FEDERAL COURT OF AUSTRALIA

Teva Pharma Australia Pty Ltd v Boehringer Ingelheim Pharma GMBH & Co. KG [2019] FCA 625

ORDERS

THE COURT ORDERS THAT:

1.    By 4.00 pm on 2 August 2019, the respondent give discovery of the documents falling within categories 1, 3, 4 and 5 below:

Capsule patent

1    All documents recording communications between:

(a)    any person working at or with Boehringer, including employees of Boehringer and external consultants, on the development of a tiotropium dry powder formulation; and

(b)    a representative from a capsule manufacturer,

concerning or referring to:

(i)    the suitability of capsules for tiotropium;

(ii)    the suitability of capsules for a moisture-sensitive formulation;

(iii)    capsules made from a cellulose derivative, including, HPMC,

during the period from June 1999 to June 2001.

…

3    All laboratory notes and reports (including research notes, experimental reports and management, weekly, monthly or similar summary reports) relating to:

(a)    the moisture sensitivity of tiotropium, including when contained in capsules;

(b)    the moisture levels of HPMC capsules;

(c)    the compatibility of HPMC with tiotropium;

(d)    the stability of tiotropium, including when contained in capsules; and

(e)    formulating tiotropium for HPMC capsules,

during the period from June 1999 to June 2002.

Powder patent

4    All laboratory notes and reports (including research notes, experimental reports and management, weekly, monthly or similar summary reports) relating to development of formulations of tiotropium with different grades or different particle sizes of lactose, during the period from October 1998 to October 2001.

5.    The protocols or standard operating procedures for each of the tests referred to in the documents discovered pursuant to category 4.

2.    In the above categories:

(a)    “Boehringer” means the respondent and its related entities;

(b)    “capsule manufacturer” means any manufacturer or supplier of hard capsules including, without limitation, Shionogi Qualicaps and Capsugel;

(c)    “HPMC” means hydroxypropylmethylcellulose.

3.    For paragraph 1, the respondent is only required to give discovery of documents of which it is aware after a reasonable search (in the sense in which that expression is used in r 20.14(1) and taking into account the matters referred to in r 20.14(3) of the Federal Court Rules 2011) and which are or have been in the respondent’s control.

4.    The respondent pay the applicant’s costs of the applicant’s interlocutory application dated 5 April 2019.

5.    There be liberty to apply.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    These reasons concern an issue of discovery. The applicant (Teva) seeks an order that the respondent (Boehringer) give discovery of documents in five categories, as set out in the schedule to Teva’s interlocutory application dated 5 April 2019. The categories of documents sought by Teva are linked to its claims that the patent referred to as the Capsule Patent (Australian Patent No 2008203057) (the Capsule Patent) and the patent referred to as the Powder Patent (Australian Patent No 757008) (the Powder Patent) are invalid for lack of inventive step.

2    The categories of documents sought by Teva are as follows:

Capsule patent

1    All documents recording communications between:

(a)    any person working at or with Boehringer, including employees of Boehringer and external consultants, on the development of a tiotropium dry powder formulation; and

(b)    a representative from a capsule manufacturer,

concerning or referring to:

(i)    the suitability of capsules for tiotropium;

(ii)    the suitability of capsules for a moisture-sensitive formulation;

(iii)    capsules made from a cellulose derivative, including, HPMC,

during the period from June 1999 to June 2001.

2    All documents recording communications between:

(a)    any person working at or with Boehringer, including employees of Boehringer and external consultants, on the development of a dry powder formulation; and

(b)    a representative from a capsule manufacturer,

concerning or referring to capsules made from a cellulose derivative, including HPMC, during the period from June 1999 to June 2001.

3    All laboratory notes and reports (including research notes, experimental reports and management, weekly, monthly or similar summary reports) relating to:

(a)    the moisture sensitivity of tiotropium, including when contained in capsules;

(b)    the moisture levels of HPMC capsules;

(c)    the compatibility of HPMC with tiotropium;

(d)    the stability of tiotropium, including when contained in capsules; and

(e)    formulating tiotropium for HPMC capsules,

during the period from June 1999 to June 2002.

Powder patent

4    All laboratory notes and reports (including research notes, experimental reports and management, weekly, monthly or similar summary reports) relating to development of formulations of tiotropium with different grades or different particle sizes of lactose, during the period from October 1998 to October 2001.

5    The protocols or standard operating procedures for each of the tests referred to in the documents discovered pursuant to paragraph 4.

3    In these categories, the expression “capsule manufacturer” means any manufacturer or supplier of hard capsules including, without limitation, Shionogi Qualicaps and Capsugel. Further, the expression “HPMC” means hydroxypropylmethylcellulose.

4    Teva made clear in its submissions that it only seeks documents of which Boehringer is aware after a reasonable search and which are, or have been, in Boehringer’s control.

The Patents

5    Although the proceeding concerns three patents, for present purposes only the Capsule Patent and the Powder Patent are relevant.

6    The Capsule Patent is titled “Inhalation capsules”. The specification includes a statement that the “invention relates to capsules for inhalation (inhalettes) consisting of specific capsule materials with a reduced moisture content, which contain the active substance tiotropium in the form of powdered preparations and are characterised by increased stability”. There is also a statement that the “capsules for inhalation (inhalettes) according to the invention are capsules which contain, as the inhalable powder, tiotropium mixed with a physiologically acceptable excipient, characterised in that the capsule material has a reduced moisture content”. On page 2a of the specification, it is stated that:

Accordingly, in one aspect, the invention provides capsules for inhalation which contain as the inhalable powder tiotropium in admixture with a physiologically acceptable excipient, wherein the capsule material is selected from among cellulose derivatives, starch, starch derivatives, chitosan and synthetic plastics, and in which the capsule material has a reduced TEWS or halogen drier moisture content of less than 15%.

7    The Capsule Patent contains 27 claims. It is sufficient for present purposes to quote claim 1, which is in the following terms:

Capsules for inhalation which contain as the inhalable powder tiotropium in admixture with a physiologically acceptable excipient, wherein the capsule material is selected from among cellulose derivatives and in which the capsule material has a reduced TEWS or halogen drier moisture content of ≤5%.

8    The title of the Powder Patent is “Novel tiotropium-containing inhalation powder”. The specification states that the “invention relates to powdered preparations containing tiotropium for inhalation, processes for preparing them as well as their use for preparing a pharmaceutical composition for treating respiratory complaints, particularly for treating COPD (chronic obstructive pulmonary disease) and asthma”. The specification also includes the following statement:

The present invention relates to inhalable powders containing 0.04 to 0.8% of tiotropium mixed with a physiologically acceptable excipient, characterised in that the excipient consists of a mixture of coarser excipient with an average particle size of 15 to 80 μm and finer excipient with an average particle size of 1 o 9 μm, the proportion of finer excipient representing 1 to 20% of the total amount of excipient. Inhalable powders which contain 0.08 to 0.64%, most preferably 0.16 to 0.4% of tiotropium, are preferred according to the invention.

9    The Powder Patent contains 22 claims. It is sufficient to refer to claim 1, which is in the following terms:

Inhalable powder containing 0.04 to 0.8% of tiotropium in admixture with a physiologically acceptable excipient, wherein the excipient consists of a mixture of coarser excipient with an average particle size of 15 to 80 μm and finer excipient with an average particle size of 1 to 9 μm, the proportion of finer excipient constituting 1 to 20% of the total amount of the excipient.

The proceeding

10    Teva’s claims are set out in its Third Amended Statement of Claim (TASOC). Teva challenges the validity of three patents (including the Capsule Patent and the Powder Patent) in respect of which Boehringer is the registered proprietor.

11    In relation to the Capsule Patent, Teva contends that each of claims 1-27 is invalid and liable to be revoked on the ground of lack of inventive step. In [5] of the TASOC, Teva alleges that the invention claimed in claims 1-27 is not a patentable invention within the meaning of s 18(1)(b)(ii) of the Patents Act 1990 (Cth) in that the alleged invention did not involve an inventive step when compared with the prior art base as it existed before the priority date of each claim, and would have been obvious to a person skilled in the relevant art in light of the common general knowledge as it existed in Australia before the priority date of each claim, whether that knowledge is considered separately or together with any single piece of prior art information referred to in the particulars to that paragraph. Paragraph (b) of the particulars sets out matters that are said to have formed part of the common general knowledge at the priority date of each claim.

12    In relation to the Powder Patent, Teva contends that each of the claims of the patent is invalid and liable to be revoked on the grounds of lack of fair basis and lack of inventive step. The allegation in relation to lack of inventive step is set out in [18] of the TASOC. Paragraph (b) of the particulars to that paragraph sets out matters that are said to have formed part of the common general knowledge at the priority date of each claim.

13    Boehringer has filed a notice of cross-claim alleging that Teva’s proposed product (known as BRALTUS) would infringe each of the three patents. It is unnecessary to refer to the cross-claim in detail.

Applicable principles

14    The parties referred in their oral and written submissions to a number of cases that have considered applications for discovery of documents that are broadly similar to the documents sought by Teva in this case. The cases referred to include: Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 14) [2011] FCA 1159; DSM Nutritional Products LLC v Suntory Holdings Ltd [2013] FCA 675; and BlueScope Steel Limited v Dongkuk Steel Mill Co Ltd [2017] FCA 1537 (BlueScope). Reference was also made to The Wellcome Foundation Limited v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 and Nichia Corp v Argos Ltd [2007] EWCA Civ 741.

15    In BlueScope, Beach J made observations about the applicable principles at [30]-[38]. His Honour stated in part:

30    First, there is considerable force in McKerracher J’s observations in Schutz DSL (Aust) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 14) [2011] FCA 1159 at [10] to [15] that Aickin J’s approach in Wellcome more resonates with the Peruvian Guano test which the current Federal Court Rules do not enshrine. Further, as McKerracher J also noted, Wellcome and its ilk were decided at a time when one did not have to concern oneself with the consequences of electronic information and communication including its storage, reproduction and exchange, which has considerably magnified the burden of giving discovery as compared with the benefit. Such a burden has been compounded by the incidences of different electronic forms, locations, computers, servers, email accounts, metadata issues, and retrieval problems. More generally, the idea that one should order general discovery of material of only tangential or second order relevance is unpalatable in the electronic age, particularly where the Peruvian Guano paradigm has no relevance to contemporary case management theory or its practice.

31    Second, Jacob LJ’s observations (albeit in dissent) in Nichia carry significant weight. As he expressed the matter, determining whether there was an inventive step “does not involve expressly what the inventor actually did or thought” (at [13]). As he said in relation to the UK analogue, “the test is not what he did or thought but whether the step would have been obvious to the man skilled in the art” (at [13]). And that “whether it actually was inventive depends on the expert evidence establishing the common general knowledge of the person skilled in the art and the teaching of the cited prior art” (at [15]); of course such observations need to be adapted to the Australian context. Ultimately though, Jacob LJ accepted that material as to what the inventor actually did or thought could not be said to be irrelevant to the question of obviousness, but that it only rose to the level of secondary significance, with questions of proportionality coming into play in determining whether the material should be required to be discovered (cf DSM Nutritional Products, LLC v Suntory Holdings Limited [2013] FCA 675 at [16] per Tracey J).

32    I must say that when one analyses Aickin J’s observations in Wellcome, there is much to be said for the view that his observations are not that inconsistent with the view that Jacob LJ strongly expressed about the secondary relevance, in relation to the question of inventive step, of material as to what the inventor actually did or thought. So, at pp 280 and 281, Aickin J said that such evidence might show that the experiments devised for the purpose were part of an inventive step. And that it might show that the experiments were of a routine character. And that it may be that the perception of the true nature of the problem was the inventive step. But such statements are not directly inconsistent with the characterisation of such material as having secondary significance or relevance. Indeed, Aickin J’s observations at 286 to 288 in some respects resonate with such a secondary characterisation.

…

36    Now in the paradigm of the Peruvian Guano approach, one can appreciate the conclusion reached by Aickin J. But that conclusion is not now as readily transposed to the present approach to discovery.

37    Third, s 7 of the Patents Act 1990 (Cth) deems an invention 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. Such a test is not assessed by direct reference to what the inventor actually thought or did. Nothing in the plurality’s reasons in AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324 at [200] to [217] (per Besanko, Foster, Nicholas and Yates JJ) supports the notion that what the inventor actually thought or did could have anything other than secondary significance or relevance to the question of inventive step.

38    Fourth, there are examples of trial judges having treated as relevant and admissible, on the question of inventive step, evidence of what the inventor actually did. I do not need to dwell on these examples as I am prepared to accept for present purposes that what an inventor did or thought may have secondary significance or relevance. And indeed when one analyses such examples, it seems that the inventor’s evidence was used more to fortify the primary evidence and analysis on inventive step, consistent with the characterisation of secondary significance.

16    Immediately after that discussion, Beach J stated at [39] that, in summary, he was prepared to treat the category 1 documents sought in that case as being relevant, but of secondary significance only. His Honour then stated that, in light of that conclusion and the fact that the Peruvian Guano test no longer applies, he would only permit discovery of “such a category that is targeted, proportionate and over a relatively tight time frame”.

17    His Honour indicated that, but for the fact that certain discovery had already taken place, he would have made an order for discovery of documents of the type sought in category 1, but over a narrower period of time than had been sought. However, the evidence showed that documents falling in that narrower category had already been discovered. It was therefore unnecessary to make the discovery order.

18    I adopt, with respect, the observations of Beach J at [30]-[38] of BlueScope.

Application of principles to the present case

19    In support of its application, Teva relies on two affidavits of Richard Norman Dalby and an affidavit of Andrew David McLean. These affidavits were filed for the purposes of the trial of the proceeding. Teva also relies on two additional documents. In opposition to discovery, Boehringer relies on an affidavit of Patrick Richard Sands dated 18 April 2019 (the Fourth Sands Affidavit). Reference was also made by Teva to an earlier affidavit of Mr Sands dated 31 January 2019 (the First Sands Affidavit).

20    One point raised by Boehringer was that Teva has not filed an affidavit in accordance with r 20.15(3) of the Federal Court Rules 2011. However, I accept the submission of Teva that such an affidavit is not required because the discovery Teva seeks is in fact less extensive than is required under r 20.14. Had I not accepted this submission, I would have dispensed with the requirement to file such an affidavit in circumstances where Teva has relied on affidavits and has provided written submissions that explain why the order it seeks should be made.

Categories 1-3

21    In this proceeding, Teva alleges that the Capsule Patent would have been obvious to a person skilled in the relevant art in light of the common general knowledge alone.

22    Teva contends that the common general knowledge included knowledge about hard gelatine capsules, including the properties of hard gelatine capsules, that it was possible to dry hard gelatine capsules to control moisture content, but if dried, capsules could become brittle and shatter when pierced, and that major suppliers of hard gelatine capsules included Shionogi Qualicaps and Capsugel.

23    Teva has filed evidence that at the priority date of the Capsule Patent, a formulator who was asked to formulate tiotropium would apprehend from the structure that tiotropium had an ester bond and was thus susceptible to hydrolysis. Teva’s evidence is to the effect that the formulator would seek to minimise moisture in the formulation, including in the capsule, and that the formulator would contact capsule suppliers to obtain information about low-moisture capsules which were suitable for use, and test the capsules that were recommended.

24    Teva has also filed evidence that, at the priority date, major capsule manufacturer Capsugel was aggressively promoting HPMC capsules in Australia, including for use in inhalable formulations.

25    Teva submits that, if they exist, documents recording communications between those persons at Boehringer who were engaged in developing a tiotropium formulation and capsule manufacturers concerning the suitability of capsules (including HPMC capsules) either for tiotropium specifically or low-moisture formulations more generally (categories 1 and 2) will support Teva’s case by showing that the steps in the development of the alleged invention taken by the alleged inventors were steps that the ordinary skilled person would take, and were no more than steps that would or should have been obvious to any skilled person in the art.

26    Similarly, Teva submits that documents as to the testing of the moisture sensitivity of tiotropium in capsules and HPMC with tiotropium (category 3) are relevant to the question of the steps that would have been taken by the skilled addressee, in light of the evidence that the skilled addressee would routinely test the capsules.

27    On the basis of these submissions and the evidence underpinning them, I accept that the documents sought in categories 1-3 are relevant, but consider them to be of secondary significance only. There was some debate at the hearing as to whether or not the documents are “directly relevant” in the sense referred to in r 20.14(1)(a) and r 20.14(2) of the Federal Court Rules. It is unnecessary to resolve this matter. It is sufficient for present purposes to conclude that they are relevant, but of secondary significance only. I note that Boehringer submits that the question of obviousness is decided by asking if the hypothetical person skilled in the art in Australia would have found the alleged invention obvious in light of the common general knowledge in Australia and any single document as referred to in s 7(3) of the Patents Act; and that this is essentially an objective question. While I acknowledge the force of this submission, I consider that the documents may nevertheless have some relevance (as indicated by the observations of Beach J in BlueScope to which I have referred). Further, insofar as the material indicates that the invention was developed in Germany, I accept the submission made in reply by counsel for Teva that there is evidence before me to suggest that this is a global field.

28    I turn then to consider whether the categories sought are targeted, proportionate and cover a relatively tight time frame (adopting the approach of Beach J in BlueScope at [39]).

29    Boehringer has, through the Fourth Sands Affidavit, put forward extensive evidence going to the issue of proportionality. Boehringer submits that the forensic benefit of the documents is very small, whereas the burden of making discovery is great, both in terms of time and cost. Boehringer also relies on the approach taken to discovery in proceedings in relation to the same or a similar patent in the United Kingdom and in Ireland.

30    In my view, category 2 is not sufficiently targeted. Unlike category 1, this category does not refer to persons working at or with Boehringer “on the development of a tiotropium dry powder formulation”, but rather to persons working at or with Boehringer “on the development of a dry powder formulation”. Taking into account the competing submissions of the parties, I consider this category to be too broad in all the circumstances.

31    However, I consider categories 1 and 3 to be targeted and proportionate and to cover a relatively tight time frame. While there will undoubtedly be considerable time and expense involved in making discovery of these categories, I note that this is a large proceeding (in terms of the financial implications of the decision, as indicated in the First Sands Affidavit at [6]-[7]), and the discovery sought is limited to documents of which Boehringer is aware after a reasonable search. While it is a matter for Boehringer to determine what constitutes a reasonable search, it would be open to Boehringer to raise practical issues with Teva and to come back to the Court to address any issues that may arise in this regard. To this end, I will reserve liberty to apply. In reaching these views, I have had regard to r 20.11.

32    I note that in the course of the hearing I raised with Senior Counsel for Boehringer whether, putting to one side category 2, there were any drafting changes that Boehringer would seek in relation to the categories, were I minded to grant the application for discovery. In response, Senior Counsel for Boehringer pointed to the inclusive reference to HPMC in paragraph (iii) of category 1 and similar wording in other categories. On balance, I am not inclined to adjust this wording. It is not apparent to me that narrowing such paragraphs will make much practical difference, and I think the limitation regarding a reasonable search is sufficient in the circumstances.

Categories 4 and 5

33    In this proceeding, Teva alleges that the Powder Patent would have been obvious to a person skilled in the relevant art in light of the common general knowledge alone.

34    Teva contends that the common general knowledge included:

(a)    knowledge about the basic principles of respiratory development, delivery and formulation, including that it was common in initial formulation development of dry powder inhalers to test different types of carriers, different ratios of carrier to API, different particle size of carrier and different mixing sequences to optimise a formulation;

(b)    that it was common to achieve blend homogeneity and dose uniformity through adjusting particle size, morphology and density of a dry powder API or carrier;

(c)    lactose, including its different grades, and its use as a carrier in formulations; and

(d)    the basic principles to optimise a DPI formulation in which lactose is a carrier, including the addition of fine lactose particles to coarse lactose particles.

35    Teva has filed evidence that, at the priority date, a formulator who was asked to formulate tiotropium would have been familiar with literature indicating that a mixture of fine and coarse lactose properties provided better dispersion and flowability to products for inhalation by dry powder inhaler and would have included a mixture of fine and coarse lactose particles in the formulation.

36    Teva submits that the documents recording trials on different grades or different particle sizes of lactose (categories 4 and 5) will support Teva’s case by showing that the steps in the development of the alleged invention taken by the alleged inventors were steps that the ordinary skilled person would take, and were no more than steps which would or should have been obvious to any skilled person in the art.

37    On the basis of these submissions and the evidence underpinning them, I accept that the documents sought in categories 4 and 5 are relevant, but consider them to be of secondary significance only.

38    I consider these categories to be targeted and proportionate and to cover a relatively tight time frame. I refer to my reasons regarding these matters in the context of categories 1 and 3. Those reasons apply also to categories 4 and 5.

Conclusion

39    For these reasons, I will make an order that Boehringer give discovery of the documents falling within categories 1, 3, 4 and 5. I will also make clear in the order that Boehringer is only required to discover documents of which it is aware after a reasonable search and which are, or have been, in Boehringer’s control. I will reserve liberty to apply, both for the reason already indicated and in case there are issues of confidentiality. I will hear from the parties as to the time in which the discovery is to be given. I will also hear from the parties in relation to costs. [Discussion ensued in relation to timing and costs.]

Associate:

Dated:    7 May 2019