Federal Court of Australia

Merck Sharp & Dohme Corporation v Pfizer Inc [2021] FCA 57

ORDERS

THE COURT ORDERS THAT:

Trial date

1.    Order 13 of the Orders of Justice Burley made on 13 December 2019 be vacated.

2.    The matter be listed for trial from 18 to 29 October 2021 and for closing legal submissions from 1 to 3 December 2021.

Separate question

3.    Order 6 of the Order of Justice Burley made on 22 December 2020 be amended to replace the reference to the hearing commencing 1 March 2021 with the date for trial in Order 2 above.

Pfizer update in relation to expert availability

4.    The Respondent (Pfizer) is to provide an update to the Court and the Applicants (MSD) on or before 28 March 2021 regarding Dr Michon’s availability to participate in any joint expert conclave, joint expert report and concurrent evidence session at trial.

Pfizer’s expert evidence

5.    If, pursuant to Order 4 above, Pfizer indicates that Dr Michon is unavailable, Pfizer is to file and serve any additional expert affidavit in answer on MSD’s invalidity claim by 15 June 2021 (not to exceed 35 pages, excluding any annexures and exhibits).

MSD further expert evidence in reply

6.    If, pursuant to Order 6 above, Pfizer files an additional expert affidavit, MSD is to file and serve any expert affidavits in reply by 15 August 2021 (each affidavit not to exceed 15 pages, excluding any annexures and exhibits).

Topics for joint expert report

7.    The parties, by their lawyers, are to confer with a view to reaching agreement by no later than 6 September 2021 in relation to the topics that the expert witnesses are to discuss by way of the following procedure:

(a)    on or before 30 August 2021, MSD is to provide Pfizer with any suggested revisions to the topics for experts previously approved by the Court;

(b)    on or before 3 September 2021, Pfizer is to provide a response to MSD’s suggested revisions, indicating any areas of disagreement;

(c)    if there remains disagreement with the document set out in (a), the parties’ counsel are to confer on or before 6 September 2021 with a view to reaching agreement; and

(d)    on or before 5.00pm on 6 September 2021, the parties are to provide to the Associate to Justice Burley the agreed topics for the experts.

Conclave and joint expert report

8.    Order 7 of the Orders of Justice Burley made on 26 February 2020, as amended by Order 3 of the Orders of Justice Burley made on 19 August 2020 and Order 2 of the Orders of Justice Burley made on 4 January 2021, be vacated.

9.    The parties’ expert witnesses participate in joint expert conference(s) during the period between 13 to 24 September 2021, such conferences to be conducted in accordance with Part 7 of the General Practice Note Entitled “Expert Evidence Practice Note (GPN-EXPT)”, and, by 27 September 2021, produce a joint report that identifies areas of agreement, partial agreement and disagreement, in respect of any matters in which they have expertise, and, where there is partial agreement or disagreement, short reasons for the partial agreement or disagreement.

10.    A Registrar be appointed to facilitate the joint expert conference(s) referred to in paragraph 9 above, said conference(s) to commence at a time to be notified by the Registrar after consultation with the parties and/or the experts.

Court Book

11.    Order 8 of the Orders of Justice Burley made on 8 December 2020 be vacated.

12.    By 3 September 2021, MSD’s solicitors are to provide to Pfizer’s solicitors a draft revised Court Book index.

13.    By 7 September 2021, the parties are to agree on the Court Book index.

14.    By 13 September 2021, MSD is to:

(a)    deliver two hard copies of the Court Book to the Registry marked to the attention of the Associate to Justice Burley;

(b)    deliver four hard copies of the Court Book to Pfizer’s solicitors; and

(c)    provide an electronic copy of the Court Book to the Associate to Justice Burley and Pfizer’s solicitors, which:

(i)    is a single PDF document in searchable (OCR) format;

(ii)    includes an index with individual hyperlinks to each document included in the index, with separate hyperlinks for each affidavit, exhibit and annexure;

(iii)    includes appropriate bookmarks to each document, including separate bookmarks for each affidavit, exhibit and annexure.

Statement of issues

15.    Orders 9 and 10 of the Orders of Justice Burley made on 8 December 2020 be vacated.

16.    The parties are to seek to agree upon a statement of issues by 24 September 2021 (noting, if necessary, any issues on which there is disagreement) by way of the following process:

(a)    on or before 6 September 2021, MSD is to provide Pfizer with a revised statement of issues;

(b)    on or before 13 September 2021, Pfizer is to provide MSD with a mark-up reflecting any areas of disagreement with the document set out in (a);

(c)    on or before 17 September 2021, MSD is to provide Pfizer with a mark-up reflecting any areas of disagreement with the document set out in (b); and

(d)    if there remains disagreement with the document set out in (c), the parties’ counsel are to confer on or before 24 September 2021 with a view to reaching agreement.

17.    The statement of issues prepared in accordance with Order 16 above is to be provided to the Associate to Justice Burley by 5.00pm on 24 September 2021.

Notices of cross-examination

18.    Orders 11, 12, 13 and 14 of the Orders of Justice Burley made on 8 December 2020 be vacated.

19.    By 4.00pm on 3 September 2021, MSD is to notify Pfizer of the affidavits (or parts thereof), on which it intends to rely at the trial.

20.    By 4.00pm on 3 September 2021, Pfizer is to notify MSD of the affidavits (or parts thereof), on which it intends to rely at the trial.

21.    If a party requires a deponent whose affidavit is proposed to be read at the trial, as advised in accordance with paragraph 19 and 20 above, to be made available for cross-examination by video-link, that party must give written notice of that requirement to the party who filed the affidavit on or before 7 September 2021.

22.    Unless written notice is given in compliance with paragraph 21 above, a deponent is not required to attend the trial by video-link for cross-examination and the deponent’s affidavit will be read into evidence, subject to any objections as to admissibility.

Written outlines of opening submissions

23.    Orders 16, 17 and 18 of the Orders of Justice Burley made on 8 December 2020 be vacated.

24.    By 5.00pm on 22 September 2021 the parties are to agree to a list of headings to be used in each party’s written outline of opening submissions and provide that list to the Associate to Justice Burley.

25.    By 4.00pm on 3 October 2021, MSD is to file and serve a written outline of opening submissions in chief (of no more than 15 pages in length).

26.    By 4.00pm on 10 October 2021, Pfizer is to file and serve a written outline of opening submissions in answer (of no more than 15 pages in length).

Objections to evidence

27.    Orders 19, 20 and 21 of the Orders of Justice Burley made on 8 December 2020 be vacated.

28.    By 4.00pm on 8 October 2021, the parties are to exchange written notices identifying any objections to any parts of the affidavits filed by the other party and the joint expert report with a brief statement identifying in each case the basis of the objection.

29.    By 4.00pm on 14 October 2021, counsel are to confer in relation to the notices of objection exchanged pursuant to order 18 and endeavour to resolve the parties’ respective objections.

30.    By 4.00pm on 15 October 2021, the parties are to file a document indicating:

(a)    the objections which the parties agree are to be upheld; and

(b)    any remaining objections on which a ruling by the Court is required.

Bundle of authorities

31.    Orders 22 and 23 of the Orders of Justice Burley made on 8 December 2020 be vacated.

32.    By 4.00pm on 13 October 2021, the parties are to exchange lists of the authorities and legislation on which they intend to rely in accordance with the General Practice Notice entitled “Lists of Authorities and Citations Practice (GPN:AUTH)”.

33.    By 4.00pm on 15 October 2021, MSD is to file and serve an electronic joint bundle of the authorities and legislation on which the parties intend to rely. The electronic joint bundle is to:

(a)    include an index with individual hyperlinks to each authority;

(b)    comprise individual PDF searchable (OCR) documents for each authority; and

(c)    for each individual document, include in the file name the corresponding tab number in the index, followed by an abbreviated description of the authority, for example “01. Myriad (2015) 258 CLR 334”.

Costs

34.    Pfizer is to pay MSD’s costs of Pfizer’s interlocutory application dated 25 January 2021.

35.    Pfizer is to pay MSD’s costs thrown away by reason of the adjournment of the hearing listed to commence on 1 March 2021.

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

REASONS FOR JUDGMENT

BURLEY J:

1    By interlocutory application filed on 25 January 2021 the respondent, Pfizer Inc, seeks orders for the vacation of a three week hearing in these proceedings listed to commence on 1 March 2021, and orders for the hearing to be rescheduled to a convenient date in the second half of 2021. In support of the application Pfizer relies on an affidavit from its former solicitor, Richard Hamer from Allens, and an affidavit from its recently appointed solicitor, Jacqueline O’Brien from Norton Rose Fulbright. The applicants (collectively, MSD) oppose the application, and rely on an affidavit from their solicitor, Odette Gourley from Corrs Chambers Westgarth.

2    The root cause of the present application arises from the tragic death, by a medical accident on 25 December 2020, of the 21 year old daughter of Dr Francis Michon, who is one of two expert witnesses called on behalf of Pfizer. Dr Michon was to participate in an expert conclave originally scheduled to occur on 18 January 2021, but which was after the accident deferred by consent until 1 February 2021, pending consideration by Pfizer of its options. Dr Michon has since informed Mr Hamer that he is very much affected emotionally and physically by the death and is not able to continue in his role as an expert witness. Ms O’Brien explains that, in her opinion, the evidence of Dr Michon is important to Pfizer’s case and to avoid substantial prejudice to Pfizer, it must be replaced by the evidence of an expert of equivalent expertise. She estimates that that process will take until about mid-June 2021.

3    MSD opposes the adjournment. It submits that it would suffer substantial prejudice if the trial is deferred and instead proposes that Pfizer be permitted to read the affidavit evidence of Dr Michon, and offers that MSD will not take a “global” hearsay objection to that evidence, or object to the affidavit on the basis of prejudice arising from the inability of MSD to cross-examine Dr Michon. MSD proposes that the trial proceed on the basis of cross-examination of the remaining witnesses and that the preparation of a joint expert report and the giving of concurrent evidence be abandoned.

4    Before addressing in more detail the arguments advanced, it is appropriate to provide some background to the proceedings. In its Originating Application MSD seeks orders for the revocation of Australian patent no 2015208821 entitled “Immunogenic compositions comprising conjugated capsular saccharide antigens and uses thereof” which claims a priority date of 21 January 2014. Claim 1 of the patent is for an immunogenic composition comprising at least one glycoconjugate from Streptococcus pneumoniae serotype 22F which has certain described characteristics. Pfizer is the owner of the patent. It has filed a cross claim seeking a declaration and an injunction in respect of the alleged threatened infringement by MSD of certain claims of the patent by its proposed launch in Australia of a 15-valent pneumococcal conjugate vaccine in which there are 15 serotypes, one of which is serotype 22F (MSD vaccine).

5    The present parties are not unknown to each other. On 14 October 2020 I delivered lengthy reasons in Merck Sharp & Dohme Corporation v Wyeth LLC (No 3) [2020] FCA 1477 (October judgment) concerning allegations that MSD would, by the launch of the MSD vaccine, infringe three other patents owned by Wyeth LLC (Wyeth is now owned by Pfizer). I found that the relevant claims of two of those patents were not valid, but that those of one, no 2006235013 (013 patent) was valid and threatened to be infringed by the MSD vaccine. Following the October judgment, the parties had a dispute about the form of orders that should be made, which gave rise to a further judgment in which I determined that MSD should be restrained from launching the MSD vaccine for the term of the 013 patent, which expires on 31 March 2026: Merck Sharp & Dohme Corp v Wyeth LLC (No 4) [2020] FCA 1719 (November judgment).

6    The relevance of this background is that at present MSD is the subject of orders restraining it from launching the MSD vaccine until 31 March 2026. In the usual way, Pfizer and MSD have each filed appeals from the October Judgment and the November judgment. Pfizer’s Notice of Appeal was lodged on 23 December 2020. MSD filed its Notice of Appeal on 19 January 2021.

7    The principles concerning the grant of an adjournment of a hearing are not in dispute. The Court has an inherent power and also a power under r 1.32 of the Federal Court Rules 2011 (Cth) to adjourn the hearing of any matter in appropriate circumstances. The discretion to do so must be exercised judicially, having regard to relevant matters including the reason for the adjournment and the timing of the application for the adjournment, the detriment to Pfizer if the adjournment is not granted, the detriment to MSD if the adjournment is granted, the detriment to the Court and other litigants, and public interest considerations: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175 at [5] (French CJ), at [93], [95], [100] and [103] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). It is of course necessary to have regard to the overarching purpose of the civil practice and procedure provisions set out in the Federal Court of Australia Act 1976 (Cth), which is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: s 37M; see Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 at [42] (Collier, Griffiths and Mortimer JJ).

8    At the hearing of the interlocutory application I indicated that in my view it is appropriate to grant the adjournment sought by Pfizer and that the proceeding will be listed for hearing from 18 October 2021. My reasons for doing so are briefly summarised below. I note that it is not impossible that Dr Michon will at some point in the coming two months feel capable of resuming his role. However, no evidence supports that proposition and what is set out below assumes that he will not. The orders that I will make include provision for Pfizer to update the Court and MSD on Dr Michon’s position in two months’ time. However, it is clear that in any event the 1 March 2021 hearing must be vacated.

9    First, the circumstance prompting the present application arises through no fault of Pfizer, could not have been foretold, and understandably explains why Dr Michon is currently unable to assist in the expert conclave or the preparation of the joint expert report, and is unlikely to be able to assist by 1 March 2021. I accept that Pfizer has acted expeditiously since being informed of Dr Michon’s inability to participate in the proceedings, and has not delayed in either bringing these matters to the Court’s attention or in filing the application.

10    Secondly, Dr Michon is one of two expert witnesses called by Pfizer. Pfizer wishes to rely on the evidence of Dr Michon as a person who has extensive industry experience in developing vaccines, including glycoconjugate vaccines, and in particular Pfizer seeks to rely on the fact that, according to Ms O’Brien, Dr Michon has directly contributed to the development of over a dozen human vaccines. Dr Michon is a biotechnology consultant who works from Bethesda, in the United States of America. Pfizer’s other expert, Professor Spencer Williams, is a Professor of Chemistry at the University of Melbourne. His work and research is said by Ms O’Brien primarily to involve synthetic chemistry and, in particular, the synthesis of carbohydrates, lipids and glycoconjugates and the understanding of the role of such compounds in immunity. As such, Dr Michon is said by Pfizer to provide evidence that is not duplicated and cannot be replaced by that of Professor Williams. Ms O’Brien gives evidence that in order to recover the position resulting from the unavailability of Dr Michon, Pfizer wishes to call the evidence of a replacement witness, with similar experience and qualifications. Norton Rose has commenced urgent investigations to locate such a witness and expects to have completed an affidavit from a suitable witness by mid-June 2021.

11    MSD submits that the evidence of Dr Michon simply duplicates or corroborates that of Professor Williams, and that accordingly the trial can proceed as scheduled, with Dr Michon’s affidavit being tendered but not requiring him to attend for cross-examination or participate in any conclave of the experts, in the preparation of a joint expert report, or the provision of concurrent evidence. However, on the basis of the evidence available, I do not accept that the evidence of Dr Michon duplicates that of Professor Williams. Each appears to bring different qualifications and skills to consideration of issues raised by the cross claim. For instance, in answer to the allegation that the asserted claims lack an inventive step, Pfizer wishes to make submissions on the basis of the evidence of Dr Michon that his particular experience in the design and development of vaccines qualifies him to advance the proposition that the invention is not obvious. Professor Williams is said to approach the question from a more academic perspective. Pfizer wishes to submit that a person such as Professor Williams may call upon the expertise of someone in the position of Dr Michon in the development of a vaccine, with their attendant different skill sets. It is at this stage of the proceedings difficult to assess whether Pfizer’s position will be vindicated, but based on the information presently available it is not an unreasonable one.

12    More generally, it appears to me that Pfizer has constructed its response to the invalidity case advanced by MSD on the basis of both the evidence of Professor Williams and Dr Michon and that it is reasonable to consider, as Ms O’Brien does, that it will suffer significant detriment in the defence of its patent if Dr Michon’s evidence is not called.

13    Thirdly, I am not satisfied that the proposal put forward by MSD, which I have summarised in [3] above, would provide a balance sufficient to mitigate the detriment to Pfizer. Although MSD has indicated that it will permit Dr Michon’s evidence to be relied upon without the benefit of cross-examination, it reserves its right to submit that his evidence should be given less weight. That will no doubt (or at least foreseeably) result in submissions being made at trial to the effect that Dr Michon’s evidence should not be accepted where it reflects disagreement with the approach of the witnesses called by MSD. In this regard, the Court would be deprived of the benefit of being able to evaluate his evidence in the light of cross-examination, including consideration of the answers Dr Michon would give to challenges to the views he has expressed in his affidavit. Those answers may be of assistance to Pfizer, because they are persuasive responses to such challenges, or of assistance to MSD, because they are not. It is not possible to evaluate the degree of any prejudice, but Pfizer has indicated that it would wish for Dr Michon to be cross-examined if his evidence is to be read and the weight to be accorded to it challenged in submissions.

14    Furthermore, a hallmark of modern patent litigation in this Court has been the requirement that experts attend a conclave, discuss their differences, produce a joint expert report and provide concurrent evidence: Federal Court of Australia, Intellectual Property Practice Note (IP-1), 20 December 2019, at 10.2-10.3; Federal Court of Australia, Expert Evidence Practice Note (GPN-EXPT), 25 October 2016, at 7.1-8.3. This approach provides experts in complex fields with an opportunity to debate their disagreements in open court. That was the process that was to take place in the present case. Whilst MSD submits that in his absence Dr Michon’s evidence could be received and preparations for the production of a joint report and concurrent evidence to be given at trial be abandoned, substituting the latter for individual cross-examination of the remaining experts, in the present case I do not consider that to be an appropriate course having regard to the complexity of the subject-matter of the proceedings.

15    Having regard to these matters, in my view it would be substantially prejudicial to the interests of Pfizer in the conduct of its case if an adjournment is not granted and if Pfizer is not given the opportunity to adduce evidence from an alternative witness with similar experience and qualifications to those of Dr Michon. In my view it would also be prejudicial to the conduct of the proceedings, and the administration of justice, if the experts whose evidence is read do not have an opportunity to discuss their differences of opinion, prepare a joint expert report and participate in the provision of concurrent evidence.

16    Fourthly, as against the immediately apparent likely prejudice to Pfizer is to be balanced the prejudice asserted by MSD. In this regard, MSD puts forward confidential evidence of its plans for the launch of the MSD vaccine. Ms Gourley gives evidence that the present proceedings and the proceedings leading to the October judgment were commenced in order to “clear the way” for the launch of that vaccine as soon as it obtained approval. MSD submits that it is currently making plans for the launch of the MSD vaccine which are contingent upon;

(a)    the success of its appeal of the October judgment and November judgment;

(b)    the failure of Pfizer’s appeal from those judgments; and

(c)    the success of the current proceedings.

In the event that those stars align, MSD submits that it will launch its product, and that a limiting step to that launch will be the adjournment of the present trial to later in the year and a consequent later delivery of judgment. MSD submits that it will suffer commercial disadvantage as a consequence of any delay, in the form of enormous sums that it may make from the sale of the vaccine. Conversely, MSD submits that it is to Pfizer’s commercial advantage for the trial to be delayed, because during that time Pfizer will be enjoying the benefit of exclusive rights.

17    The primary difficulty with this argument is that MSD is currently the subject of orders that preclude it from launching the MSD vaccine. MSD has only recently filed its Notice of Appeal from the October judgment and the November judgment, but no stay of the injunction is in place. The status quo is that MSD is precluded from launching the MSD vaccine until the expiration of the 013 patent in 2026. The commercial detriment to which MSD points would only arise in the event that each of (a) to (c) in [16] above falls in its favour. This is at best a contingent detriment that must be balanced against the more immediate prejudice to Pfizer to which I have referred.

18    MSD is also concerned that if the trial is adjourned to the second half of 2021 it will incur substantial additional costs (in the amount of hundreds of thousands of dollars) and that Pfizer may secure unfair forensic advantages. In my view neither of these outweighs the prejudice to Pfizer that I have identified. Whilst it may perhaps be doubted that the additional costs incurred will be as high as MSD suggests, in my view the first concern may be addressed by an appropriate costs order. The confidential figures of annual sales provided in the present application indicate that such an amount, if justified, would be proportionate to the value of the litigation. The second strikes me as jumping at shadows. Pfizer’s leave to adduce further evidence will be confined to responding to the evidence in chief adduced by the witnesses called by MSD. Thereafter, MSD will have an opportunity to file evidence in reply. This is of course not an ideal situation, and will visit some inconvenience and possible disadvantage upon MSD, but balanced against that suffered by Pfizer in the event that the trial is not adjourned, in my view it is the preferable and better approach.

19    Ms O’Brien estimates that by moving expeditiously, Pfizer will have completed the evidence of its further witness by mid-June 2021. Ms Gourley indicates that if the hearing is adjourned, the commitments of counsel for MSD and the Full Court sitting periods mean that the earliest date for the trial will be September 2021. After discussion with counsel at the hearing of the application as to their availabilities, I have set the matter down for hearing commencing on 18 October 2021.

20    As a result of the foregoing the orders that I will make will be to vacate the hearing scheduled to commence on 1 March 2021 and the existing pre-trial directions. I will also make timetabling orders for the future conduct of the matter. Although the present application arises through no fault of Pfizer, it has nevertheless sought an exercise of the discretion of the Court in its favour, and it is appropriate that Pfizer pay the costs of the interlocutory application, and costs thrown away by reason of the adjournment.

Associate:

Dated:    3 February 2021