Apotex Pty Ltd v AstraZeneca AB

Federal Court of Australia|2012-02-28|Before: Rares J, Emmett J

REASONS FOR JUDGMENT 1 On 14 December 2011, a judge of the Court ordered that the applicant, Apotex Pty Limited (Apotex), be restrained until further order from selling, supplying, offering to sell or supply, soliciting or taking orders for, or advertising or promoting generic rosuvastatin. Rosuvastatin is a compound that is an active ingredient in a drug for treating high blood cholesterol levels and related conditions. The injunction was granted on the motion of the respondents, AstraZeneca AB and AstraZeneca Pty Limited (together Astra). Astra markets rosuvastatin under the brand name CRESTOR. 2 By amended interlocutory application dated 20 January 2012, Apotex applied for orders that the terms of the injunction be varied so as to limit their restraint to rosuvastatin products in 5mg and 10mg dosages. Astra opposed the application on two bases. The first was that the application was in essence an abuse of process because Apotex had contested a full interlocutory hearing in consequence of which the injunction was granted, and there has been no appeal from the order granting the injunction. The second basis was that, assuming that Apotex was permitted to pursue its application, it had made out no case for varying the interlocutory order made on 14 December 2011.

INFRINGEMENT 14 The injunction granted by Rares J was not specific in relation to the patents that supported it. It was common ground before me that, if I were satisfied that there is a prima facie case of infringement of the Cation Salt Patent, there would be no need to consider whether there is also a prima facie case of infringement of the Low Dose Patent and the HeFH Patent. Nevertheless, it would be necessary to consider any additional evidence as to the balance of convenience, assuming that a prima facie case had been established. 15 The complete specification for the Cation Salt Patent (the Specification) states that a problem associated with rosuvastatin is that it is particularly sensitive to degradation under certain conditions, and that the major degradation products formed are the corresponding lactone and an oxidation product in which the hydroxy group adjacent to the carbon-carbon double bond is oxidised to a ketone functionality. The Specification states that the potential for significant degradation of rosuvastatin makes it difficult to formulate and provide a pharmaceutical composition with acceptable storage life for a marketed product. 16 The Specification then goes on to state that it had been found that it was not sufficient to improve stability for rosuvastatin solely by controlling pH in the formulation, but that stability was improved by adding to the composition an inorganic salt containing one or more multivalent inorganic cations. The Specification stated that, whilst not wishing to be bound by theory, it was believed that the multivalent inorganic cation stabilised the structure of the rosuvastatin and made it less susceptible to oxidisation and/or lactonisation. 17 Relevantly, claim 1 of the Cation Salt Patent is for the following: A pharmaceutical composition comprising [rosuvastatin], or a pharmaceutically acceptable salt thereof as the active ingredient and an inorganic salt in which the cation is multivalent, provided that: (i) the inorganic salt is not hydrotalcite or synthetic hydrotalcite; (ii) the counter anion to the inorganic salt is not a phosphate Astra contends that Apotex's products incorporate all of the features of claim 1 of the Cation Salt Patent, in that: the Apotex products are pharmaceutical compositions; the Apotex products comprise rosuvastatin in a pharmaceutically acceptable salt as the active ingredient; and the Apotex products comprise an inorganic salt, namely, ferric oxide or titanium dioxide, in which the cation is multivalent. Astra further contends that neither of the exclusions in claim 1 applies. 18 Apotex, however, says that, while the tablet coatings in its product include ferric oxide and titanium dioxide, which are well known components of tablet coatings, that is not sufficient to satisfy the requirements of claim 1. It says that the presence of titanium dioxide or ferric oxide in the coating would not provide the stability required by the inorganic salt as used in the pharmaceutical composition of the Cation Salt Patent. Apotex says none of the ingredients in its compositions is for the purpose of stabilisation and, further, that none of the ingredients in its products is an inorganic salt, as that term is properly understood when used in the Cation Salt Patent. 19 Apotex contends that, when read in the context of the Specification as a whole, claim 1 requires the inorganic salt to be present in 'close proximity' or 'intimate contact' or 'uniformly or thoroughly mixed' with the rosuvastatin, in order to achieve the stabilising effect that is asserted to be the advantage of the invention. It says that there is no inorganic salt that meets those requirements in the Apotex products. 20 However, claim 1 requires nothing more than a pharmaceutical composition comprising rosuvastatin, or a pharmaceutically acceptable salt thereof, as the active ingredient, and an inorganic salt in which the cation is multivalent. There is no reference in claim 1 to the inorganic salt being in close proximity or intimate contact or uniformly or thoroughly mixed with the rosuvastatin. Nor is there any wording in claim 1 to which that meaning can be attributed by any process of construction. 21 Certainly, claims must be construed in the light of the Specification as a whole, regardless of whether there is apparent ambiguity in the language of the claims. However, that does not mean that the plain meaning of a claim can be changed by adding a gloss from the body of the specification. To adopt the construction proposed by Apotex would be to place a gloss on the plain words of claim 1. 22 The term pharmaceutical composition encompasses all typical dosage forms. Thus, claim 7 of the Cation Salt Patent refers to a pharmaceutical composition that is a tablet or powder. It draws no distinction between the different parts of the tablet, being, for example, a tablet core and a tablet coating. The Specification does not indicate that the coating is something separate from, and not forming part of, the pharmaceutical composition. The language of the Specification suggests that the coating is a feature of the composition. Thus, the Specification states that a feature of the invention is a pharmaceutical composition comprising rosuvastatin, the composition having a ferric oxide light protective coating. That suggests that the coating is part of the composition. 23 On the other hand, the Specification then goes on to state that a further aspect of the invention comprises a method of preparing a stabilised pharmaceutical composition which comprises admixing rosuvastatin with a an inorganic salt in which the cation is multivalent. It states that a yet further aspect of the invention comprises a method of producing a stabilised pharmaceutical composition which comprises incorporating an inorganic salt in which the cation is multivalent in a pharmaceutical composition containing rosuvastatin. The Apotex products do not satisfy that description. Nevertheless, there is nothing in claim 1, or in the consistory clause of the Specification, to say that that is an integer of the invention. 24 The evidence indicates that the term salt is capable of being used in more than one sense, being a narrow or traditional sense in which it refers to the product of reaction of an acid and a base, on the one hand, and a broader compositional sense, in which it refers to a class of compounds made up of cations and anions, such as ferric oxide and titanium dioxide, on the other hand. It is certainly arguable that the Specification indicates that the term salt is used in the latter broader sense. Both the description and various claims expressly state that the counter anion of the inorganic salt may be oxide, amongst other possibilities. That is incompatible with the narrow traditional meaning of the term salt, which excludes the possibility of oxide as an anion. Further, the descriptions and claims also state that the cation may be iron, thereby including in the preferred embodiments iron oxide. There is also no reference in the Specification to an acid-base reaction as a requirement for the formation of a salt. 25 There is some evidence that both ferric oxide and titanium dioxide may provide a stabilising effect on rosuvastatin, even if they are incorporated as part of the coating of a tablet rather than in its core. Even if the objective of a stabilising effect is to be taken into account in construing the claims, it is arguably present on the construction proposed by Astra. The invention is concerned with the provision of an effect, not the mechanism by which it is produced. 26 The arguments canvassed above were canvassed before Rares J. Apotex, however, says that the position is now different because of the more detailed evidence from Dr Phillip Marshall, upon which it now relies. Dr Marshall has considerable experience in the pharmaceutical and related bioscience industries. Dr Marshall says that the Specifications should be understood as saying that rosuvastatin is unstable in certain conditions. He says that the structure of rosuvastatin contains a number of functional groups that are sensitive to degradation, including oxidation and lactonisation. The Specification states that the major degradation products formed are the corresponding lactone and a ketone. Lactones are products of degradation by lactonisation, and ketones are products of degradation by oxidation. 27 Dr Marshall says that lactonisation occurs within the molecule, and, accordingly, in his view, the multivalent inorganic cation most likely increases the stability of rosuvastatin by forming some association or complex with rosuvastatin. He would therefore understand from reading the Specification that, in order to stabilise rosuvastatin, the inorganic salt in which the cation is multivalent must be intimately and uniformly mixed with the rosuvastatin throughout the pharmaceutical composition. He would understand from the Specification that the invention would require, in the case of a tablet with a core and a coating or capsule, that both the rosuvastatin and the inorganic salt be intimately mixed together within the core of the tablet. 28 Having regard to the nature of the proceeding , the evidence was not tested by cross-examination. The Court is faced with the circumstance that there is a theory, advanced by Dr Marshall, which could well turn out to be correct. However, I am not persuaded that the additional evidence, which was not before Rares J, is sufficient to lead to the conclusion that there is not a prima facie case of infringement, assuming that the Cation Salt Patent is valid.

INVALIDITY 29 Apotex contends that the evidence shows a strong case for revocation of the relevant claims of the Cation Salt Patent. There are three bases upon which Apotex relies. 30 First, Apotex contends, claim 1 specifically disclaims inorganic salts having hydrotalcite or synthetic hydrotalcite and where the counter anion is a phosphate. However, the priority document relied on for the Cation Salt Patent discloses a composition containing rosuvastatin and a tribasic phosphate salt, and the only salts disclosed in the priority document are those in which the anion is a phosphate. Apotex contends that the Cation Salt Patent is not entitled to take the date of filing of the priority document as the priority date, but must take as its priority date the date on which various amendments were made to disclaim inorganic salts in which the counter anion is a phosphate, namely 23 August 2003. If, as Apotex contends, the priority date is deferred to 23 August 2003, there was a prior disclosure of salts other than phosphate salts. Dr Marshall concluded that that prior disclosure discloses a pharmaceutical composition that would fall within the scope of claim 1. Therefore, Apotex says, the Cation Salt Patent is not novel. 31 Astra responds that the effect of the amendments was to narrow the scope of the claim. Specifically, the effect of the amendments was to incorporate what now appear as exclusions (i) and (ii) in claim 1. Astra says that, once it is understood that the effect of the amendments was to narrow the claims, there is no basis for a conclusion that the claims 'claim matter that was in substance disclosed as a result of amending the specification'. All of the matter that is within the scope of the claims, as they stand now, was already disclosed and was already claimed, as and from the filing of the specification on 4 August 2000. It is simply that there is some additional matter, Astra says, being compositions in which, for example, the counter anion is phosphate, which is no longer claimed. The amendment of the claims of a patent to restrict them to a subset of the invention previously disclosed and claimed does not result in the claims claiming matter that was in substance disclosed as a result of the amendments. 32 Secondly, Apotex contends that the claims of the Cation Salt Patent are not fairly based on the matter described in the Specification, as required by s 40(3) of the Patents Act 1990 (Cth), because the specification describes the use of phosphate salts. Astra, by contrast, contends that the claims are clearly fairly based on the matter described in the Specification, and that, read as a whole, the description provides a real and reasonably clear disclosure of what is claimed. In particular, the Specification includes a consistory clause that mirrors the wording of claim 1, and nothing in the balance of the description indicates that the invention is narrower than what is set out in that clause. Both aspects of the consistory clause expressly incorporate the exclusions that appear in the claims. The statements of preferred embodiments that follow the consistory clause are subject to the consistory clause. 33 To the extent that there are some later references to phosphate as a counter anion, or to inorganic salts referred to that include phosphate as a counter anion, those references cannot, Astra says, overcome the express exclusion of phosphate that appears in the consistory clause and claim 1. A claim based on what has been cast in the form of a consistory clause is not fairly based if other parts of the matter in the specification show that the invention is narrower than the consistory clause. However, Astra says, that is not the case here. The phrases relied upon by Apotex, which are curious in the extreme, refer to phosphate as a possible counter anion, whereas the consistory clause explicitly excludes that. Astra contends that the skilled addressee would understand those phrases as being 'stray phrases', which do not affect the scope of the invention as described in the consistory clause. It says that the phrases do not suggest that the invention is narrower than the consistory clause. 34 Thirdly, Apotex contends that the claims of the Cation Salt Patent are invalid for lack of utility. The contention depends upon, and, in essence, is no more than the proposition that the inclusion of the inorganic salt in the tablet coating, as opposed to the core, would not achieve the promise of improving the stability of the composition. Astra says that there is no evidence to support that proposition. Indeed, there is detailed evidence, it says, as to the capacity for so-called salts such as ferric oxide and titanium dioxide to improve stability even where present in the coating of a tablet. In the absence of detailed evidence from Apotex, based, for example, on the testing of compositions, is not possible to draw the conclusion that what is claimed will not work. 35 Astra begins with its position as the grantee of a patent. The Cation Salt Patent is effective until such time as it is revoked. I am not persuaded that the additional evidence adduced by Apotex is sufficient to lead to the conclusion that I should make a finding different from Rares J as to the existence of a prima facie case of infringement. Of course, if Apotex were able to demonstrate a very strong case for revocation, that would derogate from the strength of Astra's prima facie case for infringement. The strength of the revocation case is relevant to the strength of the prima facie case of infringement. That is a factor to be taken into account in assessing the balance of convenience.

BALANCE OF CONVENIENCE 36 Apotex contends that Astra's case with respect to infringement is weak, that its own case with respect to invalidity is strong, and that those factors are relevant in the assessment of the balance of convenience, which, Apotex says, favours variation of the injunction as sought in its amended interlocutory application. Apotex contends that continuation of the injunction in its present form will deprive it of a major competitive advantage in being the first independent pharmaceutical company to commence promoting and securing orders for generic rosuvastatin products (the first mover advantage). It says that there are two aspects of that advantage, being the rapid acquisition of market share and the retention of that market share even when additional generic brands are subsequently launched. 37 The first mover advantage that Apotex asserts that it may lose is said to result from the following considerations: A new generic market entrant usually enters into long term supply contracts with pharmacies, involving substantial forward selling of a product, with discount or rebate incentives provided to those pharmacies. Pharmacies typically purchase and stock only one generic product for a given pharmaceutical compound. As a result, it is difficult for a generic company to gain market share against a competitor who has already obtained market share. 38 Apotex says that it was in a unique position to offer, as a bundle for supply, both its rosuvastatin product, and another product, described as venlafaxine SR. It says that it was the only company in a position to market such a bundle, which provided it with the opportunity to sell considerably more of the venlafaxine SR products than would otherwise have been possible. 39 Rares J held that the long term damage that Astra would suffer, if the injunction were refused, strongly outweighed the damage that Apotex might suffer if the injunction were granted until further order. Astra contends that that finding was supported by a substantial body of evidence that showed the consequences of generic entry into the market, being: the permanent and irreversible erosion of Astra's product price and sales volume; likely revenue losses of over $100 million in the first twelve months alone; effective destruction of Astra's Australian CRESTOR business within two years; and the placing in jeopardy of jobs in future product research development activity. 40 Astra contends that no justification has been shown for permitting Apotex to argue afresh where the balance of convenience lies. It says that there is no evidence of any change in circumstances favourable to the position of Apotex, and that there is no new material that could not reasonably have been put before the Court on 14 December 2011. It characterises Apotex as an invader yet to establish itself in the market, such that it should be kept at bay until a decision has been reached as to whether the invasion is lawful or not. Apotex, it says, is seeking, by the introduction of a new product to the Australian market, to disturb a situation that has been established for eight years or more. In those circumstances, it is appropriate to maintain the status quo ante. 41 Astra asserts that any first mover advantage that Apotex may enjoy has arisen only because of the refusal by Apotex to disclose its proposed product details to Astra in a timely fashion, including what are described as somewhat misleading assertions that there was no basis for Astra's claim for preliminary discovery. Apotex sought to build up as big a market presence and share as it could, using the advantage of surprise. Astra says that it would have sought an injunction long before any actual offers of supply were made, had Apotex complied with its duties as a litigant and told Astra what it was up to. Findings to that effect were made by Rares J, who was well aware of the contentions advanced on behalf of Apotex as to the balance of convenience. 42 Astra says that Apotex is seeking to protect an asserted entitlement to a springboard advantage over its competitors, rather than a statutory or proprietary right. It says that Apotex could never be entitled to claim relief of that character, which is separate and distinct from the issues raised in this proceeding. On the other hand, if Astra's patents are ultimately held to be valid, it will be entitled to a statutory monopoly to exploit its inventions for another eight years. Further, Astra says, Apotex may not be the first mover to supply generic rosuvastatin, since there are other prospective generic suppliers against whom Astra is presently seeking injunctive relief. 43 Apotex has proffered an undertaking not to market its 5mg and 10mg rosuvastatin products pending trial. It seeks to market only 20mg and 40mg products. Those products represent approximately half of the Australian rosuvastatin market by value. The marketing of only half of the product range will also inhibit profitability, substitution and loyalty to the generic brand, thereby further reducing the scope for achievement of any first mover advantage that Apotex might have. 44 Apotex points to the difficulty that it would encounter if it is required to call on the undertaking as to damages given by Astra as a term of the grant of the injunction. It says that the loss of the first mover advantage cannot be accurately calculated, because it would not be possible to calculate and remedy the lost sales of non-rosuvastatin products that it says it would be able to sell by bundling with its rosuvastatin products. Apotex would potentially be required to recreate an entirely hypothetical counterfactual market, with all the attenuated factual and evidentiary difficulties that that entails, in order to establish its damage. 45 On the other hand, Apotex says, Astra would face no such difficulties in calculating its loss if it succeeds at a final hearing. It has had a monopoly in Australia for sales of rosuvastatin since its sales commenced in 2006. If it were successful after a final hearing, it would have access to the sales records that Apotex undertakes to maintain and keep available for inspection. Therefore, Apotex says, Astra would be in a better position to calculate any loss or damage if it succeeded at final hearing. Accordingly, Apotex says, Astra would be adequately compensable by an award of damages, if it succeeds at final hearing. Astra responds that the difficulties of calculating damages, including the loss of market share, justify the grant of the injunctions, assuming that a prima facie case is established.

CONCLUSION 46 I was not persuaded that any additional evidence adduced by Apotex is of such a character as to lead to the conclusion that the findings of Rares J should be varied. In the circumstances, I concluded that I should not, at this stage, accede to the application by Apotex to vary the terms of the injunction granted on 14 December 2011. However, Astra has commenced proceedings against other generic suppliers of rosuvastatin. Those proceedings are listed for directions for the purpose of considering applications for interlocutory relief on 1 March 2012. Issues similar to those raised in this application will be raised in those proceedings. Accordingly, I considered that the appropriate course was to adjourn the hearing of this application by Apotex to 1 March 2012. If it were not for the fact that those other proceedings were listed for the purpose of considering interlocutory relief, I would have dismissed the present motion with costs. The present motion will be listed for hearing on 1 March 2012 on the basis that it will be treated as a fresh application to vary the orders made by Rares J on 14 December 2011 by reason of any change in circumstances that might arise as a consequence of orders made in the other proceedings. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Patents Act 1990(Cth)s 40(3)

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