Federal Court of Australia

Merck Sharp & Dohme Corp v Wyeth LLC (No 4) [2020] FCA 1719

ORDERS

IN THESE ORDERS:

15-valent vaccine means pneumococcal polysaccharide-protein conjugate vaccine together with a physiologically acceptable vehicle in which each of the following serotypes is conjugated to CRM197: 1, 3, 4, 5, 6A, 6B, 7F, 9V, 14, 18C, 19A, 19F, 22F, 23F and 33F.

THE COURT DECLARES THAT:

1.    The Applicants/Cross-respondents have, without the licence or authority of the Respondent/Cross-claimant, threatened to infringe claims 1 to 8 (inclusive), 10 to 13 (inclusive) and 16 to 17 (inclusive) of Australian Patent No. 2006235013 (013 Patent) by threatening to import into, and offer to sell and sell, and keep for the purposes of offering to sell and sell, in the patent area (as that term is defined in Schedule 1 to the Patents Act 1990 (Cth) (Patents Act)) the 15-valent vaccine.

THE COURT CERTIFIES THAT:

2.    Pursuant to s 19 of the Patents Act, the validity of each of claims 1 to 8 (inclusive), 10 to 13 (inclusive) and 16 to 17 (inclusive) of the 013 Patent was questioned in this proceeding.

THE COURT ORDERS THAT:

3.    The Applicants/Cross-respondents, whether by themselves, their directors, officers, servants or agents, or otherwise, in the patent area (as that term is defined in Schedule 1 to the Patents Act), during the term of the 013 Patent, without the licence or authority of the Respondent/Cross-claimant, be permanently restrained from infringing claims 1 to 8 (inclusive), 10 to 13 (inclusive) and 16 to 17 (inclusive) of the 013 Patent, including by engaging in the following acts in the patent area, without the licence or authority of the Respondent/Cross-claimant:

(a)    importing, making, selling, supplying or otherwise disposing of, or offering to import, make, sell, supply or otherwise dispose of, the 15-valent vaccine;

(b)    using or keeping the 15-valent vaccine for the purpose of doing any of the acts described in sub-paragraph 3(a) above;

(c)    authorising other people to engage in any of the acts described in sub-paragraphs 3(a) and (b) above.

4.    Pursuant to s 138 of the Patents Act, claims 1 to 6 (inclusive) and 11 to 14 (inclusive) of Australian Patent No. 2013206844 (844 Patent) be revoked.

5.    Pursuant to s 138 of the Patents Act, claims 1 to 9 (inclusive), 16 to 18 (inclusive) and 20 to 23 (inclusive) of Australian Patent No. 2012216628 (Container Patent) be revoked.

6.    Upon the undertakings referred to in paragraph 11 below, orders 4 and 5 be stayed:

(a)    initially, for a period of 28 days after the date on which these orders are pronounced; and

(b)    if an appeal or cross-appeal is lodged within that period, until the determination of that appeal or cross-appeal, or further order.

7.    The Applicants’ Further Amended Originating Application dated 22 November 2019 be otherwise dismissed.

8.    The Cross-claimant’s Amended Notice of Cross-claim dated 12 November 2019 be otherwise dismissed.

9.    The Applicants/Cross-respondents pay 85% of the Respondent’s/Cross-claimant’s costs of the proceeding insofar as they relate to the 013 and 844 Patents, including any reserved costs as agreed or taxed, but excluding any costs the subject of any other previous costs order.

10.    The Respondent/Cross-claimant pay 80% of the Applicants’/Cross-respondents’ costs of the proceeding insofar as they relate to the Container Patent, including any reserved costs as agreed or taxed, but excluding any costs the subject of any other previous costs order.

THE COURT NOTES THAT:

11.    The Respondent/Cross-claimant undertakes to the Court during the period of the stay referred to in order 6:

(a)    to prosecute any appeal or cross-appeal expeditiously;

(b)    forthwith to serve on the Commissioner of Patents copies of these orders pursuant to s 140 of the Patents Act with a request that particulars of orders 4 and 5 be registered in accordance with s 187 of the Patents Act;

(c)    not to threaten any person with proceedings, or bring proceedings against any person, for infringement of:

(i)    claims 1 to 6 (inclusive) and 11 to 14 (inclusive) of the 844 Patent;

(ii)    claims 1 to 9 (inclusive), 16 to 18 (inclusive) and 20 to 23 (inclusive) of the Container Patent;

(d)    not to seek to amend any claims of the 844 Patent or the Container Patent otherwise than in the course of, or in connection with, these proceedings.

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

REASONS FOR JUDGMENT

BURLEY J:

INTRODUCTION

1    On 14 October 2020, I delivered reasons in Merck Sharp & Dohme Corporation v Wyeth LLC (No 3) [2020] FCA 1477 (judgment) in which I found (adopting the definitions used in the judgment) that Wyeth had established that the asserted 013 patent claims are valid and infringed by MSD, and that MSD had established that the asserted 844 patent claims and the asserted container patent claims are invalid. I directed that the parties confer and provide to my chambers proposed short minutes giving effect to the reasons. The parties have done so and arrived at a measure of agreement as to the form of orders, with two areas of dispute. The first concerns whether or not orders for injunctive relief should be made restraining MSD from engaging in any acts that may infringe the asserted 013 patent claims. The second concerns the award of costs.

INJUNCTIVE RELIEF

2    Wyeth proposes the following form of order:

3.     The Applicants/Cross-respondents, whether by themselves, their directors, officers, servants or agents, or otherwise, in the patent area (as that term is defined in Schedule 1 to the Patents Act), during the term of the 013 Patent, without the licence or authority of the Respondent/Cross-claimant, be permanently restrained from infringing claims 1 to 8 (inclusive), 10 to 13 (inclusive) and 16 to 17 (inclusive) of the 013 Patent, including by engaging in the following acts in the patent area, without the licence or authority of the Respondent/Cross-claimant:

(a)    importing, making, selling, supplying or otherwise disposing of, or offering to import, make, sell, supply or otherwise dispose of, the 15-valent vaccine;

(b)    using or keeping the 15-valent vaccine for the purpose of doing any of the acts described in sub-paragraph 3(a) above;

(c)    authorising other people to engage in any of the acts described in sub-paragraphs 3(a) and (b) above.

3    MSD does not challenge the form of this proposed order, but contends that there is a substantive question to be determined, which is whether, for public interest reasons, any injunction should be ordered at all. It submits that, in any event, no order should be made now, and that the question should be deferred until after the determination of any appeal from the judgment, and will only subsequently arise if MSD’s appeal fails. It offers undertakings to prosecute any appeal or cross-appeal expeditiously, and to give Wyeth notice of when it intends to import or sell its 15-valent vaccine (unless the appeal is determined in its favour or the injunctive relief issue is determined in its favour before that event occurs).

4    MSD’s position can be briefly summarised. It submits that its 15-valent vaccine will provide health advantages over Wyeth’s Prevnar 13. It wishes to adduce evidence going to this point, and for the Court to conduct a separate hearing on whether it is against the public interest to grant an injunction restraining infringement. The proposed additional evidence would address:

(1)    the prevalence in the community of invasive pneumococcal disease caused by serotypes 22F and 33F;

(2)    the ability of the MSD 15-valent vaccine to provide additional protection against those serotypes;

(3)    recent changes in government policy concerning making pneumococcal conjugate vaccines more available in Australia; and

(4)    evidence that Wyeth’s Prevnar 13 vaccine does not provide effective protection against serotype 3.

5    MSD relies on the United Kingdom decision of Evalve Inc v Edwards Lifesciences Ltd [2020] EWHC 513 (Birss J) where the court noted at [87] that the relevant public interest sufficient to justify a refusal in part of a patent injunction is the need to protect the lives of patients for whom the defendant’s product is the only suitable treatment, when that fact is established by objective evidence. It submits that the additional evidence it seeks to adduce will lead to that outcome.

6    Wyeth opposes any deferral of the making of injunctive orders. It submits that, where there is a threat of ongoing infringement, the patentee is, as a matter of course, awarded both a specific and a general injunction to restrain infringing conduct, citing Calidad Pty Ltd v Seiko Epson Corporation (No 2) [2019] FCAFC 168; 147 IPR 386 (Greenwood, Jagot, Yates JJ) at [25] and [44]. It was for MSD to displace the presumption that Wyeth is entitled to a final injunction at the trial of the proceedings and it did not do so. It submits that the procedure that MSD now seeks to adopt is unorthodox and liable to create irregularity and prejudice, not least because it would deprive Wyeth of the fruits of the outcome that it has achieved at trial. Furthermore, it submits that the decision in Evalve only provides a very narrow exception to the general approach of awarding a final injunction following a finding of patent infringement in circumstances where the defendant’s product is needed to protect the lives of existing patients and is the only suitable treatment. That, it submits, is not established on the basis of any evidence in these proceedings.

7    In my view, for the following reasons it is appropriate to make the injunctive order for which Wyeth contends.

8    First, the status quo is that Wyeth has established that MSD threatens to launch a product that has been found to infringe the asserted 013 patent claims. It is prima facie entitled to an injunction as a consequence of that finding: Calidad at [30]. It is for MSD to establish on the basis of evidence that such an order should not be made.

9    Secondly, there is no current evidence as to the state of MSD’s proposed 15-valent vaccine. MSD has not obtained regulatory approval in Australia for a launch of such a product. Ms Howard SC, who appeared with Mr Larish for MSD, informed the Court at the hearing that MSD intends to commence the process of seeking regulatory approval first in the United States towards the end of the year and subsequently in Australia. The question of whether there is any public health benefit arising from the launch of a 15-valent vaccine would fall to be determined at the time when that product becomes available and, presumably, this determination would depend on the form of that vaccine, about which there is also no evidence. Included within the relevant information for consideration at that point will no doubt be the question of whether any additional non-infringing products are available to the Australian public. In that respect Mr Bannon SC, who appeared with Ms Cochrane and Mr Clarke for Wyeth, informed the Court that Pfizer Inc (the parent company of Wyeth) proposes to launch a 20-valent vaccine that may be launched in advance of the MSD product. Neither of the statements from the bar table of Ms Howard SC or Mr Bannon SC amount to evidence. They do, however, serve to demonstrate that the timeline relevant to any public interest argument is inchoate. For that reason, the debate about whether or not there would be a public health benefit if an otherwise infringing product were permitted to be launched would appear at this point to be entirely hypothetical.

10    Thirdly, MSD commenced these proceedings in August 2017 by way of actions to revoke Wyeth’s patents in order, as it said during the course of the preparation of the case, to “clear the way” for the launch of a 15-valent product. Wyeth then instigated a cross-claim in November 2017 seeking orders to restrain future infringement. MSD pleaded in its defence to Wyeth’s statement of cross-claim that it did not infringe the claims and that they were invalid. In [23] of its defence (which has been in this form since 11 December 2017) MSD contended that any relief restraining the supply of a 15-valent vaccine “would be inequitable, unconscionable and contrary to the public interest”. No particulars were appended to that paragraph. However, it is apparent from that pleading that MSD was conscious of the public interest issue well before the hearing. Wyeth joined issue with the point.

11    Once the question of the availability of a public interest defence to the grant of an injunction was in issue, it was open to MSD to take one of at least three courses. One was to adduce evidence at trial going to the basis upon which it alleged that it would be contrary to the public interest to restrain infringement. Another was to seek orders formally deferring consideration of the question of whether or not injunctive relief should be granted and, in so doing, explaining why that issue should not be heard at the time that liability was determined. Another was to do neither, which is what it chose to do.

12    Even if there was a present basis for declining to grant an injunction, in the absence of any evidence to explain why MSD did not either (1) lead such evidence it had available to it relevant to its public interest arguments at the trial; or (2) seek to raise the public interest point as a separate issue, I would be reluctant to permit it to, in effect, re-open its case after judgment in order to advance evidence and arguments that could have been raised then.

13    Finally, MSD complains that Wyeth has taken a “different position” in equivalent proceedings in the United Kingdom. In those proceedings, Wyeth is said to have informed the Court at trial that it did not seek an injunction to restrain the launch of a 15-valent vaccine because of public health considerations. However, the concession apparently made in the United Kingdom proceedings concerned alleged infringement of claims of an equivalent to those in the container patent, which require as an integer that the product be supplied in a “siliconized container” (see judgment at [659]). The circumstances of the making of that concession have not been explored and it is unclear, in any event, what MSD seeks to make of it in the present application.

14    Accordingly, I will make the injunctive order proposed by Wyeth.

costs

15    Wyeth submits that MSD has failed in its attempt to clear the way for the launch of its 15-valent vaccine because the 013 patent remains valid and Wyeth has been successful in establishing patent infringement. Accordingly costs should largely follow the event. However, MSD has had some measure of success and so it should have some discount. The appropriate outcome, it submits, is that MSD should pay 70% of Wyeth’s costs of the entire proceedings.

16    MSD submits that separate costs orders should be made, one in respect of the composition patents and another in respect of the container patent. In relation to the composition patents, it submits that MSD should pay 50% of Wyeth’s costs, reflecting the fact that while Wyeth succeeded in its infringement claim in respect of the 013 patent, it failed in respect of the 844 patent, which was found to be invalid. In relation to the container patent, MSD submits that Wyeth should pay 90% of its costs, the 10% discount reflecting the fact that MSD failed on various grounds of invalidity, but succeeded in relation to lack of inventive step.

17    The relevant principles concerning costs in proceedings such as the present are not in dispute. They are summarised conveniently in Davies v Lazer Safe Pty Ltd (No 2) [2019] FCAFC 118 (Greenwood, White, Burley JJ) at [5] – [7], and are set out below.

[5]    …In Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 (Nicholas, Beach and Burley JJ), the Full Court said:

[3]    The power of the Court in relation to costs is well established. Section 43 of the Federal Court of Australia Act 1976 (Cth) gives the Court a wide discretion in awarding costs. The exercise of the Court's discretion is not without principles or practices; it must be exercised judicially (Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 at [305] per Bennett, Besanko and Beach JJ). The ordinary rule is that costs follow the event, although a successful party may be awarded less than its costs, or costs may be apportioned, based upon success on the issues (Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192; [2015] HCA 53 at [6] per French CJ, Kiefel, Nettle and Gordon JJ; Les Laboratoires Servier at [297] to [298] and [303]).

[6]    Some general principles as to awarding costs, and as to when the Court may award costs on an issues basis, were set out in Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; 247 FCR 61 (Bennett, Besanko and Beach JJ):

[297]    There are two general approaches to the award of costs that have general application and have been the subject of numerous decisions:

(1)    The successful party is generally entitled to its costs. That is, costs usually follow the event.

(2)    It is also the case that a successful party may be awarded less than its costs, or there may be an order apportioning costs, on the basis of success on the issues.

…

[301]    On the other hand, Courts have been increasingly concerned, generally, to use all proper means to encourage parties to consider carefully what matters they will put in issue in their litigation. This has led to decisions whereby the successful party does not recover all of its costs where it has been unsuccessful on a discrete issue or in what is decided to be an unmeritorious objection. While it is acknowledged that, ordinarily, costs follow the event, the wide discretion in awarding costs has led to circumstances where a successful party who has failed on certain issues may be ordered to pay the other party’s costs of them (as discussed in Hughes v Western Cricket Association (Inc) [1986] ATPR 40-748 per Toohey J), although warnings have been stated that care should be taken in such a course and consideration be given to whether the issues on which the successful party failed are clearly dominant or separable (Waters v PC Henderson (Australia) Pty Ltd (1994) 254 ALR 328 at 330 to 331 per Mahoney JA) and to whether the issues involved different factual enquiries in the one proceeding or multiple causes of action, even if based on a common substratum of fact.

[7]    A claim for patent infringement and a cross-claim for patent invalidity are typically treated as separate events upon which the ordinary rule applies to costs: GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No 2) Limited v Generic Partners Pty Limited (No 2) [2018] FCAFC 100 at [8] (Middleton, Nicholas and Burley JJ), citing PAC Mining Pty Ltd v Esco Corporation (No 2) [2009] FCAFC 52 (Sundberg, Jessup and Middleton JJ) and Damorgold Pty Ltd v Blindware Pty Ltd (No 2) [2018] FCA 364 (Middleton J).

18    I do not consider that the approach proposed by Wyeth is appropriate. It is not possible on the available material to determine whether an overall assessment that MSD pay 70% of the costs of the entire proceedings in any way reflects the relative success of the parties. It would leave to chance whether the percentage of time notionally allocated for the two sets of patents represented a fair allocation of costs: see Seiko Epson Corp v Calidad Pty Ltd [2018] FCA 104 at [15].

19    The approach proposed by MSD has the benefit of providing an allocation of costs that is still broad-brush, but nonetheless is more closely linked to the outcome of the proceedings. MSD correctly submits that there is a distinct difference between the proceedings insofar as they concern the composition patents and the proceedings concerning the container patent. The composition patents had the same priority dates, concerned the same common general knowledge and the same technology. The container patent involved a later priority date and largely different experts and common general knowledge.

20    Having regard to the way that the parties presented their cases, in my view, it is appropriate in this instance to break down the costs separately by reference to the composition patents and the container patent.

21    MSD submits that in relation to the composition patents, MSD should pay 50% of Wyeth’s costs. It submits that while Wyeth obtained a finding of threatened infringement of the 013 patent and defended its validity, MSD secured orders for the revocation of 844 patent. On the other hand Wyeth submits that it was entirely successful in establishing infringement of all of the asserted 013 and 844 patent claims, but failed only in relation to the ground of lack of support for the 844 claims. Otherwise, it successfully defended all of the many grounds of invalidity advanced against the composition patents.

22    With respect to the container patent, MSD submits that Wyeth should pay 90% of its costs. It submits that, whilst the Court rejected various grounds of invalidity it raised against the container patents, because MSD succeeded on the ground of lack of inventive step which occupied the most time in concurrent evidence sessions and submissions, the small 10% discount it proposes is appropriate. Wyeth puts it the other way, however, and submits that it was successful in defending MSD’s novelty, manner of manufacture, utility, fair basis and clarity challenges, with MSD only succeeding in relation to its lack of inventive step challenge against the container patent.

23    In relation to the composition patents, the infringement case was confined to questions of construction, which substantially overlapped with some of the grounds of invalidity. I will make allowance for the success that MSD had in its one ground of invalidity, being lack of support for the 844 patent, and conclude that MSD should pay 85% of Wyeth’s costs for the combined infringement and invalidity cases. In my view, this adequately reflects the success that Wyeth achieved in the outcome of the litigation insofar as the composition patents are concerned. Although MSD succeeded on one ground and has achieved the revocation of the asserted 844 patent claims, it chose to advance many grounds of invalidity that were unsuccessful and ultimately has been found to infringe valid claims of the 013 patent. Having regard to the manner in which the case was conducted, in my view, it would be unnecessarily productive of costs on taxation to separate out the costs for infringement from those of invalidity.

24    The calculus is different where the container patent is concerned. MSD was successful on the forensically onerous ground of lack of inventive step, with the consequence that the claims were found to be invalid. It was unsuccessful in relation to the other grounds of invalidity, of which there were many, and infringement. In my view, the appropriate apportionment of costs, again taking a broad-brush approach, is that Wyeth should pay 80% of MSD’s costs of the container patent infringement and validity case.

Associate:

Dated:    30 November 2020

SCHEDULE OF PARTIES