Apotex Pty Ltd v Cipla Limited

BEACH J: 1 The cross-claimants have sought an interlocutory injunction against the first cross-respondent (Apotex), seeking to restrain Apotex until the trial of this proceeding from infringing various claims of the Patent in suit. In essence the cross-claimants seek a continuation of the present interim injunction currently in force. 2 The first cross-claimant (Cipla) is the registered owner of Australian Patent No. 2003244799 titled "Combination of azelastine and steroids" (the Patent). Cipla is also the respondent to the principal proceeding before me wherein Apotex (as the applicant) has challenged the validity of various claims of the Patent. 3 The Patent relates to pharmaceutical products and formulations for nasal and ocular use for preventing or minimising allergic reactions. The Patent relates to pharmaceutical products and formulations containing a combination of an antihistamine (in particular, azelastine or a pharmaceutically acceptable salt, solvate or derivative thereof) and a corticosteroid (in particular, fluticasone or a pharmaceutically acceptable ester thereof). 4 The Patent claims a priority date of 14 June 2002. It was filed on 13 June 2003 and has an expiry date of 13 June 2028. 5 The second cross-claimant (Meda) is said to be the exclusive licensee of the Patent in Australia within the meaning of the Patents Act 1990 (Cth) (the Act), although this is challenged by Apotex. 6 On 14 January 2014, with the permission of Meda, an Australian company within the Meda group of companies, Meda Pharmaceuticals Pty Ltd (Meda Pharmaceuticals) obtained registration on the Australian Register of Therapeutic Goods (ARTG) for a nasal spray formulation containing azelastine, hydrochloride and fluticasone propionate administered as a single dose. This product is indicated for "Symptomatic treatment of moderate to severe allergic rhinitis and rhino-conjunctivitis in adults and children of 12 years and older where use of a combination (intranasal antihistamine and glucocorticoid) is appropriate." 7 During the period July 2014 to 1 November 2017, Meda Pharmaceuticals, under licence from Meda, offered for sale and sold in the Australian market under the brand name DYMISTA the said product. It purchased DYMISTA from Meda. Following the acquisition of the Meda group of companies by the Mylan group of companies, on 1 November 2017, the business of Meda Pharmaceuticals was taken over by Mylan Health Pty Ltd (Mylan Health). Since 1 November 2017, Mylan Health, under licence from Meda, has offered for sale and sold in the Australian market DYMISTA purchased from Meda. 8 On 27 August 2017, Apotex obtained registration on the ARTG for two pharmaceutical products for a nasal spray formulation containing azelastine hydrochloride and fluticasone propionate administered as a single dose. The Apotex products are manufactured overseas. Apotex threatens to import, sell and otherwise exploit the Apotex products in Australia. 9 In this proceeding, Cipla and Meda assert that the exploitation of the Apotex products in Australia would infringe each of claims 1 to 4, 6, 8, 9, 11, 12, 14, 15, 17, 19, 20, 22 and 23 of the Patent, such that Apotex's threat to exploit the Apotex products constitutes a threat to infringe each of the said claims. For the purposes of the present interlocutory application, Apotex concedes that the Apotex products have all the features of each of the relevant claims. 10 Voluminous evidence has been filed in relation to the interlocutory injunction application, principally directed to invalidity questions. Apotex has contended that it has a very strong case to establish invalidity such as to dictate that I should refuse the interlocutory injunction sought. 11 The cross-claimants have filed expert evidence from two independent expert witnesses relevant to the invalidity questions: (a) Dr Warner Carr (a clinician in the field of allergies, clinical immunology and asthma); and (b) Dr Hugh Smyth (a pharmaceutical formulation scientist). In respect of the balance of convenience and other issues, the cross-claimants have filed evidence from Mr Mohit Gupta (Mylan's head of business development portfolio and sourcing), Mr Hans-Jűrgen Tritschler (Mylan's head of global key brands), Mr Owain Stone (an independent forensic accountant) and Ms Shyama Jayaswal (solicitor). 12 Apotex relies, inter-alia, on the following affidavits concerning the question of invalidity: (a) Dr Desmond Williams (pharmaceutical scientist); (b) Associate Professor Stephen Adelstein (clinician); and (c) Dr Louisa King (literature search). 13 It has also filed other evidence on the balance of convenience and other matters: (a) Mr Roger Millichamp (managing director of Apotex); (b) Mr Antony Samuel (an expert forensic accountant); and (c) Ms Kellech Smith (solicitor).

Background 14 Before proceeding further, I should say something about the Patent and recent events.

(a) The Patent 15 The Patent relates to pharmaceutical products and formulations containing a combination of an antihistamine, in particular azelastine or a pharmaceutically acceptable salt, solvate or derivative thereof, and a corticosteroid, in particular fluticasone or a pharmaceutically acceptable ester thereof. 16 The Patent states (p 1 lines 10 to 18): It is known to use antihistamines in nasal sprays and eye drops to treat allergy-related conditions. Thus, for example, it is known to use the antihistamine azelastine (usually as the hydrochloride salt) as a nasal spray against seasonal or perennial allergic rhinitis, or as eye drops against seasonal and perennial allergic conjunctivitis. It is also known to treat these conditions using a corticosteroid, which will suppress nasal and ocular inflammatory conditions. Among the corticosteroids known for nasal use are, for example, beclomethasone, mometasone, fluticasone, budesonide and ciclesonide. Corticosteroids known for ocular anti-inflammatory use include betamethasone sodium, dexamethasone sodium and prednisolone acetate, for example. 17 It then states (p 1, lines 19 to 22): It would be highly desirable, however, to provide a treatment that combines the effects of anti-histamine treatments and steroid treatments, in a pharmaceutically acceptable formulation, which is tolerated in situ, without significantly disrupting the potency of the constituent pharmaceuticals. 18 The Patent then states (p 1, lines 23 to 32) that: We have now found that, very surprisingly, azelastine (4-[(4-Chlorophenyl)methyl]-2-(hexahydro-l-methyl-lH-azepin-4-yl)-l(2H)-phthalazinone), or a pharmaceutically acceptable salt, solvate or physiologically functional derivative thereof, preferably in salt form and even more preferably in the form of the hydrochloride salt, can advantageously be combined with a steroid, or a pharmaceutically acceptable salt, solvate or physiologically functional derivative thereof, to provide a stable, very effective combination product or formulation preferably for nasal or ocular treatment. The combination can provide, in a single administration or dosing regime, the antihistaminic properties of azelastine and the anti-inflammatory (and / or other) properties of the steroid, without any significant interference between the two, or adverse reaction in situ. 19 This passage is significant in a number of respects, particularly given Apotex's challenge concerning manner of manufacture and inventive step. 20 Further, on p 6 (lines 8 to 15), there is reference to an advantageous synergistic therapeutic effect referred to in the following terms: It will also be appreciated from the above, that the respective therapeutic agents of the combined preparation can be administered simultaneously, either in the same or different pharmaceutical formulations, or separately or sequentially. If there is separate or sequential administration, it will also be appreciated that the subsequently administered therapeutic agents should be administered to a patient within a time scale so as to achieve, or more particularly optimise, the above referred to advantageous synergistic therapeutic effect of a combined preparation as present in a pharmaceutical product according to the present invention. 21 This is referred to in similar terms on p 7 (lines 22 to 26) and on p 8 (line 7). These passages are also significant in relation to the manner of manufacture and inventive step questions. 22 On p 10 begins a discussion of examples with a prefatory statement that "In Examples where only the ingredients of formulations according to the present invention are listed, these formulations are prepared by techniques well known in the art." Apotex made much of this statement, but I do not think that it greatly assists it on manner of manufacture or inventive step. No doubt it was inserted by the patentee to avoid a lack of sufficiency issue. 23 Apotex also made reference to the boilerplate provision on p 16a, line 6. But I do not need to linger on this for the purposes of the present context. 24 As to the claims, for the purposes of the present application it is sufficient to set out only several of the claims: Claim 1 provides: A pharmaceutical formulation which comprises azelastine, or a pharmaceutically acceptable salt, solvate or physiologically functional derivative thereof, and fluticasone or a pharmaceutically acceptable ester thereof. Claim 3 provides: A formulation according to claim 1 or 2, wherein said fluticasone or a pharmaceutically acceptable ester thereof is present as fluticasone propionate or fluticasone valerate. Claim 17 provides: A formulation according to any of claims 1 to 16, which comprises azelastine hydrochloride and fluticasone propionate.

25 Before proceeding further and in order to provide a focus for the following discussion, I would observe the following. It is trite to observe that the Patent must be construed in light of the common general knowledge of the skilled addressee as at the priority date. 26 The cross-claimants have contended that it formed part of the common general knowledge of the notional drug development team comprising a pharmaceutical formulator and clinician in the field of allergy medicine as at June 2002 that: (a) First, combining two active pharmaceutical ingredients (APIs) into one product may affect the efficacy, stability, safety and the side effects of the APIs. (b) Second, choosing excipients to use in a formulation was generally not a straight forward exercise and a significant level of work and skill was often required to identify the best excipients in any given formulation to ensure the formulation was stable, safe and efficacious. The difficulties were exacerbated when the formulation included multiple APIs. (c) Third, formulating a product with multiple APIs was challenging, particularly where the two APIs were not in the same dosage form. Significant additional research and development was often required when designing a new formulation that combines two APIs. (d) Fourth, the administration of an antihistamine and a corticosteroid was not considered to be more effective than the administration of a corticosteroid alone and often resulted in increased side effects. (e) Fifth, different dosage regimes were typically required for antihistamines and corticosteroids. 27 The cross-claimants have contended that, in light of the common general knowledge, as at June 2002 a formulation comprising a combination of an antihistamine (azelastine or a pharmaceutically acceptable salt, solvate or physiologically functional derivative thereof) with a corticosteroid to provide a "stable, very effective combination product or formulation" "in a single administration or dosing regime" "without any significant interference between the two, or adverse reaction in situ" was indeed "very surprisin[g]". 28 The parties have filed expert evidence in support of these propositions in the case of the cross-claimants and against such propositions in the case of Apotex. I am in no position to resolve such differences on the present application. It will be appreciated that accordingly in the present context, I am unable to say whether Apotex has a strong case to establish a lack of inventive step. As to the question of "manner of manufacture", which in one of its threshold dimensions is an analysis to be confined to the face of the specification, Apotex is on firmer ground as there is not the same capacity for the cross-claimants to "add" aspects of common general knowledge. I will return to this later. 29 Having briefly dealt with the Patent, it is appropriate to say something about recent events.

(b) Chronology of Key Events 30 On 17 August 2017, Apotex informed Meda by letter that it expected to receive regulatory approval for the Apotex products "within the next week". On 27 August 2017, Apotex received regulatory approval for the Apotex products to be listed on the ARTG. 31 On 1 September 2017, Apotex and Meda first engaged in "without prejudice" commercial discussions about the Apotex products. On 26 September 2017, Meda commenced discussions with Cipla in relation to notification of the Apotex products and the conduct of any litigation against Apotex. On 27 September 2017, Meda requested by letter that Apotex provide a formal undertaking not to launch the Apotex products on the Australian market until after the expiry of the Patent. Meda requested that Apotex execute the undertaking by 6 October 2017. On 6 October 2017, Apotex by letter refused to provide the undertaking and stated that Apotex expected to be able to begin marketing and taking orders for the Apotex products within the next month. On 24 October 2017, Meda made a counteroffer to Apotex as part of the ongoing discussions with Apotex in relation to the Apotex products. On 9 November 2017, Apotex informed Meda that they would provide a response to Meda's counteroffer within a couple of days. 32 On 10 November 2017, Apotex commenced the present proceedings seeking revocation of the Patent. Also on 10 November 2017, Apotex contacted at least one pharmacist with an offer to supply "APO-AZELASTINE/FLUTICASONE 125/50 azelastine/fluticasone nasal spray". Apparently, Apotex will have stock to be able to meet orders in February 2018. 33 On 14 November 2017, an application to register Meda as the exclusive licensee of the Patent was filed with IP Australia. 34 On 21 November 2017, Meda and Cipla filed their cross-claim seeking relief for infringement of the Patent or threatened infringement. They also filed an application for an interlocutory injunction and an associated interim injunction. 35 On 22 November 2017, I first heard the parties on the injunction application. I granted an interim injunction restraining Apotex from supplying or promoting the Apotex products, and otherwise listed the interlocutory injunction for hearing on 20 December 2017. The interim injunction was initially expressed to expire on 20 December 2017, but was extended by me to expire upon judgment being given in relation to the interlocutory injunction application. On 22 November 2017, I gave the parties until 29 November 2017 to agree on a suitable form of security that Meda was to provide for the undertaking as to damages given as the price for the interim injunction, foreshadowing that if agreement could not be reached on that question, I would reconvene to settle that dispute on the form of security. 36 The parties were unable to agree on a suitable form of security. Accordingly, on 5 December 2017, I heard the parties again on that issue. On that occasion I ordered that Mylan Health be joined as a second cross-respondent so that it, as an Australian company associated with Meda, could give the undertaking as to damages in relation to the interim injunction. I also adjourned over Apotex's application for security for costs. Further, I fixed the trial of the main proceeding (both the principal application and the cross-claim) for hearing on the question of liability on 3 December 2018.

Principles relevant to the injunction application 37 The principles are well known and need no elaborate disquisition. 38 The applicable principles were discussed by the Full Federal Court in Samsung Electronics Co Limited v Apple Inc (2011) 217 FCR 238 (Samsung), but are sourced to the observations of Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at [65] to [67]. 39 The cross-claimants must demonstrate that they have a prima facie case of infringement of the Patent and that the balance of convenience favours the grant of an injunction up to the trial of the proceeding. 40 The sufficiency of the likelihood of success required is dependent upon the nature of the right being asserted and the practical consequences that are likely to flow if the injunction is granted. Further, as the Full Court observed in Samsung (at [67]), the issues of prima facie case and balance of convenience are related inquiries and should not be considered in isolation. Indeed, the apparent strength of the parties' substantive cases is an important consideration to be weighed in the balance of convenience. The Full Court said at [51]: It is true that an applicant for interlocutory relief need not necessarily show that its case is, on balance, likely to succeed. However, the exercise described in O'Neill may lead to the conclusion that in order sufficiently to recognise the serious consequences for the respondent of the grant of interlocutory relief, the applicant should reasonably be expected to demonstrate such likelihood. Where the merits and the question of convenience are fairly evenly balanced, there will be no injustice in requiring that the party seeking relief demonstrate good prospects of success before imposing almost certain prejudice on the other side. 41 The stronger the prima facie case, the less the need to satisfy the Court on balance of convenience and vice versa. 42 Apotex also relies upon its own prima facie case of invalidity of the relevant claims of the Patent. It submits that the evidence establishes a strong prima facie case on invalidity of each of the claims alleged to be infringed. Moreover, there is no presumption of validity of a patent under Australian law. Section 20(1) of the Act provides: 20 Validity of patent not guaranteed (1) Nothing done under this Act or the PCT [Patent Cooperation Treaty] guarantees the granting of a patent, or that a patent is valid, in Australia or anywhere else. Where the legislature has intended to make provision with respect to a presumption of validity, it has done so; see for example, the Trade Marks Act 1995 (Cth). It has not done so with respect to the Act. Nevertheless, Apotex does bear the onus of proof in establishing invalidity. 43 The question of the validity of the Patent is also an important factor to weigh in the balance of convenience. In Hexal Australia Pty Ltd v Roche Therapeutics (2005) 66 IPR 325; [2005] FCA 1218 at [78], Stone J refused interlocutory relief after taking into account, inter-alia, the fact that the strength of the case on invalidity "probably ha[s] more weight" than the strength of the case on infringement. The question of validity was also determinative in Smith & Nephew Pty Ltd v Wake Forest University Health Sciences (2009) 82 IPR 467; [2009] FCAFC 142. I will return later to the more recent decision of Kenny J in InterPharma Pty Ltd v Hospira, Inc (No 3) [2017] FCA 1536. 44 The approach of the Full Court in Samsung also demonstrates this (see in particular at [67], [70] and [88]). 45 Before proceeding further, I should make a number of other observations concerning Samsung. 46 First, in Samsung, the parties there accepted that the orders made below were effectively final in that the commercial viability of the Galaxy Tab 10.1 in the Australian market would be lost. That is not at all the present case if I were to grant the interlocutory injunction. 47 Second, Samsung referred to considering and evaluating the impact that the grant or refusal of an injunction would have or was likely to have on third parties and the public generally. I accept that this is a relevant consideration and I will return to this later. 48 Third, the cross-claimants urged me to take into consideration that Apotex has sought to launch the relevant product with its "eyes wide open" and that it should have "cleared the way" by applying for the revocation of the Patent well before now. Samsung discussed that issue and did not determine it to be irrelevant to the exercise of the discretion to grant an interlocutory injunction. But I accept that the oft-deployed expression that a firm has entered the market with its "eyes wide open" should not be given undue weight. Where a firm has a genuine belief on reasonable grounds that a rival's intellectual property is invalid or that a rival's product may be contested with a non-infringing product, a firm may enter the rival's market, particularly if the firm takes prompt legal action to challenge the validity of the rival's intellectual property. Of course, the firm takes the risk that it may be met with a successful injunction application and/or it may fail at trial. But I accept that where the validity of the patent is in issue, there is no necessary obligation to "clear the way" by revoking the patent. But the fact that a new entrant is prepared to take the risk of being restrained with its eyes wide open is a factor in the assessment of whether to grant an injunction. 49 Finally, on this aspect of my reasons, I accept that the power to grant interlocutory relief for infringement is limited by the purpose for which the power is conferred. Its purpose is to ensure the effective exercise of the jurisdiction invoked against a party against whom final relief might be granted (relevantly here, under s 122 of the Act). In this context I accept that Mylan Health has no standing to invoke the jurisdiction of this Court in relation to infringement. When considering the rights to be protected pending trial, the principal focus should be on Cipla and Meda as, at least arguably, an exclusive licensee. It is the assessment of harm to those parties, if there is no injunction, and the assessment of prejudice or harm to Apotex, if an injunction is granted, that is central to the relevant discretionary considerations that I will come to.

prima facie case 50 There is little doubt that the cross-claimants have a very strong prima facie case on infringement, assuming the relevant claims to be valid. Indeed this was not seriously disputed. 51 On the question of Apotex's assertions on invalidity, it of course has the onus ultimately of establishing them. 52 In my view, in summary, the assertions of invalidity have some merit, but I am not satisfied that any of such asserted grounds of invalidity, separately or together, rise to the level of a strong prima facie case on invalidity. 53 In terms of relative significance as between the various grounds of alleged invalidity, the stronger appears to be the lack of manner of manufacture, followed by the lack of inventive step, and then lack of novelty. 54 I was urged by Apotex to find that its invalidity arguments, particularly on the grounds of a lack of inventive step and lack of manner of manufacture were strong and at the least were equal to or exceeded in strength the cross-claimants' prima facie case on infringement. I am not so persuaded. It is convenient to turn to each of the asserted grounds for invalidity. But if I am circumspect about my discussion of the detail, it is for the following four reasons. First, as the likely trial judge, it is inappropriate for me to be too definitive in the expression of my views at this embryonic stage. Second, relevant witnesses have not been called and cross-examined. Indeed most of the affidavit material is hearsay, if not compounded hearsay. Third, and relatedly, assertion countered by assertion provides little appropriate foundation for me to be definitive on any particular ground of invalidity. Fourth, given the relative speed with which this matter has been brought on and the voluminous material that has been filed, in the limited time available I have little choice but to be circumspect. 55 Let me now proceed to make some brief observations on the questions of invalidity raised.

(a) Novelty 56 It is really only necessary to consider the novelty attack with respect to claims 3 and 17. It is accepted that if those claims are valid, the cross-claimants have a very strong infringement case of those claims. In relation to the novelty attack, it does not avail Apotex in the present context to show that it has a strong case in respect of claims other than claims 3 and 17. For the present context, it also needs to press home that it has a strong case in respect of the novelty attack in relation to claims 3 and 17. In my view, it has not established this. 57 In Apotex's amended particulars of invalidity, Apotex does not allege that claims 3 and 17 are invalid for lack of novelty based on European Patent Application No. 0780127 (EP 127) titled "A nasal spray containing a steroid and a antihistamine". EP 127 was published in 1997. Apotex's pleaded case seeks only to impugn the remainder of the asserted claims for lack of novelty based upon EP 127 but not claims 3 and 17. But before me, Apotex sought to contend that claims 3 and 17 also lack novelty based upon EP 127. 58 In my view, Apotex's submission that claims 3 and 17 are not novel has not been shown to be sufficiently strong at this provisional level to qualify the conclusion that there is a strong prima facie case of threatened infringement of those claims. 59 In particular, the following matters may be noted: (a) First, there appears to be no express or implied disclosure in EP 127 of any ester of fluticasone, let alone fluticasone propionate. (b) Second, it would appear that even if there was an implied disclosure of fluticasone propionate, then EP 127 does not disclose the specific combination of APIs claimed in claims 3 and 17. (c) Third, it would appear that even following the directions in EP 127 and example III as suggested by Dr Williams does not inevitably result in the pharmaceutical formulations of claims 3 or 17. 60 EP 127 concerns "novel nasal spray compositions comprising a safe and effective amount of glucocorticosteroid and an antihistamine" (p 2, lines 5 to 6). The specification states under the heading "Summary of the Invention" (p 2, lines 36 to 44): The present invention relates to pharmaceutical compositions for nasal administration comprising: a) a safe and effective amount of a glucocorticoid selected from the group consisting of beclomethasone, flunisolide, triamcinolone, fluticasone, mometasone, budesonide, pharmaceutically acceptable salts thereof and mixtures thereof; b) a safe and effective amount of a leukotriene inhibiting antihistamine selected from the group consisting of cetirizine, loratadine, azelastine, pharmaceutically acceptable salts thereof, optically active racemates thereof and mixtures thereof; and c) an intranasal carrier. 61 Under the heading "Glucocorticoid Agents" the specification states (p 3, lines 15 to 18): Glucocorticoid agents most useful to the present invention include those selected from the group consisting of beclomethasone, flunisolide, triamcinolone, fluticasone, mometasone, budesonide, pharmaceutically acceptable salts thereof and mixtures thereof. 62 Although fluticasone is referred to, there is no mention of esters of fluticasone there or elsewhere in the specification. 63 In addition, there is a broad disclosure of numerous possible combinations in the formulation of which azelastine (and its pharmaceutically acceptable salts of which hydrochloride is one) and fluticasone (but not its esters) is one. 64 Example III (p 6, lines 25 to 46) provides: The intranasally administered pharmaceutical composition of the present invention is prepared by combining the following components utilizing conventional mixing techniques similar to that described in Example I. Component Wgt% triamcinolone acetonide 0.050 azelastine HCI 0.070 polysorbate 80 0.050 glycerin 2.000 hydroxypropyl methyl cellulose 1.000 sodium chloride 0.900 ethylenediamine tetraacetic acid 0.050 benzalkonium chloride 0.020 distilled water q.s. to vol.

Administration of approximately 0.4 grams of the composition is used for topical nasal application to provide relief from allergy or allergy-like symptoms. Additionally, substantially similar results are also obtained using, in whole or in part, equivalent amounts of other glucocorticoid agents such as fluticasone, mometasone, budesonide, pharmaceutically acceptable salts thereof and mixtures thereof. 65 Although fluticasone is referred to as a member of the group of corticosteroids, there is no mention of esters of fluticasone there or elsewhere in the specification. 66 The test for novelty is set out in The General Tire & Rubber Company v The Firestone Tyre and Rubber Company Limited [1972] RPC 457 at 485 and 486. I do not need to repeat it. 67 Unless a prior publication discloses with precision what is claimed or the inevitable result of following the directions in the prior publication is to arrive at the claimed invention, the claim in suit is novel. Pithily expressed, anticipation "is deadly but requires the accuracy of a sniper, not the firing of a 12 gauge shotgun" (Apotex Pty Ltd v Sanofi-Aventis (2008) 78 IPR 485; [2008] FCA 1194; at [91]). 68 Now it may be said that a direction, recommendation or suggestion may be implicit in what is described in a prior publication. But although an implicit disclosure may constitute a sufficient disclosure for finding that information in a prior art document anticipates a claimed invention, the limits of implicit disclosure must be borne in mind. In order to anticipate explicitly or implicitly, the prior publication must as a matter of fact disclose with precision what is claimed. And it is simply impermissible to add common general knowledge to fill the gap between what is disclosed in the prior publication and the claimed invention; I am not here talking about a skilled addressee just construing a prior publication in the light of common general knowledge. 69 It is not in dispute that EP 127 does not expressly refer to fluticasone propionate. But Dr Williams' evidence for Apotex, however, was that: I understand that EP 127 is using [the term fluticasone] to include pharmaceutically acceptable esters of fluticasone (and indeed the other named GCCs [i.e. glucocorticosteroids]). This is because I know, and knew before the Relevant Date, that GCCs in the form of esters have better transport across cell membranes (including epithelial cells in the nose) and this improves drug delivery. I would thus understand (and would have understood at the Relevant Date) that the inventors of EP 127 to be referring to fluticasone and its esters. 70 The cross-claimants contend that there are a number of difficulties with this evidence. 71 First, in relation to the ground of lack of novelty, it is impermissible to use common general knowledge to fill the gap between what is disclosed in the prior publication and the claimed invention. I agree. 72 Second, Dr Smyth for the cross-claimants gave contrary evidence. 73 I am not able to resolve the conflicts in this evidence. Generally, Apotex has not satisfied me that it has a strong case on the grounds of lack of novelty. Let me turn to the next attack concerning matter of manufacture.

(b) Manner of manufacture 74 Apotex alleges that the invention insofar as claimed in each of claims 1 to 25 of the Patent is not a patentable invention within the meaning of s 18(1)(a) of the Act in that it is not a "manner of manufacture" within the meaning of s 6 of the Statute of Monopolies 1624, 21 Jac 1 c 3. Apotex contends that the invention claimed in each of the claims of the Patent is not a manner of manufacture relying upon one or both of the following arguments. First, it says that the claims are for nothing more than the use of a known material in the manufacture of known articles for a purpose for which that material's known properties make it suitable. Second, it says that it is a mere collocation of parts, each performing its own separate function, and is not patentable. 75 In terms of one dimension to this threshold question, the requirement of manner of manufacture will not be satisfied if it is apparent on the face of the specification that the claimed invention lacks the necessary quality of newness or inventiveness for a "manner of new manufacture". An aspect of this dimension to the threshold question is that it must be made out on the face of the specification itself. But it may be accepted that the specification must be construed in the light of the common general knowledge. But in terms of principle, for the purposes of the present context I accept Apotex's submission that I should not refer to any body of evidence external to the specification even if that knowledge is part of the common general knowledge (assuming that it is outside the framework of the construction exercise of course). 76 Let me make a few observations on what the specification appears to disclose. 77 It would appear that the result disclosed by the specification as a whole is a particular pharmaceutical combination that is stable, effective and can in a single administration or dosage regime, provide the antihistaminic properties of azelastine and the properties of the steroid without interference/adverse reaction in the treatment of allergy reactions. 78 It is strongly arguable that the specification does not anywhere admit that a formulation as defined by any of the asserted claims is not new or not inventive over the prior art. Indeed, the specification asserts that the invention which combines an antihistamine (azelastine) with a corticosteroid "advantageously" provides a "stable, very effective combination product or formulation" "in a single administration or dosing regime" "without any significant interference between the two, or adverse reaction in situ". 79 It is also strongly arguable that the specification does not admit that a formulation as defined by any of the asserted claims is a mere collocation of parts, each performing its own separate functions. The specification positively asserts that it is the "combination" of an antihistamine (azelastine) with a corticosteroid which provides the stated advantages for the treatment of allergic conditions using a single administration. Further, the Patent makes express reference to the combination as having "synergistic therapeutic effects" (see pp 6, 7 and 8). 80 For my own part after reviewing the specification, it does not seem to me that Apotex has a strong prima facie case on this aspect. Let me address some of Apotex's submissions. 81 Apotex contends that a mere collocation of parts, each performing its own separate function, is not patentable. However, it accepts that a claim may validly combine a number of elements which interact with each other to produce a new result or product. Such a combination may be one constituted by integers, each of which are old, or by integers some of which are new, the interaction being the essential element. Apotex contends that the point in a combination patent must always be that the elements of which the combination is composed are combined together so as to produce one result. It says that the characteristic which a combination of known integers must possess in order to afford patentable subject matter is mutual relation in the operation of such integers. It says that separate elements may have been brought together, but yet each may continue to operate as it did before. In other words, all that the patentee may have done is assemble together things or ideas, which apart from sequence, order, position and proximity of association, just continue to perform their known functions as before. It contends that the patentee may in such a case have produced a more convenient and a better appliance or process, but contributed nothing in doing so which amounts to invention. 82 By reference to the Patent, Apotex contends that the following matters appear from its face: (a) It was known to use azelastine hydrochloride as a nasal spray against seasonal or perennial allergic rhinitis; and (b) It was known to use fluticasone nasally to treat seasonal or perennial allergic rhinitis. 83 It then says that the techniques for the preparation of formulations according to the alleged invention were well known in the art. It is said that this can be inferred because in each of the Examples, other than Example 2, only the ingredients are listed. 84 It says that the boilerplate disclaimer provision immediately before the claims, to the effect that references to prior art publications should not be construed as admissions that such publications form part of the common general knowledge, is not engaged by the references that Apotex points to in the specification. It is said that they are standalone statements of what was known, and not made with reference to a publication. 85 Apotex says that the Patent states (p 1, lines 19 to 32): It would be highly desirable … to provide a treatment that combines the effects of anti-histamine treatments and steroid treatments, in a pharmaceutical acceptable formulation, which is tolerated in situ, without significantly disrupting the potency of the constituent pharmaceuticals. We have now found that, very surprisingly, azelastine … preferably in the form of the hydrochloride salt, can advantageously be combined with a steroid … to provide a stable, very effective combination product or formulation preferably for nasal or ocular treatment. The combination can provide, in a single administration or dosing regime, the antihistaminic properties of azelastine and the anti-inflammatory (and / or other) properties of the steroid, without any significant interference between the two, or adverse reaction in situ. 86 Accordingly, it is said that the invention is identified as the combination of known agents for their known properties. It is said that there is not alleged to be any working inter-relationship between the two: the azelastine works as an antihistamine (i.e. opposing the activity of histamine receptors in the body) and the steroid provides its anti-inflammatory properties. It is said that the Patent emphasises the lack of inter-relationship, by pointing to the absence of interference, adverse reaction or disruption. 87 Apotex says that the references at pp 6, 7 and 8 to "the above referred to advantageous, synergistic therapeutic effect" are in error and that there is no such effect described in the Patent. 88 Further, it is said that in any event, the suggestion that it was "very surprising" that azelastine could be combined with a steroid is not supported by the specification read as a whole. It is said that there is no disclosure in the Patent of any difficulties formulating pharmaceutical preparations containing azelastine hydrochloride and any of the named steroids. It is said that there is nothing in the Patent that causes the skilled addressee to think that combining azelastine and a steroid would be beyond the skill of the calling. 89 Now I do not consider Apotex's arguments to be without merit. Indeed, on the present material it has advanced a reasonably arguable case as to invalidity on this aspect. But I do consider that Apotex has read the specification and the relevant authorities too narrowly. First, there is force in the cross-claimants' case that Apotex has read the authorities too narrowly on this aspect. Second, the references to "advantageous, synergistic therapeutic effect" on pp 6, 7 and 8 of the specification cannot strongly be said to be in error. And they negate the suggestion of mere collocation. Now I am inclined to the view that Apotex has a reasonable case on manner of manufacture in terms of a ground of invalidity, but I would not describe it as a strong case. 90 Let me now turn to the attack on the question of the lack of inventive step.

(c) Inventive step 91 Apotex bears the onus of establishing that the claimed invention lacks an inventive step over the prior art. The Court must find an inventive step, unless "the invention would have been obvious to a person skilled in the relevant art" at the priority date. The word "obvious" means "very plain" (Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 at [34] and [85]). A "scintilla of inventiveness" is sufficient; alternatively expressed, "no smallness or simplicity will prevent a patent being good" (Meyers Taylor Pty Ltd v Vicarr Industries Ltd (1997) 137 CLR 228 at 249, per Aickin J). 92 Whether the invention would have been obvious is determined by comparing the claimed invention with the common general knowledge alone, or with that knowledge and s 7(3) information. 93 Given that expert evidence has been filed on this topic in the present case, I should observe the following. 94 First, it is impermissible hindsight for an expert witness to be led to the invention by a series of specific questions framed by a person with knowledge of the claimed invention. 95 Second, inventive step cannot be assessed by resort to information or knowledge of the invention or information about any prior art gained through knowledge of the Patent. That involves a hindsight inquiry after the priority date. 96 Now for present purposes, it is not necessary to say anything further on the principles.

Allergic rhinitis 97 For the purposes of the present application only, I am prepared to accept the following in terms of common general knowledge as at the claimed priority date. 98 Allergic rhinitis is an allergic condition resulting from an immune response to allergens. It can be either perennial or seasonal. The typical symptoms of allergic rhinitis include runny nose, sneezing, a blocked nose and sinus pain. These symptoms are caused by various inflammatory responses in a person's nose or sinuses. As at the claimed priority date, the three most common means of treating allergic rhinitis were allergen avoidance, pharmacotherapies and immunotherapy. In terms of pharmacotherapies, the main pharmaceutical interventions were antihistamines, which work by blocking the effect of histamine, and corticosteroids, which work by reversing inflammation caused by an allergic response. 99 Prior to the claimed priority date, clinicians adopted a "stepwise" approach to the treatment of allergic rhinitis along the following lines: (a) The first step involved the administration of oral antihistamines, which were readily available over the counter from pharmacists, were relatively inexpensive, did not present any particular challenges from a patient compliance perspective, and (in the case of second-generation antihistamines) had minimal side effects; (b) If a patient's symptoms did not improve sufficiently using an oral antihistamine, the second step involved the administration of a topical corticosteroid (in the form of a nasal spray). Prior to the claimed priority date, topical corticosteroids were invariably used for the treatment of allergic rhinitis in preference to oral corticosteroids, as the side-effects associated with the use of topical corticosteroids were significantly less than those associated with oral corticosteroids; and (c) If therapy using an antihistamine or corticosteroid alone did not improve or control symptoms (and a patient was unable or unwilling to undergo immunotherapy), the third step involved the combined administration of an antihistamine (typically in the form of an oral dosage form) and a corticosteroid (typically in the form of a nasal spray), that is, two separate products and in different administration forms. 100 Although other pharmacotherapies existed for the treatment of allergic rhinitis prior to the claimed priority date, such therapies were not used as frequently as antihistamines and/or corticosteroids due to them being less effective in treating the condition (in the case of chromones), or due to them being comparatively more expensive (in the case of leukotriene inhibitors). Despite their effectiveness, decongestants could only be used to treat allergic rhinitis for a short period of time (up to 10 days), and their use was therefore considered generally inappropriate. However there was some evidence before me suggesting that decongestants were used in the treatment of allergic rhinitis in preference to corticosteroids. 101 Of the large number of antihistamines approved before the claimed priority date, the vast majority of approved antihistamines were oral, and there were only a limited number of nasal antihistamines available. One such nasal antihistamine was azelastine hydrochloride. 102 Prior to the claimed priority date, intranasal corticosteroids prescribed for the treatment of allergic rhinitis included beclomethasone dipropionate, budesonide, fluticasone propionate and mometasone furoate. 103 Generally speaking, the selection of an antihistamine and/or corticosteroid to prescribe to a patient for the treatment of allergic rhinitis was based on a number of factors, including clinicians' preferences and experiences, patients' responses to treatment, cost and product availability.

Apotex's arguments 104 First, in terms of formulation, Apotex has contended that as part of the drug development process, the process for formulating intranasal formulations of APIs, including in the form of nasal drops, sprays, gels and powders, was well-established prior to the claimed priority date. 105 It contends that intranasal formulations (including nasal sprays) were commonly used before the claimed priority date where the therapeutical goal was the alleviation of nasal symptoms, such as to reduce congestion, inflammation or an allergic response, or where there were problems with other routes of administration. It contends that prior to the claimed priority date, the formulation process for intranasal sprays involved: (a) the consideration and testing of the chemical, physical and pharmacokinetic properties of the API in the context of its intended clinical use and the physiology of the absorption site; and (b) the selection of excipients suitable for use in a liquid formulation for nasal administration. 106 Second, in terms of combination therapies, Apotex contends that it is apparent from the evidence that, before the claimed priority date: (a) both azelastine hydrochloride and fluticasone propionate were well-known compounds, formulated as intranasal sprays, and indicated for the treatment of allergic rhinitis; (b) the combined use of antihistamines and corticosteroids in the treatment of allergic rhinitis was known, and accepted clinical practice in Australia; (c) there were known benefits with intranasal administration of antihistamines for the treatment of allergic rhinitis, resulting from the increased amount of API at the target location (i.e. the nasal passage); (d) azelastine hydrochloride was one of a limited number of intranasal antihistamines approved before the claimed priority date; (e) the preferred administration route for corticosteroids for the treatment of allergic rhinitis was via the intranasal route; (f) the intranasal corticosteroids commonly prescribed for the treatment of allergic rhinitis were equally effective and were used interchangeably; (g) practitioners rarely prescribed combination therapy using two nasal spray products, due to the difficulties inherent in administering two drugs via that route (including patient compliance problems and possible effects on efficacy); (h) products comprising a combination of two or more APIs were widely used, including (in the case of combination antihistamine/decongestant products) for the treatment of allergic rhinitis; and (i) the benefits of combination therapies, including improved patient adherence or compliance and increased convenience for patients, were well-known. 107 Apotex contends that the evidence reflects known problems with the sequential administration of two products via the intranasal route. It contends that prior to the claimed priority date, an obvious solution to that problem would have been the combination of the two products into a single treatment. Apotex says that particularly in light of the accepted practice of prescribing a combination of an antihistamine and a corticosteroid for the treatment of allergic rhinitis, there can be no inventiveness in the abstract idea of combining an antihistamine and a corticosteroid into a single formulation. 108 Apotex says that if it is accepted that there is no invention in the idea of a combination product, the question is then whether the hypothetical person skilled in the art (in this case, the skilled team) could design and formulate a suitable combination product within the relevant claims. Broadly speaking, this is said to involve two steps: (a) the selection of APIs for use in the combination product; and (b) the formulation of the product itself. 109 As to the selection of APIs, Apotex submits there is nothing inventive in the selection of which antihistamine and which corticosteroid to combine in the combination product. It is said that the specification of the Patent reinforces this, as it describes "specific combinations of therapeutic agents employed in pharmaceutical products and formulations" as comprising azelastine hydrochloride with any one of beclomethasone dipropionate, fluticasone propionate, fluticasone valerate, mometasone furoate or mometasone furoate monohydrate. It is said that considered at the priority date, the selection of which antihistamine and which corticosteroid to use were matters plainly within the ordinary perception and competence of the skilled team seeking to produce a combination product.

Hypothetical task 110 Dr Williams for Apotex was given the task of preparing a pharmaceutical formulation containing the antihistamine azelastine hydrochloride and the corticosteroid fluticasone propionate, as a nasal spray for use in the management of allergic rhinitis. He was informed that both azelastine hydrochloride and fluticasone propionate had obtained marketing approval as monotherapy nasal sprays for the treatment of allergic rhinitis. 111 Dr Williams ascertained a substantial amount of information about the physical and chemical properties of the APIs relevant to the formulation task from the names of the APIs to be used in the formulation. Dr Williams observed that because azelastine hydrochloride would be likely to be present in solution (due to its anticipated aqueous solubility), and fluticasone propionate would be likely to be present in suspension (as it is unlikely to be soluble in water), there would be a significantly lower risk of any compatibility problems between the two APIs. Based on the names of the APIs alone, Dr Williams opined that a formulation combining azelastine hydrochloride and fluticasone propionate would need to include various ingredients. 112 Dr Williams gave evidence that when preparing a new formulation comprising existing products (already approved for clinical use), he would have reviewed "Martindale: the Complete Drug Reference" (Martindale), for further information regarding the APIs. The 32nd edition of Martindale (Parfitt, K (ed), Martindale: The Complete Drug Reference (32nd ed, Pharmaceutical Press, 1999)) (which Dr Williams owned and had access to before the claimed priority date) contained entries for both azelastine and fluticasone, including their proprietary names (Astelin and Flonase, respectively). Dr Williams would have then sought or requested copies of the approved product information documents (PIs) for Astelin and Flonase (from either the Australian Therapeutic Goods Administration or the US Food and Drug Administration). 113 It is said that the PIs for Astelin and Flonase disclosed information about the physical, chemical and physicochemical properties of azelastine hydrochloride and fluticasone propionate, including their respective concentrations in each of the mono-products, information relating to each API's solubility, the fact that fluticasone propionate is present in the form of an aqueous suspension of micronized particles, the pH of each compound, and the excipients present in each of the mono-products. 114 It is said that the information contained in the Astelin and Flonase PIs would have provided the skilled addressee with sufficient information to prepare a pharmaceutical formulation containing both azelastine hydrochloride and fluticasone propionate prior to the claimed priority date. The process would have involved starting with the formulation of one of the approved products, and making minor adjustments to the formulation to accommodate the requirements of the other API. To the extent it may have been necessary for the skilled addressee to try various example formulations (by substituting well-known excipients) to achieve a sufficiently stable formulation in which the activity of neither API was compromised, this would have been a matter of routine. Apotex contends that such a process does not involve an inventive step. 115 Further, although Dr Williams' evidence is that the PIs alone provided the skilled addressee with sufficient information to undertake the task, he would have also conducted a literature search (or arranged for one to be conducted) of relevant scientific and patent literature. 116 Dr Williams considered relevant search results and would have obtained copies of (and reviewed) four documents: Galant, Canonica, EP 127 and WO 243. As to EP 127, Dr Williams identified Example III as disclosing that a "formulation of a nasal spray solution containing azelastine hydrochloride and fluticasone had been made and tested with similar results", and concluded that the formulation disclosed as Example III "would have been likely to answer the hypothetical task set for the development team". 117 In summary, Dr Williams' evidence was that the information in the Astelin and Flonase PIs and the information contained in EP 127 would have provided the skilled addressee with sufficient information to prepare a pharmaceutical formulation for an intranasal spray containing azelastine hydrochloride and fluticasone propionate falling within the asserted claims.

Conclusion 118 Accordingly, Apotex says that, on the basis of this evidence, the claims lacked an inventive step. 119 But I consider that there are real difficulties as to whether Martindale, the Flonase PI and/or the Astelin PI formed part of the common general knowledge in Australia before the claimed priority date. Further, there are significant doubts as to whether such documents in any event could be properly characterised as s 7(3) documents. 120 As to Martindale, Dr Williams stated that, before the claimed priority date and after that time, he regularly used a number of reference works as sources of information on drugs and pharmaceutical products marketed in Australia and overseas. But he does not attest to what others commonly practiced or knew at the time. In particular, Dr Williams does not attest that Martindale was treated as a general body of knowledge that was generally accepted and assimilated by persons skilled in the art. 121 Furthermore, Dr Smyth gave evidence for the cross-claimants that he occasionally referred to Martindale but did not do so regularly and did not own his own copy. There are also significant doubts as to whether Martindale is a s 7(3) document. Further, there are significant doubts that the skilled addressee could reasonably have been expected to combine Martindale with any other reference. 122 As to the Flonase PI and the Astelin PI, Dr Williams stated that during his time at Faulding and Sigma, he and his colleagues would place Freedom of Information requests (or direct others to place such requests) in order to use that information as part of drug development/optimisation projects. But the cross-claimants correctly contended that this does not necessarily establish that the information in either PI was generally accepted and assimilated by persons skilled in the art. As a consequence, it is strongly arguable that the PIs do not constitute common general knowledge. 123 Further, the cross-claimants contend (in my view with some force) that the PIs do not constitute s 7(3) documents. Further, there is also no direct evidence of why the Astelin PI and the Flonase PI, which are two distinct s 7(3) documents, would have been combined together. It is said by the cross-claimants that in view of the common general knowledge at the claimed priority date, there was no motivation to combine them. The cross-claimants rely upon Dr Smyth who explained that there would be no motivation to combine disclosures pertaining to a solution versus a suspension due to the distinct and often conflicting nature of the two formulations. These submissions have considerable force. 124 Further, it was contended that there would be no motivation to combine one or both of the PIs with any of the other documents that Dr Williams refers to, namely Martindale and/or EP 127. Again, it seems to me that the cross-claimants have a good point on this. Further, it is said that in relation to these documents, as well as EP 127, there is no evidence that these documents would be ascertained, understood and regarded as relevant unless an inappropriately confined hypothetical task were provided. 125 I do not propose to discuss further the conflicting expert opinions or the debates between the parties. It is sufficient for present purposes to say that Apotex has not demonstrated that it has a strong prima facie case on a lack of inventive step. The debate between the parties is extensive and complex, and as the likely trial judge it is inappropriate to comment further.

Exclusive licensee 126 Before addressing in detail the balance of convenience question, it is convenient at this point to deal with another matter raised by Apotex. It contends that it has a strong or very strong case to show that Meda is not an exclusive licensee. On the information and arguments tendered before me, I disagree. The evidence adduced before me provides considerable support for the following: (a) In 2009, Cipla and Meda entered into an agreement the "Azelastine Combination Product Agreement" (the European Agreement) which, inter-alia, contained an exclusive licence from Cipla to Meda to the "Product Intellectual Property" for certain countries including Australia. Schedule B to the European Agreement indicates that Cipla was to prepare a list of the "Product Intellectual Property". At all relevant times, it appears that Cipla and Meda have conducted themselves as if Schedule B included the Patent; at least that was the uncontested evidence that was tendered before me through Mr Tritschler. (b) Pursuant to the European Agreement, Meda was granted the exclusive right to exploit the "Product Intellectual Property" (and therefore the Patent) in respect of all acts of exploitation other than the right to manufacture, which Cipla retained. (c) In November 2017, before filing the cross-claim in this proceeding, the European Agreement was amended by an agreement titled "Third Amendment Agreement" (the Amendment Agreement) to ensure that Meda was granted the exclusive right in respect of all acts of exploitation of the claimed invention in the Patent. Without elaborating further, it is strongly arguable that cl 2.2 of the Amendment Agreement does not derogate from the exclusive licence given by Cipla to Meda pursuant to cl 2.1 and that the "exclusive sublicence" granted by Meda to Cipla in cl 2.1 is an exclusive licence within the meaning of the Act. 127 In essence, it is strongly arguable that the terms of cl 2.1 of the Amendment Agreement constitutes Meda as an "exclusive licensee" within the meaning of the Act and the grant of the sublicence referred to in cl 2.2 does not detract from the force of that proposition (notwithstanding the inconsistent recitals to the Amendment Agreement as pointed out to me during the course of argument by Mr Murray for Apotex). 128 It is not appropriate that I say anything further at this stage on this question. For present purposes I reject Apotex's contention that Meda has no standing to obtain interlocutory relief or to recover loss. 129 Let me now turn to addressing in detail the balance of convenience question.

Balance of convenience 130 In my view the balance of convenience favours the grant of the interlocutory injunction sought by the cross-claimants. It is appropriate to begin by making a number of preliminary observations. 131 First, the status quo is that Apotex is presently not in the market. 132 Second, this is not a case where granting an interlocutory injunction will practically put an end to this litigation. 133 Third, the Patent is longstanding. Apotex has known of the Patent for some time, and that its products may infringe if the Patent is valid. But they have not, as the cross-claimants describe it, sought to "clear the way" by bringing revocation proceedings at an earlier time. I accept, as Apotex contends, that this does not necessarily need to have happened, but by not doing so Apotex took the risk. 134 Fourth, I accept that the strength of the prima facie case limb, in this case the strength of both the infringement case and the strength of the asserted grounds of invalidity, may inter-relate with and weigh with the balance of convenience question. But on this aspect, any such relative strengths weigh more to the advantage of the cross-claimants. They have a strong prima facie case on infringement, assuming validity. And as to the invalidity questions, Apotex only has a reasonably arguable position on lack of manner of manufacture and lack of inventive step, and a weaker argument on lack of novelty. 135 Fifth, no case has been put that Cipla would suffer damage if the injunction were to be refused. 136 Let me now elaborate on some of the principal points raised. 137 First, the status quo from the time DYMISTA was first sold on the Australian market in July 2014 until the commencement of the proceedings was that Meda Pharmaceuticals and Mylan Health have been the sole and continuous distributors of the combination product in the Australian market. Apotex has not sold the Apotex products. Since the launch of DYMISTA, Meda has developed a substantial business of selling DYMISTA to Meda Pharmaceuticals, and more recently Mylan Health, for distribution in the Australian market. In my view, the status quo and the maintenance thereof supports the grant of an injunction. 138 Second, the market for DYMISTA has been growing year by year since July 2014. The evidence before me suggested that there has been considerable investment in the marketing and education of the benefits of DYMISTA. This has significantly contributed to the growth of sales in Australia of DYMISTA. However, the evidence also suggests that the market is still developing and sales have not yet reached a steady state rate of growth. The cross-claimants contend that if Apotex is restrained from entering the market, Mylan Health intends to continue its substantial investment in the marketing and education benefits of DYMISTA which is aimed at having DYMISTA considered the gold standard for allergic rhinitis and to be recommended as first line therapy under Australian guidelines. I am prepared to accept that evidence although, in some respects, it might be seen to have been overstated. But generally speaking, in my view, such matters weigh in favour of the cross-claimants and support the grant of an injunction. 139 Third, DYMISTA is a significant product for both Meda and Mylan Health. 140 Fourth, the Patent has approximately 10 years to run to its expiry. Again, these are points that favour the cross-claimants. 141 Fifth, Apotex has acted with its "eyes wide open" since at least around one year prior to it obtaining ARTG approval for the Apotex products. Apotex is likely to have begun the process of applying to register the Apotex products on the ARTG irrespective of the Patent. Apotex took no steps to "clear the way" before launch and it seems that Apotex was prepared to take the risk. Again, in my view such matters favour the cross-claimants on the balance of convenience question. 142 Sixth, Apotex asserts that it will lose its first mover advantage if enjoined. I am prepared to accept that this is likely to be the case. But in my view, whilst the loss of the first mover advantage is a matter to be weighed in the balance, it is not a decisive consideration in assessing where the balance of convenience lies. As Yates J said in Otsuka Pharmaceutical Co Limited v Generic Health Pty Ltd (2012) 291 ALR 763; [2012] FCA 239 at [178]: I accept that the evidence discloses a benefit of being the "first mover" in the sense in which the respondent uses that term. It is clear, however, that that advantage is one that derives from what I have found to be a prima facie case of threatened infringement of the 772 patent. Thus it is an advantage that is sought to be derived at the expense of the applicants' asserted monopoly rights. I would make a similar observation in the present context in response to Apotex's argument concerning its loss of first mover advantage. 143 Seventh, I accept that the impact on Apotex's business, if it is restrained, will be to deny it a significant revenue stream, and for some time. But the cross-claimants have offered Apotex security for $10 million in the form of a bank guarantee in respect of any claim for damages (under any future enforcement of the undertaking as to damages) for the period up to the hearing and determination of the trial. The trial has been set down for December 2018. The intervening period during which Apotex would be enjoined is likely to be approximately one and a half years. The amount of the bank guarantee would appear to be sufficient to cover any reasonable claim for damages by Apotex for that intervening period. But I accept that the delay in the hearing and determination of a trial and any appeal may effectively lock Apotex out of the relevant market for some time and may provide an advantage to its competitors. I have taken this into account. 144 Eighth, if the Apotex products are exploited in the Australian market, then the loss to Meda and Mylan Health is likely to be immediate and significant. This is a very substantial matter weighing in favour of the cross-claimants. Generally speaking I accept the following on the evidence: (a) Mylan Health distributes DYMISTA through wholesalers who on-sell to both pharmacy groups and individual pharmacies. The terms (including price) for the supply of DYMISTA to pharmacy groups or individual pharmacies are agreed between Mylan Health and those entities. If Apotex is permitted to enter the market, the price for which Mylan Health will be able to sell DYMISTA may have to be significantly reduced in order for Mylan Health to compete with Apotex in the market. This is because the decisions of the pharmacy groups and individual pharmacists as to whether to purchase DYMISTA or the Apotex products are likely to be driven by price. The reduction in the price of DYMISTA is likely to occur quickly (within the first six months). (b) Further, approximately 80% of retail pharmacies in Australia are members of a buying group (which brokers a price for all pharmacies within the respective groups), with the remaining 20% comprising independent pharmacies. DYMISTA is a non-PBS prescription drug. A generic entrant in the non-PBS prescription market is likely to quickly take market share away from the originator. The share of the azelastine hydrochloride/fluticasone propionate nasal spray market that the Apotex products are likely to take away from DYMISTA in the first six months and then over the next three years is likely to be significant. (c) Further, Meda is likely to directly suffer loss if DYMISTA loses market share to the Apotex products. This is because Meda sells DYMISTA to Mylan Health for sale in Australia. Presently, in respect of each unit of DYMISTA purchased by Mylan Health, Meda makes a profit. If Apotex enters the market with the Apotex products, the number of units sold by Mylan Health and, therefore, the number of units sold by Meda to Mylan Health is likely to be reduced significantly. Every sale of DYMISTA lost by Mylan Health as a result of the Apotex's sale of the Apotex products represents a sale of DYMISTA which Meda would have made to Mylan Health. The loss to Meda is likely to be significant. This is likely to have a significant effect on the total revenue and profit earned by Meda in respect of the sales of DYMISTA in the Australian market. If Mylan Health is forced to reduce the price of DYMISTA to customers in order to compete with the lower priced Apotex products, this may also compel Meda to reduce the price at which it sells DYMISTA to Mylan Health. This will further reduce the profit made by Meda in respect of its sales of DYMISTA to Mylan Health. (d) Further, Mylan Health is also likely to directly suffer loss if the Apotex products are permitted to enter the market. Now even though Mylan Health does not have rights as a patentee or exclusive licensee under the Act, its interests should be taken into account. A reduction in price and market share for DYMISTA is likely to cause a reduction in the total revenue and profit that Mylan Health will make in respect of this product. (e) Further, if the Apotex products enter the market, then Mylan Health may reduce its promotional and educational activities for DYMISTA, which may lead to significant reputational damage to both the DYMISTA brand and Mylan Health. (f) Further, if Apotex is permitted to enter the market with the Apotex products (i.e. I refuse the injunction) but is permanently restrained from selling the Apotex products after the trial (i.e. I dismiss Apotex's principal proceeding and uphold the cross-claimants' cross-claim), then damage may continue for the life of the Patent. Having reduced the price of DYMISTA to compete with the Apotex products during the intervening period, Mylan Health may have difficulties in reinstating the price of DYMISTA to its previous level after the determination of the trial. 145 Let me now deal with a separate topic. Each of the parties contended that there would be significant difficulties forensically in calculating the damages each would or might suffer: (a) in the case of the cross-claimants, if the injunction were to be refused; and (b) in the case of Apotex, if the injunction were to be granted. 146 The parties each filed expert accounting evidence to support their positions. 147 The cross-claimants have principally contended the following: (a) First, the market for DYMISTA is not a static market. Rather it is still being developed and the growth trends in sales of DYMISTA are not predictable. This is in large part as a result of the considerable marketing and educational investment that Mylan Health has made in respect of DYMISTA. If the Apotex products enter the market then this investment may stop. It would be very difficult to calculate how the DYMISTA market would have grown had the investment continued and the Apotex products not entered the market. (b) Second, the market for medicines for treating allergic rhinitis is complex. Although DYMISTA is a prescription medicine, it competes with over the counter (OTC) medicines such as Nasonex, Claratyne and Zyrtec. This makes it difficult to predict consumer behaviour in the market. It is said that as a result of Mylan Health's educational efforts and clinical studies, the market is now starting to shift back from OTC preparations (a self-medicated, in-pharmacy environment) to DYMISTA supplied on prescription. But this market shift is in its early stages and requires continued support by Mylan Health to reach its full potential. If Mylan's Health's investment in marketing and education ceases, then the OTC preparations may gain ground over the total market for DYMISTA and the Apotex products (and any other generic products that enter this market). Now Mr Millichamp for Apotex took issue with some of what Mr Gupta said about such matters. But I cannot presently resolve the conflict in the evidence on this aspect. All I can say is that the cross-claimants' contentions have some force. (c) Third, if Apotex is not restrained, it is likely that additional generic suppliers will quickly obtain ARTG listing of generic azelastine hydrochloride/fluticasone propionate nasal spray products. This would cause further price reductions and loss of market share for DYMISTA. It would also be difficult to attribute and quantify damage to the respective generic entrants. (d) Fourth, the difficulties in calculating Meda's damages and the risk that Meda will not, therefore, be adequately compensated is compounded by the extended period of time over which damage will occur during the unexpired term of the Patent. (e) Fifth, damages will not be an adequate remedy in circumstances where Meda has the burden of prosecuting a damages claim that is likely to be complex and difficult. 148 Contrastingly, Apotex contends the following: (a) First, the imposition of a restraint on Apotex will, if it is successful at trial, result in Apotex incurring very substantial expense over many years to recover damages on the undertaking as to damages, in circumstances that make the determination of such damages very complex and imprecise. (b) Second, a very difficult component of the exercise would be an estimation of the hypothetical volume of sales Apotex would have made, including the rate of growth of those sales, during a period in which Apotex will not have made any sales at all by reason of the restraint. There will not be any real-world data on which to base the estimation. This greatly complicates the exercise of estimating what Apotex's sales might have been. By contrast, Meda and Mylan Health are in a monopoly position in the market such that the impact of Apotex's conduct, if any, on them, if ultimately found to infringe a valid patent, will be reasonably capable of quantification and compensation. (c) Third, the damage that would be suffered by Apotex if restrained includes damage that would be very hard to quantify, including loss of opportunity to advertise, promote and sell its products in the Australian market and consequent loss of profit and loss of opportunity to maintain its position as a first mover in the generic product market and the consequent effect that has on market penetration and, in turn, sales. 149 Now I accept that there is some force in Apotex's position concerning its own difficulties and some force in its contention that some of the difficulties put forward by the cross-claimants may be problematic in degree. But I cannot resolve these issues at an interlocutory level. In particular, I cannot resolve the competing positions of Apotex's expert (Mr Samuel) and the cross-claimants' expert (Mr Stone) notwithstanding Apotex's suggestion that I should find Mr Samuel's position more persuasive. Nor can I resolve the competing positions between Mr Millichamp for Apotex and Mr Gupta for the cross-claimants. But I do accept Apotex's points that: (a) There will be no PBS price drop if Apotex enters; (b) To some extent, if there was no injunction, any Apotex sales in the interim could be recorded with details captured, which may assist in making the damages payable by Apotex more readily quantified; and (c) Although it is said that Mylan Health would have to cut back on promotional expenditure in Australia should Apotex be permitted to enter the market, the margins made from sale of DYMISTA in Australia may be sufficient to enable such activities to continue even with a large loss of market share. 150 In my opinion, the forensic difficulties that each of the parties face in proving their damages (under relevant scenarios) are equally matched.

Other matters 151 First, I have taken into account that Apotex will undertake to keep accounts and provide a bank guarantee to secure any exposure to a damages award. And Apotex is a substantial company which will be able to, or is likely to be able to, meet any award ultimately made against it. But I do not consider that this sufficiently addresses the above concerns. 152 Second, I have also taken into account the public interest if an injunction was ordered. Pharmacists and patients may be deprived of a choice of products which may be offered to them at cost savings. These products are not reimbursed via the PBS and pharmacists can determine their own prices with patients bearing the full cost. The impact on pharmacists (being denied a choice of products and more profitable revenue stream) and patients (being denied a choice of products and potential cost savings) may be significant. But having said that, the cross-claimants have the Patent and have the entitlement to exploit the same including the charging of monopoly prices. It is in the public interest not to deny a patentee or exclusive licensee the fruits of such a position. 153 Third, as Mylan Health is neither the patentee nor the exclusive licensee, it has no standing to seek relief. Yet such a point does not answer the force of the cross-claimants' point that any effect on Mylan Health will have a direct impact on Meda, as I discussed with counsel for Apotex and referred to above. Further, forensic difficulties in proof if an injunction were not granted would flow back to trying to assess Meda's position. Problems with loss of market share, pricing and reputation for Mylan Health if there was no injunction would produce upstream problems for Meda in proving damage if there was no injunction. 154 Fourth, I do agree with Apotex's submission that some aspects of the cross-claimants' reputational harm argument may be over-stated, in the scenario where the injunction was refused. Further, as I have indicated, in relation to reductions in promotional expenditure and reductions in clinical trial funding, there is doubt as to whether this would occur to the extent contended for by the cross-claimants. And as for the problem perceived with the restoration of monopoly pricing if the cross-claimants were to succeed at trial, at present it is quite unclear as to whether there would be such a problem. On this latter aspect, Apotex has said that there is no evidence as to the nature of any reputation presently enjoyed by Meda, Mylan Health or DYMISTA. It is said that it is notorious that pharmaceutical companies, like banks and insurance companies, are seen by the public as large, profit-making enterprises, for which the public has little sympathy. It is said that the assertion that an increase in price will cause damage to reputation cannot be assumed. It is said that there is no evidence of the extent to which the public associates the brand DYMISTA with Meda or Mylan Health. That may be so, but, in my view, that doesn't deny the force of the cross-claimants' argument that some damage to reputation might occur. 155 Fifth, the position of Mylan Health should be considered in any event as a third party and the effect upon it if I were to refuse the injunction. It is relevant to consider the position of Mylan Health even if it is not entitled to seek relief under the Act directly. 156 Sixth, I have taken into account that third party suppliers within or to the Apotex group of companies may suffer loss if Apotex is restrained and they receive no supply orders from Apotex.

Summary 157 In summary, in my view the balance of convenience favours the grant of an injunction. 158 Like Kenny J in InterPharma Pty Ltd v Hospira, Inc (No 3) [2017] FCA 1536, in particular at [190] to [204], I do not consider damages to be an adequate remedy. And like her Honour, even if it was to be accepted that the parties before me face a similar level of difficulty in calculating damages or the alleged infringer will suffer a greater difficulty, that would nonetheless be insufficient to justify a radical shift in the balance of convenience, particularly where the originator has a strong prima facie case for infringement and an injunction will preserve the status quo. 159 I will hear counsel further as to the form of the orders, including the terms of any necessary bank guarantee as security for any undertaking as to damages [Discussion then ensued, with orders made in the terms set out earlier]. I certify that the preceding one hundred and fifty-nine (159) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.

SCHEDULE OF PARTIES VID 1229 of 2017 Cross-Claimants Second Cross-Claimant: MEDA A.B. Cross-Respondents Second Cross-Respondent MYLAN HEALTH PTY LTD (ACN 601 608 771)