Federal Court of Australia

Abbey Laboratories Pty Ltd v Virbac (Australia) Pty Ltd (No 4) [2025] FCA 1352

ORDERS

THE COURT NOTES THAT:

1.    The Respondent / Cross-Claimant (Virbac) undertakes to the Court and to the Cross-Respondents that, until determination by the Full Court in the appeal in this proceeding:

(a)    Virbac will submit to any such order that the Court considers to be just for the payment of any compensation, to be assessed by the Court, or as it may direct, to the Applicant / Cross-Respondents (Abbey), if Abbey is successful in the appeal and is adversely affected by the operation of orders 4, 5 and 7 of the Orders dated 24 September 2025; and

(b)    should Virbac become aware of any person other than Abbey exploiting or threatening to exploit in Australia (within the definition of the term “exploit” in the Patents Act 1990 (Cth), any generic levamisole/moxidectin pour on product, the exploitation or supply of which Virbac believes would infringe Australian Patent No. 2012227241, Virbac will: (i) notify Abbey by its instructing solicitors within 5 business days, and (ii) take reasonable steps to enforce those patent rights, including, if necessary, commencing proceedings seeking interlocutory injunctive relief restraining the relevant acts of exploitation.

THE COURT ORDERS THAT:

Stay application

2.    Order 4 (to the extent only that it applies to Abbey keeping the Levamox Duo product) and Order 5 made on 24 September 2025 be stayed until the determination of Abbey’s application for leave to appeal and any appeal therefrom.

3.    Abbey’s interlocutory application dated 14 October 2025 otherwise be dismissed.

4.    Abbey pay Virbac's costs of that interlocutory application.

Inquiry into pecuniary relief

5.    Abbey file and serve an affidavit by 21 November 2025 to the effect outlined by Mr Ryan SC in Court.

6.    The matter stand over to 10 December 2025 at 9.30 am for case management.

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

REASONS FOR JUDGMENT

Delivered ex tempore, Revised from Transcript

JACKMAN J:

1    I gave judgment in these proceedings on 24 September 2025: Abbey Laboratories Pty Ltd v Virbac (Australia) Pty Ltd (No 3) [2025] FCA 1179 (the Principal Judgment). Defined terms in this judgment bear the same meaning as in the Principal Judgment.

2    On 7 October 2025, Abbey filed an application for leave to appeal from the Principal Judgment confined to the issue of novelty. That application has not been heard. Abbey seeks a stay of certain orders made on 24 September 2025, namely Order 4 (restraining Abbey from infringing certain claims of the Patent), Order 5 (requiring destruction or delivery up of all Levamox Duo and related material) and Order 7 (ordering an inquiry as to damages or an account of profits). On 17 October 2025, by consent, those orders were stayed until 4.00 pm today.

Both parties rely on the statement of relevant principles by Jagot J in Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (No 2) [2010] FCA 1212; (2010) 88 IPR 633 at [15]: The principles apparent from the decisions on which the parties relied may be summarised as follows:

(1)    “A successful party is presumed to be entitled to the benefits of the judgment obtained” (Advanced Building Systems v Ramset Fasteners (Aust) Pty Ltd (1997) 145 ALR 121 at 122).

(2)    An “applicant for a stay has the burden of persuading the court that it should be granted” (Advanced Building Systems at 122) but it is not necessary to show special or exceptional circumstances (Henderson v Amadio Pty Ltd (1996) 136 ALR 593 at 595 applying Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685).

(3)    “The court, in the exercise of its discretion, will not hesitate to stay proceedings when it is necessary to preserve the subject matter or integrity of the litigation. Nor will the court hesitate to grant a stay where the refusal of a stay could create practical difficulties in terms of the relief which [the] court could grant” (Advanced Building Systems at 122).

(4)    It is relevant to consider whether “there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed” (Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220 at 223).

(5)    Another relevant consideration is whether the proposed appeal is genuine and based on reasonable grounds (Henderson v Amadio Pty Ltd at 595).

(6)    Relevant also is the willingness or not of a party to give an undertaking as to damages. Hence, in Red Bull Australia Pty Limited v Sydneywide Distributors Pty Limited [2001] FCA 1750 at [10] Red Bull’s refusal to give such an undertaking, thereby exposing Sydneywide to irrecoverable loss if Sydneywide succeeded in its appeal, was described as “a factor which is clearly relevant to the exercise of the discretion to grant a stay”, however it proved insufficient to displace the presumption that Red Bull was entitled to the benefit of its judgment (at [20]).

3    I will proceed on the assumption that there is a reasonably arguable basis for the proposed appeal by Abbey, without deciding whether or not that is the case. However, as matters stand, Virbac, as the successful party, is presumed to be entitled to the benefits of its success, as set out in the Principal Judgment.

4    Before dealing with the prejudice claimed by both parties in relation to any stay of the injunction, I note that Virbac is willing to undertake to the Court and to Abbey to submit to any order the Court sees fit to compensate Abbey for any loss suffered by reason of the operation of Orders 4, 5 and 7, if Abbey succeeds on appeal. Virbac is also willing to undertake to take reasonable steps to enforce its patent rights against any person other than Abbey of whom it becomes aware exploiting or threatening to exploit in Australia any generic levamisole/moxidectin pour-on product, which it believes would infringe the Patent, including by way of interlocutory injunction.

5    In relation to Abbey's alleged prejudice, Abbey submits that if the injunction is not stayed, its lost sales of Levamox Duo, pending the outcome of the appeal, will be difficult to quantify. However, unlike the circumstances prevailing when Virbac sought an interlocutory injunction against Abbey, Abbey now has the benefit of sales evidence for the last ten months or so, and any difficulties of proof of lost sales do not strike me as insurmountable.

6    Next, Abbey submits that it will suffer reputational damage as an unreliable supplier and that damage will not be confined to Levamox Duo but will also affect its future veterinary product launches. I note that Abbey launched its Levamox Duo product some months after it commenced these proceedings, seeking revocation of the Patent. Abbey made a conscious decision to launch its product before obtaining the Court's decision as to whether the Patent should be revoked, knowing that if not revoked then Abbey's Levamox Duo product infringed the Patent, thereby taking the risk as to whether it would succeed in the litigation which it had already commenced for revocation of the Patent. Abbey is therefore the author of its own misfortune in relation to any reputational damage.

7    Next, Abbey submits that its lost sales will extend to other products within its range which Abbey bundles or packages on an incentive basis with Levamox Duo. Again, any such loss is covered by Virbac's undertaking. To the extent that it may turn out to be too difficult to quantify (as to which I express no opinion), it is the result of Abbey's decision to launch at risk in the face of Virbac's existing Patent.

8    Abbey then submits that if a stay is not granted and the appeal succeeds, Abbey's "first mover" advantage as the first generic levamisole/moxidectin product on the market would be destroyed. Abbey predicts that it would likely only achieve 2% of the total market rather than the 7-10% it would achieve on current projections that assume the product is not withdrawn. That is said to be because, if Abbey succeeds on appeal, Abbey will have effectively cleared the way for other generics to enter the market at the same time that Abbey relaunches Levamox Duo, but with the disadvantage that Abbey has damaged its relationships with existing customers in the meantime.

9    The submission seems to me to be heavily exaggerated. The evidence of Mr Findlay for Abbey is that there are no other generic versions of Virbac's product available for purchase in Australia and there are no third-party registrations for a combination levamisole/moxidectin product registered on the APVMA other than the Abbey product. Further, Mr Findlay proves that it took Abbey almost a year to achieve registration after commencing the process with the APVMA, and then Abbey faced months of delay because of difficulties in sourcing one of the actives.

10    It seems inherently unlikely that third parties would actively attempt to enter the market before the outcome of the appeal is known in light of the Principal Judgment, especially given the significant costs involved in seeking registration. Even if a generic manufacturer were to do so, they would have to face Virbac's reasonable steps to enforce its patent rights and prevent them from entering the market until the determination of the appeal. Accordingly, I do not think it is likely that rejection of the stay will have any effect on Abbey's first mover advantage, assuming that one exists.

11    As to prejudice to Virbac, Virbac submits that its sales of Cydectin Platinum increased substantially before Abbey launched Levamox Duo but have subsequently decreased. Virbac submits that it has been forced to adjust its proposed pricing structure for Cydectin Platinum to seek to remain competitive and to increase its marketing expenditure, and the pricing changes may be irreversible. Virbac also says that Levamox Duo impacts the sales of other products in the Virbac range, and that may be irreversible.

12    There is a dispute between the rival witnesses as to the extent to which Abbey and Virbac compete having regard to the different sales channels with which they engage, which I am unable to resolve on the material before me. While I accept that there are aspects of Virbac's quantification of damages which may well be difficult to assess, I do not regard the problems as insurmountable on the material currently available to me. In addition, Virbac may well be able to contend that its difficulties of proof arise from the nature of the wrongful conduct by Abbey, thereby entitling Virbac to favourable inferences where exact proof cannot be established. However, Virbac is entitled now to the benefit of the full scope of its rights as patentee, rather than being confined to pecuniary remedies.

13    In all the circumstances, I do not regard Abbey as having discharged its burden of persuading the Court that a stay of the injunction in Order 4 is appropriate. Virbac is entitled to the benefit of its success in restraining Abbey. There is one exception to that conclusion, namely in relation to infringement by way of "keeping" Levamox Duo, which I will deal with in conjunction with Order 5.

14    As to Order 5 relating to destruction and delivery up of Abbey's stocks of Levamox Duo, Abbey submits that even if the injunction were not stayed, Order 5 should be stayed. Abbey submits that it is not necessary for Order 5 to take effect now to aid the injunction pending appeal, as the injunction does not in terms prevent Abbey from retaining its stock on hand. I do not think that that is correct, because Order 4 is expressed in general terms, although the particular matters which are referred to by way of inclusive (rather than exhaustive) references do not refer to "keeping" stock. Further, Abbey submits that Order 5 would entail unnecessary losses and costs in the event that Abbey's appeal succeeds, namely, the loss of value of the stock, the cost of disposal of hazardous substances, and the further cost of manufacturing replacement stock and associated material.

15    Virbac submits that, on Abbey's own evidence, the stock on hand of Levamox Duo will expire in early 2027 and will thus be difficult to sell after any successful appeal by Abbey because of the short shelf-life of the remaining stock. Accordingly, Virbac submits that it will have to be destroyed in any event. However, the force of Virbac's submission depends on the timing of the appeal and of the judgment on appeal. It is conceivable that an appeal might be heard expeditiously and that a judgment might also be delivered expeditiously. I express no opinion as to the likelihood of those matters occurring, as distinct from my hope that they will do so. If that were to happen, and if Abbey succeeds, then it may well be able to sell at least some of its present stock of Levamox Duo. I note also that to the extent that Abbey is able to sell that stock, that may assist Abbey in maintaining what it claims to be its first mover advantage. Accordingly, in my view, a stay of Order 5 is justified. Similarly, it is appropriate to stay the injunction in Order 4 to the extent that the injunction restrains Abbey from "keeping" its Levamox Duo product.

16    As to Order 7 concerning the inquiry as to damages or an account of profits, Abbey submits that significant time and expenses will be required to prepare for a hearing on pecuniary remedies which will be potentially wasted if Abbey succeeds on appeal. However, any costs wasted by reason of the parties preparing for and conducting a hearing on pecuniary remedies can be met by a costs order or pursuant to Virbac's undertaking to compensate Abbey. In my view, there is a strong imperative to conduct litigation as expeditiously as possible, especially where Virbac is prepared to take the risk of compensating Abbey for any wasted costs. Accordingly, I am not persuaded to stay Order 7.

17    In relation to the question of costs, the costs of the interlocutory application seem to me to be almost entirely attributable to the dispute as to whether the injunction in Order 4 should be stayed. Abbey has achieved some success, namely in relation to Order 5, but that has not substantially added to the costs of the interlocutory application. Further, it seems to me, in light of Virbac expressly disclaiming any contention that there is a risk of Abbey infringing the injunction (otherwise than by “keeping” Levamox Duo) that, if the only order which Abbey had sought to have stayed was Order 5 (together with the "keeping" aspect of Order 4), then the matter would probably have been resolved consensually without the need to approach the Court.

18    In those circumstances, in my view the appropriate order is that Abbey pay Virbac's costs of the interlocutory application.

Associate:

Dated:    4 November 2025