FEDERAL COURT OF AUSTRALIA

InterPharma Pty Ltd v Hospira, Inc (No 4) [2018] FCA 45

ORDERS

THE COURT ORDERS THAT:

1.    Each party’s costs of the application for interlocutory injunctive relief dated 18 August 2017 be its costs in the cause.

2.    The costs of the cross-claimants’ application for interim injunctive relief dated 6 September 2017 be the cross-claimants’ costs in the cause.

3.    The cross-respondent pay the cross-claimants’ costs of the cross-respondent’s interlocutory application dated 17 October 2017.

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

REASONS FOR JUDGMENT

KENNY J:

1    On 18 December 2017, on the application of Hospira, Inc and Pfizer Australia Pty Ltd (collectively, Pfizer), the Court granted an interlocutory injunction restraining InterPharma Pty Ltd (InterPharma) from, amongst other things, marketing its Generic Dexmedetomidine Product. The Court had earlier granted an interim injunction in essentially the same terms, with costs reserved. Also on 18 December 2017, the Court dismissed InterPharma’s application dated 17 October 2017 to discharge the interim injunction.

2    On 18 December 2017, with respect to costs, the Court also ordered that, unless they could agree, the parties were to file and serve submissions on costs and that costs issues were to be dealt with on the papers. The parties have filed written submissions on the costs orders they seek. These reasons are concerned with the disposition of the costs of Pfizer’s application for interlocutory injunctive relief, a re-visiting of the costs reserved order in respect of Pfizer’s application for interim injunctive relief, and with InterPharma’s application to discharge the interim injunction. I note that the costs of Pfizer’s interim injunction application were reserved, on the stated basis that that order might be revisited after the hearing of Pfizer’s interlocutory injunction application: see InterPharma Pty Ltd v Hospira, Inc (No 2) [2017] FCA 1280 at [9].

3    Pfizer sought orders that InterPharma pay Pfizer’s costs of its application for interlocutory injunctive relief dated 18 August 2017 (heard on 23 November 2017); its application for interim injunctive relief dated 6 September 2017 (heard on 7 September 2017); and InterPharma’s interlocutory application dated 17 October 2017 (heard on 23 November 2017).

4    InterPharma opposed the orders that Pfizer sought. It submitted that each party’s costs of Pfizer’s application for interlocutory injunctive relief should be that party’s costs in the cause or, in the alternative, that the costs of that application should be reserved. InterPharma further submitted that there ought to be no separate order as to the costs of its own interlocutory application of 17 October 2017, which it submitted was “effectively subsumed” by Pfizer’s interlocutory injunction application.

The parties’ submissions

5    Pfizer submitted that there were four considerations justifying an order that it should have costs in any event, as opposed to its costs in the cause. In particular, Pfizer submitted that:

(1)    Pfizer’s successful application for interim injunctive relief was necessary only because of InterPharma’s “irregular, and unreasonable, conduct” in commencing to exploit its Generic Dexmedetomidine Product, without notice, after the question of interlocutory injunctive relief was on foot and scheduled for hearing.

(2)    If InterPharma had commenced its action for revocation of the Patent earlier, either in September 2015 (when it signed an agreement requiring it to purchase minimum quantities of dexmedetomidine to sell in Australia) or in August 2016 (when it had an intention to enter the market), then it would have been unnecessary for Pfizer to seek interlocutory relief to restrain InterPharma's launch of its Generic Dexmedetomidine Product after entry in the Australian Register of Therapeutic Goods (ARTG) in July 2017.

(3)    InterPharma actively opposed the grant of interim and interlocutory relief by filing substantive lay and expert evidence, making detailed written and oral submissions, and serving three Notices to Produce requesting production of a large number of documents, most of which were not pressed at the hearing.

(4)    InterPharma’s allegations of material non-disclosure that formed the basis of InterPharma’s interlocutory application of 17 October 2017 were not made out and ultimately the application was pressed only in a limited manner.

6    On the other hand, InterPharma submitted that an order in the form that it sought would ensure that costs followed the outcome after trial, which was appropriate given that Pfizer’s success was the outcome of a provisional assessment of the relative merits of the parties’ cases. InterPharma further submitted that, given the extensive interlocutory evidence and expedited trial, much if not most of the evidence filed at the interlocutory hearing would also be relied on by the parties at trial and that a costs order at this stage in favour of Pfizer would effectively encompass its costs incurred in preparing its case for trial.

7    Finally, InterPharma submitted that if the Court was of the view that, regardless of the outcome of the trial, Pfizer should not in the circumstances be at risk of paying InterPharma’s costs, then the appropriate order would be that Pfizer’s costs be its costs in the cause. In this event, Pfizer would only be entitled to recover its costs of the interlocutory application if it succeeded at trial, and that if InterPharma were ultimately successful, InterPharma would be required to bear its own costs of opposing the interlocutory application. In this regard, InterPharma referred to JT Stratford & Son Limited v Lindley (No 2) [1969] 3 All ER 1122 at 1123 (Lord Denning MR); ACD Tridon Inc v Tridon Australia Pty Ltd [2003] NSWSC 357 at [8] (Austin J); and Jadwan Pty Ltd v Rae & Partners (No 2) [2015] TASSC 17 at [15] (Holt AsJ).

Consideration

8    Under s 43(2) of the Federal Court of Australia Act 1976 (Cth), the disposition of costs is at the discretion of the Court, although it is well-established that this discretion must be exercised judicially, having regard to the relevant principles and the justice of the case in all the circumstances.

9    It may be accepted that, as Pfizer submitted, referring to Dibeek Holdings Pty Ltd v Notaras & Anor (1998) 143 FLR 132 (Dibeek) at 140–141, a party successful in an interlocutory application may be entitled to its costs in any event, or to its costs only on the basis that they are that party’s costs in the cause. It may also be accepted that, generally speaking, an order for costs in any event will be made where a party’s success reflects some act or omission by the opposing party: Dibeek at 140–141. It may also be accepted that, as Pfizer submitted, interlocutory applications differ in their nature and purpose, and a consequential order for costs may reflect this difference.

10    Nonetheless, as InterPharma submitted, and I accept, Pfizer’s success in its applications for interim and interlocutory relief was based on a provisional assessment of the merits, particularly of the parties’ cases on invalidity, and the balance of convenience. The ultimate outcome after trial may lead the Court to declare the Patent invalid, in which case the basis on which injunctive relief was granted would be found to have failed. It is for this reason, as InterPharma submitted, that interlocutory injunctions are invariably granted, as in this case, on the condition that the patentee give the usual undertaking as to damages in an attempt to ensure that a party in InterPharma’s position will receive compensation for any loss that is suffered by reason of the grant of the injunction in the event it appears that Pfizer is not ultimately entitled to relief: see Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 311 (Gibbs J), 318-20 (Stephen J) and 324-25 (Mason J) and Commonwealth of Australia v Sanofi [2015] FCAFC 172; 237 FCR 483 at [68]-[74] (Kenny and Nicholas JJ).

11    Further, the possibility that the predicate of the grant of interlocutory relief – that by marketing and the like its Generic Dexmedetomidine Product, InterPharma would infringe Pfizer’s valid patent claim – may be shown upon trial to be ill-founded is reflected in an order that each party’s costs be its costs in the cause. As InterPharma noted, such an order has been made with respect to other contested applications for interlocutory injunctions where issues of pharmaceutical patent infringements and validity have arisen: see, for example, Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2009] FCA 595; 81 IPR 339. InterPharma also noted, correctly, that in other contested applications for interlocutory injunctions involving pharmaceutical patent infringements, costs have been reserved, as in Reckitt Benckiser Healthcare (UK) Ltd v GlaxoSmithKline Australia Pty Ltd (No 2) [2013] FCA 736; 103 IPR 472 (appeal allowed: [2013] FCAFC 102) and Eli Lilly and Company v Generic Health Pty Ltd [2013] FCA 1254. Each of these two cases differed, however, from the present case, including in terms of the complexity of the issues and arguments raised at the interlocutory hearings and the volume of substantive evidence adduced.

12    Bearing the above-mentioned considerations in mind, with respect to Pfizer’s application for interlocutory injunctive relief, it appears to me that the appropriate order is that the costs of the application be each party’s costs in the cause. In the circumstances of this case, the award of costs on this application should depend on the ultimate result upon the trial. I am not persuaded that I should reach a different conclusion on account of the considerations to which Pfizer referred. The first and last of Pfizer’s considerations have limited, if any, relevance to the disposition of costs with respect to this application. I am also not persuaded that I should take a different view either because InterPharma actively opposed the grant of interlocutory relief or because InterPharma failed to take the steps of the kind Pfizer mentioned.

13    The interim injunction was granted to preserve the status quo pending the hearing and determination of Pfizer’s interlocutory injunction application and to ensure that that application was not frustrated. The hearing proceeded on very short notice and was conducted on the basis that a full interlocutory hearing would follow, as has occurred. The order for reserved costs was previously made on the basis that the order might be revisited after the hearing of Pfizer’s application for interlocutory injunctive relief: see InterPharma Pty Ltd v Hospira, Inc (No 2) [2017] FCA 1280 at [7], [9]. The outcome of that hearing has been ascertained. It does not seem to me that Pfizer should be at risk of paying InterPharma’s costs in respect of this application, even if InterPharma succeeds at trial, having regard to the circumstance that InterPharma commenced to market its Generic Dexmedetomidine Product, without notice to Pfizer, after Pfizer had made its application for interlocutory injunctive relief and that application was scheduled for hearing: see InterPharma Pty Ltd v Hospira, Inc [2017] FCA 1075 at [2]-[3], [23]. The appropriate order in this circumstance is that the costs of Pfizer’s application for interim injunctive relief be Pfizer’s costs in the cause.

14    Finally, I would order that InterPharma pay Pfizer’s costs of InterPharma’s interlocutory application dated 17 October 2017. This interlocutory application was essentially self-contained. The issues raised by it have been considered and dealt with in my reasons for judgment in InterPharma Pty Ltd v Hospira, Inc (No 3) [2017] FCA 1536 at [145]-[163]. InterPharma was unsuccessful in that application as reflected in the Court’s order made on 18 December 2017 that the interlocutory application be dismissed. In the circumstances, costs should follow the event.

Disposition

15    For the reasons stated, I would order that: (1) each party’s costs of the application for interlocutory injunctive relief dated 18 August 2017 be its costs in the cause; (2) the costs of Pfizer’s application for interim injunctive relief dated 6 September 2017 be Pfizer’s costs in the cause; and (3) InterPharma pay Pfizer’s costs of InterPharma’s interlocutory application dated 17 October 2017.

Associate:

Dated:    5 February 2018

SCHEDULE OF PARTIES