevant to solving a particular problem, or meeting a long-felt want or need, as the patentee claims to have done”: AstraZeneca HCA at [68] (Kiefel J). In Lockwood at [153], the High Court observed:

The question of what a person skilled in the relevant art would regard as relevant, when faced with the same problem as the patentee, is to be determined on the evidence. The starting point is the subject matter of the invention to be considered together with evidence in respect of prior art, common general knowledge, the way in which the invention is an advance in the art, and any related matters. It should be mentioned that the starting point is not necessarily the inventive step as claimed, or even agreed between parties, because the evidence, particularly in respect of a combination of integers, may support a different inventive step.

110    For interlocutory purposes, InterPharma’s inventive step ground relied on:

(a)    evidence concerning the common general knowledge of the person skilled in the art before April 1998 as to the use of sedation in ICUs, and as to the compound dexmedetomidine and its sedative and analgesic properties;

(b)    the common general knowledge of the person skilled in the art before April 1998 combined with the disclosures in the Talke Article; or

(c)    the common general knowledge of the person skilled in the art before April 1998 combined with the disclosures in a paper presented at the World Congress of Anaesthesiologists in Sydney, Australia in 1996 by Dr Talke and Dr Maze on dexmedetomidine and its potential use for ICU sedation (Talke Presentation).

Common general knowledge

111    Professors Bellomo and Shehabi agreed that before April 1998 all intensive care specialists were required to be knowledgeable in, and skilled at, the administration and management of sedation for ICU patients. It may be accepted, on the basis of the evidence as it stands, that before the priority date the skilled addressee knew as a matter of common general knowledge the following matters.

(1)    The sedation of critically ill patients was important for their comfort and safety. Sedation was provided to prevent distress, anxiety and pain, and to     facilitate life support treatments such as mechanical ventilation, dialysis,     dressing and maintenance of vascular and airway catheters. More than 80% of patients in ICUs would need sedation and pain relief during an episode of ICU treatment.

(2)    For almost all patients in an ICU deep sedation was the best way to ensure the patient’s safety and comfort.

(3)    The standard and most common combination of agents for sedation of a critically ill patient who was receiving mechanical ventilation was midazolam and morphine. These two agents were commonly mixed together in the same syringe to keep patients deeply sedated for days on end.

(4)    From 1980 to the late 1990s intensive care specific equipment and techniques were introduced that led to significant changes in monitoring techniques, cardiovascular support, ventilator management and artificial kidney replacement therapies. These changes did not alter sedation practice and as such sedative agents such as midazolam, diazepam and propofol were used to sedate ICU patients.

(5)    ICU patients have different sedation and analgesia requirements from post-surgery patients who may not need intubation and may need analgesia and     sedation for a few hours only.

112    Further, on the basis of Professor Bellomo’s evidence, it would also appear that, before the priority date, the skilled addressee also knew as a matter of common general knowledge the following:

(6)    Particular caution was to be exercised when administering drugs to ICU     patients, who did not always respond to medications in the same way as healthy subjects.

(7)    The effect of a drug on an ICU patient's vital functions was particularly significant, given that almost all ICU patients had unstable vital functions.

(8)    It could not be assumed that a drug that was appropriate for non-ICU subjects would also be appropriate for ICU patients or that data generated from non-ICU subjects could be extrapolated to ICU patients.

113    Both Professors Shehabi and Bellomo shared the opinion that after the priority date, from the 2000s, there was a shift in practice from the use of deep sedation towards lighter sedation for critically ill ICU patients. Professor Bellomo’s evidence was that from about 2004/2005 he held the belief that light sedation may be preferable to deep sedation for ICU patients. Professor Shehabi’s evidence was that he held this view from his clinical work with critically ill patients in the ICU after 2000 and that he had participated in the transition to lighter sedation over the past 10 years (i.e. since 2007). For present purposes, I put to one side as apparently inconsistent with his own evidence and that of Professor Bellomo, Professor Shehabi’s subsequent statement that there was a move away from deep sedation to light sedation “[b]y about the mid-1990s”. It may be that this apparent inconsistency will be explained at trial. There was evidence, however, that many intensive care patients continue to receive deep sedation as clinical opinion is still evolving.

114    Although Professors Shehabi and Bellomo were both aware of dexmedetomidine before the priority date of 1 April 1998, it may be accepted that, as at that date, dexmedetomidine was not commercially available and had no established clinical uses. Professor Shehabi had read published literature about dexmedetomidine and its pharmacological properties in about 1996, including the Talke Article. Also in that year, he attended the Talke Presentation. An abstract of the presentation was annexed to his first affidavit. Professor Shehabi’s evidence was that the Talke Presentation concerned the role of dexmedetomidine in anaesthesia and analgesia. Professor Shehabi deposed that after attending the Talke Presentation, he expected dexmedetomidine to work on human patients and to achieve the ideal concept for ICU sedation. He added that he later “communicated, [between] about 1997 to 2000, with Victor Jordan of Abbott Laboratories”. Abbott Laboratories was the pharmaceutical manufacturer of dexmedetomidine at that time. Professor Shehabi stated at one point that clinicians in Australia with an active interest in research may have had knowledge before April 1998 of the properties and use of dexmedetomidine in sedation and its potential use in ICU and anaesthesia, from published journal articles. He subsequently qualified this by saying that researchers with a specific interest in the area of sedation could have accessed the relevant literature.

115    Professor Bellomo’s evidence was that, in 1997, he became aware of dexmedetomidine and “some of” its properties because he read a paper by Dr Jalonen published in Anaesthesiology entitled “Dexmedetomidine as an Anesthetic Adjunct in Coronary Artery Bypass Grafting” (Jalonen Paper). Professor Bellomo stated that he read the Jalonen Paper in the context of writing a review article looking at the potential use of agents during surgery to protect the kidney. Professor Bellomo’s evidence was that he did not consider using dexmedetomidine as a sedative in the ICU after preparing his review article, because the literature he reviewed in preparing the article (including the Jalonen Paper) did not suggest to him that dexmedetomidine would have been useful as a sedative in the ICU. He stated that he did not have knowledge of the use of dexmedetomidine in sedation or its potential use in sedation in an ICU setting as at April 1998 and did not consider that his colleagues had that knowledge as at that date.

116    On the basis of the evidence currently before me, I am not persuaded that the use of dexmedetomidine in sedation and its potential use in sedation in the ICU were common general knowledge amongst intensive care specialists before the priority date in Australia. Professor Bellomo’s evidence is clearly to the contrary. Professor Shehabi’s evidence appears to be that before the priority date researchers with a specific interest in the area of sedation could have accessed the relevant literature to ascertain the properties and use of dexmedetomidine in sedation and its potential use in ICU and anaesthesia. It is, however, well established that information does not constitute common general knowledge merely because it might be found in a journal or by a literature search. As Luxmoore J said in British Acoustic Films Ltd v Nettlefold Productions (1936) 53 RPC 221 at 250:

[I]t is not sufficient to prove common general knowledge that a particular disclosure is made in an article, or series of articles, in a scientific journal, no matter how wide the circulation of that journal may be, in the absence of any evidence that the disclosure is accepted generally by those who are engaged in the art to which the disclosure relates. A piece of particular knowledge as disclosed in a scientific paper does not become common general knowledge merely because it is widely read, and still less because it is widely circulated. Such a piece of knowledge only becomes general knowledge when it is generally known and accepted without question by the bulk of those who are engaged in the particular art; in other words, when it becomes part of their common stock of knowledge relating to the art.

117    I am not therefore persuaded that, as part of the common general knowledge before the priority date, the notional skilled addressee was aware of the properties of dexmedetomidine, including sedation, such that he or she would have been directly led as a matter of course to try dexmedetomidine in ICU sedation with the expectation that dexmedetomidine might well produce an ideal method of sedating an ICU patient to achieve patient comfort. I would not therefore accept InterPharma’s submission, on the evidence as it currently stands, that the invention so far as claimed in the Relevant Claims does not involve an inventive step when compared with the common general knowledge in Australia before the priority date: compare s 7(2) of the Patents Act.

Prior art – s 7(3)

118    As stated above, before a prior art document can be used for the purpose of s 7(2) of the Patents Act, it must meet the requirements of s 7(3). That is, it must be information that the skilled addressee could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and, regarded as relevant to work in the art.

119    The Talke Article, which principally concerned the haemodynamic profile of patients infused with dexmedetomidine perioperatively, did not contain data specifically relating to the use of dexmedetomidine in patients in ICU. Professor Bellomo’s evidence was that:

(a)    the Talke Article reported that there was no clinically observable sedation in postoperative patients receiving an infusion of dexmedetomidine and that ICU sedatives need to provide a sedative effect for the entire time in which they are administered;

(b)    the Talke Article reported that sedated patients before surgery were “easily arousable” and that this would have been regarded as inappropriate for ICU sedation given common general knowledge as at the priority date when the accepted practice was deep sedation, as I have provisionally accepted (see [111] above);

(c)    the Talke Article disclosed that intraoperatively, dexmedetomidine significantly lowered patient blood pressure and slowed patient heart rate and a drug that significantly affects blood pressure and heart rate was not appropriate for ICU use;

(d)    the Talke Article did not disclose any information about whether the patients in the study were intubated and mechanically ventilated postoperatively and this was important information when assessing the prospects of a sedative for ICU use; and

(e)    there was a want of information in the Talke Article about the use of dexmedetomidine in ICU patients; and a drug that was appropriate for sedation of non-ICU patients would not be understood or regarded as relevant for ICU patients without further data.

120    Professor Shehabi’s evidence was that the Talke Article disclosed that the dexmedetomidine infusion “may have had a sedative effect” and that this possibility would have supported further investigative study.

121    If Professor Bellomo’s evidence is accepted, then it is difficult to see on what basis the skilled addressee could be reasonably expected before the priority date to have regarded the Talke Article as relevant to the work of finding an ideal sedative agent to be administered to an ICU patient to achieve patient comfort. It may be, however, that at trial Professor Shehabi’s evidence will prove sufficient to satisfy the s 7(3) requirement.

122    Assuming that the Talke Article meets the requirements of s 7(3), on the evidence as it currently stands, I am not persuaded that the skilled addressee, armed with common general knowledge as at the priority date and the Talke Article, would have been directly led as a matter of course to try dexmedetomidine in ICU sedation with the expectation that dexmedetomidine might well produce an ideal method of sedating an ICU patient to achieve patient comfort. I am not persuaded that on the current evidence there is a sufficient showing to support InterPharma’s submission with respect to the Talke Article that the invention as claimed in the Relevant Claims would have been obvious to a person skilled in the art before the priority date.

123    Regarding the Talke Presentation, I assume for present purposes, without deciding, that Professor Shehabi’s evidence is sufficient to satisfy the s 7(3) requirement with respect to it. Professor Shehabi has produced a copy of the Abstract for the Talke Presentation and has given evidence not only as to its contents but also as to its presentation at the 11th World Congress of Anaesthesiologists held in Sydney in 1996, although he has been unable to locate a copy of the paper that Dr Talke, with Dr Maze, presented at that time.

124    Professor Shehabi stated that Dr Talke in the Talke Presentation said that dexmedetomidine was potentially useful for stabilising patients in the ICU because of its clinical characteristics, which included its sedative and analgesia sparing effect, and that further clinical studies were planned in the ICU setting. Professor Shehabi agreed, however, that the reference in the Talke Presentation to stabilising patients in the ICU setting was to haemodynamic stability and that the use of dexmedetomidine as an anaesthetic adjunct did not establish that dexmedetomidine operated as a sedative on its own. Particularly having regard to this latter statement, I am unpersuaded on the evidence as it stands that the skilled addressee, armed with common general knowledge as at the priority date and the Talke Presentation, would have been directly led as a matter of course to try dexmedetomidine in ICU sedation with the expectation that dexmedetomidine might well produce an ideal method of sedating an ICU patient to achieve patient comfort. I am not persuaded that on the current evidence there is a sufficient showing to support InterPharma’s submission with respect to the Talke Presentation that the invention as claimed in the Relevant Claims would have been obvious to a person skilled in the art before the priority date.

125    For these reasons, I do not accept InterPharma’s submission that it has a strong prima facie case that each of the Relevant Claims lacks an inventive step. I am not persuaded on the evidence adduced and argument presented to date that InterPharma’s case under its inventive step ground rests on a firm foundation.

The fair basis ground

126    Section 40(3) of the Patents Act, as applicable to the Patent, requires that the claim or claims be fairly based on the matter described in the specification. The invention must be broadly described in the body of the specification and not travel beyond the matter disclosed in that document. This ground calls for an inquiry into what the body of the specification read as a whole discloses as the invention: see Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [2004] HCA 58; 217 CLR 274 (Lockwood No 1) at [99].

127    In Lockwood No 1 at [68]-[69] the High Court stated:

Erroneous principles. The comparison which s 40(3) calls for is not analogous to that between a claim and an alleged anticipation or infringement. It is wrong to employ “an over meticulous verbal analysis”. It is wrong to seek to isolate in the body of the specification “essential integers” or “essential features” of an alleged invention and to ask whether they correspond with the essential integers of the claim in question.

“Real and reasonably clear disclosure”. Section 40(3) requires, in Fullagar J's words, “a real and reasonably clear disclosure”. But those words, when used in connection with s 40(3), do not limit disclosures to preferred embodiments.

“The circumstance that something is a requirement for the best method of performing an invention does not make it necessarily a requirement for all claims; likewise, the circumstance that material is part of the description of the invention does not mean that it must be included as an integer of each claim. Rather, the question is whether there is a real and reasonably clear disclosure in the body of the specification of what is then claimed, so that the alleged invention as claimed is broadly, that is to say in a general sense, described in the body of the specification.”

Fullagar J's phrase serves the function of compelling attention to the construction of the specification as a whole, putting aside particular parts which, although in isolation they might appear to point against the “real” disclosure, are in truth only loose or stray remarks.

128    Section 40(3) does not concern the question of the merits of or entitlement to the claimed invention, but instead concerns the question of drafting and a single comparison of the claims with the disclosure of the specification: Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2011] FCAFC 132; 119 IPR 194 at [89]. However, the High Court also stated in Lockwood No 1 at [99] that:

[T]he correct position is that a claim based on what has been cast in the form of a consistory clause is not fairly based if other parts of the matter in the specification show that the invention is narrower than that consistory clause. The inquiry is into what the body of the specification read as a whole discloses as the invention. An assertion by the inventor in a consistory clause of that of which the invention consists does not compel the conclusion by the court that the claims are fairly based nor is the assertion determinative of the identity of the invention. The consistory clause is to be considered by the court with the rest of the specification.

129    InterPharma submitted that it has a strong prima facie case that the Relevant Claims are invalid for lack of fair basis because, while the Patent specification describes sedation wherein the patients remain arousable and oriented, the claims cover the complete spectrum of sedation.

130    In outlining its fair basis ground, InterPharma referred to p 1 lines 24-26 of the Patent, where it is stated that “[t]he aim of ICU sedation is to ensure that the patient is comfortable, relaxed, and tolerates uncomfortable procedures such as placement of iv-lines or other catheters, but is still arousable”, and to p 2 lines 25-26, where it is stated that “most intensive care doctors in the ICU prefer their patients to be asleep but easily arousable”. It referred to the specification at p 3 lines 23-25, which described the properties of an ideal sedative agent as providing sedation at easily determined doses with “ready arousability”.

131    InterPharma also noted that the specification further describes the invention as follows:

It has been unexpectedly found that dexmedetomidine or a pharmaceutically acceptable salt thereof is an ideal sedative agent to be administered to a patient in the ICU to achieve patient comfort.

[p 4a, lines 10-12]

Applicants have surprisingly discovered that dexmedetomidine or a pharmaceutically acceptable salt thereof is an ideal agent to be administered to a patient in the ICU for achieving sedation and patient comfort.

[p 6, lines 11-13]

The quality of the sedation in the ICU achieved by administering dexmedetomidine is unique. Patients sedated by dexmedetomidine or a pharmaceutically acceptable salt thereof are arousable and oriented, which makes the treatment of the patient easier.

[p 6, lines 24-27]

132    At the hearing, senior counsel for InterPharma also referred to some of the examples mentioned in the specification, which were consistent with InterPharma’s argument on fair basis.

133    In support of its fair basis ground, InterPharma relied on Professor Shehabi’s evidence. He identified the key problem that the Patent seeks to overcome as “distress and anxiety in ICU patients through the provision of sedation”. Further, he noted that “[a]ccording to the specifications, [the Patent] emphasises as a benefit of the invention that patients in ICU that are sedated with dexmedetomidine or a pharmaceutical acceptable salt thereof, are asleep but easily arousable”. Professor Shehabi observed that “[a]ll of the claims include a requirement that the sedation is in the context of an [ICU]”, which the Patent specification states includes “any setting that provides intensive care”. As used in the claims of the Patent, however, Professor Shehabi understood the term “sedation” to “encompass any level of sedation from RASS-1 (calm and comfortable) to RASS-5 (deeply sedated and not arousable)”.

134    In response to Professor Bellomo’s view that the level of sedation to which the specification refers is that achievable with dexmedetomidine, which includes the complete spectrum from very light to very deep, Professor Shehabi observed:

... Professor Bellomo does not refer to any other passages of the Patent to support his opinion that wherever the word sedation is used in the specification of the Patent (other than in the claims) it includes the complete spectrum of sedation from very light to very deep.

When one reads the language of the passage referred to by Professor Bellomo, it is not clear to me that the level of sedation referred to includes deep sedation. The description in the passage is vague, and merely refers to sedation that is “deeper” than the level of sedation that has been given.

135    Pfizer drew attention to some other parts of the specification, including at p 6, lines 25-31, stating:

Patients sedated by dexmedetomidine or a pharmaceutically acceptable salt thereof are arousable and orientated, which makes the treatment of the patients easier. The patients can be awakened and they are able to respond to questions. They are aware, but not anxious, and tolerate an endotracheal tube well. Should a deeper level of sedation or more sedation be required or desired, an increase in dexmedetomidine dose smoothly transits the patient into a deeper level of sedation.

The idea that the level of sedation may be adjusted by use of the drug, including to deeper sedation, is also expressed in Example 1: see p 8, lines 24-27.

136    Pfizer submitted that “[t]he invention disclosed in the Patent relates to the use of dexmedetomidine in any level of sedation in the ICU, from very light (where a patient is ‘easily arousable’) to very deep”. Professor Bellomo’s evidence supported this construction. Referring to p 6, lines 25-31, Professor Bellomo’s opinion was that, in the context of the Patent, the level of sedation included the complete spectrum of sedation from very light to very deep. His opinion was that, as used in the claims of the Patent, the level of sedation applies the same meaning of sedation as used in the specification.

137    Pfizer drew attention to Professor Shehabi’s evidence that “[a]ccording to the specifications [sic], [the Patent] emphasises as a benefit of the invention that patients in ICU that are sedated with dexmedetomidine … are asleep but easily arousable” (emphasis added). Pfizer submitted, and it may be accepted, that the benefits of performing the invention do not need to be included as an integer of each claim. Pfizer submitted that the invention is the use of dexmedetomidine as an ICU sedative and that there is a real and reasonably clear disclosure in the body of the specification of the use of dexmedetomidine for ICU sedation at any level. The claims do not travel beyond that disclosure.

138    Having regard to the parties’ competing submissions and the evidence thus far adduced of Professors Shehabi and Bellomo, I accept that, under the fair basis ground, InterPharma has raised an issue that will, if pressed, fall for determination at trial and that is not untenable. I would not, however, accept InterPharma’s submission that it has a strong prima facie case that the Relevant Claims are invalid for lack of fair basis.

conclusion on prima facie case

139    For the reasons stated, InterPharma has raised a clear triable issue under its manner of manufacture ground and under its novelty ground, with respect to the Precedex® Trials Consent Forms, although with respect to this latter matter a number of sub-issues also arise for determination. Of course, a decision in favour of InterPharma on either of these two grounds would lead to a finding that the Relevant Claims of the Patent are invalid.

140    The fact that InterPharma has raised clear triable issues touching the validity of the Patent does not, however, require that Pfizer’s application for interlocutory injunctive relief be refused. It must be borne in mind that Pfizer has shown a strong prima facie case of the threatened infringement of claims 1, 13 and 26 of the Patent. Whether or not interlocutory injunctive relief should be granted requires consideration of the balance of convenience.

Balance of convenience

The status quo

141    The evidence was that most Australian hospitals use Pfizer’s products and that Pfizer Australia supplies about 15% of all sterile injectable medicines used in Australian hospitals (excluding vaccines and biologics). Pfizer Australia currently sells injectable drugs in a number of presentations in various therapeutic segments, including cardiovascular, anaesthesia, anti-infectives, oncology, analgesics and emergency. Pfizer Australia sells both originator and generic products. Precedex® is one of its originator products.

142    Precedex® was first launched in Australia by the Patent’s predecessor in title (Abbott Pharmaceuticals) in around 2003, in respect of ICU sedation. It was not indicated for procedural sedation until 2009. In around 2004, Hospira emerged out of the predecessor in title and acquired the rights to promote and sell Precedex® in Australia. Since 3 September 2015, Pfizer has held these rights.

143    Pfizer contended that the balance of convenience favoured the grant of interlocutory injunctive relief, first because it had been in the market selling its dexmedetomidine product Precedex® since around 2003 whilst InterPharma had not yet entered that market.

144    I accept that the status quo from around 2003 until the commencement of this proceeding is that Pfizer, by its predecessors in title, has been the sole and continuous distributor of dexmedetomidine in Australia. InterPharma has not sold any Generic Products to customers. Subject to considering InterPharma’s application to discharge the interim injunction, I would regard the grant of interlocutory injunctive relief as best protecting the practical status quo until the trial, which has been set down for May 2018.

InterPharma’s application to discharge the interim injunction

145    As already stated, on 11 September 2017, the Court granted Pfizer interim injunctive relief designed to preserve the status quo. Relying on the affidavit of Mr Stephens sworn on 17 October 2017, InterPharma sought, by application dated 17 October 2017, to have that interim injunction discharged on the basis that there was a material non-disclosure by Pfizer in its interim injunction application. The basis for InterPharma’s application was two alleged non-disclosures, or misrepresentations, on Pfizer’s part that:

(1)    there were contractual terms in fixed term, fixed price contracts between it and its customers, which enabled its customers to renegotiate the price of dexmedetomidine in the event of a cheaper source of dexmedetomidine becoming available; and

(2)    even if successful at trial, Pfizer would be locked into a reduced price for the term of the contract which meant it would be unable to increase the price again until the next round of customer purchasing decisions, which might not be for a relatively lengthy period.

146    InterPharma directed attention to the affidavit of Nicholas Peter Goodwin affirmed on 6 September 2017, the affidavit of Stephen John Munro affirmed on 5 September 2017, and Pfizer’s written and oral submissions. InterPharma submitted, and I accept, that, having regard to these affidavits and submissions, Pfizer did misrepresent its position in some of the material filed in support of its application for an interim injunction.

147    InterPharma submitted that, in these circumstances, Pfizer’s non-disclosure of material matters, in combination with erroneous evidence, “created a false and misleading impression” about the market and how Pfizer would be affected in the short term by the entry of InterPharma’s Generic Products into the market. InterPharma submitted that the Court should take into account, in assessing whether the balance of convenience favours the continuance of injunctive relief previously granted, that there was a material non-disclosure by Pfizer in its interim injunction application and that this was particularly relevant to the Court’s consideration of the status quo at the time of the application for interlocutory relief. In other words, the Court should take into account the circumstance that the status quo going into Pfizer’s application for interlocutory relief should have been that which would have prevailed if no interim injunction had been granted and InterPharma’s Generic Products were on the market.

148    In reasons for judgment published on 11 September 2017, I referred to the existence of the contractual rights of Pfizer’s customers to renegotiate the price of dexmedetomidine and the possibility that a lower renegotiated price could be locked in for a period of time: see InterPharma Pty Ltd v Hospira, Inc [2017] FCA 1075 at [23] and [28]. These paragraphs read:

[23]    The cross-claimants filed their cross-claim seeking interlocutory (and permanent) injunctions on 18 August 2017. The evidence before the Court indicates that some time prior to 31 August 2017 InterPharma placed an order for the supply of the InterPharma Products with its supplier and that product was supplied on that date to InterPharma in Australia and then sent to InterPharma’s distributor. Mr Gray deposes that it was his expectation that the distributor had sufficient quantity of the InterPharma Products to meet market demand for about 5 months. The attention of the cross-claimants was drawn to this development only when they began to receive new pricing requests under contracts with their customers. These requests were apparently triggered by InterPharma’s activities in marketing the InterPharma Products. There is no evidence before the Court that there have yet been any sales of the InterPharma Products to customers.

[28]    Furthermore, Mr Munro deposed that the entry of InterPharma into the market would immediately give rise to a contractual right for most of the cross-claimants’ customers to renegotiate the price at which they purchase Precedex from the cross-claimants. Once the contractual price was re-negotiated, the cross-claimants would be unable to consider raising the price until the next round of its customers’ purchasing decisions, which might not be for a number of years.

149    Pfizer accepted that there were errors in Mr Munro’s affidavit of 5 September 2017, specifically in the reference to “hospital tender arrangements for Precedex®” and in the suggestion that Pfizer presently supplies Precedex® pursuant to competitive tender arrangements analogous to the agreement that Pfizer has with Health Purchasing Victoria (HPV Agreement). Pfizer submitted that, notwithstanding these errors, paragraphs [23] and [28] of the reasons for judgment published on 11 September 2017 remained fully supported on the evidence.

150    After the grant of interim injunctive relief, Pfizer filed a further affidavit affirmed by Mr Goodwin on 28 September 2017, in which Mr Goodwin stated that the reference to “hospital tender arrangements for Precedex®” in Mr Munro’s 5 September 2017 affidavit was incorrect, because until a generic dexmedetomidine product entered the market, Pfizer will not have engaged in any competitive tender processes.

151    In his affidavit of 10 November 2017, Mr Munro stated that he did not intend to suggest in his 5 September 2017 affidavit that Precedex® was included in the HPV Agreement; conceded that his 5 September 2017 affidavit “did not clearly articulate the distinction between Pfizer’s present arrangements for the supply of Precedex®, and the arrangements that Pfizer will enter into once Precedex® becomes a Competitive Product”; and sought to correct his mistake, stating that he should instead have referred to the risk of Pfizer losing its customers for Precedex®, or Pfizer being forced to reduce its price for Precedex® to compete with InterPharma.

152    In his affidavit of 13 November 2017, Mr Goodwin outlined the current arrangements for the supply of Precedex®. He stated that the drug was typically distributed through wholesalers, although customers could obtain Precedex® directly from Pfizer. He continued:

Irrespective of the distribution method, the terms (including price) for the supply of Precedex® to individual customers are agreed between Pfizer and the individual customer.

Pfizer provides its wholesalers with a list of the agreed price for each customer to whom the wholesaler distributes Precedex®. ... The price agreed between Pfizer and the customer is the maximum price at which the wholesaler can sell to the respective customer.

The terms for the supply of Precedex® to individual customers are either:

(a)    by way of formal contractual agreements; or

(b)    negotiated pricing.

[M]ost sales are made by way of negotiated pricing.

153    Mr Goodwin affirmed that the effect of the current contracts that Pfizer has in place for the supply of Precedex® is that “Pfizer’s customers would nevertheless be able to purchase a generic dexmedetomidine product, and/or reconsider those contracts and request that Pfizer reduce its price for Precedex®, once a generic product enters the market”.

154    Mr Goodwin stated that, as part of negotiated pricing, “[w]here Pfizer agrees to supply Precedex® at a reduced price for a given period, Pfizer commits to supplying Precedex® at that price during that period, although there is nothing to prevent the customer requesting a lower price during that period”. He added that “[o]ther than Pfizer’s commitment to a maximum price of Precedex® for a set period, the only contractual terms that apply to a Negotiated Pricing arrangement are Pfizer’s standard terms and conditions”; and “[a]ccordingly, customers purchasing Precedex® via a Negotiated Pricing arrangement ... are not committed to purchasing dexmedetomidine from Pfizer, although while it remains a Sole Supplier Product they have no choice as to supplier; and ... can seek to negotiate a lower price at any time, even while Precedex® remains a Sole Supplier Product or when it becomes a Competitive Product”.

155    In his affidavit of 13 November 2017, Mr Goodwin stated that “Pfizer’s current arrangements for the supply of Precedex® give its customers the ability to respond quickly to the entry of a generic dexmedetomidine product on the market, in terms of negotiating pricing and/or moving to the generic supplier”. According to Mr Goodwin:

(a)    Customers purchasing Precedex® under [] contracts ... would immediately seek to reconsider [their] contracts ... and Pfizer would be effectively required to submit a lower price, at which point the customer would choose between Precedex® and the InterPharma dexmedetomidine products.

(b)    Customers purchasing Precedex® via a Negotiated Pricing arrangement would immediately require Pfizer [to] reduce its price and/or move to purchasing InterPharma’s generic dexmedetomidine product. These customers may also subsequently proceed with a formal competitive tender process.

156    Mr Goodwin stated that, although the sale price of Precedex® was agreed with central state and territory public tender boards, it is not agreed by way of a competitive tender process. This continued to be the case with respect to Queensland, and was correct with respect to New South Wales until 31 July 2016 and with respect to Tasmania and the Northern Territory, until June 2016.

157    Mr Munro’s evidence was that some tender boards responded “very quickly” to the first generic product entering the market (within 2 to 3 months) and others would respond more slowly. Mr Munro added, however, that “for all tender boards, in the interim period before the tender is awarded, individual account holders (eg a public hospital) are likely to contact Pfizer almost immediately after InterPharma enters the market with its generic dexmedetomidine product, to seek a discounted price.”

158    The evidence currently before the Court is that:

(1)    Precedex® is a product for which Pfizer is the only supplier in the Australian market. The terms, including as to price, for the supply of Precedex® to individual customers are agreed between Pfizer and the individual customer.

(2)    The terms for the supply of Precedex® to individual customers are either by way of formal contracts or negotiated pricing arrangements. Most sales are made by negotiated pricing arrangements.

(3)    Negotiated pricing arrangements do not involve the entry into a formal contract. Rather, under these arrangements, Pfizer commits to a maximum price for the supply of Precedex® during the agreed period on its standard terms and conditions. The customer can seek to negotiate a lower price at any time.

(4)    Pfizer also sells, and in the past has sold, Precedex® pursuant to formal contracts that have been put in place following a tender process for a range of products (both competitive and non-competitive products), including dexmedetomidine. However, the sale price of Precedex® is not the subject of price competition in that tender process because Pfizer is the only supplier of dexmedetomidine. The effect of these contracts is that Pfizer’s customers would be able to purchase a generic dexmedetomidine product and/or reconsider those contracts and request that Pfizer reduce its price for Precedex® if a generic product entered the market.

159    With respect to [23] of the reasons in InterPharma Pty Ltd v Hospira, Inc [2017] FCA 1075, there is evidence that Pfizer was contacted by several customers regarding the entry into the market of a generic dexmedetomidine product and that some of these customers expressly requested a price reduction for Precedex®. The subsequent evidence of Mr Munro and Mr Goodwin showed that it was incorrect to say that the requests were “under contracts”, but rather the requests were by customers currently purchasing Precedex® under negotiated pricing arrangements.

160    With respect to [28] of the reasons in InterPharma Pty Ltd v Hospira, Inc [2017] FCA 1075, it would appear that once InterPharma enters the market with its Generic Products, then all Pfizer’s customers would be entitled to renegotiate the price at which they purchase Precedex® from Pfizer, whether a customer is currently purchasing Precedex® under a formal contract or a negotiated pricing arrangement. Where a renegotiated price is sought under a contract, the contractual price would be renegotiated by the customer by way of a formal competitive tender process giving rise to a tender agreement, a contractual agreement or an agreed pricing arrangement. Customers would be capable of entering into such new agreements and arrangements relatively quickly after InterPharma’s Generic Products entered the market. Once the contractual price was negotiated under a tender agreement or a contractual agreement, Pfizer would be unable to raise the price for a fixed period, typically between one and three years.

161    Pfizer did not contest that, in making its application for an interim injunction, it had an obligation to make a full and fair disclosure of all material matters within its knowledge that tended to favour InterPharma. In this regard, InterPharma referred to a number of authorities including Parola v Parola [2009] WASC 190, in which the principle had been stated and applied with respect to ex parte applications. InterPharma submitted, and Pfizer did not contest, that the same principle applied “whenever an urgent interim relief is granted prior to a full interlocutory hearing”. I assume, for present purposes, that this is broadly correct, although it seems to me that some account must be taken in applying any such principle of the fact that the parties to the application for interim injunctive relief were all present at the hearing and represented by experienced lawyers.

162    Be that as it may, it does not seem to me that the errors in Pfizer’s evidence were sufficiently egregious to warrant the discharge of the interim injunction, or to justify considering the current application on the basis that the status quo should have been different from what it is in fact. It would appear that the errors on Mr Munro’s part were inadvertent; and, in any event, they did not render paragraphs [23] and [28] of InterPharma Pty Ltd v Hospira, Inc [2017] FCA 1075 (see [148] above) incorrect in substance. InterPharma alleged that the errors gave rise to two misrepresentations, but, on examination, it appears that the essential point remains – that Pfizer’s customers will be entitled to renegotiate the price of Precedex® once InterPharma enters the market with its Generic Products, whether they are able to do so under formal contracts or negotiated pricing arrangements. Once the contractual price is negotiated under a tender agreement or a contractual agreement, Pfizer would be unable to raise the price for a fixed period, typically between one and three years.

163    For these reasons, I would also dismiss InterPharma’s interlocutory application dated 17 October 2017.

InterPharma’s failure to clear the way

164    InterPharma did not contest Pfizer’s statement that it had known, or ought to have known, of the Patent for some time and that its Generic Products would infringe or that there was a significant risk that it would infringe at least some of the claims of the Patent. The evidence of Mr Goodwin was that InterPharma would have filed its application to the TGA for its Generic Products to be entered on the ARTG at least 12 months before that entry was made, on 13 July 2017: see [17] above. It might be inferred from this that InterPharma had an intention to enter the market a little more than 12 months before the commencement of these proceedings, and that InterPharma took no steps to “clear the way” (for example, by bringing revocation proceedings) at an earlier time than before attempting to launch its Generic Products.

165    It may be accepted that, as InterPharma submitted, it was under no obligation to “clear the way” by seeking revocation of the Patent. Nonetheless, as it conceded, the fact that it was prepared to take the risk of being restrained, with its “eyes wide open” to that risk, is a factor that may weigh in favour of the grant of interlocutory injunctive relief: see, for example, Smith & Nephew v Wake Forest University Health Sciences at [51]-[52]; Samsung at [196]; cf Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 626.

166    Relying on the observation of the Full Court in Samsung at [196], InterPharma submitted that where there is a finding that the alleged infringer should not reasonably have been expected to stop the relevant activity, failure to “clear the way” is irrelevant. InterPharma argued that before launching the Generic Products it should not reasonably have been expected to have cleared the way, having regard to the following circumstances:

(a)    until it obtained its ARTG listings in July 2017, it had no lawful entitlement to market the Generic Products in Australia regardless of the outcome of any revocation proceedings; and

(b)    even if it had filed revocation proceedings as soon as it applied for an ARTG listing, it could have had no reasonable expectation that its case would have been heard and determined at the trial stage, let alone by the Full Court on appeal, or by the High Court on a subsequent application for special leave, prior to the ARTG listings having been obtained.

167    InterPharma added that had it acted at the earliest commercial opportunity to try to “clear the way”, then it would have given Pfizer and its generic competitors advance notice of its intentions, thus potentially losing its first mover advantage; and that, in any event, it would have been in the same position as it now is, with Pfizer seeking interlocutory relief and the validity of the Patent not finally determined.

168    I accept that, as senior counsel for Pfizer observed, the position of Samsung in Samsung was relevantly different to that of InterPharma in this case. I also accept that InterPharma would have had no reasonable expectation that all potential appeals arising out of any revocation proceeding commenced in July 2016 or thereabouts would have been completed twelve months later. It seems to me, however, that this is to set the relevant expectation too high. Relevantly, it seems to me that, had InterPharma sought expedition, InterPharma should have reasonably expected that a first instance hearing and determination would have been completed by July 2017 or thereabouts. I also accept that the decision as to whether or not to take steps to “clear the way” (as by bringing revocation proceedings) is often significantly affected by commercial considerations of the kind to which InterPharma referred. It does not follow from this that the failure to take any steps to “clear the way” is not a factor that can weigh in the balance of convenience in the circumstances that have arisen here. I would regard this as a factor to be included in the balance, although not one weighing heavily in that balance.

No delay on Pfizer’s part

169    There was no suggestion in this case that there had been any delay on Pfizer’s part that might affect the balance of convenience.

The inadequacy of damages as a remedy

170    At the hearing, Mr Cordiner QC, for Pfizer, submitted that if interlocutory injunctive relief were not granted, then Pfizer would suffer significant damage, which would be impossible to quantify accurately and irreversible, such that damages would not be an adequate remedy. Pfizer submitted that the entry of the Generic Products on to the market would cause it substantial financial loss because it would be under considerable pressure immediately to drop its pricing. If it did not respond in this way, it would lose market share to InterPharma.

171    Pfizer submitted that there were a number of factors that would make it difficult to calculate damages in the event that InterPharma were not restrained and Pfizer were ultimately successful, including that:

(a)    Precedex® is a substitutable product, which primarily competes with propofol and midazolam, which are significantly cheaper sedation agents;

(b)    the market for dexmedetomidine is not mature because the market volume has not been steady for a material period of time;

(c)    the use of Precedex® varies across the market, with some hospitals using Precedex® widely, while others might only use Precedex® in certain situations, or not at all, reflecting, in part, differing clinical acceptance of the benefits of Precedex® over its competitors;

(d)    once InterPharma enters the market, it will significantly disrupt the market and any assessment of damages would likely be complex and uncertain, requiring consideration of the impact on the market volume and prices resulting from InterPharma’s entry into the market;

(e)    with reduced market volume and reduced prices, Pfizer would no longer make the required investment to grow the market to its full potential, which investment includes clinical trials and market education; and, in consequence, Pfizer’s increasing, but not mature, level of sales might never reach the level they would have done if the Generic Products had not entered the market prior to the expiry of the Patent; and

(f)    the effect on pricing (and overall sales) of dexmedetomidine could extend well beyond the determination of the proceeding at trial, including beyond the expiry of the Patent in March 2019.

172    Regarding the damages question, Pfizer relied on the evidence particularly of Mr Goodwin and Mr Stone. Mr Stone, a chartered accountant, had 30 years’ experience in forensic accounting and some familiarity with the issues likely to arise in any future assessment of damages in a case of this kind.

173    In support of its opposing submissions on damages, InterPharma relied particularly on the evidence of Mr Samuel and Mr Moore. The evidence of Mr Williams, the Business Unit Manager of InterPharma, was also relevant. Mr Samuel, a forensic accountant and valuer, had spent over eleven years in forensic services, and had some familiarity with the issues likely to arise in any future assessment of damages in cases of this kind. Mr Moore had twenty-five years’ experience as a health economist, including eighteen years in management and governance of New Zealand’s pharmaceutical funding body.

174    So far as the adequacy of Pfizer’s damages was concerned, InterPharma focussed on the calculation of Pfizer’s damages in the probable event that Pfizer did not elect for an account of profits if it were ultimately successful at trial and InterPharma were not restrained on an interlocutory basis. In substance, InterPharma’s contention was that the calculation of any damages claim made by Pfizer was relatively straightforward. InterPharma submitted that a number of the elements in any assessment of Pfizer’s damages would be calculated as “an accounting exercise”, depending on data as to the sales made by InterPharma, and as to Pfizer’s profitability. Whilst InterPharma accepted that some elements of this assessment would involve making estimates, it submitted that “the evidence does not establish that these estimates would be likely to cause particular difficulties for a Court”. In this connection, InterPharma relied on the Sales Forecast for Precedex® (see [9] above) and submitted that the straightforward nature of the task was exemplified by the Court’s approach in Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd [2017] FCA 250; 124 IPR 23 (Bayer) in which damages were awarded on the basis that each of the generic company’s sales was a lost sale to the patentee. InterPharma accepted that its sales would not necessarily all be lost sales to Pfizer because a decreased market price may increase market demand, but submitted that the likely aggregate demand for dexmedetomidine in the absence of price competition could be estimated from historical trends. InterPharma contended that there was no real risk to Pfizer that it would not be compensated appropriately if InterPharma’s case failed at trial since InterPharma proffered an undertaking that it will, until final determination of the proceedings, keep proper accounts of sales of the Generic Products, and its supplier has offered to provide an irrevocable bank guarantee from an Australian bank in a sum agreed to by the parties or ordered by the Court.

175    At the hearing, Ms Rofe QC, for InterPharma, submitted that the Sales Forecast for Precedex® did not indicate any forthcoming transformational change in the market. She further submitted that “Pfizer’s main damages would be the lost profits during the rest of the Patent term, attributable to the early market entry” and, in this connection, she drew attention to the relatively short period remaining for the Patent.

176    Further, InterPharma submitted that the calculation of its damages on Pfizer’s undertaking if it was enjoined and Pfizer’s case ultimately dismissed would be considerably more difficult than any calculation of Pfizer’s damages in the event InterPharma were not enjoined and Pfizer were ultimately successful. In support of this proposition, InterPharma particularly relied on the evidence of Mr Samuel that econometric modelling would be required to estimate the hypothetical market shares that would have been achieved by the parties and any other generic parties that claimed they would have entered the market; the speed of marketing penetration; and the hypothetical prices that would have been achieved.

177    Mr Williams, for InterPharma, stated in his affidavit evidence that he would have expected the market for dexmedetomidine to be predictable given that the drug had been on the market in Australia since around 2003 and that the sales records held by Pfizer could be used to predict future sales over a period of three to five years. Mr Williams’ opinion, as stated in his third affidavit, was that government and hospital restrictions on the purchase of dexmedetomidine would be relaxed if InterPharma were able to supply the drug in the concentrate form at a lower price than Pfizer currently did and that a reduction in the price of the drug would consequently result in an increase in the unit sales of dexmedetomidine.

178    As to the issue of market maturity and the potential for transformational change in Precedex® sales, InterPharma relied particularly on Mr Moore’s report, in which it was said that:

Sales may be variable in nature because of the small number of parties involved but the markets are likely mature. I make this assessment for a number of reasons. First, the product has been marketed since 2003. Both intensivists and anaesthetists are the primary prescribers and both are relatively small and coherent groups with strong colleges and a high level of collegiality. There is a strong connection between Pfizer and the prescribing community through continuing education events, promotion of training and sponsorship of trials. Thus, there will be a good familiarity with the pharmaceutical and that familiarity will be evenly shared across prescribers.

I note there is still some applied research in, for instance, paediatric use which is current ‘off label” (meaning it is used but not formally indicated as such by the [TGA], and some research aimed at showing outcome benefit (in terms of reduced hours in ICU). Likely, any small incremental benefit in improving the evidence base will shore up sales of dexmedetomidine and will keep Precedex® front of mind with prescribers. These are, however, minor additions to existing knowledge rather than transformational.

Likely, variation in use will arise because of clinical decision making, because of differing funding constraints in hospitals or because of different priorities for different population groups.

The market could expand, but likely only if budget gatekeepers lessen any restrictions or other barriers to use. This is the reality of rationing use in a budget constrained health sector rather than a sign of market immaturity.

179    InterPharma also relied on Mr Samuel’s report in support of its contention that assessing its damages on Pfizer’s undertaking in the event that it was enjoined and ultimately succeeded at trial would be a difficult exercise. Mr Samuel stated in his report that, compared to patent infringement damages, there would be a “wider range of potential outcomes, which in turn would require a higher number of contentious assumptions and a lower degree of certainty as to the ultimate outcome”. Mr Samuel’s opinion was that estimating InterPharma’s hypothetical sales (which would include its lost “first mover advantage”) absent an interlocutory injunction would be “very significantly more difficult to estimate with precision than the hypothetical sales Pfizer would have made absent the infringement”.

180    Mr Goodwin, who led Pfizer’s team responsible for the marketing and supply of Precedex® as a sole supplier product, stated that, under the current arrangements, Pfizer’s customers would be able “to respond quickly to the entry of a generic dexmedetomidine product on the market, in terms of negotiating pricing and/or moving to the generic supplier”, to seek a lower price for Precedex® and/or switch to InterPharma’s Generic Products.

181    Mr Goodwin’s evidence was that he anticipated Pfizer would be forced to significantly reduce the price of Precedex® to compete with the lower priced generic product, and as a result Precedex® would become a significantly less profitable product for Pfizer. Even if InterPharma subsequently left the market, once the contractual price was negotiated under a tender agreement or a contractual agreement, Pfizer would be unable to raise the price for a fixed period, typically between one and three years.

182    Contrary to Mr Williams, Mr Goodwin did not consider that “the length of time that a drug has been on the market [was] alone sufficient to determine whether the market for that drug has reached maturity”. This was mostly because “the Precedex® market [was] not mature and clinical opinion about the benefits of dexmedetomidine [was] still evolving”. Mr Goodwin did not consider that Pfizer’s future sales could be reliably assessed, simply by having regard to Pfizer’s sales records and forecasts. Mr Goodwin’s evidence was that, bearing in mind that the market for Precedex® was not mature, there were a “host of unpredictable factors that may or may not influence its development”.

183    Mr Goodwin disagreed with Mr Williams’ statement that a reduction in the price of dexmedetomidine would result in a proportionate increase in the unit sales of the drug. Mr Goodwin stated that:

Based on my knowledge of the current varying prices paid by customers for Precedex®, and the corresponding usage of Precedex® in hospitals, I am not aware of any evidence of a linear relationship in the Precedex® market between price and usage. ... I believe that reducing the price of Precedex® may result in some increased unit sales of Precedex® but, particularly given the evolving state of clinical opinion about the benefits of dexmedetomidine, I consider that any increase will be modest and not of the level required to “offset any price reduction resulting in no loss of profits or an insignificant loss of profits”.

184    Mr Goodwin also disagreed with Mr Moore’s statement that the market would expand if the government and hospital budget gatekeepers lessened their restrictions. Emphasising that in his opinion, the most significant factor was “the evolving clinical opinion about the benefits of sedation with dexmedetomidine in the ICU”, Mr Goodwin stated that:

Whether or not a critical mass of ICU professionals accepts the benefits of sedation with, and therefore adopt the use of, dexmedetomidine, depends on, among other things:

(a)    the outcome of major studies, such as the SPICE observational study ...;

(b)    the extent to which relevant articles are published by influential researchers in high impact journals;

(c)    hospitals preparing ICU sedation guidelines that include the use of dexmedetomidine;

(d)    the nature of the flu season in a given year. For example, a particularly bad flu season often gives rise to more individuals being admitted to the ICU and therefore more use of Precedex®;

(e)    articles and opinions regarding off label practices. For example, a highly regarded individual publishing on an off label use of Precedex® may result in other clinicians adopting that off label use; and

(f)    the unavailability of other sedatives.

185    Regarding the assertion made by Mr Williams that “[i]f the sales volume increases this can offset any price reduction resulting in no loss of profits or an insignificant loss of profits” Mr Goodwin stated that this “does not take into consideration Pfizer’s loss of market share once a generic product or products enter the market. Pfizer’s loss of market share would compound Pfizer’s inability to recover lost profits through increased unit sales”.

186    Pfizer also relied on Mr Stone’s report to support its contentions about the difficulties of assessing the impact of InterPharma’s entry onto the market on its market volume and prices, and the difficulties with modelling the hypothetical “springboard” effect of InterPharma’s early entry to the market prior to the expiry of the Patent. As to the springboard period, to which Mr Samuel referred, Mr Stone said:

... Mr Samuel hypothesises that InterPharma “may never achieve the level of sales it would have achieved as the first generic in the market”. Whilst this is a possibility ... [t]he possibility exists that Pfizer’s level of sales may never reach the level it would have done if Pfizer had not had competition from a generic in the market through to 31 March 2019.

187    There was also some evidence, to which reference was made in InterPharma Pty Ltd v Hospira, Inc [2017] FCA 1075, that Pfizer might suffer reputational harm for which damages would not be an adequate remedy, in the event that Pfizer sought to raise the price of Precedex® to the price at which it sold before InterPharma entered the market (assuming InterPharma entered the market now and Pfizer was ultimately successful at trial).

188    In relation to InterPharma’s contention that an assessment of its damages under Pfizer’s undertaking would be more difficult than an assessment of Pfizer’s infringement damages, Pfizer relied on Mr Stone’s report. In this report, Mr Stone stated that, in his opinion, it was “overly simplistic” to say that damages on an undertaking are “necessarily” more complex or difficult than for infringement, and observed that damages estimates for both scenarios will have “many of the same elements of complexity”. Mr Stone noted, for example, that:

[A] reduction of price may increase the demand for the product. Therefore, it would be necessary to estimate the volumes that Pfizer would have experienced if InterPharma had not entered the market and prices had not dropped. The effect of a reduction in price is likely to have increased demand at that stage, all else being equal.

However, conversely, the reduction of the price of a drug may make it less attractive for the patent holder to actively market that particular drug, which may adversely impact on the growth in the market for that drug.

189    It may be accepted that Pfizer will suffer significant damage if InterPharma enters the market for dexmedetomidine before the trial in May next year. This was the effect of the affidavit evidence of Mr Goodwin, who had first-hand knowledge and experience of that market, and his evidence was supported by evidence of the speedy responses of some of Pfizer’s customers after InterPharma attempted to launch the Generic Products before the grant of interim injunctive relief. Further, it may be provisionally accepted that the damage to Pfizer would extend beyond the life of the Patent, although the precise nature and the quantum of that damage would appear to be unascertainable at this stage.

190    The critical issue is whether damages would be an adequate remedy in the circumstances of this case. For the following reasons, I accept that they would not. I accept that, as Mr Goodwin stated, the use of Precedex® has changed since around 2003. I also accept that the use of Precedex® varies across the market, being used by some hospitals and not others and not always being used in the same range of situations. I accept that this change and variation is, in part, a reflection of changing clinical opinion about the use of the drug and that relevant clinical opinion continues to evolve. Mr Goodwin’s evidence in this regard was supported by the evidence of Professors Bellomo and Shehabi concerning the evolution of the opinion and practice of intensive care specialists from the early 2000s until today. It may be accepted that changing clinical opinion about the benefits of dexmedetomidine has affected and continues to affect the market for the drug, particularly bearing in mind that the drug has been and remains significantly more expensive that the alternative sedation agents, propofol and midazolam.

191    As the evidence stands, therefore, there is a credible basis for Mr Goodwin’s repeated statements that the market for dexmedetomidine cannot be considered a mature market in the sense that the market volume has not been steady for a material period of time. It seems to me that Mr Williams’ perhaps not unreasonable expectation that the market for dexmedetomidine was predictable is thereby undermined. I would therefore provisionally prefer the evidence of Mr Goodwin to that of Mr Williams concerning the utility of sales records and forecasts in any assessment of Pfizer’s damages. It also seems to me that Mr Moore’s plausible opinion concerning the issues of market maturity and transformational change should not at this stage be preferred to the evidence of Mr Goodwin since, in contrast to Mr Goodwin, Mr Moore did not have first-hand knowledge of the Australian market for dexmedetomidine.

192    Accepting, provisionally, Mr Goodwin’s evidence concerning the immaturity of the market, I would also accept, provisionally, his further evidence that the development of “a critical mass” of clinical opinion was a significant factor in increasing the sales of the drug, since without that critical mass the drug would not be regularly prescribed. In this context, I would also accept that, as Mr Goodwin stated, the emergence of this critical mass depends on a range of factors, including the publication of the results of clinical studies, the publication of research in influential journals, hospital guidelines, and other extrinsic factors. I accept, provisionally, that the effect of these factors on Pfizer’s sales of Precedex® between now and the expiry of the Patent may be difficult to determine with any degree of reliability. InterPharma’s reference to the notion of an absence of transformational change directs attention to a different, though related, inquiry.

193    It may be accepted that the entry of InterPharma into the market will lead to a reduction in the price of dexmedetomidine and that this will lead to an increase in the demand for the drug, all other things being equal. The effect of the budget constraints under which government and hospitals operate would appear to be relevant in this context, as the evidence of Mr Williams, supported by Mr Moore, indicates, but Mr Goodwin has disputed the existence of “a linear relationship … between price and usage”. A significant factor in the non-linear nature of the relationship would be, it may provisionally be accepted, the prevalence of clinical opinion about the benefits of the drug as compared with its competitors. It is also possible that Pfizer may, as postulated by Mr Goodwin and Mr Stone, determine to withdraw its investment in the market if the price of Precedex® fell as a result of InterPharma’s market entry. It is impossible as things stand to form a view on the extent to which the demand for dexmedetomidine would in fact increase if InterPharma entered the market now, and it is unnecessary to do so. It suffices to say that, in assessing Pfizer’s damages on infringement, if InterPharma entered the market now (and InterPharma lost its invalidity case at trial) difficult issues would arise as to the extent and effect of Pfizer’s loss of market share and the extent to which Pfizer could recover lost profits through increased sales. It may therefore be accepted that InterPharma’s entry into the market would disrupt that market, and that any assessment of Pfizer’s damages will be difficult and uncertain.

194    As to InterPharma’s contention about the relative difficulty in assessing Pfizer’s damages on infringement compared with its damages on Pfizer’s undertaking, it may be accepted that the calculation of InterPharma’s damages on Pfizer’s undertaking if it were enjoined now and Pfizer’s case ultimately dismissed, would be difficult, and InterPharma may choose to rely on econometric modelling as the best way to estimate its hypothetical market share, speed of market penetration and prices. It may also be accepted that, as Mr Samuel states in his report, estimating InterPharma’s hypothetical sales with precision in this way would not be straightforward, particularly regarding its lost “first mover advantage”, and that any estimate will be affected by assumptions as to market share and speed of market penetration.

195    InterPharma accepted, however, that its damages on Pfizer’s undertaking would be “reasonably capable of quantification”. As the previous discussion has indicated, the calculation of damages suffered by Pfizer if InterPharma is permitted to sell the Generic Products prior to trial and Pfizer is ultimately successful will also be uncertain and difficult. I interpolate at this point that Bayer did not concern a substitutable product or an immature market of the kind described by Mr Goodwin. It seems to me, therefore, that it may be “overly simplistic”, to adopt Mr Stone’s description, to say that the assessment of InterPharma’s damages under Pfizer’s undertaking will necessarily be significantly more difficult than the assessment of Pfizer’s damages on infringement. Both the potential assessments of damages, whether suffered by Pfizer or InterPharma, would require the construction of hypothetical counter-factual scenarios that present complexities. It is not possible at this stage to estimate the difference in the level of difficulty between the two potential exercises, because both depend on substantial speculation. It follows, it seems to me, that it cannot be positively affirmed that the difference in the level of difficulty on InterPharma’s side is so much greater than on Pfizer’s side as to justify a radical shift in the balance of convenience and justice of the case.

Relief will not practically put an end to the litigation

196    In written submissions Pfizer contended, and InterPharma did not deny, that the grant of interlocutory relief will not for practical purposes bring an end to the litigation. Neither party addressed this consideration at the hearing. This factor has not figured to any degree in assessing the balance of convenience.

Public interest

197    In written submissions Pfizer touched only briefly on the potential detriment to the public interest that might arise if it were not to continue to invest in clinical trials of the drug and drug education as a consequence of InterPharma’s entry into the market.

198    In written submissions, InterPharma submitted that “significant weight should be given to the public interest in reducing the market price of dexmedetomidine hydrochloride, in circumstances where the evidence establishes the utility of the product for sedation of patients before and during surgery, and in the ICU, and that its main users are public hospitals, many of which ration its use due to budgetary constraints”. This submission was not, however, further developed and, as previously stated, the parties contest the extent to which a reduction in the price of the drug would be accompanied by increased hospital use. It is not possible to resolve this issue at this stage on the current evidence. There is, moreover, the competing public interest in protecting the monopoly conferred by the Patent during its term, in order to foster investment, including investment of the kind to which Pfizer referred.

199    The matter of public interest does not, in this case, affect the balance of convenience.

conclusion

200    Pfizer has shown a strong prima facie case of threatened Patent infringement. As stated, however, by its case of Patent invalidity, InterPharma has raised a clear triable issue under its manner of manufacture ground and under its novelty ground, with respect to the Precedex® Trials Consent Forms, although with respect to this latter matter a number of sub-issues also arise for determination. A decision in InterPharma’s favour on either ground would lead to a finding that the Relevant Claims of the Patent are invalid. Whilst this circumstance tends against the relief Pfizer seeks, the strength of Pfizer’s prima facie case of infringement and the balance of convenience weighs in favour of the grant of that relief.

201    Apart from the strength of Pfizer’s prima facie case, the factors favouring the grant of interlocutory injunctive relief are:

(1)    The status quo from around 2003 until the commencement of this proceeding is that Pfizer, by its predecessors in title, has been the sole and continuous distributor of dexmedetomidine in Australia.

(2)    Pfizer will suffer significant harm if InterPharma enters the market for dexmedetomidine before the trial in May next year, for which damages will not be an adequate remedy. Further, it may be provisionally accepted that this harm would extend beyond the life of the Patent, although its precise nature and the quantum would appear to be unascertainable at this stage.

(3)    InterPharma proceeded with its “eyes wide open” to the existence of the Patent and the fact that, by its proposed conduct, it would, or that there was a significant risk that it would, infringe the Patent and was prepared to take the risk of being restrained, without taking any steps to try to “clear the way”.

202    For the reasons stated, I have rejected InterPharma’s contention that errors in Pfizer’s evidence were sufficiently egregious to warrant the discharge of the interim injunction, or to justify considering the current application on the basis that the status quo should have been different from what it is in fact.

203    As to InterPharma’s contention about the relative difficulty in assessing Pfizer’s damages on infringement compared with its damages on Pfizer’s undertaking, I am not satisfied that the difference in the level of difficulty in the potential assessment of InterPharma’s damages under Pfizer’s undertaking is so much greater than the potential assessment of Pfizer’s infringement damages to justify a radical shift in the balance of convenience and the justice of the case. Further, the significance of the relatively short remaining period of the Patent has been considered in the context of considering the adequacy of damages and the comparable difficulties of assessing potential claims for damages by Pfizer and InterPharma.

204    Bearing in mind the strength of Pfizer’s prima facie case of Patent infringement, though tempered by the existence of triable issues in InterPharma’s invalidity case, and the other considerations mentioned above, I am of the opinion that the balance of convenience favours the grant of interlocutory injunctive relief. Having regard to the fact that Pfizer proffers the usual undertaking as to damages and that any loss to InterPharma (or a third party) arising from the interlocutory injunction can sound in an award of damages, I would grant the relief that Pfizer has sought.

205    For the reasons stated, I would also dismiss InterPharma’s interlocutory application dated 17 October 2017.

a further issue: Relief

206    At the conclusion of the hearing on 23 November 2017, senior counsel for Pfizer provided the Court with a proposed Short Minute of Orders (Proposed Orders) that Pfizer sought in the event that it succeeded in its interlocutory injunction application. Order 1 of the Proposed Orders was in the following terms:

Until the hearing and determination of this proceeding or further order, the Cross-respondent, by itself, its directors, officers, servants, agents or howsoever otherwise, be restrained from engaging or threatening to engage in the following acts within the patent area (as that term is defined in the Patents Act 1990 (Cth)) without the licence or authority of the Cross-claimants:

(a)    making, marketing, selling, supplying or otherwise disposing of any medicament for use in intensive care unit sedation containing dexmedetomidine or a pharmaceutically acceptable salt thereof (Generic Dexmedetomidine Product);

(b)    offering to make, sell, supply or otherwise dispose of any Generic Dexmedetomidine Product;

(c)    using or importing any Generic Dexmedetomidine Product; or

(d)    authorising, inducing, procuring or joining in a common design with any other person to do any of the acts referred to in sub-paragraphs (a) to (c) above.

207    On 29 November 2017, InterPharma’s legal representatives, Stephens Lawyers & Consultants, emailed my associate with a copy of Pfizer’s Proposed Orders “marked up with Stephens Lawyers & Consultants’ proposed amendments to the Orders”. Amongst other things, in their marking-up, Stephens Lawyers & Consultants, for InterPharma, sought an order that:

Notwithstanding Order 1 ... (and for the avoidance of doubt), the Cross-respondent by itself, its directors, officers, servants, agents or howsoever otherwise, may:

(a)    make, market, sell, supply or otherwise dispose of any medicament for use in procedural sedation outside the intensive care unit containing dexmedetomidine or a pharmaceutically acceptable salt thereof (Generic Dexmedetomidine Product for Procedural Sedation);

(b)    offer to make, sell, supply or otherwise dispose of any Generic Dexmedetomidine Product for Procedural Sedation;

(c)    use or import any Generic Dexmedetomidine Product for Procedural Sedation; or

(d)    authorise, induce, procure or join in a common design with any other person to do any of the acts referred to in sub-paragraphs (a) to (c) above.

208    The solicitors for Pfizer responded on the same day, relevantly, as follows:

At the interim injunction hearing on 7 September 2017, the Cross-Claimants' counsel noted that the Cross-Respondent had not indicated any intention to attempt to avoid the InterPharma dexmedetomidine products being put to an infringing use (in light of the approved indications for the InterPharma generic dexmedetomidine products) (see transcript 7/9/2017 T29.25-36).

At the hearing of the interlocutory injunction application on 23 November 2017, the Cross-Respondent did not adduce any evidence, or make any submissions, regarding any intention to supply the InterPharma dexmedetomidine products, even if the injunction sought by the Cross-Claimants was granted, in a manner that appears to suggest would avoid infringement under s 117 of the Patents Act 1990 (Cth) (the Act).

Had the Cross-Respondent done so, the Cross-Claimants would have led evidence to address, among other things, the likelihood that hospitals would procure and use the InterPharma dexmedetomidine products regardless of the purpose to which the supplier indicates they can be used. Further, the Cross-Claimants would have led evidence and made submissions regarding the scope and relevance of the indications approved by the TGA for the InterPharma dexmedetomidine products, directed to the application of s 117of the Act. Specifically, the fact that a product can be put to a non-infringing use does not mean that the product can be supplied in a manner that avoids infringement pursuant to s 117 of the Act.

In the above circumstances, the Cross-Claimants respectfully submit that the Cross-Respondent’s proposed order ... be disregarded. Alternatively, the Cross-Claimants consider that the Court could not entertain making an order in that form without the Cross-Claimants being afforded the opportunity to lead evidence and make submissions on the issues referred to above.

209    Section 117 of the Patents Act is in the following terms:

Infringement by supply of products

(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.

210    It may be accepted that to date in these proceedings InterPharma has not made any submissions or sought to adduce any evidence regarding an intention to supply the Generic Products in a manner that might avoid s 117 of the Patents Act. The possibility that it might have such an intention was raised for the first time in response to the Proposed Orders that Pfizer gave the Court in the event it was successful.

211    The terms of the interlocutory injunction contemplated by Pfizer’s Proposed Orders are the same as the terms of the interim injunction made on 11 September 2017. InterPharma itself described Pfizer’s current application as an application for the “continuation of interim injunctive relief previously granted” and it did not foreshadow either in written or oral submissions that it had in mind to seek an order in the terms it now proposes. In the absence of an opportunity to put on evidence and make submissions, Pfizer opposes the making of an order in the terms proposed by InterPharma, for the reasons it has outlined in its responsive email of 29 November 2017 set out above.

212    In the circumstances I would make orders substantially in the form that Pfizer proposes. There will, however, be liberty reserved to InterPharma to apply, on reasonable notice, for these orders to be varied to include an order of the kind it has proposed.

Associate:

Dated:    18 December 2017

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