Apotex Pty Limited v Sanofi

Federal Court of Australia|2013-11-26|Before: Mr J, Nicholas J

Counsel for the Applicants/Cross-Respondent: Mr SG Habib SC with Ms JM Beaumont

Solicitor for the Applicants/Cross-Respondent: Ashurst

Counsel for the Respondents/Cross-Claimants: Mr J Sheahan SC with Ms C Cochrane

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1639 of 2007

JUDGE: NICHOLAS J DATE OF ORDER: 26 november 2013 WHERE MADE: SYDNEY

By 17 January 2014, the respondents serve revised proposed Amended Points of Defence.
By 17 January 2014, the respondents provide full particulars of the matters referred to in paragraph 6(e) of the proposed Amended Points of Defence attached to their interlocutory application filed on 28 October 2013.
The date in Order 6 of the Orders made on 30 September 2013 be varied from 29 November 2013 to 17 December 2013.
The matter be listed for Directions at 9.30am on 3 February 2014.
Costs are reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1639 of 2007

JUDGE: NICHOLAS J DATE: 23 December 2013 PLACE: SYDNEY

INTRODUCTION 1 In this matter the respondents (who I shall refer to as the Sanofi parties) applied for leave to amend their points of defence. The applicants (who I shall refer to as the Apotex parties) opposed the application. At the conclusion of the argument I made various procedural orders including an order requiring the Sanofi parties to file and serve revised proposed amended points of defence. These reasons explain why I rejected the principal argument relied upon by the Apotex parties in support of their opposition to the proposed amendments. They also identify what I regard as significant deficiencies in the proposed amended points of defence previously served by the Sanofi parties.

BACKGROUND 2 On 16 August 2007, Apotex Pty Ltd (Apotex), then called Genrx Pty Ltd, commenced a proceeding against Sanofi (formerly Sanofi-Aventis) (Sanofi) seeking orders for the revocation of Australian patent number 597784 (Patent). Sanofi then cross claimed against Apotex for infringement of the Patent. 3 Gyles J heard an application brought by Sanofi for an interlocutory relief. The relief sought included an interlocutory injunction restraining Apotex from, inter alia, selling or offering to sell pharmaceutical compositions which had, as an active ingredient, the compound known as clopidogrel (clopidogrel products). His Honour granted the interlocutory relief sought on 25 September 2007 (see GenRx Pty Ltd v Sanofi-Aventis (2007) 73 IPR 502). 4 As a condition of obtaining the interlocutory injunction, Sanofi was required to give the usual undertaking as to damages. It was also required to provide security in the amount of $40 million. His Honour also accepted an undertaking proffered by Apotex that, until the determination of the proceeding or further order, it would not take any steps to obtain listing of any clopidogrel products under the pharmaceutical benefits scheme (PBS) maintained by the Commonwealth of Australia under the National Health Act 1953 (Cth) (National Health Act). 5 There was a trial of the proceeding before Gyles J. His Honour found that some of the claims of the Patent were valid (claims 2, 3, 4 and 5) but that others (claims 1, 6 - 9, 10, and 11) were invalid (see Apotex Pty Ltd (formerly GenRx Pty Ltd) v Sanofi-Aventis (2008) 78 IPR 485). His Honour made a declaration that the clopidogrel products that Apotex proposed to market and sell in Australia infringed claim 3 of the Patent. His Honour also granted an injunction restraining any infringement of claim 3. 6 Apotex filed a notice of appeal against the decision of Gyles J. In the appeal proceeding Apotex gave undertakings to the Court that it would not take any steps to obtain a listing of any clopidogrel products under the PBS and that it would not infringe any of claims 1, 6, 7, 8, 9, 10 or 11 of the Patent until the determination of the appeal or further order. The Sanofi parties gave cross-undertakings as to damages in the usual form. At some stage further orders were made increasing the security which Sanofi and the other Sanofi parties were required to provide. The total amount of security provided pursuant to such orders is confidential. 7 The Full Court subsequently upheld Apotex's appeal and ordered that the Patent be revoked (see Apotex Pty Ltd v Sanofi-Aventis (2009) 82 IPR 416). The Sanofi parties obtained a stay of the order until the determination of an application for special leave to appeal to the High Court of Australia. In return they provided a further undertaking as to damages. The application for special leave was refused on 12 March 2010. 8 By notice of motion filed on 4 May 2010 the Apotex parties sought, inter alia, orders for the payment of compensation by the Sanofi parties pursuant to the various undertakings provided by the Sanofi parties during the course of the proceedings both at first instance and on appeal. 9 The Apotex parties filed Points of Claim on 7 June 2010. The Sanofi parties filed Points of Defence on 21 June 2010. The Points of Claim included allegations to the effect that, were it not for the interlocutory relief obtained by Sanofi, Apotex would have obtained listing of Apotex's clopidogrel products on the PBS and would have commenced the supply of such products in Australia. These allegations were not admitted by the Sanofi parties in the Points of Defence.

THE PROPOSED AMENDMENTS 10 There are six categories of amendment in issue between the parties which consist of: para 4(a) - express allegations to the effect that Apotex would not have supplied the clopidogrel products in Australia for so long as the Patent remained unrevoked due to the risk that it might be ordered to pay damages for patent infringement (Category 1); para 4(b) - express allegations to the effect that the undertaking which Apotex gave to the Court on 25 September 2007 was given for forensic or commercial reasons that were considered advantageous to Apotex (Category 2); para 4(c)-(d) - express allegations to the effect that Apotex would not have been able to obtain PBS listing of Apotex's clopidogrel products without making misrepresentations to the Department of Health and Ageing which it would not have made (Category 3); para 4(e) - express allegations to the effect that the Minister could not, or would not, list Apotex's clopidogrel products on the PBS because it was not open to the Minister to do so (Category 4); para 6 - express allegations to the effect that, if the clopidogrel products had been manufactured in Canada by the Apotex parties, then this would have constituted an infringement of the Canadian equivalent of the Patent (Category 5); paras 7-9 - express allegations to the effect that Apotex Inc and Apotex Research Private Limited are not entitled to recover on the undertaking as to damages either because the loss allegedly suffered by them was not foreseeable or because it is too remote (Category 6).

APPROBATION AND REPROBATION 11 The principal ground upon which the Apotex parties resisted the proposed amendments was that, if the Court was to permit them to be made, then it would be allowing the Sanofi parties to approbate and reprobate. It was submitted that the interlocutory injunction granted by Gyles J, and the undertaking given to his Honour by Apotex, was obtained by the Sanofi parties on the basis that Apotex intended to obtain listing of its clopidogrel products on the PBS at the earliest possible date, that Apotex intended to begin marketing and supplying such products in Australia as soon as that occurred, and that Apotex was able to do these things. It was further submitted that the Sanofi parties should not be allowed to run a case inconsistent with the basis upon which the interlocutory relief was obtained and that, consequently, the Sanofi parties should not be permitted to dispute that Apotex intended to, or was able to, obtain the relevant PBS listing and thereafter commence to market and supply the relevant products in Australia. 12 The Apotex parties founded these arguments upon what was described by Sir Nicolas Browne-Wilkinson V-C (as he then was) in Express Newspapers PLC v News (UK) Ltd (1990) 18 IPR 201 as a principle of law of general application. His Lordship said at 210: There is a principle of law of general application that it is not possible to approbate and reprobate. That means you are not allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt two inconsistent attitudes towards another: he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance. 13 In Commonwealth v Verwayen (1990) 170 CLR 394 Brennan J acknowledged the existence of the doctrine of approbation and reprobation. His Honour said (at 421) that it "… precludes a person who has exercised a right from exercising another right which is alternative to and inconsistent with the right he exercised as, e.g., where a person 'having accepted a benefit given him by a judgment, cannot allege the invalidity of the judgment which conferred the benefit': Evans v Bartlam [1937] 2 All ER at p 652, per Lord Russell of Killowen." 14 The doctrine has also been considered more recently in Acohs Pty Ltd v Ucorp Pty Ltd (2012) 201 FCR 173 (Jacobson, Nicholas and Yates JJ) at [200]-[203] and Mandurah Enterprises Pty Ltd v Western Australian Planning Commission (2008) 38 WAR 276 by the West Australian Court of Appeal at [95]-[125] per McLure JA. It was held that the doctrine did not apply on the facts of either case. In Mandurah Enterprises McLure JA expressed the view that the doctrine stood outside the recognised categories of election. However, her Honour also observed at [118] that "[o]n any view, the independent doctrine requires that there be a choice between two inconsistent courses of conduct or claims." 15 The Apotex parties also relied upon the decision of Arnold J in Lilly Icos LLC v 8PM Chemists Ltd [2010] FSR 4; [2009] EWHC 1905. In that case the claimants, which included Lilly Icos (Lilly), and other well-known pharmaceutical manufacturers, obtained interim injunctions against 8PM Chemists (8PM) and a number of related companies based in Turkey in respect of the supply by them of branded pharmaceutical products to online retailers based in Canada. Lilly and the other manufacturers alleged that the 8PM and the other defendants were guilty of trade mark infringement. The interim injunctions were ultimately discharged on the basis that the defendants did not infringe any of the claimants' trademarks. An inquiry as to damages payable under the cross-undertakings given by Lilly and the other claimants in support of the interim injunctions was heard by Arnold J. 16 Until they were enjoined, 8PM and another defendant (RDA) had been supplying pharmaceuticals to various businesses, including CanadaDrugs, which were supplying those products to patients resident in the USA who made purchases of pharmaceuticals by internet or telephone. 17 At the inquiry, Lilly (who obtained the first interim injunction) and the other claimants (who obtained "piggy back" interim injunctions) argued that the defendants could not recover on the cross-undertakings on public policy grounds because the importation of pharmaceuticals into the USA was illegal under US law. Arnold J accepted that the importation of such products into the USA was illegal under US law. However, he concluded that this did not prevent the defendants from recovering. 18 The only argument put to Arnold J with which I am presently concerned was founded upon the following four propositions. First, Lilly's counsel had argued before the judge who granted the interim injunction (Mann J) that the importation of pharmaceutical products into the US was illegal under US law. Secondly, Lilly's counsel did not suggest that recovery under the cross-undertaking would be barred as a consequence of such illegality, and thereby impliedly represented that such a claim would not be barred. Thirdly, the defendants relied upon Lilly's implied representation by not arguing that a bar on recovery under the undertaking showed the balance of convenience favoured the refusal of the interim injunction. Fourthly, Mann J also relied upon Lilly's implied representation in granting the interim injunction. 19 Although Arnold J considered the defendants' argument to have force if advanced as a case of estoppel by representation, he saw it as having more force when advanced by reference to the principle discussed in the Express Newspapers case. As Arnold J observed at [299], the principle was applied in that case by holding that it was not open to the plaintiff to advance inconsistent cases on the claim and on the cross-claim which to all intents and purposes were mirror images of each other. Arnold J then said at [300]: In my judgment this principle is applicable to the present situation. Lilly persuaded Mann J to grant an interim injunction on the basis that the damage to the Defendants' business could be adequately compensated by an award under the cross-undertaking even though Lilly was contending that importation into the USA was illegal. The other Claimants subsequently adopted the same stance in obtaining piggy-back injunctions. It is quite inconsistent with that stance for the Claimants to turn around after the injunctions have been discharged and say such compensation is irrecoverable as a matter of law by virtue of that illegality. 20 There was no finding that the illegality relied upon by Lilly and the other manufacturers would have prevented any of the defendants from carrying on business as they had done before the interim injunctions were granted. On the contrary, Arnold J made an express finding that, were it not for the interim injunctions, the defendants would have continued to engage in profitable trade with, among others, CanadaDrugs. 21 Arnold J's reasoning on the Express Newspapers point seems to come down to this. Because Lilly obtained its interim injunction on the basis that the defendants could be compensated by an award of damages pursuant to the cross-undertaking in the event that they were ultimately found not to have infringed in the knowledge that the trade in pharmaceutical products in which CanadaDrugs was engaged was illegal under US law, it was not open to Lilly to resist the defendants' claims on the cross-undertaking on the basis that any damage suffered by the defendants was irrecoverable by reason of such illegality. 22 The Sanofi parties referred to the decision of the English Court of Appeal in Les Laboratoires Servier v Apotex Inc [2013] RPC 21. This was an appeal from another decision of Arnold J: Les Laboratoires Servier v Apotex Inc [2011] RPC 20; [2011] EWHC 730 (Pat). 23 The claimant (Servier) obtained an interim injunction against the defendants, Apotex Inc, and a related company, restraining infringement of a European patent. The patent was later held to be invalid. A preliminary issue heard by Arnold J concerned the Apotex defendants' attempt to recover damages on Servier's cross-undertaking. Servier argued that they could not recover damages on the cross-undertaking by reason of the application of the rule of law reflected in the Latin maxim ex turpi causa non oritur actio (no action can arise from an illegal or immoral act) because the Apotex defendants, in order to supply their products, would have had to manufacture them in Canada, where Servier held a valid patent which would have been infringed. 24 The Apotex defendants contended that Servier could not invoke the ex turpi causa rule because, having given an unqualified cross-undertaking, that would involve approbating and reprobating. Arnold J accepted that the ex turpi causa rule applied. In rejecting the Apotex defendants' argument, his Lordship distinguished his previous decision in Lilly Icos v 8PM Chemists. 25 The principal judgment in the Court of Appeal was delivered by Etherton LJ (with whom Kitchin and Laws LJJ agreed subject to what, for present purposes, may be put aside as some immaterial qualifications). Everton LJ said at [61]: I do not accept Mr Watson's starting position that the court is precluded from even considering the illegality defence because that would be contrary to the principle that a party cannot both approbate and reprobate. I agree with him that, contrary to the view expressed by the judge, it was apparent to Servier at the time Mann J granted the interlocutory injunction on 8 August 2006 that the goods that Apotex was to be injuncted from importing or selling would have been manufactured in Canada and nowhere else. I do not accept, however, that Servier is, for that reason, precluded from running the illegality defence. There is no evidence that Servier had at that date actually formed any intention to run any such defence in the future to a claim on the cross-undertaking. No authority was cited by Mr Watson for the proposition that the principle that a party may not both approbate and reprobate applies in such circumstances. In substance the submission amounts to an argument that, whenever an interim injunction is granted against a defendant, and the claimant subsequently fails in the action, the claimant will never be entitled to defend a claim on the cross-undertaking by relying on facts of which the claimant had knowledge at the time the injunction was granted, whether or not at the time the claimant had in mind a future defence based on those facts. I can see no obvious justification for such a draconian policy or principle, and, in the absence of any authority to support its existence, I reject it. 26 The present case raises a very similar problem for the Apotex parties to that which confronted them in their dispute with Servier. Manufacture of the clopidogrel products in Canada would, as I understand, have infringed Canadian Patent No. 1,336,777 (the Canadian Patent). In 2011, in proceedings in the Federal Court of Canada between Sanofi and Apotex Inc, the Canadian Patent was held invalid. Quite recently, however, the Federal Court of Appeal reversed the trial judge's decision on that issue, with the result that the Canadian patent is valid unless Apotex Inc can succeed in an appeal to the Supreme Court of Canada which it can only bring if it obtains leave to do so. 27 The Apotex parties ask me to refuse the application for leave to amend on the basis that the Sanofi parties' reliance upon arguments to the effect that Apotex could not, or would not, have obtained PBS listing for, and commenced to sell, clopidogrel products in Australia, as well as the Sanofi parties' reliance upon the ex turpi causa rule, must fall foul of the principle of law that prevents a party from approbating and reprobating. I would not refuse the application for leave to amend on that basis unless I was satisfied that the principle of law relied upon by the Apotex parties clearly precluded the Sanofi parties from relying upon these arguments. It is sufficient to say that I am not persuaded that this is the case.

PREJUDICE AND DELAY 28 The Apotex parties filed their notice of motion seeking to enforce the various undertakings given by the Sanofi parties more than three years ago. A procedural chronology compiled by the Sanofi parties suggests that there have been substantial delays by both sides in filing affidavit evidence. 29 The matter has not yet been fixed for hearing. From a case management perspective, the matter has been complicated by the fact that the Commonwealth has also filed an application seeking to recover on the Sanofi parties' undertaking as to damages for losses it claims to have suffered as a consequence of (inter alia) the interlocutory relief granted by Gyles J. It is highly likely that the Apotex parties' claim and the Commonwealth's claim will be heard together. Realistically, the matters cannot be heard until the second half of next year at the earliest even if the amendments proposed by the Sanofi parties were disallowed. 30 The Apotex parties submitted that no real explanation had been proffered by the Sanofi parties for the delay in raising the matters sought to be introduced by the proposed amendments. They further submitted that even if I was satisfied that it was open to the Sanofi parties to assert that Apotex could never have obtained PBS listing of its clopidogrel products or that Apotex could not, or would not, have brought such products to market in Australia until such time as the Patent was revoked, I should still refuse the Sanofi parties leave to amend. 31 The delay has been explained by reference to the recent developments in Canada to which I have referred and the involvement of different legal advisers to the Sanofi parties who were apparently brought in to represent the Sanofi parties in relation to the Commonwealth's application. The Sanofi parties have already filed points of defence in the Commonwealth's application which raise some of the matters which they seek leave to raise by way of answer to the Apotex parties' application. 32 The other point to make in relation to the application for leave to amend, and the possible prejudice to the Sanofi parties in the event that leave was refused, relates to the amount of money involved. The Apotex parties' claim is for an amount that runs into several hundred million dollars, and the Commonwealth's claim is for more than double that amount. Depriving the Sanofi parties of an opportunity to rely on arguments which may provide a complete answer to the Apotex parties' claims would not be in the interests of justice. By contrast, I am satisfied that the Apotex parties are not likely to suffer any relevant prejudice which cannot be cured by an appropriate order for costs if the amendments are allowed. 33 It will remain open to the Apotex parties to plead a case in reply to the effect that the Sanofi parties should not be permitted to deny that Apotex would have obtained PBS listing for its clopidogrel products and that Apotex would have thereafter commenced to supply them in the Australian market were it not for the orders made by Gyles J. 34 What I have said to this point disposes of the principal ground upon which the Apotex parties resisted the Sanofi parties' application for leave to amend. What follows are my observations in relation to the particular categories of amendment as identified in para [10] above.

Category 1 35 The pleadings in their current form include allegations made by the Apotex parties, which are not admitted by the Sanofi parties, to the effect that Apotex would have, but for the orders made by Gyles J, obtained PBS listing of Apotex's clopidogrel products which Apotex would have then supplied in the Australian market. On the present state of the pleadings it would be open to the Sanofi parties to run a case to the effect that Apotex would not have commenced to market its clopidogrel products for so long as the Patent remained unrevoked because of the commercial risk involved should Apotex ultimately fail in establishing the invalidity of the relevant claims. If this was not already clear to the Apotex parties, then the proposed amendments will ensure that they are well aware of the case that the Sanofi parties wish to run and which the Apotex parties may be required to meet.

Category 2 36 This is one of the categories of amendments that I will not allow in the form currently proposed. The relevant allegation appears in paragraph 4(b)(iii) and is in the following terms: the undertakings given by Apotex were volunteered by it for forensic or commercial reasons that were considered advantageous to Apotex and were not imposed by court order; PARTICULARS (A) On 18 September 2007, during the course of the hearing before Gyles J, Apotex informed the court that: (I) it would be prepared not to apply for listing of its drugs on the PBS, and to agree to provide an undertaking in support of that position, if the court were to grant an interlocutory injunction preventing Apotex from selling its drug; and (II) it did not want to be listed on the PBS if it could not sell its brand because that would be of no benefit to Apotex, it would damage Sanofi by bringing the latter's price down twelve and a half percent, and it would make Apotex enemies in the industry; and (B) On 25 September 2007, Apotex informed the court that it agreed to provide the undertaking in paragraph 2 of the 25 September 2007 Order to avoid a "jurisdictional" argument over whether the court could, in fact, make the injunction in paragraph 1 of the 25 September 2007 Order; 37 As to (A), the relevant exchange between Senior Counsel for Apotex and Gyles J that took place during the hearing on 18 September 2007 was as follows: Senior Counsel: We would be prepared, if your Honour is against us and grants an injunction against us from selling, we will not apply to the PBS during the period of that restraint with liberty to apply. His Honour: Yes. All right. Senior Counsel: Because, in short your Honour, it's pointless for us, the question of needing to restrain us from doing anything with the PBS or restraining the PBS doesn't arise. If your Honour were against us --- His Honour: Why would that be, why would that be, because --- Senior Counsel: It's of no value to us, your Honour. We don't want to get listed, to be candid, we don't want to be listed on the PBS if we can't sell. It would damage our friends by bringing their price down twelve and a half per cent. His Honour: Yes, that's a risky thing anyway. Senior Counsel: Yes. It will only damage our friends, it's of no benefit to us, and we will make ourselves enemies in the industry. His Honour: Yes. All right. I'm not inquiring really why, I just want to know what the situation is. Senior Counsel: So, your Honour, we would be happy to - if your Honour, we would be unhappy, but if your Honour makes an injunction against us selling, we would agree on an appropriate undertaking that would fix that up. His Honour: Yes. All right. Thank you. 38 It is apparent from this that Apotex was of the view (at least as reflected in what Apotex's Senior Counsel told Gyles J) that it would be pointless to obtain PBS listing of Apotex's clopidogrel products, and thereby trigger a mandatory 12.5% price reduction under s 99ACH of the National Health Act, if Gyles J granted an interlocutory injunction restraining Apotex from selling any such products. According to the transcript of the 18 September 2007 hearing, it was on this basis that Apotex proffered its undertaking. 39 As to (B), those particulars do not accurately summarise what the Court was told on 25 September 2007. The transcript for that day reveals that the jurisdictional argument that was referred to by Senior Counsel for Apotex before Gyles J related not to paragraph 1 of his Honour's orders but to the question whether there was jurisdiction to grant an injunction to restrain Apotex from proceeding with an application to obtain PBS listing of its clopidogrel products. The relevant exchange between Senior Counsel for Apotex and Gyles J was as follows: Senior Counsel: And your Honour remembers your Honour raised the jurisdictional question relating to our applying to [sic] a listing under the PBS. His Honour: Yes. Senior Counsel: And we've agreed - your Honour remembered in running we agreed that if your Honour would make the first injunction, to save the jurisdictional argument, we would make the second undertaking. His Honour: Yes, and you give that undertaking? Senior Counsel: Yes, your Honour, I do. 40 It is tolerably clear that Apotex did not wish to have an argument before his Honour which would raise for determination the question whether the Court had power to grant an interlocutory injunction restraining Apotex from proceeding with an application for PBS listing of its clopidogrel products in circumstances where the Court had already determined that it would grant an interlocutory injunction restraining Apotex from supplying any such products. 41 The purpose of the allegation made in para 4(b)(iii) of the proposed points of defence is unclear when read in light of the particulars. The principal allegation is that Apotex volunteered its undertaking for "forensic or commercial reasons". The reasons given by Senior Counsel for Apotex for providing the undertaking indicate that Apotex saw no point in obtaining PBS listing for products which the interlocutory injunction prevented it from selling in circumstances where, by doing so, a mandatory price reduction would be triggered. If the Sanofi parties wish to contend that there was some other reason which motivated Apotex to provide the undertaking then that is a matter that should be clearly and distinctly pleaded. Similarly, if the Sanofi parties wish to contend that any loss suffered by Apotex is not recoverable because it was suffered as a result of an undertaking volunteered by Apotex, rather than the interlocutory injunction granted by Gyles J, then that is also a matter that should be clearly and distinctly pleaded.

Category 3 42 By para 4(c)(i)-(iii) of its proposed amendments the Sanofi parties contend that merely by applying for PBS listing of its clopidogrel products, Apotex would have engaged in conduct that amounted to exploitation of the invention the subject of the Patent so as to infringe the exclusive rights of the patentee, thereby exposing Apotex to the risk of substantial damages in the event that the Patent was not revoked. That allegation raises the same issue that Senior Counsel for Apotex alluded to before Gyles J on 18 and 25 September 2007. I do not see any reason why this proposed amendment should not be allowed. 43 The proposed amendments also include para 4(c)(iv)-(viii) which, as will be seen, also draws on para (c)(i). Here the Sanofi parties seek to raise an argument to the effect that Apotex could not have obtained PBS listing for Apotex's clopidogrel products without making a misrepresentation or otherwise engaging in misleading or deceptive conduct. Paragraph (c)(i) and (iv)-(viii) relevantly state: (c) … independent of the effect of any of the Restraints, Apotex could not have applied for the listing of the Apotex Registered Clopidogrel Products on the PBS while the Patent remained unrevoked in that: (i) upon the listing of those products, Apotex would have had an obligation: (A) to supply those products, pursuant to section 99AEB of the National Health Act 1953 (Cth) (NHA); and (B) to notify the Minister of any inability to supply those products, pursuant to section 99AEG of the NHA; … (iv) further and by reason of the matters referred to in sub-paragraph (c)(i) above, an application by Apotex for listing of the Apotex Registered Clopidogrel Products on the PBS would have conveyed an assurance or representation that Apotex was able to supply those products; (v) unless and until the Patent was revoked, Apotex could not give an assurance that it would supply the Apotex Registered Clopidogrel Products without the licence or authority of Sanofi (which Apotex did not have); (vi) in the premises, an application by Apotex for listing of the Apotex Clopidogrel Products, while the Patent remained unrevoked, would have involved a misrepresentation by Apotex, or misleading or deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth); (vii) further or in the alternative, in order to make an application for listing of the Apotex Registered Clopidogrel Products on the PBS, Apotex would have been required to specify the dates when supply of those products would be made available to Approved Pharmacists, and to certify that the information given this regard was correct; and PARTICULARS Form PB11 "Application to list a Drug or Medicinal Preparation as a Pharmaceutical Benefit". (viii) any specification of a supply date while the Patent remained unrevoked would have involved either the giving of false information (namely, an assurance that Apotex would supply the Apotex Registered Clopidogrel Products, when it could not give such an assurance while the Patent remained unrevoked), or the omission of information (namely that Apotex could not give an assurance of supply of the Apotex Clopidogrel Products unless and until the Patent was revoked); 44 At all relevant times s 99AEB and s 99AEG of the National Health Act provided: 99AEB Guarantee of supply The responsible person for a guaranteed brand of a guaranteed item must supply the guaranteed brand of the guaranteed item during the guaranteed period for the guaranteed brand of the guaranteed item. Note 1: For the circumstances when a responsible person fails to supply, or is unable to supply, in the guaranteed period, see sections 99AEE and 99AEF. Note 2: For the consequences for the responsible person for failing to supply, or being unable to supply, in the guaranteed period, see Subdivision F. … 99AEG Requirement to notify Minister of failure to supply etc. Notification of belief that responsible person will fail to supply or be unable to supply (1) If, during the guaranteed period for a guaranteed brand of a guaranteed item, the responsible person for the guaranteed brand of the guaranteed item forms the belief that the person will fail to supply, or will be unable to supply, the guaranteed brand of the guaranteed item in the period, then, as soon as practicable after the person forms the belief, the person must notify the Minister, in writing, of that belief. Notification of failure to supply or inability to supply (2) If, during the guaranteed period for a guaranteed brand of a guaranteed item, the responsible person for the guaranteed brand of the guaranteed item fails to supply, or is unable to supply, the guaranteed brand of the guaranteed item, then, as soon as practicable after the failure or inability occurs, the person must notify the Minister, in writing, of that failure or inability unless the person notified the Minister about that supply under subsection (1). Offence (3) A person commits an offence if: (a) the person is required to notify the Minister under subsection (1) or (2); and (b) the person fails to do so. Penalty: 60 penalty units. (4) Subsection 4K(2) of the Crimes Act 1914, which creates daily or continuing offences, does not apply to an offence against subsection (3). 45 It is one thing to say that Apotex would not have applied for PBS listing because of the commercial risk involved for so long as the Patent remained unrevoked. However, that is not what para 4(c)(iv)-(vi) is about; rather, the Sanofi parties assert, as I understand this part of their proposed pleading, that Apotex could not have applied for a PBS listing of its clopidogrel products because it could not make a representation that it was able to supply such products while the Patent remained unrevoked. 46 There are three points to be made about para 4(c)(iv)-(vi). First, as I understand the allegation, the misrepresentation referred to would be one that arose by implication. The circumstances said to give rise to any implied representation should be fully pleaded and particularised. Second, the pleading should specify what conduct, short of actual misrepresentation, is said to be (or rather would have been) misleading or deceptive. Thirdly, the proposed amendments do not adequately explain why Apotex could not have obtained PBS listing were it not for the interlocutory relief obtained by Sanofi on 25 September 2007. In particular, they do not explain why any representation (if made) to the effect that Apotex was, or would be, able to supply clopidogrel products after obtaining PBS listing would have been untrue or misleading or deceptive at the time it was made (all of this being on the assumption, of course, that there was no interlocutory injunction restraining Apotex from selling its clopidogrel products in Australia). The same is also true of para 4(c)(vii)-(viii) of the proposed amended points of defence. 47 I do not propose to allow para 4(c)(iv)-(viii) in its present form. Paragraph (d) is wholly dependent on (c) and is also disallowed.

Category 4 48 This is one of the categories of amendment which, as it presently stands, will not be allowed. Paragraph 4(e) of the proposed amended points of defence states: … independent of the effect of the Restraints, the Minister would not have made a determination under section 85 of the NHA to list the Apotex Registered Clopidogrel Products on the PBS, while the Patent remained unrevoked; and PARTICULARS The Respondents repeat sub-paragraphs (c)(i)-(c)(iv). No Minister acting reasonably could have made a determination under section 85 of the NHA to list the Apotex Registered Clopidogrel Products on the PBS in circumstances where such a listing would have imposed upon Apotex an obligation to supply those products, and such supply would have been an infringement of exclusive rights that had been granted to the Respondents under other Commonwealth legislation, namely the Patents Act 1990 (Cth). Further, the Minister would not have made such a determination, having regard only to relevant considerations, and in particular those matters in sub-paragraphs (a) and (b)-(c) above. 49 The effect of this allegation, as I read the proposed pleading, is that the Minister would have refused an application for PBS listing of Apotex's clopidogrel products for two reasons which I will deal with in turn. 50 First, it is asserted that no Minister acting reasonably could have decided to list Apotex's clopidogrel products on the PBS: see Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230. To establish that it was not open to the Minister to decide to list Apotex's clopidogrel products on the PBS on this basis would require the Sanofi parties to establish that no reasonable person, having a proper understanding of the relevant statutory provisions, could make such a decision. As presently advised, I doubt whether this case could be described as reasonably arguable, but that is not something that was the subject of debate before me so I will say no more about it. 51 The second assertion is slightly less ambitious. It is said that if the Minister had regard only to relevant considerations the Minister would not have listed Apotex's clopidogrel products on the PBS. It is by no means clear what the Sanofi parties say the "relevant considerations" are for this purpose. It is clear that the Minister has a broad discretion when acting under s 85(2) of the National Health Act. If the Sanofi parties wish to contend that after taking into account relevant considerations (and ignoring irrelevant considerations) the Minister would have declined to list Apotex's clopidogrel products on the PBS then the Sanofi parties will be required to identify the relevant considerations that they say would have led the Minister to make that decision. 52 Finally, if the Sanofi parties wish to contend that the Minister could not have lawfully listed Apotex's clopidogrel products on the PBS because of the existence of the Patent then this must be clearly and distinctly pleaded and particularised.

Categories 5 and 6 53 The amendments falling within these categories were resisted on grounds previously addressed. They will be allowed. The Sanofi parties have agreed to provide particulars of the deduction referred to in para 6(e) and an order requiring that they do so has been made. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.

Trade Practices Act 1974(Cth)

National Health Act 1953(Cth)ss 85(2), 99ACH, 99AEB, 99AEG

At a glance

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Judgment (19 paragraphs)

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Cases Cited (7)

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