AFT Pharmaceuticals (AU) Pty Ltd v Reckitt Benckiser

GLEESON J: 1 On 21 May 2020, I delivered my judgment on liability in this matter: AFT Pharmaceuticals (AU) Pty Ltd v Reckitt Benckiser (Australia) Pty Ltd [2020] FCA 672 (liability judgment). 2 On 4 August 2020, I refused the application made by the applicant (AFT) for leave to re-open the matter after judgment was given but before judgment was published: AFT Pharmaceuticals (AU) Pty Ltd v Reckitt Benckiser (Australia) Pty Ltd (No 2) [2020] FCA 1092. 3 The parties disagreed as to the final orders that ought to be made, consequent upon the liability judgment. 4 These reasons use expressions defined in the liability judgment.

AFT's claim 5 AFT proposed two declarations, in the following terms: 1. There is an adequate scientific foundation for the following statements as made in the advertisement attached as Annexure A by reference to the Daniels 2018 Study and the Aitken Study: (a) "maxigesic GET BETTER1 & FASTER1 PAIN RELIEF THAN PARACETAMOL OR IBUPROFEN ALONE1"; (b) "A new clinical study of moderate to severe dental pain shows that Maxigesic® provides better and faster pain relief than both paracetamol and ibuprofen alone, at maximum dosage1."; (c) "Faster onset of meaningful pain relief than for Paracetamol or Ibuprofen alone1."; (d) "Maxigesic® is a unique Paracetamol + Ibuprofen combination that provides superior analgesic efficacy for patients than either Paracetamol or Ibuprofen alone1."; (e) "PROVEN TO PROVIDE MORE EFFECTIVE PAIN RELIEF IN A NEW CLINICAL STUDY"; and (f) "36% MORE EFFECTIVE THAN IBUPROFEN1 & 78% MORE EFFECTIVE THAN PARACETAMOL1", except insofar as the statements set out in sub-paragraphs (a) and (b) state that Maxigesic provides "faster" pain relief without qualifying that statement to refer to the "faster onset of meaningful pain relief". 2. There is not an adequate scientific foundation for the following representations when made in an unqualified manner, without reference to the Daniels 2018 Study and the Aitken Study: (a) "Maxigesic is more efficacious than paracetamol or ibuprofen alone"; (b) "Maxigesic provides better and faster pain relief than both paracetamol and ibuprofen alone"; (c) "Maxigesic provides better and faster pain relief than both paracetamol and ibuprofen alone at maximum dosage"; (d) "Maxigesic provides 36% more effective pain relief than ibuprofen and 78% more effective pain relief than paracetamol"; and (e) "Maxigesic provides better pain relief than paracetamol or ibuprofen alone"; (f) "When taken at their respective maximum recommended daily doses, Maxigesic provides stronger and more effective relief from pain than OTC doses of either paracetamol or ibuprofen alone". 6 The respondent (Reckitt) proposed that AFT's application dated 21 February 2019 be dismissed. 7 Senior counsel for AFT, Mr Caine QC, submitted that the first proposed declaration would secure commercial certainty about the use of phrases included in the new advertisement, which is the subject of the proceeding. Mr Caine QC referred to AWB Ltd v Cole (No 6) [2006] FCA 1274; (2006) 235 ALR 307 at [5]-[6] and submitted that the proposed declaration would reflect the final outcome of the liability judgment with certainty and precision, and would constitute an authoritative resolution of the dispute presented to the Court. 8 The first proposed declaration does not reflect the reasons in the liability judgment. At [194] of the liability judgment, I concluded that AFT has an adequate scientific foundation, in the Daniels 2018 study, read with the Aitken study, for statements 1(c) to 1(f) in the proposed declaration, to the extent to which those statements are read as reporting the results of the Daniels 2018 study. This qualified conclusion follows the observation, at [179] of the liability judgment, that the case proceeded on the basis that the advertising materials conveyed much broader representations. The first proposed declaration fails to acknowledge the possibility that a reasonable reader would not read the relevant statements as reporting the results of the Daniels 2018 study. 9 I also did not find that there was an adequate scientific foundation in the terms described in the first proposed declaration for statements 1(a) and 1(b) except insofar as they are not qualified to refer to the "faster onset of meaningful pain relief". 10 I also subsequently found, at [200] and [201] of the liability judgment, that by making five broader representations and the restrained representation in the new advertisement, AFT engaged in conduct in contravention of the Schedule 2 of the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law). Even if the first proposed declaration reflected the terms of the liability judgment (which it does not), I consider that the proposed declaration is likely to create confusion about the lawfulness of publishing the new advertisement. Specifically, the proposed declaration may create the false impression that the relevant statements have been found not to be misleading or deceptive provided they are accompanied by a reference to the studies. 11 I do not consider that there is any utility in making the second proposed declaration. Further, the words "without reference to the Daniels 2018 Study and the Aitkens Study" are vague and are likely to create confusion by suggesting that a scientific foundation for the statements may be established by a reference to the studies when, on the facts found, there is only a scientific foundation for the statements to the extent that those statements are read as reporting the results of the Daniels 2018 study. 12 Accordingly, AFT's application dated 21 February 2019 must be dismissed.

Declarations and injunctions 13 I am satisfied that the draft declarations proposed by Reckitt reflect the central findings in the liability judgment, having regard to the way that the parties litigated the matter. 14 I am also satisfied that it is appropriate to make the injunctive orders proposed by Reckitt, although the proposed injunction directed to the relevant representations should be qualified to apply only where AFT does not have an adequate scientific foundation for making those representations.

Corrective advertising 15 The power to order corrective advertising is to be used protectively and not punitively: Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289; (2003) 135 FCR 1 at [48]-[49] (Stone J, Moore and Mansfield JJ agreeing). Stone J cited with approval the following statement by Tamberlin J in Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) 35 IPR 635 at 640: The purpose of corrective advertising is to protect the public interest. … Corrective advertising is intended to dispel incorrect or false impressions which may have been created as a result of deceptive or misleading conduct. It is not intended to be punitive. In any matter concerning corrective advertising the timing of such corrective advertising is of course important, … There is no principle that any particular period is appropriate as a point beyond which corrective advertising is not warranted. In the context of advertising it is necessary to examine the nature, extent and intensity of the advertising and the media in which it has been released with a view to deciding whether there could reasonably be any current misapprehension as a result of the advertisements. 16 In REA Group Ltd v Fairfax Media Ltd (No 2) [2017] FCA 884 at [16], Murphy J identified the following rationales for orders for correcting advertising: (a) alert consumers to the fact that there has been misleading and deceptive conduct: Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 (Medical Benefits Fund) at [53] (Stone J); Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 at [22] (French J); (b) protect the public interest by dispelling the incorrect or false impressions that were created by the ... advertising campaign: Medical Benefits Fund at [49]; Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) 35 IPR 635 at 641 (Tamberlin J); (c) support the primary orders and assist in preventing repetition of the contravening conduct: Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 95 FCR 114 (Real Estate Institute of WA) at [49] (French J); and (d) to bring the outcome of the litigation to public attention so that those in the market have a broad understanding of the ways in which contraveners have had to change their conduct: Real Estate Institute of WA at 133. 17 Senior counsel for Reckitt, Mr Lancaster SC, submitted that the new advertisement was published in eight or nine magazines between January and March 2019, and that Court cannot be confident that those magazines would have been discarded. Accordingly, the new advertisement may still be in circulation. Further, he submitted that the point of sale materials may have been displayed until around June 2019 and as late as March 2020 in pharmacies at remote locations. Mr Lancaster SC also submitted that AFT's track record of non-compliance with Court orders supports corrective advertising, as an additional mechanism to promote future compliance. Mr Lancaster SC further argued that the form of the proposed corrective advertisement faithfully reflects the Court's findings, using language that is appropriately neutral, direct and clear. 18 I am not persuaded that the proposed corrective advertising orders should be made for the following reasons: (1) It is a matter of speculation whether the new advertisement is still in circulation and to what extent. There is no evidence that it is still in circulation. (2) I accept that it is possible that there is still some current misapprehension as a result of the advertising materials. However, the evidence does not reveal any such misapprehension. Further, while the case proceeded on the basis that the materials conveyed the offending representations, there was evidence that the materials could also reasonably be read in a manner that did not convey the representations. At [178] of the liability judgment, I found that the new advertisement can be read as a set of claims about the results of the Daniels 2018 study. In my view, that is the more likely reading of the new advertisement. The prospect of current misapprehension is accordingly diminished. (3) Particularly in the light of (2) above, I am concerned that the proposed corrective advertising orders would have a punitive effect that could outweigh any possible public benefit.

Costs 19 AFT argued that there should be no order as to costs on the basis that each party had enjoyed a measure of success in the proceeding. I disagree with this characterisation of the outcome. AFT has failed in its application and Reckitt has succeeded on its cross-claim. In the ordinary course, costs follow the event. Accordingly, unless there is some reason for a different outcome, AFT should pay the costs of the proceeding. 20 Reckitt contended that AFT's breach of order 12 of the orders made on 29 November 2018 in proceeding NSD1542/2017 is a circumstance that warrants a departure from the ordinary course, so that the Court should order Reckitt to pay costs on an indemnity basis. In Colgate-Palmolive Co v Cussons Pty Ltd [1992] FCA 801; (1993) 46 FCR 225 at 234, Sheppard J identified contempt of court as a circumstance which has been thought to warrant the exercise of the discretion to award indemnity costs. 21 There is no evidence about the circumstances surrounding AFT's breach. I am not persuaded that the breach of order 12, without more, justifies the award of indemnity costs. Reckitt submitted that it may be appropriate to defer the question of costs until after its foreshadowed contempt proceedings are determined. In my view, the preferable course is to award costs in Reckitt's favour on a party party basis, but grant leave to Reckitt to apply for indemnity costs following the determination of any contempt proceedings, on the basis of evidence that is not presently available to Reckitt to support such an application. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gleeson.