Aktiebolaget Hässle v Alphapharm Pty Limited

Statutory framework 8 In making its claim of invalidity, Alphapharm relies on section 138 of the 1990 Act. Section 138(1) provides that any person may apply to a "prescribed court", which includes the Federal Court of Australia, for an order revoking a patent. Under section 138(3), the Court may revoke a patent on one or more of the grounds set out in that subsection, but on no other ground. For present purposes, the relevant ground is that contained in section 138(3)(b), namely, "that the invention is not a patentable invention". 9 Under section 18(1)(b)(ii) of the 1990 Act, a patentable invention is, relevantly, an invention that involves an inventive step. Section 7(2) provides that, for the purposes of the 1990 Act, an invention is to be taken 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 in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim. 10 The Formulation Patent was granted under the predecessor of the 1990 Act, the Patents Act 1952 ("the 1952 Act"). Section 233(4) of the 1990 Act provides that objection cannot be taken to a patent granted under thePatents Act 1952 ("the 1952 Act"), and that such a patent is not invalid, on any ground that would not have been available against that patent under the 1952 Act. The Formulation Patent was granted under the 1952 Act. Accordingly, the elements of each ground of revocation under the 1990 Act apply only to the extent that they replicate in substance the elements that previously constituted a ground of revocation under the 1952 Act: see - NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 44 FCR 239 at 253-254. As is common ground between the parties, it follows that it is necessary to have regard to the 1952 Act in order to determine whether any ground of invalidity relied on by Alphapharm can be made out. 11 Under section 100(1) of the 1952 Act, a standard patent was able to be revoked on one or more of the grounds set out in that subsection, but on no other ground. The presently relevant ground, which is in substance replicated by the 1990 Act, is was that contained in section 100(1)(e) of the 1952 Act as follows: "that the invention, so far as claimed in any claim of the complete specification… was obvious and did not involve an inventive step having regard to what was known or used in Australia on or before the priority date of that claim." 12 It follows that the question for determination is whether the invention claimed in the Formulation Patent was obvious, and did not involve an inventive step, having regard to what was known or used in Australia on or before the priority date. 13 A question is raised in the notice of contention as to the correct priority date of the Formulation Patent, in the light of amendments that were made to its specification pursuant to Part 2 of Chapter 10 of the 1990 Act. However, for the purposes of considering the question of inventive step at this stage, we must take the relevant priority priority date of the Formulation Patentof the Formulation Patent to be Astra's claimed priority date, 30 April 1986 ("the priority date").

Tthe patent 14 Some arguments on behalf of Alphapharm, in relation to the question of inventive step, were based on the terms of the specification prior to its amendment. Those arguments will be dealt with in due course. However, for present purposes, we must assume the amendments were validly made and take as the relevant form of specification forthat has been argued before the Full Court the specification as amended ("the Amended Specification"). 15 The Amended Specification describes the field of the so-called invention in this way: "The present invention is related to a new stable pharmaceutical preparation containing omeprazole for oral use, to a method for the manufacture of such a preparation and to a method of affecting gastric acid secretion when using them." 16 Omeprazole is a compound that, when absorbed in the upper part of the small intestine, inhibits gastric acid secretion. It is a useful drug in connection with the treatment of stomach and duodenal ulcers. The compound itself was the subject of Australian Patent Number 529654 ("the Compound Patent"). Astra was also the grantee of the Compound Patent. It was the imminent expiry of the Compound Patent, on 30 April 1999, that gave rise to the need for an urgent trial of the present proceeding. 1617 The abstract in respect of the Formulation Patent contains the following claim: recites the substance of Claim 1 of the Amended Specification. Claim 1 is in the following terms: "An oral pharmaceutical preparation in the form of a tablet or pellet containing omeprazole as the active ingredient, characterized in that it is composed of:

(A) core material containing omeprazole together with an alkaline reacting compound, oror an alkaline salt of omeprazole optionally together with an alkaline reacting compound; (B) one or more inert reacting subcoating layer(s) on said core material; and (C) an outer layer, which is an enteric coating, said inert reacting subcoating layer(s) between the alkaline reacting core said core material and said outer layer comprising tablet excipients which are soluble or rapidly disintegrating in water, or polymeric, water soluble, filmforming compounds, optionally containing pH-buffering, alkaline compounds." 1718 The Amended Specification describes the background of the so-called invention as follows: "From e.g. EP-A1-0 005 129 omeprazole,… a potent inhibitor of gastric acid secretion is known. Omeprazole shows a powerful inhibitory action against secretion of gastric juice… and can be used for the treatment of gastric and duodenal ulcers. Omeprazole resulted from pioneering work by [Astra]. However, the compound is not easily formulated into a satisfactory pharmaceutical composition. Further pioneering work by [Astra] has now established a number of important facts relevant to the formulation of omeprazole as set out herein. Omeprazole is susceptible to degradation/transformation in acid reacting and neutral media. The half-life of omeprazole in water solutions at pH-values less than four is shorter than ten minutes. Also at neutral pH-values the degradation reaction proceeds rapidly. The stability profile is similar in the solid phase. The degradation of omeprazole is catalyzed by acidic reacting compounds and is stabilized in mixtures with alkaline reacting compounds. The stability of omeprazole is also affected by moisture and organic solvents. Thus an oral dosage form of omeprazole should be protected from contact with the acid reacting gastric juice in order to reach the small intestine without degradation where it can be absorbed. The rate of release of omeprazole from a pharmaceutical dosage form can influence the total extent of absorption of omeprazole to the general circulation. Thus a fully bioavailable dosage form of omeprazole must release the active drug rapidly in the proximal part of the gastrointestinal canal."

19 Lehane J commented that this extract "states the general nature of the perceived problem", which he helpfully summarised in this way: "Omeprazole is unstable and degrades rapidly in an acid or neutral solution. Its stability is also affected by moisture and organic solvents. In order to work as a drug, it must be released rapidly when it reaches the top of the small intestine; but it must be protected from acidic gastric juice on its way through the stomach." 1820 The consistory clause asserts that, in order to meet these requirements, the so-called invention provides an oral pharmaceutical preparation containing omeprazole as the active ingredient characterized in that it is composed of the three elements set out in the claim quoted in para 17 above. The consistory clause then repeats the language of Claim 1. The effect of Claim 1 and the this clauseconsistory clause is to describe the so-called invention as a preparation composed of three3 integers, being: · core material, · a subcoating layer or layers, · an outer layer.

1921 The core material is to contain: · omeprazole, together with an "alkaline reacting compound", or · an alkaline salt of omeprazole optionally together with an "alkaline reacting compound".

The alkaline reacting compound, or alkaline salt of omeprazole, is said to enhance the stability of the omeprazole.

2022 The subcoating layer is to be an "inert reacting" layer or layers between the core material and the outer layer. For present purposes, nothing seems to turn on the question whether there is a single subcoating layer or more than one. For convenience, therefore, we will refer to the subcoating layer or layers only in the singular.

23 The subcoating layer is to comprise tablet excipients. An excipient is an inactive substance that serves as the vehicle or medium for a drug. The excipients in the subcoating layer are to be: · soluble in water, or · rapidly disintegrating in water, or · polymeric, water soluble, film forming compounds.

The subcoating layer may optionally contain pH-buffering, alkaline compounds. 2124 The outer layer is to be "enteric coating". The term "enteric-coated" means coated so that the contents pass through the stomach unaltered. In other words, the coating is to be impervious to gastric acids in the stomach. The specification explains: "Ordinary enteric coatings, are made of acidic compounds. If covered with such a conventional enteric coating, omeprazole rapidly decomposes by direct or indirect contact with it, with the result that the preparations become badly discolored and lose omeprazole content with the passage of time. It has been found that in order to enhance the storage stability, the cores which contain omeprazole should also contain alkaline reacting constituents. When such a core is enteric coated with an amount of a conventional enteric coating polymer such as, for example, cellulose acetate phthalate, that permits the dissolution of the coating and the active drug contained in the cores in the proximal part of the small intestine, it also will allow some diffusion of gastric juice through the enteric coating into the cores, during the time the dosage form resides in the stomach before it is emptied into the small intestine. The diffused water of gastric juice will dissolve parts of the core in the close proximity of the enteric coating layer and there form an alkaline solution inside the coated dosage form. The alkaline solution will interfere with the enteric coating and eventually dissolve it. In accordance with the present invention this is prevented by the subcoating layer." The trial judge commented: "That suggests that the invention solves two particular problems. One is that, though in order to pass through the stomach to the small intestine omeprazole needs to be protected by an enteric coat, contact of omeprazole with such coat, which is acidic, causes the omeprazole to decompose. The solution to that problem is that the core to be coated contain 'alkaline reacting constituents'. Additionally, however, (it is said) some gastric juice will diffuse part of the core, forming an alkaline solution which in turn will attack the enteric coat from within. That problem is solved by the addition of the 'subcoating layer'." 25 The Amended Specification does not suggest any of the three integers is itself an invention. The claim is that the combination of these integers is an inventive step. In order to assess that claim, it is important to understand the purpose of the combination. It is this: 22·The The enteric coating protects the contents of the core, during passage through the stomach, from the effects of the gastric acids that are contained in the stomach. Once the preparation reaches the small intestine, the the alkaline there contained dissolves the enteric coating and releasesthe active drug contained in the core, making itthat will be capable of absorption into the bloodstream through the small intestine. The enteric coating renders the preparation insoluble in acid media but permits rapid disintegration or dissolution in neutral to alkaline media. 23·Omeprazole is "chemically labile" in an acid environment. That means the drug will degrade or decompose in such an environment. Conventional enteric coatings are made of acidic compounds. Therefore, omeprazole decomposes in direct contact with a conventional enteric coating, with resultant degradation of the preparation during the coating process or storage. With the passage of time, the preparation becomes badly discoloured and loses omeprazole content. The purpose of the inert reacting subcoating layer is to avoid these problems, by preventing interaction between the enteric coating and the drug. 26 The Amended Specification also says that a core coated with a conventional enteric coating will allow some diffusion of gastric juice through the enteric coating into the core during the time when the preparation resides in the stomach, before it is emptied into the small intestine. That rather suggests the enteric coating is not fully effective;. Tthe whole purpose of the coating is to protect the core from the stomach's acidic gastric juices. Nevertheless, tThe Amended Specification suggests the problem is caused byproceeds to "diffused water of gastric juice" dissolving thosethose parts of the core in close proximity to the enteric coating, andby forminging an alkaline solution inside the enteric-coated preparation. It is said the alkaline solution interferes with the enteric coating and will eventually dissolve it. Of course, if the enteric coating has been dissolved prior to reaching the small intestine, If that happens before the omeprazole reaches the small intestine, the drug will be exposed to the gastric acidsin of the stomach and itself degrade or decompose. The Amended Specification claims that the risk of this occurring dissolution of the enteric coating or degradation of the omeprazole in the core, as described above, is prevented by the presence of the subcoating layer. 27 Somewhat inconsistently within this exposition, the Amended Specification also asserts that omeprazole formulations with acceptable acid resistance can be prepared by using a conventional enteric coating technique. However, without the subcoating layer, storage stability of the formulations is not acceptable. Discolouration, showing a degradation of omeprazole, occurs during short storage at an elevated temperature or during the enteric coating process. If the amount of alkaline substances in the core is increased to a level providing an acceptable storage stability, or if an alkaline reacting salt of omeprazole is used in the preparation of the core, then, without the subcoating layer, the resistance to dissolution in acid media becomes unacceptably low and much or all of the active ingredient will degrade in the stomach. 28 On the basis of either of these expositions, or both of them read together, it is clear that, the essence of the so-called invention is the inclusion of a subcoating layer that separates the core containing the active drug from the enteric coating.

29 The Amended Specification contains another 16 claims. Claims 2 Claim 1 of the Amended Specification defines the invention in terms similar to those used in the abstract claim set out at para 17 above, except that it specifies that the preparation is to be "in the form of a tablet or pellet". Claims 2 to 12 and 14 are all fully dependent on Claim 1. Claims 2to 4 are concerned with more specific descriptions of the subcoating layers. Claims 5 and 6 are concerned with more specific description of the alkaline compound to be contained in the core. Claims 7 and 8 are concerned with more specific description of alkaline salts in the core. Claim 9 is concerned with more specific description of the enteric coating. Claim 10 is concerned with the water content of the formulation. Claim 11 is concerned with the thickness of the sub-coating layer. Claim 12 is concerned with a formulation in the form of a capsule.

30 Claims 13, 14 and 15 are concerned with the preparation of an oral formulation. Claims 16 and 17 are concerned with methods in "the treatment of gastrointestinal disease". Although Claims 13, 15, 16 and 17 are not, in terms, entirely dependent on Claim 1, there has been no suggestion that any distinction should be drawn between Claim 1 and any of the other claims for the purposes of considering the question of inventive step. Accordingly, it is not necessary at this stage to deal with the detail of any of those other claims.

Tthe law as to "inventive step" 2831 The inventive element needed to sustain a patent may be small. A "scintilla of inventiveness" is sufficient;"no smallness or simplicity will prevent a patent being good": see - Meyers Taylor Pty Ltd v Vicarr Industries Ltd (1977) 137 CLR 228 at 249. However, while While a simple idea may beinventive, it is nevertheless essential for the validity of a patent that there be some inventiveness. In Allsop Inc v Bintang Ltd (1989) 15 IPR 686 at 701, a Full Court of this Court adopted a statement made in the Supreme Court of the United States in Graham v John Deere Co of Kansas City (1966) 383 US 1 at 15: "the subject matter sought to be patented must be beyond the skill of the calling". The Full Court also referred to a dictum of Cotton LJ in Britain v Hirsch (1888) 5 RPC 226: "I do not agree with the view … that when anything is done which has not been done before, that is sufficient to justify a patent being obtained for it. In my opinion, it must be a question of whether there is sufficient invention to justify a monopoly being granted by the Crown in the particular thing." 2932 Section 100(1)(e) of the 1952 Act speaks of a patent being revoked where the invention is obvious and does not involve an inventive step "having regard to what was known or used in Australia" on or before the relevant priority date". That which is obvious does not involve an inventive step. That which involves an inventive step is not obvious. That matter is to be judged against the background of what was known or used in Australia on or before the relevant priority date. 3033 The expression "what was known or used in Australia on or before the priority date" has been explained by reference to a line of authority that predated the 1952 Act. The test of what was obvious, and did not involve an inventive step, having regard to what was known or used in Australia at the priority date, isof whether the invention would have been obvious to a non-inventive skilled worker in the field, equipped with the common general knowledge in that particular field of endeavour as at the priority date. It cannot be assumed that common general knowledge in Australia is the same as common general knowledge in a place outside Australia. Itt is necessary to prove, by evidence in the particular case, in any case just what constitutes the state ofrelevant common general knowledge in Australia: see is Wellcome Foundation Ltd v V.R. Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 at 270. 3134 Common general knowledge comprises that which is known to, or used by, those in the relevant field. Common general knowledge consists of the background knowledge and experience that is available to all (not merely particular individuals) in the relevant field, in considering the making of new products or improvements in old products. It must be treated as being used by an individual as a general body of knowledge: see - Minnesota Mining &and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 at 292.

The issue in the present case 34 As already noted, in the present case, the invention claimed is a new combination of three integers. Astra does not suggest any of those integers in itself is inventive. The issue is whether the combination of the three integers, being the core, the subcoating layer and the enteric (outer) coating, constitutes an inventive step or whether such a combination of integers would have been obvious to the non-inventive skilled worker in the field of pharmaceutical formulation. It must be emphasised that the 35 Th question is whether it would have been obvious to a non-inventive skilled worker in the field to select, from a possibly very large range of publications, the particular combination subsequently chosen by a revoker, "in the glare of hindsight", and also whether it would have been obvious to that worker to select the particular combination of integers from those selected publications. prior existence of publications revealing the three integers, as separate items, does not of itself make the an alleged invention obvious. It is the selection of the integers - out of, perhaps, many possibilities -, which must be shown to be obvious: see - Minnesota Mining & Manufacturing Co at 293. 36 However, it is important to note exactly what is meant by "obvious" in this context. The law does not require that it be apparent, at the outset, to the non-inventive skilled worker, that a particular combination of integers will succeed in obtaining the desired result. It is enough that it be apparent to such a worker that it would be worthwhile to try each of the integers that was ultimately successfully used. The point was made in a classic statement of Buckley LJ in Beecham Group Limited's (Amoxycillin) Application [1980] RPC 261. At 290-291, his Lordship said (omitting citations): "It is clearly established that, for a particular step or process to be obvious for the purpose of either section, it is not necessary to establish that its success is clearly predictable. … It will suffice if it is shown that it would appear to anyone skilled in the art but lacking in inventive capacity that to try the step or process would be worthwhile … Worthwhile to what end? It must, in my opinion, be shown to be worth trying in order to solve some recognised problem or meet some recognised need. The uninventive expert … should not be supposed to be attempting to discover something new, that is, to be striving for inventiveness. Having been shown what was disclosed by the prior art, he must be supposed to be attempting to solve some problem or fulfil some need which has not been resolved or satisfied by the prior art but which appears to his uninventive mind to be possibly capable of solution or satisfaction by taking the step or doing the thing under consideration. This, it seems to me, must involve the uninventive but skilled man having a particular problem or need in mind. If on carrying out his test he finds that the new step has the sort of consequence he had hoped but in an unexpectedly high degree, this would or might not mean that the new step was inventive or other than obvious; it might merely mean that a new obvious step has solved the problem or met the need unexpectedly well. The question would, I think, be one of degree. If, on the other hand, the new step produces some unexpected result productive of an improvement or benefit of an unexpected kind it may well be held to be inventive, the association of the new step with its result not having been obvious." [Emphasis added] 37 See also WR Grace & Co v Asahi Kogyo Kabushiki Kaisha (1993) 25 IPR 481 at 492-494. 38 Alphapharm does not suggest that the combination of integers disclosed in the patent would have been apparent to the skilled worker in the field prior to that worker attempting to formulate omeprazole. However, it says that each of the integers was at least worthwhile trying; therefore the combination itself was "obvious", in the sense in which that word is used in this area of the law. The critical question, in relation to the appeal, is whether this assertion is correct. The reasoning of Lehane J 3439 There was no dispute at the trial as to what type of person shouldwas properly to be regarded as the hypothetical "non-inventive skilled worker in the field". It was common ground this is a person who is experienced in the practical work of formulating drugs for therapeutic use. Such a person will typically be is the skilled worker in the relevant field for present purposes. The typical practical formulator is a highly qualified pharmaceutical chemist, whose qualifications frequently, if not usually, will include a doctorate. 3540 Argument on the question of inventive step, before the trial judge, and before the Full Court, principally concerned the use made of a number of documents that were referred to by witnesses called by Alphapharm. It seems this dispute extended to eight documents. Alphapharm contended that the contents of all eight should be regarded as common general knowledge; alternatively, if the documents were not part of common general knowledge, routine literature searches would have led the hypothetical formulator to those documents. Astra argued that none of the documents was part of common general knowledge and it was not legitimate to treat the hypothetical formulator as having access to them. 3741 Lehane J found two of the documents did not form part of the prior art; it was not proven that the documents had been published in Australia before the priority date. It is not necessary to consider those documents further. 3842 Two of the documents concerned earlier patents relating to enteric coatings. One patent was granted in 1953, the other in 1948. His Honour did not accord any weight to the patents and they played no part in the argument before the Full Court.

3943 The four documents that appear to have dominated the argument before the trial judge were as follows: · Australian Patent No. 563842 ("the Salts Patent") relating to a series of compounds that are alkaline salts of omeprazole and pharmaceutical compositions containing salts of omeprazole. Astra is the grantee of the Salts Patent. · An article published in 1985 in the Scandinavian Journal of Gastroenterology, the authors of which were Dr A. Pilbrant and Dr C. Cederberg ("the Pilbrant-Cederberg Article"). The article is entitled "Development of an Oral Formulation of Omeprazole". Both Dr Pilbrant and Dr Cederberg were members of the scientific and medical team within Astra that developed the dedicated to the development and formulation of omeprazole the subject of the Formulation Patent. · Technical Information Sheet No. H-17 issued by the Shin-Etsu Chemical Co ("Shin-Etsu H-17"). The sheet is dated March 1975 and is entitled "Enteric Coating on Tablets Containing Alkaline Matter". · Notes of a course conducted by Röohm Pharma on the coating of tablets ("the Röohm Pharma Notes"). The document was published in 1983. 44 It should be noted that the contentious documents did not include the Compound Patent. It seems to have been accepted that this document would be available to the hypothetical formulator. 4045 The trial judge found that none of the four documents mentioned in para 42 was comprised in the relevant common general knowledge as at the priority date. However, he also found that the hypothetical formulator, if asked in April 1986 to formulate omeprazole, would have done a literature search that would have uncovered, not only the Compound Patent, but also the Pilbrant-Cederberg Article and the Salts Patent. 4146 The Pilbrant-Cederberg Article reveals a number of important aspects of omeprazole. It shows that omeprazole is onlyvery slightly soluble in water, but is very soluble in alkaline solutions and degrades rapidly in water solutions at low pH values. It disclosesd that moisture, solvents and acidic substances have a deleterious effect on the stability of omeprazole and should be avoided in pharmaceutical formulations. Two principal options for the formulation of an oral solid dosage of omeprazole arewere suggested. The first iswas a conventional oral dosage form, from which omeprazole is released and absorbed rapidly enough to avoid degradation in the stomach. The second iswas an enteric coated dosage form which iswas said to offer the best possibility. 4247 The Salts Patent discloses the instability of omeprazole and, in particular, that upon storage without any special precautions being taken, it is degraded at a rate that is higher than desired. None of Alphapharm's witnesses suggested that the Salts Patent disclosed a subcoat. 4448 At para 110 of his reasons, Lehane J said:formulated the question of inventive step as follows: "Certainly, considered at the commencement of a hypothetical attempt, immediately before the priority date, to formulate omeprazole, the combination claimed in the patent was not obvious. The question is whether the hypothetical, not particularly imaginative skilled formulator, equipped with common general knowledge and embarking on the task at that time, would be likely to have arrived at the combination by taking routine steps which such a formulator would take for the purpose of formulating a drug." (Paragraph 110) (emphasis added [Emphasis added]) 49 After dealing with some submissions about witnesses, the trial judge commented, at para 112: "What is important, however, is the steps which the hypothetical formulator would have taken and where those steps would have led. I have no difficulty with the proposition that a formulator asked, in April 1986, to formulate omeprazole would have done a literature search at least in order to discover what learning there was about omeprazole itself and its characteristics. Clearly enough such a search would have uncovered the compound patent, the omeprazole salts patent and Pilbrant and Cederberg. Pilbrant and Cederberg both indicated a number of the characteristics of omeprazole and pointed the formulator in a particular direction: an enteric coated dosage form seemed most likely to be the best possibility. That being so, there can be no surprise that the witnesses would have first tried directly enteric coating an omeprazole core, or that the particular 'controlled release' dosage form that Dr Marshall would have tried was an enteric coated one. I accept that that is what the hypothetical formulator would have done. I accept also that the process which would then have followed would have been a complex, detailed and laborious one, involving a good deal of trial and error, dead ends and the retracing of steps; and it is easy to fall into the twin traps of hindsight and over simplification. But there is no reason to doubt that the hypothetical formulator would, having tried the first simple formulation, have done substantially what Astra did: submitted it to appropriate tests, including tests for stability on manufacture and on storage and for acid resistance." 50 Lehane J said it was difficult to resist the force of an observation by Dr Story, an expert witness called on behalf of Alphapharm,"that it is irrational to suppose that the hypothetical formulator's tests would have produced results substantially different from those of Astra's tests". Astra's tests showed immediate discolouration, on coating, of a core to which no alkaline reacting substance had been added. His Honour also said that, if it was accepted, as he thought it should be, that a hypothetical formulator would have used an alkaline substance to stabilise omeprazole (an acid labile drug) there was no reason to suppose that further testing would not have revealed the two problems identified by the Astra tests: either inadequate stability on storage or inadequate gastric resistance, depending on the quantity and character of the alkaline material included in the core. 51 The learned judge noted a controversy between the expert witnesses as to whether the hypothetical formulator would have concluded that either or both these problems stemmed from interaction between the enteric coat and the alkaline material. This was the most contentious factual issue in the case. The experts called by Alphapharm put the gastric resistance problem down to undermining of the enteric coat by its interaction with the core, rather than permeation of water or acid through a properly applied and intact enteric coat. 52 However, his Honour thought this controversy to be immaterial. At paras 116-117 he said he found nothing improbable in the assertions of the witnesses called by Alphapharm: "that, once problems were identified resulting from applying an enteric coat directly to the core, the formulator would have consulted manufacturers' literature and would have found, if not FMC Aquateric, then at least the Röhm Pharma course notes (1983) and Shin-Etsu H-17. It is true that Shin-Etsu H-17 deals with a somewhat different situation in which 'imaginable ion exchange' might occur and suggests that, whereas in that situation a water-soluble sub-coat (HPMC) will not work, a water insoluble sub-coat will (and, of course, a water insoluble sub-coat was likely to present serious difficulties with a drug that was only slightly soluble and had to be released in the upper part of the small intestine). And the particular sub-coat suggested by the Röhm Pharma document is a second enteric coat: one, therefore, hardly likely to solve a problem of interaction between an alkaline core and enteric coat. More generally, there is apparent force in the comment made in submissions for Astra that, as at the priority date, references to sub-coats included for the purpose of separating incompatible substances were few and scattered among some obscure publications. Nevertheless, if one accepts, as I do, that it was generally known by Australian formulators that there was commonly to be found in manufacturers' literature information relevant to the use of their products in formulations, and that the particular publications were likely to have been found by the formulator as a result of routine steps taken in the course of the formulation process, the force of the comment is significantly weakened; and if one accepts also, as again I do, the evidence, particularly of Dr Story, that one does not look at documents only for the purpose of finding precise directions but that one reads them for more general ideas, andthat one would first try the simpler solutions rather than the more complex, then it is not difficult finally to accept that the element of a water soluble sub-coat, in combination with the other elements(a core of omeprazole with which alkaline substance has been mixed and an enteric coat) of the combination, might have been arrived at by the skilled, though not particularly imaginative, formulator."[Emphasis added] 53 The trial judge continued, at para 118: "To look at the matter in that way is not, I think, to ask the irrelevant question, were the individual integers of the combination obvious, rather than the relevant question, was the combination obvious. That which is obvious, or non-inventive, in this context is that at which the skilled, but not particularly imaginative or inventive, formulator might have arrived by following the routine processes of the craft. Of course, the particular process would not have been a simple or quick one and numerous possibilities might have been tried. But, given Pilbrant and Cederberg and all the expert evidence, an enteric coated dosage form was the highly likely starting point (as it was for Astra) and, to a large extent, the likelihood that particular subsequent steps would be taken must depend on the firmness with which the view was maintained that the selected starting point was appropriate. The evidence of the formulators suggests, and Astra's experience confirms, that that view was likely to have been maintained with considerable firmness." [Emphasis added] 54 The judge said he was "fortified in that way of viewing the matter" by the evidence of Dr Marshall, an organic chemist who has had considerable experience in the research and production of pharmaceutical products. Dr Marshall did not read the Formulation Patent prior to the trial. But he had provided a series of reports to Alphapharm's solicitors, each of which responded to particular items of information supplied, or questions asked, by the solicitors. The idea was to replicate the thought processes of the hypothetical formulator, who had no knowledge of the teaching contained in the patent, so far as this would be possible without conducting any tests. His Honour said, in para 119: "Astra took comfort of a number of aspects of his evidence: that he accepted that the task [of] formulating omeprazole was likely to be a difficult and complex one; that he did not arrive at the precise combination of the patent; and (as it was submitted) that the instructions he was given from time to time directed him along a path towards the combination. I have already described his evidence in some detail. Of course, the exercise undertaken by Dr Marshall was not an actual formulation of a substance which he had but a theoretical or hypothetical one, and that presented difficulties and (as he commented) frustrations. It was conducted in 1998 not 1986, though it was not suggested that that fact particularly affected the value of his evidence as he was effectively blinkered (I do not think that it is of any consequence that he obtained his copy of Pilbrant and Cederberg from Alphapharm's solicitors: he found the abstract by his own researches). But, despite the limitations of the exercise, several aspects of his report are striking. He, like all the other witnesses, thought that an enteric coated dosage form was an [sic] appropriate. He moved quickly to that position following his initial general comments about the formulation process and about sustained and controlled release; I do not doubt that it was his own independent idea to opt for an enteric coat, not merely the product of a suggestion to him by someone else. His formulation of the core included, apparently as a matter of course calling for no particular comment, a strongly alkaline substance (as I have mentioned, he thought it probable that he could successfully apply an enteric coat directly to that core). When presented with scenarios, which had to take the place of actual tests but were, I think, a reasonable reflection of the Astra experience, one of the things which he thought might be occurring was an interaction between core and coat and one of the steps which he suggested was the incorporation of a sub-coat, initially of (water insoluble) ethylcellulose. Perhaps the question he was then asked, 'why ethylcellulose?', was a 'nudge' but, more importantly, when asked to consider what he would do if tests showed poor bioavailability, he suggested changes to the sub-coat. Certainly, his preferred (theoretical) solution was a 'leaky' sub-coat comprising a mixture of ethycellulose and HPMC; but HPMC was among a number of alternative sub-coating materials which, he suggested, would be considered." Ethylcellulose is not water soluble, but HPMC (Hydroxypropylmethlcellulose) is. It will be recalled that the Amended Specification stipulated that the subcoat be soluble in water, rapidly disintegrating in water or a polymeric, water soluble, film forming compound. 55 His Honour concluded (at para 120), in relation to obviousness: "Cumulatively and allowing as best I can for the insidious effects of hindsight, the evidence persuades me that the combination claimed in claim 1 of the patent did not, having regard to common general knowledge at the priority date, involve an inventive step. That being so, the same conclusion must apply equally, I think, in relation to each of the claims (certainly there was no suggestion that any of them might be considered independently in this context). The consequence is that, on the ground of obviousness, Alphapharm succeeds on its cross-claim." 45His Honour also said as follows: "The Astra tests showed immediate discolouration, on coating, of a core to which no "alkaline reacting" substance had been added; there was no suggestion that the core was formulated or made in any other than a well known way, that is a way in which the hypothetical skilled formulator might well have chosen… there was nothing unusual about the use of an alkaline substance to stabilise an acid labile drug;… If that also is accepted, as I think it should be, as a step which the hypothetical formulator was likely to take, there is no reason to suppose that further testing would not have identified the "Scylla and Charybdis" identified by the Astra tests: either inadequate stability on storage or inadequate gastric resistance, depending on the quantity and character of the alkaline material included in the core." (Paragraphs 113-114) (emphasis added) 4655Later on, however, his Honour said: "…it is not difficult finally to accept that the element of a water soluble sub-coat, in combination with the other elements… of the combination, might have been arrived at by the skilled, though not particularly imaginative, formulator." (Paragraph 117) (emphasis added) 4755His Honour then went on to state the following proposition: "That which is obvious, or non-inventive, in this context is that at which the skilled, but not particularly imaginative or inventive, formulator might have arrived by following the routine processes of the craft." (Paragraph 118) (emphasis added) 4855His Honour accepted that the process in which the hypothetical formulator would engage would have been a complex, detailed and laborious one, involving a good deal of trial and error, dead ends and retracing of steps. His Honour considered that the particular process would not have been a simple or quick one and that numerous possibilities might have been tried. His Honour also referred to the evidence of Dr Marshall, to whom reference will be made later, who accepted that the task of formulating omeprazole was likely to be a difficult and complex one. 4955Despite finding that there was no evidence that what was contained in Shin-Etsu H-17 and the Rohm Pharma Notes had entered the stock of common general knowledge, his Honour held that the witnesses called by Alphapharm were entitled to rely on those documents for the purposes of their evidence. His Honour accepted their evidence that one does not look at such documents only for the purpose of finding precise directions but that one reads them "for more general ideas". 5055Further, his Honour accepted that Shin-Etsu H-17 deals with a situation somewhat different from that which arises in the case of omeprazole. Shin-Etsu assumed the use of an intermediate coating and recommended the inclusion of stearic acid in that coating. Further, while a subcoat is suggested by the Rohm Pharma Notes, the particular subcoat suggested was a second enteric coat. Such a coating, of course, was hardly likely to solve a problem of interaction between the core material and an enteric coating. Notwithstanding that neither document pointed towards the intermediate coat of the Formulation Patent, his Honour concluded that reference to Shin-Etsu H-17 and the Rohm Pharma Notes might have led the hypothetical formulator to the idea of subcoating, albeit a subcoating of a different nature from that suggested by either of the documents.

Contentions on appeal 56 Astra's written "Submissions on the issue of obviousness" identified two grounds of challenge to the decision of Lehane J on this issue. First, it was said, "the primary judge made a fundamental error in treating a number of documents …" (these were identified as the eight documents mentioned in paras 40 to 44 above) as if they were part of the stock of common general knowledge. Second, according to the submission, "the primary judge's findings lead to the contrary conclusion". The submission identified the relevant findings as those contained in paras 110 and 112 of the judgment (quoted at paras 48 and 49 above). 57 These grounds were amplified, both in the written submissions and in oral argument. Counsel for Astra supported Lehane J's finding that the documents were not part of common general knowledge as at the priority date. They contended this finding should have led his Honour to hold that the hypothetical formulator would not have been aware of the information they contain. It follows, said counsel, his Honour erred in having regard to the fact that the hypothetical formulator would, by routine searches, have found the relevant documents. Counsel for Astra argued that the process of reasoning adopted by Alphapharm's witnesses effectively treated the documents that, they said, would have been discovered by routine steps as though they were part of common general knowledge. In addition, counsel argued that the documents in question did not point towards the solution in the Formulation Patent. Rather, they said, some of the documents taught away from that solution. 58 The first of the two references made in the second ground of appeal is to the passage in the trial judge's judgment in which he said "considered at the commencement of a hypothetical attempt, immediately before the priority date, to formulate omeprazole, the combination claimed in the patient was not obvious". Counsel for Astra argued this finding ought, logically, to have concluded the issue of obviousness in their clients' favour. The second reference is to the passage in which his Honour said the process that would have been involved in making the invention would have been a "complex, detailed and laborious one". Accordingly, counsel contended, his Honour ought to have found the Formulation Patent involved an inventive step. 5159 Alphapharm supported the conclusion of the trial judge that the invention was obvious. Counsel pointed out that the only witnesses who fell within the agreed description of the hypothetical skilled worker - that is, a practical formulator (typically a highly qualified pharmaceutical chemist with a capacity for original research) working in Australia - were called by Alphapharm. Counsel said, not only that the trial judge was correct to prefer the view of those witnesses to that of the Astra witnesses, but his Honour ought not even to have considered the views of the Astra witnesses. 60 Counsel for Alphapharm also pointed out there was ample, undisputed evidence that it was standard practice for formulators to commence their task by undertaking computer searches to ascertain the characteristics of the relevant drug. There was also evidence that it was common practice for Australian formulators to use manufacturers' literature. On this basis, counsel argued, the hypothetical formulator, by taking routine steps that would have led to the documents in question, would have arrived at the solution suggested by the documents, notwithstanding that the documents themselves were not part of common general knowledge. Alternatively, Alphapharm claimed his Honour erred in concluding that the Salts Patent, the Pilbrant/Cederberg Article, Shin-Etsu H-17 and the Röhm Pharma Notes were not part of common general knowledge as at the Priority date. 53Astra contended that his Honour made a fundamental error in treating the relevant documents as if they were part of the stock of common general knowledge, notwithstanding his finding to the contrary. The effect of following the process of reasoning adopted by Alphapharm's witnesses was to treat the documents that they said would have been discovered by routine steps as though they were part of common general knowledge. The weight to be given to the trial judge's opinion 61 TheThe question whether an invention is obvious has been described as "a kind of jury question": see per Jenkins LJ in Allmanna Svenska Elektriska AB v Burntisland Shipbuilding Co Ltd [1952] RPC 63 at 70. A finding on that question and should be treated with considerableappropriate respect by an appellate court. As was pointed out by Lord Hoffman, speaking for the House of Lords in Biogen Inc v Medeva Plc (1996) 36 IPR 438 at 452, specific findings of fact, even by the most meticulous judge, are necessarily an incomplete statement of the impression that was which was made upon her or him by the primary evidence. So there is a need for caution in reversing athe trial judge's evaluation of the relevant facts.evaluation of the facts His Lordship pointed out that "expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualifications and nuance … of which time and language do not permit exact expression, but which may play an important part in the judge's overall evaluation". If no question of error of law or principle is showninvolved, an appellate court should be slow to interfere with a trial judge's assessment of obviousness. -However, where the a question of principle is involved, or the trial judge is demonstrated to have erred as a matter of in point of principle, it may be appropriate for an appellate court to come to a different assessment from that of the trial judge. 62 In the present case, Astra submitted the trial judge did err in point of principle. Counsel argued his Honour applied the wrong standard in accepting, as he did in para 117 of his reasons (quoted in para 52 above) "that the element of a water soluble sub-coat, in combination with the other elements … of the combination, might have been arrived at by the skilled, though not particularly imaginative, formulator". (Emphasis added) Counsel said the question for his Honour was not whether the particular combination might have been arrived at by the hypothetical formulator but whether he was satisfied that, as a matter of probability, it would have been arrived at. 63 It is likely the trial judge derived the word "might" from a passagein the judgment of Aickin J in Wellcome Foundation, which Lehane J cited at para 110. At 286, Aickin J stated the test of obviousness in these words: "The test is whether the hypothetical addressee faced with the same problem would have taken as a matter of routine whatever steps might have led from the prior art to the invention, whether they be the steps of the inventor or not." [Emphasis added] However, we think the word "might" was used in a different sense in this passage. Aickin J was probably intending to refer to the steps that "might" be taken, whatever they might have been, that would have led from the prior art to the invention. We do not think he intended to assert the sufficiency of a mere possibility of a particular result. That would be a standard inconsistent with settled authority; see, for example, the words of Buckley LJ in Beecham Group, quoted at para 36 above: "a new obvious step has solved the problem". 64 Notwithstanding that Lehane J, in para 110 (quoted at para 48 above), said the question "is whether the hypothetical … formulator … would be likely to have arrived at the combination" and, at para 112, stated "what is important is the steps the hypothetical formulator would have taken and where those steps would have led", there is some ambiguity about his use of the word "might" in paragraphs 117 and 118 of his reasons. It is conceivable, notwithstanding his earlier statements of the issue, that his Honour had in mind a possible result of the hypothetical formulator's activity, rather than a probable result. If that was the case, he would have adopted an erroneous standard. The meaning of the words being uncertain, fairness to the appellant requires us to accept the possibility that Lehane J erred, and be prepared to examine for ourselves the evidence pertaining to lack of inventive step. We will make our own finding on that matter; although, of course taking into account the stated impact of that evidence on the trial judge.

Expert evidence 65 Evidence in chief consisted, to some extent, of what the witness asserted would have been obvious to a formulator. For example, Dr Rowe said: "After reviewing [various references] and conducting such further tests as were necessary, it would have been an obvious and routine task for … any … competent formulator in Australia to produce an enteric coated dosage form, either in the form of an enteric coated tablet, or coated granule or pellet formulation, which was subsequently filled into hard gelatin capsules. ……………… If on conducting [certain stability tests identified in Dr Rowe's affidavit] the omeprazole was decreasing in potency, it would have been obvious to … any competent formulator that either one of two scenarios was occurring: (a) the drug was unstable in the solid state on its own; or (b) the drug was interacting with something in the formulation which was causing it to breakdown." Dr Story said: "The concept of using a subcoat to physically separate an alkaline core from an enteric coat to prevent interactions between them was obvious to me before the Priority Date and I believe that it would also have been obvious to any formulation chemist in Australia before the Priority Date." 66 Assertions as to the ultimate issue may be rendered admissible by the operation of section 80 of the Evidence Act 1995. Section 80 provides as follows: "Evidence of an opinion is not inadmissible only because it is about: (a) a fact in issue or an ultimate issue; or (b) a matter of common knowledge." 67 Lehane J posed the question: what were the steps that "the hypothetical formulator would have taken and where those steps would have led". That was a proper formulation of the question for the Court, assuming it is established there is a practice for ordinary skilled non-inventive workers in the field to take particular steps. Evidence as to what those steps were, and where those steps would have taken the hypothetical formulator, would then be admissible. 68 Of course, admissibility is one thing, utility is another. Opinion evidence consisting of conclusions, such as assertions as to what is commonly or generally well known or done, unless supported by specific facts or scientific evidence that supports the witness' assertions, may be given little weight. The weight to be given in a particular case will depend on the trial judge's assessment of the witness. However where, as in the present case, there is little dispute about the witnesses' assertions and the trial judge assesses the witness to be reliable there is no reason to deny weight to the assertions. 69 Statements by an expert as to what "would have been obvious" raise questions of what the expert understands by the concept of obviousness. Such evidence ought not be received unless it is first demonstrated that the expert understands the concept of obviousness as explained in the 1990 Act and the authorities. 70 It is important to distinguish between evidence of what a hypothetical formulator would have done and what the witness himself or herself would have done. Evidence of the latter kind is not admissible; it is not relevant to the question at issue. To ask the question what the witness would have done is to raise a false issue: the true issue is the knowledge and practices of the hypothetical formulator, rather than those of the witness. Of course, evidence as to the materials, information and research techniques that were available to, and habitually used by, the hypothetical skilled worker in the relevant field would clearly be admissible. So would evidence as to what skilled workers in the field actually did at or prior to the Priority Date. The relevance of reference documents 71 While manufacturers' literature may well play an important role in the work of a hypothetical formulator, as Lehane J observed at para 42, in the light of the authorities it would be a "bold" submission to contend that material, which is not part of common general knowledge, can be relied upon to determine the question of obviousness. Nevertheless, by a process that his Honour characterised as taking the routine steps that the hypothetical formulator would take for the purpose of formulating a drug, such documents were held to be admissible for the purpose of raising "general ideas". 72 If that process were permissible, the concept of common general knowledge would lose much of its significance. If it is shown that the particular skilled worker in the field would, as a matter of routine, read literature beyond the common general knowledge of the field, the distinction becomes quite meaningless. The question is not whether a skilled worker conducting a literature search would find pieces from which there might have been selective elements which make up a patent - Minnesota Mining & Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 at 293. What might be found by a diligent searcher is not the same as "common general knowledge". 73 That is not to say that the whole of the content of "common general knowledge" need be within the conscious awareness of the hypothetical non-inventive skilled worker. For example, there may be publications of technical and detailed information that are habitually consulted by the hypothetical skilled worker. Notwithstanding that the hypothetical skilled worker would not have the whole of the contents of such reference material in his or her mind, such information should be regarded as part of common general knowledge. 74 Another area where it may be permissible to rely upon information that is not part of the common general knowledge is where the hypothetical addressee, faced with a problem, would resort to information that is fundamental to understanding the nature of the problem, if this were found to be a routine step that would have led from the prior art to the invention: cf Welcome Foundation at 286 per Aickin J. Such information would include information about the basic characteristics of a drug for which a formulation is to be found. 75 Astra accepted of the proposition that the hypothetical formulator must be assumed to have had access to the Compound Patent. The rationale of this acceptance must be that it is possible to postulate the existence of a skilled person, concerned at the priority date to formulate omeprazole, only in the context of that person having decided, or been instructed, to formulate the drug. As such a decision or instruction would be unimaginable in the absence of the decider or instructor having information about the basic characteristics of omeprazole, it must be assumed the hypothetical formulator has found, or been given, that information, or, at least, been told where it may be obtained. So it makes sense to assume access to the Compound Patent. 76 Similar reasoning applies to the Salts Patent and the Pilbrant-Cederberg Article. Both these documents were available to anyone who made an appropriate computer search against the word "omeprazole". A computer search against the relevant drug is a routine first step for a formulator. Accordingly, it is reasonable to assume that all the information contained in the Compound Patent, the Salts Patent and the Pilbrant-Cederberg Article was known at the outset to the hypothetical formulator. We will refer to the information contained in these three documents as "the basic information". In any event, Dr Rowe gave evidence that, if information about the basic characteristics of omeprazole was not already available to a formulator, the formulator could, and would, readily obtain it by carrying out a series of routine tests on a quantity of omeprazole. Although Astra objected to this evidence it elected not to cross-examine Dr Rowe on it, or otherwise dispute it. We regard this evidence as admissible for much the same reason as evidence as to routine steps is admissible and it therefore stands as undisputed evidence. Thus, it may make little difference to the result whether or not the Salts Patent and the Pilbrant Cederberg Article are assumed to have been available to the hypothetical formulator as a routine step or whether the hypothetical formulator would, as a matter of routine, ascertain the characteristics of omeprazole by his or her own tests. 77 We do not consider that it is permissible to have regard to documents that would have been read merely for "general ideas". However, we have concluded that this case does not turn on the question of whether material such as manufacturers' literature should be treated as part of the common general knowledge of the hypothetical formulator, or regarded as material available to him or her in carrying out routine steps in arriving at a hypothetical formulation. Our ultimate conclusion of lack of an inventive step does not depend on the contents of manufacturers' literature; rather, the conclusion is based on expert evidence regarding fundamental concepts known to pharmaceutical formulators prior to the priority date. 78 For the purposes of the appeal we are prepared to assume, without finally determining, that the hypothetical formulator should be assumed not to have had access to the manufacturer's literature that would have been found upon a literature search where that information is not part of common general knowledge. The references to manufacturers' literature made by Alphapharm's witnesses really arose by way of citations to support their claim of general knowledge of those concepts and were therefore examples which corroborated, rather than proved, the existence of the concepts. Thus, although the existence of Shin-Etsu H-17 or the Röhm-Pharma Notes prior to the priority date tended to corroborate the evidence of Alphapharm's witnesses as to what was commonly known in the industry at the relevant time, it was not necessary for Alphapharm to use them for that purpose because, as we later explain, that evidence was not disputed. We, of course, disregard the four documents (mentioned in paras 41 and 42 above) that were discarded by Lehane J.

The critical issues 79 In analysing the evidence, it is necessary for us to bear in mind that the step that is claimed to be inventive was the selection of the integers; none of the integers, itself, is claimed to be inventive. The patent identifies three integers: · core material comprising omeprazole and an alkaline reacting compound or alkaline salt; · a subcoating layer soluble, or rapidly disintegrating, in water or consisting of polymeric, water soluble, film forming compounds; and · an enteric coated outer layer. 80 As to the first integer, omeprazole is a "given"; the whole purpose of the formulation was to deliver that particular drug to the bloodstream of a patient. The basic information would instruct the hypothetical formulator that omeprazole is an acid-labile compound. It follows, as was generally agreed at the trial, that it would immediately be apparent to the hypothetical formulator that the omeprazole would need to be stabilised by association with an alkaline reacting compound or alkaline salt. The first integer selects itself. We do not understand there to be any dispute about that proposition. 81 Nor do we understand there to be any dispute about the obviousness of using an enteric coating. An enteric coating is a coating that is resistant to acids. Given that omeprazole is acid-labile, and the known presence of acid gastric juices in the stomach, an enteric coating is an obvious requirement for delivering a satisfactory quantity of omeprazole to the small intestine. It is notable that all the expert witnesses thought the first step for the hypothetical formulator was to apply an enteric coating directly to the core material and test the result. The evidence of Dr Pilbrantestablished that this was the first step in fact taken by the Astra team. As the trial judge commented, in para 94 of his reasons: "At the outset, the formulator would have had no reason to suppose that a simple enteric coated dosage form would not suffice." 82 The only integer whose presence raises a doubt about obviousness is the subcoat. Was it obvious, within the sense of the relevant legal authorities, for the hypothetical formulator to try out the idea of a subcoat? And, if so, was it obvious for the hypothetical formulator to try out a subcoat falling within the description contained in the patent? These are the questions critical to the claim of lack of inventive step. They overlap and may be addressed together. 83 Before going to the evidence pertaining to these issues, we indicate that we reject the submission made by counsel for Astra that the finding made by Lehane J, in para 110 of his reasons for judgment (quoted at para 48 above), logically concluded the issue of obviousness in their clients' favour. It will be recalled that his Honour said that "considered at the commencement of a hypothetical attempt … the combination claimed in the patent was not obvious" (our emphasis). That finding would dispose of the issue only if the concept of obviousness was restricted, in the case of a combination patent, to a situation where the hypothetical formulator could foresee, at the commencement of his or her task and without the necessity for testing or any process of trial and error, which particular integers (out of all those "worth a try") would be most appropriate. However, that is not the law, as was made clear by Buckley LJ in the extract from the Beecham Group quoted at para 36 above. Once it is accepted that it is sufficient that it be obvious to the hypothetical formulator that a particular possibility is worth trying (perhaps amongst many possibilities), it must follow that it is incorrect to say that an invention lacks obviousness simply because the hypothetical formulator would, or might, have been unable to say in advance which (if any) of the possibilities worth trying would prove most satisfactory. 84 This reasoning applies even where (as here) a problem unexpectedly appears during the course of routine steps undertaken for the purpose of creating a new product. Although the existence of the problem may not have been apparent at the outset, its solution (when it does appear) may be obvious, as distinct from inventive, depending on whether or not it would immediately be apparent to a skilled worker in the field to try the solution that in fact proved effective. 85 Obviousness is not necessarily negated by the fact that the task of the hypothetical formulator would have been "complex, detailed and laborious, involving a good deal of trial and error, dead ends and retracing of steps". Depending on the nature of the relevant product, these qualities may be inherent in the evaluation of possibilities that are obviously "worth a try". In Wellcome Foundation at 287, Aickin J said: "The fact that extensive research and experiment was carried out by a person claiming to be an inventor will not of itself prove that an invention had been made. Invention will depend on the nature of the result ultimately claimed, whether product or process, viewed against the background of common general knowledge." 86 In a case where the possibilities "worth a try" concern the cheapest, and most efficient, method of manufacture, and the efficacy and storage characteristics, of a human medication, the carrying out of extensive research and experiment is probably inevitable. As the English Court of Appeal pointed out in The General Tire & Rubber Company v The Firestone Tyre and Rubber Company Limited [1972] RPC 457 at 497, the critical question is not whether a hypothetical formulator would have needed to undertake complex and laborious work, but "whether what had to be done to achieve the step was truly a matter of inventive experiment or merely a matter of that type of trial and error which forms part of the industrial function of such an addressee". 87 The answer to that question must depend on the evidence in the particular case, to which we now turn. As Alphapharm bears the onus of proof on the issue of lack of inventive step, we will deal with its evidence on this issue before considering that of Astra. Alphapharm's evidence on subcoat (i) Dr Story 88 Dr Michael John Story has a doctorate, in chemical engineering, from the University of Cambridge. Between 1973 and 1986 he held a series of positions in a major Australian pharmaceutical company, F H Faulding & Co Ltd. Between 1986 and 1990, Dr Story was Director of Research and Development at Cortecs International Limited, a United Kingdom pharmaceutical company. He returned to Australia in 1990 and was employed until 1996 in research and development of pharmaceutical formulations. At the time of giving evidence, Dr Story was a consultant to the pharmaceutical industry. 89 Dr Story has had considerable "hands on" experience in the formulation of pharmaceutical preparations, particularly enteric coating. His Honour concluded there was no doubt that Dr Story was, subject to one matter, within the relevant class of skilled formulators. That one matter is that Dr Story is named as sole inventor in a patent and one of two joint inventors in three other patents. Astra submitted to the trial judge that he could not, therefore, be regarded as non-inventive. However, his Honour concluded that Dr Story was qualified to give evidence as to common general knowledge in Australia as at the priority date and as to the practice of formulators in Australia at that time. 90 In his first affidavit, Dr Storysaid the use of alkaline material to stabilise acid-labile medicaments was well known before the priority date and, in relation to omeprazole, had been published in the Pilbrant-Cederberg Article.He said, the use of a subcoat "was a perfectly normal and routine application used to separate a core from an enteric coat". In para 41 of his first affidavit Dr Story also said: "An inert subcoating is commonly used, and was commonly used in Australia prior to April 1986, to prevent: (a) interactions between an enteric coating and cores containing alkaline matter; (b) interaction between an enteric coating and substrate component(s); (c) interaction between an inner coat and an outer coat; (d) poor adhesion of an enteric coating to hard or soft gelatin capsules; (e) moisture or solvents from contacting or being absorbed into the surface of core; (f) tablet abrasion." 91 Dr Story supported this statement by referring to ten publications discussing subcoats, each of which, he said, was available in Australia before the priority date. At a later point in his affidavit, Dr Story said "the use of a separating layer between an alkaline core and an enteric coating has been known to the pharmaceutical industry in Australia for decades." Having regard to the debate, at trial and before us, as to the availability to the hypothetical formulator of information contained in manufacturers' literature, it is important to note that Dr Story did not say he knew about the use of subcoats only because of what he had learned in manufacturers' literature. He asserted the use of subcoats was part of his store of knowledge and, he thought, part of general industry knowledge. The manufacturers' literature merely gave detailed information about particular types of subcoats. 92 Dr Story said it was "well known before the priority date that enteric coatings are mildly acidic as they contain carboxyl groups". He explained: "These coatings are insoluble in acidic media and soluble in neutral to mildly alkaline fluids, such as intestinal juice. If there is direct contact between the alkaline core and the enteric coating, there may be a reaction between the alkaline core and the acidic carboxyl groups in the enteric coating causing degradation of the enteric coat. Similarly, if there is direct contact between the acid labile omeprazole and the acidic carboxyl groups in the enteric coating, there is always the potential for a reaction causing degradation of the omeprazole." 93 Commenting on the Formulation Patent's specification of the subcoat, Dr Story said: "The subcoating would be expected to be required to be water soluble so that it did not impede the dissolution of the core." 94 Although Astra objected to Dr Story's statements in para 41 of his first affidavit (quoted above in para 90) the evidence it filed in reply to Dr Story did not challenge any of the statements we have quoted. Rather, it concentrated on emphasising the particular characteristics of omeprazole, and Dr Story's lack of experience of that compound, and disputing some of his observations about the wording of the Formulation Patent specification. At the trial, Dr Story was cross-examined by senior counsel over 95 pages of transcript. Dr Story was asked some questions in relation to his evidence in para 41 of his affidavit (quoted in para 90 above) but he was not challenged on the assertions referred to above. In particular, it was not put to Dr Story that the decision to use a water soluble subcoat involved an inventive step. Dr Story's evidence is admissible for the reasons set out in paras 66-67, the trial judge was entitled to accept that evidence, as he plainly did, and it therefore stands as undisputed evidence. (ii) Dr Rowe 95 Dr James Steven Rowe has a doctorate of philosophy, in pharmaceutics, from the University of London. At the date of the trial, he was Scientific Director of a technical consulting company that was engaged in development, formulation and stability testing of, and advising regarding, pharmaceutical, veterinary and personal care products. From 1967 to 1990, Dr Rowe worked as a researcher or development chemist for various pharmaceutical companies in Australia and the United Kingdom, with the exception of a period (December 1976 to April 1983) when he was a research fellow and lecturer at the School of Pharmacy, University of London. 96 In his first affidavit Dr Rowe dealt with the need for an enteric coat, likening omeprazole to erythromycin which, he said, "is acid labile and is usually formulated as an enteric coated product". He went on: "In fact, from the point of view of developing an oral dosage formulation for omeprazole, and indeed similar acid labile drugs, the objective is to protect the drug from gastric acid and release it for absorption into the intestine. In this respect the relevant characteristics of omeprazole, while it may be a matter of degree, are the same as those of all acid labile drugs. In this sense, working with omeprazole is a routine variation of working with other acid labile drugs. The learning in relation to other acid labile compounds may be directly applied to omeprazole." 97 Dr Rowe said that, after producing an enteric-coated dosage form of the compound as a capsule or tablet, the next step would have been to test the product for stability. He set out the required stability standards and said that, if they were not satisfied, it would have been obvious that the omeprazole was interacting with some excipients in the formulation which enhanced the rate of breakdown of the omeprazole. He went on: "I would have been aware from a review of the components of the formulation of the product (in this case omeprazole) that the enteric coated film contained acidic groups which were the most likely cause of the problem. The obvious answer to that problem would have been to coat the core material with a water soluble film which would protect the drug from the enteric coat and also act as a protective film against moisture and oxygen, which are the common causes of drug instability. I was well aware of this technique before the Priority Date and I believe that formulators in Australia would also have been well aware of it". 98 In support of the claim of awareness, Dr Rowe cited five pre-1986 publications, the earliest of which was published in 1956. Dr Rowe said: "The use of a sub-coat or film coating to improve the stability of pharmaceutical products was well established before the Priority Date. … … in my opinion, the concept and use of a highly water soluble protective coat for the protection of alkaline core materials prior to enteric coating was well established before the Priority Date. I knew about it then …" 99 Later, Dr Rowe said: "The techniques described in the Patent were, in my opinion, well established well before the Priority Date, both individually and in combination. The use of water soluble materials such as methycellulose and polyvinyl pyrrolidine have long been used in Australia to protect sensitive drugs from the effects of moisture and oxygen. It would have been logical before the Priority Date, in my opinion, to use this type of coating to enhance the stability of omeprazole by protecting it from moisture and oxygen and possibly protecting the core containing the acid labile omeprazole from the acid groups of the enteric coat and the enteric coat from the 'alkaline reacting compounds' in the core." 100 Dr Rowe also said: "While the Patent makes no mention of it, if one were concerned about the alkaline nature of the core interacting with the enteric coat, it would have been obvious to use a sub-coat because a well known or accepted use of a sub-coat was to provide a physical separation between incompatible materials for example an alkaline core and an acidic enteric coat." 101 Astra's expert witnesses did not challenge any of the above statements. Neither did senior counsel in his cross-examination of Dr Rowe, over 78 pages of transcript. Counsel took Dr Rowe to para 39 of his affidavit (quoted above at para 97) but only for the purpose of questioning his view, in the first sentence of the paragraph, about the cause of the problem of insufficient stability. Counsel also took Dr Rowe to paras 43 and 44 of his affidavit (quoted above at para 98) but only questioned his examples and not his basic assertion. Counsel made no challenge in cross-examination to Dr Rowe's statement that the "obvious answer" to the problem would have been to coat the core material with a water soluble film. Although much of this evidence was objected to, for the reasons set out in paras 66-67, we regard the evidence of practices that were well established at the priority date as admissible, the trial judge was entitled to accept that evidence, as he plainly did, and it therefore stands as undisputed evidence. (iii) Dr Thiel 102 Although the trial judge did not make special mention of him, another Alphapharm witness was Dr William James Thiel, Senior Lecturer in the Department of Pharmaceutics at the Victorian College of Pharmacy, Monash University. At the time of giving evidence, Dr Thiel had had 18 years experience teaching undergraduate students the principles and practice of tablet and pellet formulation and compression, film watering methods, and production of controlled release formulations. During that time, Dr Thiel had had an extensive association with the pharmaceutics industry in relation to product formulation. 103 Dr Thiel deposed in his affidavit to a belief: "that it was widely known in Australia that the formulation of an acid labile drug using enteric film coating of tablet cores or pellets required the following factors to be considered: (a) the pH at which the enteric polymer dissolves, … (b) the correct choice of plasticiser for the polymer … which also impacted on the factors listed below as (c) and (d); (c) the ingress of water into the tablet core, if water based coating formulations were used, … (d) the rate of ingress of gastric juice (or simulated fluid) through the coating into the core, … (e) the addition of materials to the core to buffer the contents, … (f) the addition of swelling disintegrants to the core formulation, to ensure a suitable disintegration time was achieved once the tablet entered the intestine, …" (Citations omitted) 104 Dr Thiel supported his assertions by references to papers dealing with each of these six factors. He also referred to three papers, published before the priority date, each of which "discusses the reaction between a basic drug and an enteric film and recommends the use of an intermediate film(s) to isolate the drug-containing core from the enteric film coating". 105 Dr Thiel was also cross-examined at length. Much of the cross-examination related to the publications cited by Dr Thiel, the point being made that there were differences between the products to which they related and the subject product. Although Astra objected to Dr Thiel's evidence quoted in para 103 above, there was no challenge to the correctness of the general statements mentioned above and therefore for the reasons explained in paras 66-67 the evidence as to what was widely known in Australia at the priority date is admissible, the trial judge was entitled to accept that evidence, as he plainly did, and it therefore stands as undisputed evidence.

Astra's evidence on subcoat (i) Dr Pilbrant 106 Dr Äke Gunnar Pilbrant is one of the persons named as inventors of the subject formulation. At the time of giving evidence, Dr Pilbrant was Scientific Advisor, Pharmaceutical Research & Development, of the first appellant, by whom he had been employed for about 20 years. During the whole of that time, he had been concerned with product development. 107 Dr Pilbrant said omeprazole was first synthesised in 1979. A team of research scientists was set up to find suitable formulations. They were known as "the Omeprazole Project Group". He was a member of the group and leader of a sub-group, consisting of five or six persons, who met regularly "to discuss results of studies and make plans for progressing the project". 108 Dr Pilbrant said the most convenient dosage form of an active drug is a solid oral dose administered once daily. So this was the preferred form of marketing omeprazole. 109 After substance characterisation work in late 1979, which apparently demonstrated that omeprazole may be absorbed from the small intestine, development of a solid oral dosage commenced in early 1980. Dr Pilbrant said: "As a result of early substance characterisation studies undertaken by Astra, data was accumulated which showed that omeprazole had a low solubility in water and was highly unstable, being sensitive to acid conditions, water, solvents, high temperature and light. The initial studies were undertaken over a period of about 6 to 12 months, but continued after this time in parallel with the other development work we undertook. We appreciated at the time that the compound would be extremely difficult to formulate because it would have to be protected during manufacture and formulation processing, during storage and on ingestion, and that it had to be absorbed rather rapidly from the small intestine. It was not unknown for medicinal compounds to be acid-sensitive, e.g. penicillins and erythromycin. However, in the course of our ongoing work, the acid sensitivity of omeprazole proved to be particularly problematic. Apart from the degradation of the drug itself, some of the degradation products of omeprazole are very intensely coloured, so that even very slight degradation can bring about a significant colour change in the bulk active compound or in a dosage form." 110 Dr Pilbrant said the group's first task was to obtain a sufficiently stable dosage form for toxicological and initial human pharmacological studies. A solution of omeprazole was not practicable, because the pH level at which omeprazole is soluble in water is unacceptably high for oral administration. So the group prepared a suspension of omeprazole in an alkaline aqueous phase. This proved satisfactory for human studies conducted in June 1980. The data from those studies provided the reference point for determining the relative bioavailability of other dosage forms. 111 In late 1979 the team considered an oil formulation, but omeprazole proved unstable in oil. So, in early 1980, the researchers moved to the idea of enteric coated pellets. The coating was to be applied directly to a core consisting of omeprazole and an alkaline substance. Dr Pilbrant explained: "Before we did our first experiments with a solid oral dosage form, we were aware of the sensitivity of omeprazole to acids and moisture, and it occurred to us to try to protect the omeprazole during manufacture by adding an alkaline substance." 112 In October 1980 the group applied enteric coatings to spray-layered cores and tested the enteric coated cores invitro. 113 Early in 1981 the group commenced Phase II bioavailability studies on a small number of healthy volunteers. They found uncoated pellets provided poor bioavailability; the best result was obtained for enteric coatings soluble at low pH values (pH 5.5 or 6.0). There were also tests of acid resistance in vitro, using simulated gastric acid. It seems these tests occupied most of the year. 114 Dr Pilbrant said a "brainstorming" meeting was held on 10 December 1981. A range of possibilities was discussed. In relation to tablets, they included: "(i) a buffered, uncoated tablet, in which the alkaline buffering in the tablet would be used to protect the omeprazole from the degrading effects of gastric acid; and (ii) a rapidly dissolving core containing omeprazole and an alkaline reacting compound or an alkaline salt of omeprazole, press coated with a neutral coating and then enteric coated - in other words, a subcoated and enteric coated tablet;" In relation to pellets, one discussed possibility was the use of a subcoat. Dr Pilbrant said that, at that time, it was not possible to "predict that any of the possibilities which had been suggested would solve the problems we had with omeprazole". 115 Dr Pilbrant also said the group was not then sure what caused the poor acid resistance of the directly enteric coated formulations, but it had been noted that acid resistance varied depending on the composition of the enteric coated cores and the kind and amount of alkaline reacting compound in the cores. He said: "These data gave us the idea something unusual might be happening with the enteric coat. An enteric coat is supposed to be practically impermeable to water of gastric juice. All film formers have a degree of permeability and, in practice, enteric film formers do hydrate to some extent, but if they are properly prepared and applied they do not generally allow the permeation of damaging amounts of water. We were using good enteric coating materials, with suitable plasticisers, which were properly prepared and applied. Nevertheless, breakdown of the enteric coat and acid resistance failure occurred. It occurred to us that there was a possibility that the enteric coat might be allowing some water to penetrate to the core where it dissolved some of the alkaline material, so that the alkaline solution thus formed then dissolved the enteric coat from the inside. We addressed this problem by trying to make the enteric coat more hydrophobic and by increasing the thickness of the enteric coat. However, based on our previous experience with dissolution rate and bioavailability, it occurred to us that measures of that kind might have increased the time taken for the enteric coat to dissolve in the small intestine. The knowledge we had gained in relation to uncoated omeprazole with regard to dissolution rate and bioavilability gave rise to a concern that this might not have been an acceptable solution to the problem because insufficient drug would be available to the patient to have the desired effect. A possible solution that occurred to us was to introduce a further coating in the form of a subcoat beneath the enteric coat. This was undesirable from a production point of view because it introduced a further processing step. Further, a water insoluble subcoat may also have impeded the dissolution of omeprazole and thereby decreased its bioavailability. On the other hand a water soluble subcoat might not have prevented water permeation. We appreciated that a water soluble subcoat could not keep out water indefinitely, but because we believed we could not afford to reduce bioavailability by using a water insoluble subcoat, we decided that we should investigate the use of a water soluble subcoat." 116 Dr Pilbrant went on "During the first four months of 1982, we tested directly enteric coated cores as well as cores with a water soluble subcoating added before the enteric coating. These experiments were carried out in parallel. We noted that subcoated cores were less discoloured. This led us to believe that through the inclusion of a subcoat we might at least get rid of the discoloration problem in formulating omeprazole. We also found that a water soluble subcoat improved acid resistance. This held out the possibility of better long term stability, although stability could have been adversely affected by the addition of another coat because it could make it more difficult to remove solvent residues. We continued working on a range of possible approaches to solving the acid resistance problem, though the inclusion of a water soluble subcoating seemed a promising approach. A lot of experimentation was carried out to try to improve the enteric coating system itself, but we still experienced problems with discoloration and/or poor acid resistance when we did not use a subcoat." 117 Dr Pilbrantgave details of the tests, including tests of directly enteric coated cores. As might be expected, the testing process was a laborious business. However, by the end of 1982, the group had settled on a formulation with an HPMC subcoat and an HP-55 enteric coat for Phase III Studies; that is, clinical investigation utilising a large number of patients and documentation of the properties of the product. Also, it was possible for long term stability studies to commence. Dr Pilbrant said: "When,in early 1983, we decided to use the formulation combining an omeprazole core containing an alkaline reacting compound, a water soluble subcoat and an enteric coat for the Phase III studies, we believed we might have a formulation which solved the range of difficult problems we had encountered with omeprazole. It was not until we had the long term stability studies in 1985 that we could be sure the invention did solve the problems. From the time the decision was made to proceed with the Phase III formulation, a lot of work was done in many areas in order to scale-up to production, including construction and setting up of a totally new production line. Other work was done to optimise the moisture content of the final formulation in order to reach a good chemical stability of omeprazole without compromising the mechanical stability of the gelatin capsules." 118 During the course of cross-examination, Dr Pilbrant gave this evidence: "Q.The steps taken to formulate omeprazole involve using a pH adjustment for the core for the omeprazole? A. Yes. We - I don't know what you mean by the pH adjustment, but we managed the pH in the core, yes. Q. By putting in an alkaline-reacting compound? A. Yes. Q. And you put an enteric coat on? A. For the phase II, yes. Q. And you put a subcoat on for the phase III? A. First the subcoat and then an enteric coat, yes. Q. And each of those steps were known technologies, known techniques to you at the time? A. The technology and the techniques for applying it was known, yes. Q. And you are aware that other people have used the idea of adjusting an acid labile compound sensitivities by putting in an alkaline-reacting compound? A. I guess, yes. Q. You are aware other people had enteric coat formulations? A. Yes. Q. You are aware other people had put subcoats? A. No. Q. For formulations? A. No. Q. You had never heard of a concept of a subcoat used before in the enteric coat of a substance, is that right? A. Yes. Q. Never knew it existed? A. A subcoat. Q. The idea of a subcoat? A. The idea of a subcoat was known at the time, yes. Q. The idea - sorry, you did know about the ideas of putting on a subcoat? A. For? Q. For a formulation? A. There were descriptions of using subcoats in formulations, yes. Q. And you were aware of the ideas of using subcoats in the enteric coated formulations? A. I didn't know that before, no. Q. You didn't? A. No. Q. In what context then were you aware of subcoats being used in formulations? A. There were different examples. I can't mention any particular now but, I mean, the concept as such was known." 119 Dr Pilbrant also said that, before using a subcoat, he noticed discolouration, probably mostly on the edge of the pellets. This manifested itself initially as a manufacturing problem. After working without a subcoat "for a couple of years", he said, "we realised there could be an interaction between the alkaline core and the enteric coat"; so the team "put a subcoat on". 120 Dr Pilbrant disputed that interaction between the core and the enteric coat was the sole cause of the observed discolouration; but he conceded it was "one of the causes". He then gave this evidence: "Q. If you had seen a cause as being the interaction, or direct contact of the core and the coat, an obvious solution would be to separate them with a subcoat, wouldn't it? A. If you could say that the 100 per cent cause is through direct interaction. Q. So are you saying that as a formulator you never try something unless you are certain that it is 100 per cent of the cause? A. If you can say it is 100 per cent of the cause but there are many other ways to get around it. Q. But if you see it as a cause, this is one obvious way to get around it, to put a subcoat in? A. No, I wouldn't say that. The most obvious one is to increase the enteric coating layer. Q. And another obvious one is to put in a subcoat? A. It could be. … Q. So at the time, a first action that was taken was to put in a subcoat? A. No. That was not the first action. Q. I said a first? A. I don't think it was a first. Q. All right. But the subcoat was put in in order to separate the core from direct contact with the coating? A. Yes, that is one of the reasons, yes. Q. And the discolouration that was seen during the coating process was then avoided? A. It was better. Q. So you don't agree with this, that it was avoided? A. No, not totally. Q. But it certainly made better the manufacturing process? A. No. It improved the appearance of the dosage form. I don't think it has improved the processing process because you are putting another processing step and that is not an improvement. Q. Did you obtain the Pharmacoat from Shin-Etsu? A. The Pharmacoat, yes." (iii) Dr Cederberg 121 Dr Hans Christer Cederberg, another of the persons credited with the claimed invention, was also an Astra employee at the time of the trial. He is an animal physiologist by basic training and participated in clinical trials of various formulations of omeprazole. His concern was bioavailability. Dr Cederberg's affidavit sets out details of the trials and confirms the existence of decomposition problems in the non-subcoated formulation. It also states there was no significant difference in bioavailability as between a non-subcoated formulation and a subcoated one. Dr Cederberg was not cross-examined.

(iii) Dr Rhodes 122 Dr Christopher Thomas Rhodes is Professor of Applied Pharmaceutical Sciences at the University of Rhode Island in the United States of America. He has been involved since 1965 in research and teaching on the design and evaluation of drug delivery systems and has acted as consultant to various pharmaceutical companies, national governments and international agencies. Dr Rhodes served for 15 years on the Committee of Revision of the United States Pharmacopoeia and has published extensively on drug delivery systems. He has had contact with Astra, in relation to omeprazole litigation, since 1993. Prior to this trial, Dr Rhodes had given evidence on Astra's behalf in cases heardin Korea and Israel. 123 Dr Rhodes was not in Australia in 1986 and had not then worked for any Australian pharmaceutical company. However, for the purpose of considering matters relevant to the issue of lack of an inventive step, he made the assumption "that the knowledge and skills of persons working in the field of pharmaceutical formulation in Australia in early 1986 were broadly comparable to those working in North America or Western Europe". Even so, he said, "the solution disclosed in the patent cannot reasonably be considered as obvious to someone skilled in the art of pharmaceutical formulation". He gave these reasons: "The difficulties described in the patent can be summarized as follows. The drug substance was very unstable at the pH values in the stomach and thus (if a conventional solid dosage form was to be used) enteric coating was required to protect the product from the acidic contents of the stomach. The stability problems encountered included highly coloured degradation products, poor shelf life and insufficient enteric resistance. It had been shown that adding an alkaline material could improve the stability of the drug. However, as is demonstrated by data in the patent, the alkaline material in the core may adversely affect the integrity of the enteric coat. It is important to note that, at the priority date, the exact nature of the formulation decomposition pathway(s) had not been delineated. Thus, when it became apparent that the formulation had the problems I have referred to, one might have considered the cause(s) of the problems to have been one or more of the following: the drug, drug impurities, core excipient, excipient impurities, organic solvents, water, solvent impurities, or the choice of coating materials (eg film formers (polymers), monomers or initiators, plasticiers or other additives, and impurities). These problems could have been exacerbated by any one or more of the following: process conditions (such as temperature, wetness, humidity, process duration, spray conditions, drying methods and conditions), orstorage conditions (ie temperature, humidity and light). Some of the obvious formulation changes which might be considered to improve the protection which the enteric coat offers against gastric juice (eg increasing the thickness of the enteric coat), might well be expected adversely to affect bioavailability. Since at pH values below 9 omeprazole has a relatively low solubility, it is essential that the enteric coat be rapidly removed from the core when the product passes from the stomach into the proximal part of the small intestine where it is absorbed. In this part of the small intestine the pH will tend to be slightly acid … so omeprazole will dissolve only slowly. Therefore it is important that the entire surface of the core be exposed as rapidly as possible to the intestinal juices so that the drug can dissolve rapidly and completely. The competing requirements of the various stability-related problems associated with omeprazole are such that many pharmaceutical scientists (myself included) would have felt that the particular sub-coated enteric-coated product claimed in the patent was neither desirable nor feasible. First, I would have rejected the idea of using a sub-coat which is water soluble or rapidly disintegrating in water on the ground that such a coat was unnecessary, because the enteric coat, to all practical intents and purposes, would be impervious to water. Even if the enteric coat were permeable, using a sub-coat which contained functional groups capable of interacting with water would merely act as a 'sink' for water, attracting water into the dosage form. The enteric coat might then 'blow off' while the product was still in the stomach. In fact, as is now known, the unique balancing act provided by the patent works. It provides for acceptable processing without the problem of discolouration during coating. It also solves the problem of discolouration during storage. The shelf life is of satisfactory length, ie more than one year. The product has adequate enteric resistance so that the drug is not degraded in the stomach. Finally, and most importantly, the product is bioequivalent to an aqueous suspension (ie it has a bioavailability between 80% and 120% of the suspension)." 124 During the course of cross-examination, Dr Rhodes agreed that "the fact that one does not know how something works or … if there is more than one mechanism involved, does not stop a formulation being made". He also agreed that, if he had been formulating omeprazole, he would first have tried an enteric coat directly on the core; the reason being that enteric coats were known to protect medicaments against gastric juice. If the result failed bioavailability tests, or proved unstable during storage, he would make tests to see what was happening. 125 Dr Rhodes was asked about the options he had mentioned in his affidavit. He said they related to the whole drug delivery system, not just the form of the enteric coat. The evidence went on: "Q. So what you are saying is there are a number of options that can be taken, each of which would involve a step-wise process? A. Yes. I'm suggesting these possible options. I also say that some of the ideas could be mixed and matched. The point I am trying to make is that it was not pre-ordained from the beginning of creation that omeprazole could only be formulated in an enteric coated pellet with a water soluble subcoat; that there are a number of other possibilities which formulators could have considered. Q. And you would agree that a formulator would go for the simplest option first rather than the most complex one to try? A. Not necessarily so. I think when a formulator goes to a problem, to some extent they work on what they have used before, what has been successful; to some extent they work upon what equipment they have available; and to some extent they may be under pressure of management to go with the least expensive option. So there are a number of conflicting pressures. I would agree that, as someone who does a lot of work in advising industry, there is a great deal to be said in the acronym KISS, 'Keep It Simple Stupid', and therefore a simple system is very often the best, yes." 126 In relation to the choice of a water soluble subcoat, it is interesting to note the reaction of Dr Rhodes to a reference in an earlier patent to the use of wax coats. Dr Rhodes said: "My concern would be if I had been a formulator in 1986 looking at this patent, my first reaction would have been to say: Wax coats? Wax coats are hydrophobic. They are not water soluble. I don't want anything like a wax coat near a drug which I know has got a very low solubility and, therefore, has got a potential bio-availability problem." (iv) Dr Rees 127 Dr John Elvan Rees retired as Professor in the School of Pharmacy and Pharmacology at the University of Bath in the United Kingdom shortly before the trial. Since 1963 he had been involved in the design of pharmaceutical dosage forms and delivery systems, including tablets, pellets and their associated coatings. Much of his career was spent with pharmaceutical companies but interspersed with periods in academia. His most recent experience working directly in the pharmaceutical industry was in a management position between 1978 and 1981. Dr Rees also gave evidence on behalf of Astra in the Israeli case mentioned during Dr Rhodes' evidence; indeed he and Dr Rhodes produced a joint statement for that case. In addition, Dr Rees gave evidence for Astra in proceedings in the European Patent Office. He made affidavits or declarations on behalf of Astra in four jurisdictions. 128 Dr Rees made an affidavit dealing with the issue of lack of an inventive step. He expressed the view that "the invention was not obvious on the priority date". He went on: "Indeed, I consider that the invention involved not merely an inventive step, but what might be characterised as an 'inventive journey' through the maze of possibilities and choices which lay between what was previously known and the formulation of the patent." 129 Dr Rees explained why it was desirable to deliver omeprazole to the small intestine rather than the stomach and said that, in April 1986, he would have expected (and, he believed, the average, competent formulator would have expected) an enteric coated tablet to do this. He then spoke of the "twin problems" of discolouration and avoiding decomposition of the drug in the stomach. Dr Rees went on: "To confound matters further, it was eventually determined (as is shown in the data in the patent), that steps taken to improve stability in manufacture and storage (thus avoiding discolouration) tended to decrease very substantially the resistance of the formulation to degradation in the stomach, and vice versa. The omeprazole formulator would thus have been caught 'between Scylla and Charybdis' … A further challenge would have been to resolve these problems, which were pulling the formulator in different directions, without compromising the bioavailability of this poorly soluble drug … As shown in the patent, the invention successfully tackles all the difficulties simultaneously (ie the problems of discolouration and inadequate gastric resistance and the need for satisfactory bioavailability), with a combination of features which was (on the face of it) inappropriate in the circumstances, and would not have been expected to resolve the dilemma. Even today, considering the matter with hindsight, one can only form unproven hypotheses as to why the system actually works in practice." 130 In commenting generally on the affidavits of Alphapharm's witnesses, Dr Rees said: "Had I been faced with the problems which had to be addressed with the formulation of omeprazole, I could not possibly have been confident that the formulation work would have followed a systematic, virtually continuous, linear, forward progression founded on reasoning and logic followed by confirmatory experiment. Certainly, in practice, nothing is usually further from the truth. As I know well from my industrial experience, in real life the development of a pharmaceutical formulation is seldom ordered and straightforward. And that would be especially the case when the drug compound presented a panoply of potential and actual problems, such as was the case with omeprazole." 131 Dr Rees claimed in his affidavit that Dr Rowe agreed with him that a subcoat that is water soluble or rapidly disintegrating in water "is the very last thing which I would have expected to solve the gastric resistance problem". Dr Rowe did say he thought it unlikely that a water soluble subcoat would protect the core from gastric juice. However, he said it was the function of the enteric coating to perform that task.Dr Rowe described the function of the water soluble subcoat as being to "protect the drug from the enteric coat and also act as a protective film against moisture and oxygen, which are the common causes of drug instability". He apparently did not think the subcoat was needed to protect against gastric juice. 132 Dr Rees made it clear that the reason he would not have expected the use of a water soluble subcoat was that he thought there was a potential problem of permeation by water or gastric juice. It appears now to be accepted this is not the case. 133 In cross-examination, Dr Rees indicated that the reason why he would not have thought the cause of the breakdown of the enteric coat was interaction between the core and the enteric coat was that he was not aware of any reason to expect an incompatibility between an enteric coat and the core it was designed to protect. However, it turned out this was a rather semantic point; Dr Rees considered that a compound that did not protect against discolouration could not be regarded as an alkaline reacting compound for the purpose of omeprazole. When it was pointed out to him that the Formulation Patent Amended Specification did not stipulate the quantity of alkaline substance to be used in the core, Dr Rees said a person skilled in the art, if aware of the idea of adding an alkaline substance to an acid labile compound, would be able to determine how much alkaline substance to use. (v) Dr Brown 134 The other Astra witness on the issue of lack of an inventive step was Dr Kenneth Frederick Brown, Professor of Pharmaceutics at the University of Sydney. Dr Brown had commercial experience, between 1988 and 1992, as Medical and Technical Director of 3M Riker, a division of 3M Healthcare Australia. In that capacity he was responsible, amongst other things, for the division's laboratory product development and clinical research. However, he did not himself engage in formulation work. 135 Dr Brown thought the formulation claimed in the patent was not obvious. Indeed, he said, "there would have been real practical difficulties in developing a formulation for omeprazole in Australia in 1986". The reason, he explained, was the necessity for a formulator to have access to a significant quantity of the relevant compound. He said: "I am aware that omeprazole was not on the market in Australia or, I am informed, anywhere else, until well after the priority date. Therefore in Australia at the priority date there were no samples of the drug available to any third party which could be used for formulation purposes, nor even to use to obtain preliminary data necessary before formulation work could have been done." 136 Dr Brown also referred to the paucity of pharmaceutical research and development work in Australia in 1986. He said formulation work in Australia at that time was generally limited to generic drugs; that is, "drugs for which the active ingredient was no longer subject to patent protection". 137 Dr Brown said that, if he had been asked in 1986 to formulate omeprazole, he would have begun by carrying out a search into information on the active ingredient. He would have expected to find the Compound Patent, the Salts Patent and, he thought, the Pilbrant-Cederberg Article. The last-mentioned document, he said, contains relevant information. He said: "This information is useful, and would enable a formulator to prepare a formulation of omeprazole. However, it does not include much of the basic information required to indicate whether the formulation would be suitable for registration. For example, it lacks essential information as to the absorption rates, possible toxicity, degradation products, first pass effects and stability." It followed, in Dr Brown's opinion, that there was insufficient information available in Australia for a formulator to undertake the development of a formulation to omeprazole. 138 Duringcross-examination, Dr Brown conceded that, as at 1986, he had never conducted any "hands on formulation work" himself. He also said he would have confined his search for information to the journals he habitually read. 139 Dr Brown agreed he would do tests if he found, during the manufacturing process, that there was discolouration on the edge of an enteric-coated core. His evidence went on: "Q. If you thought there might be an interaction between the core and the enteric coat, one of the tests that you could perform would be to put a separating layer between them? A. That could be. Q. That would be a reasonable and obvious test to do, wouldn't it? A. I guess we are coming from the point of view of saying that an enteric coat was necessarily the way that we would normally go. Perhaps there are other formulation options that one might consider. If you had a problem with this one you might discard that and immediately turn to another route of formulation. Q. Let us go back to my question for the moment, back to the question if you were putting an enteric coat on the core and you started on that course, and you see an interaction during the coating process, wouldn't it be a reasonable and obvious test to do to put a separating layer in and see if that alleviated the problem? A. I think maybe. Q. In putting such a separating layer in, if you chose to do that, if you were aware that the proposed site of delivery of the medicament was in the small intestine, it would be reasonable to try and put a water soluble coating, wouldn't it? A. No, I don't see why that would necessarily be the case. Q. You wouldn't even think of trying it? A. Well, there are a number of options. Q. Yes, and wouldn't one of the options have been a water soluble subcoat? A. It might be. I guess my natural reaction would be if you wanted a separating layer why not have a water impervious layer, and you may have such a water impervious layer which might be digested readily by enzymes in the intestine. Q. Let us say you did that, you had the dissolution studies and you weren't getting adequate dissolution, it would be reasonable to go back and try a water soluble coat, wouldn't it? A. Yes. But I don't accept that you would necessarily get poor dissolution studies. Q. Are you denying, Professor Brown, that it would even be a reasonable course to take to try a water soluble subcoat as a separating layer between an enteric coat and an alkaline core? A. No, I'm not denying it."

Discussion of the evidence regarding the subcoat 140 On the basis of this evidence, it should be concluded that the formulation described in the patent was obvious, within the meaning of the relevant legal authorities, and so lacks any inventive step. We readily agree with the trial judge that, "considered at the commencement of a hypothetical attempt, immediately before the priority date, to formulate omeprazole, the combination claimed in the patent was not obvious". We also agree that the work done by Astra was "complex, detailed and laborious … involving a good deal of trial and error, dead ends and retracing of steps". Nonetheless, that was all that was involved. Although Astra's development of the formulation took some time, it was essentially an exercise in trying out various known possibilities until the correct solution emerged. It is interesting to note this is essentially the way Dr Rees described the Astra team's "inventive journey". He did not claim any particular inventive step. Rather, he lauded the Astra team's successful negotiation of a "maze of possibilities and choices". Negotiation of a maze is not invention. 141 As we have said, the first integer, the core consisting of omeprazole stabilised in an alkaline substance was a "given". The fact that this core was required to be delivered to the small intestine, rather than the stomach, of the patient made an enteric coating also a "given" ingredient. In the case of many (perhaps most) drugs, no other integer would be required. And, from a manufacturing point of view (as Dr Rhodes said), it was desirable to keep the formulation as simple as possible. These facts explain why Astra first tested pellets with directly enteric-coated cores. Those tests occupied most of 1981, by the end of which year it was apparent that pellets in that form provided acceptable bioavailability but suffered an unacceptable degree of discolouration. So the team held a "brainstorming" session on 10 December 1981 at which it was decided to try, as one possibility for both tablets and pellets, a water soluble subcoat; that is, the solution ultimately adopted. In other words, the combination disclosed by the patent was recognised as "worth trying" (to use Buckley LJ's term) as soon as it was apparent that the formulation that was to be preferred on manufacturing grounds would not give an acceptable result. 142 Dr Pilbrant's evidence as to what actually occurred is consistent with the evidence of Dr Story and Dr Rowe as to what they would have expected to occur. They both said the first thought of a hypothetical formulator would be to apply an enteric coat directly to a core consisting of alkaline stabilised omeprazole. If the result proved unacceptable, on either bioavailability or stability grounds, the next step would be to try a subcoat. Dr Story and Dr Rowe both thought the formulator would try a watersoluble subcoat, perhaps amongst other possibilities. It seems neither of them shared Dr Rees' opinion that this would be a surprising choice. That was because they did not accept his assumption that the discolouration was caused by the enteric coating allowing water to penetrate to the core. They seem to be right about that; the formulation has proved effective, despite the use of a water soluble subcoat. 143 The theoretical evidence of Dr Story and Dr Rowe is supported by the practical reactions of Dr Marshall. At the time hegave his responses, Dr Marshall had no knowledge of the content of the Formulation Patent; he did not know the integers of the specified combination. Like the Astra team, Dr Marshall first proposed pellets consisting of a directly enteric-coated core. He did not carry out tests himself. When apprised of the observed deterioration of such pellets, he considered other possibilities and suggested a trial of various types of subcoats, one type being a watersoluble subcoat as specified in the patent. 144 The evidence of Dr Story and Dr Rowe is also supported by that of Dr Brown. It may be correct that, as Dr Brown said in his affidavit, in a practical sense no Australian formulator would have had the opportunity to formulate omeprazole in 1986; no samples of omeprazole would have been available in Australia. But that approach misses the point. In dealing with a claim of obviousness, courts do not consider whether there was in fact a skilled worker willing and able to undertake the task of achieving the result described in the relevant patent specification; the issue is whether, assuming there was such a person, he or she would have been likely to prove successful. The skilled worker is assumed to exist, and to have the opportunity to attempt to replicate the result of the patent. This assumption is essential to the test. The point at issue is one of objective fact: whether the so-called invention involves an inventive step. A so-called invention does not involve an inventive step if a skilled worker would have been likely to have replicated the result. For the assumption to make sense, it must also be assumed that the skilled worker has access to the necessary material; in this case a sufficient quantity of omeprazole.Dr Brown's erroneous approval undermines his affidavit evidence. However, it is noteworthy that, when Dr Brown was asked in cross-examination to put himself in the position of a hypothetical formulator, he gave evidence consistent with that of Dr Story and Dr Rowe. In the passage set out in para 139 above, Dr Brown agreed that, if he saw an interaction occurring during the coating process, it would be "a reasonable and obvious test" to try a separating layer between the core and enteric coating; and that it would be a reasonable course to try a water soluble subcoat as that separating layer. 145 The approaches of Dr Rhodes and Dr Rees seem to have been heavily influenced by their uncertainty as to the cause of the discolouration of directly enteric-coated pellets. 146 Dr Rhodes said in his affidavit that, at the priority date, "the exact nature of the formulation decomposition pathway(s) had not been delineated". No doubt that is correct; possibly this is still not known. However, as Dr Rhodes agreed in cross-examination, ignorance of the cause of a problem does not necessarily prevent the development of a formulation that overcomes the problem, whatever its cause. That is what happened in this case. Without fully understanding the cause of the problem of discolouration, the Astra team resolved the problem. The question is whether it ought to be found that a hypothetical formulator would have been able to do the same. 147 Dr Rhodes made clear that he would have been reluctant to use a subcoat. This would have involved an additional step in the manufacturing process and offended the "KISS" principle. However, he accepted this was an option to be tried, if directly enteric-coated pellets proved unsatisfactory. 148 In para 42 of his affidavit, Dr Rhodes said he would have rejected the idea of using a subcoat which is water soluble or rapidly disintegrating in water. His stated ground was that "such a coat was unnecessary, because the enteric coat, to all practical intents and purposes, would be impervious to water". That ground would make sense if a directly applied enteric coating provided an acceptable result; in that case a subcoat would clearly have been unnecessary. But if a directly applied enteric coating did not prove satisfactory, as Astra found, something more was obviously required. Dr Rhodes did not explain why the "something more" would not have been a water soluble subcoat; especially if, as seems to have been the case, the cause (or at least a major cause) of the problem of discolouration of directly enteric-coated pellets was interaction between the core and the enteric coat. 149 Even so, Dr Rhodes made it clear, by his horrified reaction to the idea of using wax coats, that any subcoating should not be water insoluble. It follows that, once it is accepted that a subcoat was worth trying, it followed that it was worth trying a water soluble subcoat. Dr Rhodes eventually conceded that an enteric-coated pellet with a water soluble subcoat was one of a number of possibilities for a formulator to consider: see paras 125-126 above. 150 Dr Rees was also impressed by the difficulty in understanding the cause of the pellet discolouration. Even at the trial, he seemed to hold to the view that the discolouration stemmed from permeation of water or gastric juice; he still could "only form unproven hypotheses as to why the system actually works in practice". However, although it is usually easier to find a solution if one knows the cause of a problem, this is not always essential. It may be obvious that it is worth trying a particular solution, even though the cause of the problem is uncertain. 151 In postulating that the so-called invention "involved not merely an inventive step, but what might be characterised as an 'inventive journey'", Dr Rees seems to have adopted an incorrect test. If he had been in the position of the hypothetical addressee, in relation to the formulation of omeprazole, he said, "I could not possibly have been confident that the formulation work would have followed a systematic, virtually continuous, linear, forward progression founded on reasoning and logic followed by confirmatory experiment". This statement seems to reflect a belief that a so-called invention is obvious only where it was possible for the hypothetical formulator, at the beginning, confidently to predict what combination of integers will succeed, without any necessity for a process of trial and error. As we have pointed out at paras 83 to 87 above, obviousness is not confined to such straightforward cases. 152 In many cases of claimed obviousness, the patent holder is able to make the telling point that nobody succeeded in developing the product before the inventor named in the patent. In the case of a product having substantial commercial value, and in the absence of other explanation, it is reasonable for the patent holder to invite the court to ask itself why, if the invention was indeed obvious, nobody else got in first. 153 In the present case, Astra has not sought to make this point. The reason is readily apparent. Until the expiration of the Compound Patent in 1999, nobody else was entitled to market the drug; so nobody else had any reason to undertake a formulation of it. 154 The conclusion that Alphapharm has made out its case on obviousness accords with Lehane J's reaction to the expert evidence. At para 110 of his reasons for judgment, his Honour expressly accepted "the general descriptions given by Dr Story and Dr Rowe of the way in which they would go about the formulation of a new drug". He obviously regarded Dr Story and Dr Rowe as generally reliable. His Honour noted (at para 114) that Dr Rhodes and Dr Rees "strongly expressed the view that such an interaction (that is, between the enteric coating and the core) was so contrary to experience and to well understood science that the formulator would have thought of other causes and would have pursued solutions other than the one which Astra found". But his Honour preferred the contrary view of Alphapharm's witnesses. He went out of his way to say that "the cause of the gastric resistance problem suggested by the patent, 'diffusion of water of gastric juice' was hypothesis, not established fact." 155 The only criticism of the trial judge's reasoning process that we would make, apart from the ambiguity of the word 'might', relates to the extent to which his Honour rested his conclusion on statements made in the manufacturer's literature and (to a lesser extent) the earlier patents to which Alphapharm's witnesses referred: (see for example paras 116-117 of the reasons of Lehane J). As we have demonstrated, those witnesses asserted that, at the priority date, each of the elements in the claimed combination was well known to Australian formulators and the combination was also well known. The assertions were not shown to have been dependent or based upon the manufacturers' literature. Whatever the reason, Astra did not challenge the assertions or enquire whether the evidence of the expert witnesses would have been the same in the absence of the manufacturer's literature or the earlier patents. We have concluded that, to the extent the trial judge's reasoning, including his preference for the evidence of Alphapharm's expert witnesses, rested on the manufacturer's literature and the earlier patents, those documents corroborated, rather than established, the assertions of the witnesses. Astra did not adduce evidence in chief or by cross-examination that disputed those assertions. It was therefore not necessary for Lehane J to rely on the documents they cited in support of their assertions. And, of course, if his Honour did accept their evidence, as he clearly did, that was enough to make out Alphapharm's claim of lack of inventive step. Thus, the undisputed assertions of those witnesses established Alphapharm's case on obviousness. Our conclusion, therefore, is the same as that reached by Lehane J at para 120, being that the evidence persuades us that the combination in claim 1 of the patent did not, having regard to common general knowledge at the priority date, involve an inventive step.

Disposition 156 It follows that Astra's appeal should be dismissed. We will so order. In that circumstance, it is not necessary for us to consider or determine the matters raised in Alphapharm's notice of contention. 157 Astra must pay the costs of the appeal. I certify that the preceding one hundred and fifty-seven (157) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Wilcox, Merkel and Emmett .

Associate: Dated: 12 October 2000 Counsel for the Applicant: Dr J Emmerson QC, DM Yates SC, KJ Howard

Counsel for the Respondent: Dr A Bennett SC, S Burley

Solicitor for the Respondent: Mallesons Stephen Jaques

Date of Hearing: 29 November 1999 - 2 December 1999