(4) The discretion issue - the scope of the discretion under s 105(1) - consideration
161 It is common ground that Servier's proposed amendments are not precluded from allowance by ss 102 and 105(4). As I have explained above, the discretion conferred by s 105(1) is unconfined by implications or limitations that are not part of the grant of power when read with s 102. Nonetheless, in exercising the discretion under s 105(1) the Court must act judicially, mindful that the grant or rejection of an amendment may affect not just the rights and liabilities of the patentee and the other parties in the relevant litigation, but also those of the public at large.
162 The words and other descriptions used in a patent are chosen by the original applicant who, generally, will become the patentee. The choices of those words and descriptions do not involve a process such as that in the negotiation of a contract in which two or more parties express what is ultimately a common outcome, usually reached after compromises of various positions. Thus, when a patentee applies to amend the terms of the document originally put forward as the basis for the State granting the patentee a limited monopoly, the circumstances surrounding the patentee's decision to make the application in that form, ordinarily, will be relevant to the Court's consideration of whether the patentee should be allowed to depart from what he, she or it originally wrote to express the extent of the monopoly sought.
163 The Act does not evince any particular approach or predisposition as to how the Court should exercise its discretion to permit an amendment to a patent that is otherwise allowable, except to the extent that the occasion for the exercise of the power in s 105 necessarily will be in proceedings in which questions of revocation, infringement or validity of the patent are in issue.
164 That being so, I am of opinion that the power in s 105(1) exists for the purpose of enabling the Court to have an unfettered discretion to permit or refuse such amendments as are both allowable and may make the patent valid or enforceable in respects that, without amendment, it would not be. Nonetheless, the ordinary principle in litigation ought apply that the patentee must make out a case in favour of the exercise of the discretion in the circumstances. As Yates J observed in Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd (2012) 99 IPR 59 at 87 [161], drawing on what Emmett J had said in Les Laboratoires Servier v Apotex Pty Ltd (2010) 89 IPR 219 at 231 [59], the power under s 105 exists for the benefit of the patentee to validate what would otherwise be an invalid, or partly invalid, patent.
165 Kenny and Stone JJ said in Servier 89 IPR at 235 [76] that the remarks of Aldous J in Smith Kline & French Laboratories Ltd v Evans Medical Ltd [1989] 1 FSR 561 at 569 offered guidelines, that have often been relied on in the exercise of the discretion to grant or refuse amendments under s 105 and its analogues. His Lordship said there:
The discretion as to whether or not to allow amendment is a wide one and the cases illustrate some principles which are applicable to the present case. First, the onus to establish that amendment should be allowed is upon the patentee and full disclosure must be made of all relevant matters. If there is a failure to disclose all the relevant matters, amendment will be refused. Secondly, amendment will be allowed provided the amendments are permitted under the Act and no circumstances arise which would lead the court to refuse the amendment. Thirdly, it is in the public interest that amendment is sought promptly. Thus, in cases where a patentee delays for an unreasonable period before seeking amendment, it will not be allowed unless the patentee shows reasonable grounds for his delay. Such includes cases where a patentee believed that amendment was not necessary and had reasonable grounds for that belief. Fourthly, a patentee who seeks to obtain an unfair advantage from a patent, which he knows or should have known should be amended, will not be allowed to amend. Such a case is where a patentee threatens an infringer with his unamended patent after he knows or should have known of the need to amend. Fifthly, the court is concerned with the conduct of the patentee and not with the merit of the invention. (emphasis added)
166 Subsequently, in Oxford Gene Technology Ltd v Affymetrix Inc (No 2) [2001] RPC 18 (commencing at page 310) at 317 [18]-[20] Aldous LJ, (with the agreement of Brooke LJ at 327 [58], and Sedley LJ at 328 [64]) explained that under an analogue of s 105 (s 75 of the Patents Act 1977 (UK)) the Court had the power to refuse an amendment that sought to validate a patent or to impose conditions to safeguard the public in cases where the patentee had abused the monopoly, particularly when the amendment operated retrospectively. He said that all types of abuse could result in a refusal to exercise the discretion favourably to the patentee, but that each case depended on its own facts. Aldous LJ said that his remarks from Smith Kline [1989] 1 FSR at 569 quoted above instanced the most common situations, but then went on to say ([2001] RPC at 317 [19]-[20]):
It is also not surprising that when a patentee seeks amendment, the court requires him to place before it the relevant facts and matters upon which it is to exercise its discretion. That is particularly appropriate where some amendment proceedings are conducted without the presence of an opponent. The obligation is akin to that required by a party seeking an ex parte injunction or Mareva relief. That can be illustrated by taking a typical case where a patentee seeks to amend under section 75 to strengthen his patent against an attack based upon a particular piece of prior art. Thus his statement of reasons will give that as the reason for amendment. It follows that the court is concerned with whether to exercise its discretion to allow amendment for that reason and the patentee must turn his mind to that issue so as to be able to inform the court of the relevant facts. Any disclosure should be limited to that issue and only ordered if necessary. An opponent may raise other grounds of abuse, but they should be properly particularised before wider disclosure becomes potentially necessary.
… it seems that practitioners believe there to be an obligation upon a patentee to trawl through his documents to see whether they are relevant to the exercise of the discretion, whatever the reason put forward for the amendment. That results in considerable expense and is not required under modern principles. The obligation of good faith requires the patentee to put forward correct reasons for the amendment. If there be facts relevant to the exercise of the discretion for those reasons then those facts need to be put before the court. (emphasis added)
167 The parties debated what Aldous J had said at first instance and in the Court of Appeal in the passages quoted above as if his Lordship's remarks were the words of a statute, rather than the explanation by the judge of generalised factors that he considered may be relevant to the exercise of an unfettered judicial discretion. The focal point of their debate concerned the subject matter of what Aldous J had meant when he said that the patentee had to make full disclosure of all relevant matters: Smith Kline [1989] 1 FSR at 569.
168 As Jessup J observed in CSL Ltd v Novo Nordisk Pharmaceuticals Pty Ltd (No 2) (2010) 190 FCR 522 at 539 [56], his Lordship's observation related to the difficulty for a Court to deal appropriately with an application to amend if relevant facts were not before it. Jessup J held that, even if some material facts only came to light during, or as a result of, the forensic process, the Court should proceed to determine the application on its merits. That view is consistent with the explanation given by Aldous LJ in Oxford Gene [2001] RPC at 317 [19] that the patentee has an obligation of candour that has particular importance as to the patentee's reasons for seeking the amendment as well as on an ex parte application. Pertinently, his Lordship said that that obligation "requires the patentee to put forward correct reasons for the amendment" but did not impose a general obligation to "trawl through", and I would add produce, documents to see whether they are relevant to the exercise of the discretion on bases other than the disclosure of the patentee's reasons for seeking to amend ([2001] RPC at 317 [20]).
169 Accordingly, I have made findings of fact in these reasons on the basis that Servier had an obligation of candour as to its reasons for seeking the amendments (which I have found Servier properly met) and an onus to establish that the discretion be exercised in its favour. The opponents carried an onus of proof on the other matters that they sought to advance in the grounds of opposition, such as those concerning the 2002 method and the alpha-crystalline patent (on which, as I explain in these reasons, they failed to satisfy me). An amendment application is not a trial on the validity of the patent were the amendment granted.
170 I reject the opponents' argument that the subsequent amendments to the Act in the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) are relevant to the exercise of the discretion. Those amendments operated prospectively, not retrospectively, on existing rights. The Explanatory Memorandum for the Bill that became that Act accepted the interpretation of s 105 by the Full Court in Pfizer 68 IPR 1 seven years earlier, and explained that the Parliament intended to change the law as to amendment of patents in order to bring it into conformity with that of other countries. The 2012 amendments, and the secondary materials associated with them, do not assist in the interpretation of s 105 as it operated in the Act in respect of Servier's accrued rights to seek an amendment the subject of the present application: cf: Allina Pty Ltd v Commissioner of Taxation (1991) 28 FCR 203 at 212 per Lockhart, Burchett and Gummow JJ.
171 Here, Servier's reason for the amendment is not far to seek. Self-evidently, it was to correct Servier's failure to comply with s 40(2)(a), because the complete specification did not include the 1986 and 1991 methods, as Apotex had pleaded and proved. That is what Dr Jaguelin said and I find.
172 The trial had proceeded on the basis that the relevant controversy that Apotex had raised was about the failure of the complete specification to disclose the best method known to Servier of performing the invention, being the relevantly indistinguishable 1986 and 1991 methods. Apotex conducted its case at the trial in such a way that it relied only on the failure of the patentee to disclose the 1986 and 1991 methods. Apotex' decision to confine its case amounted to a conscious abandonment of any other basis on which it could seek revocation of the patent under s 138(3)(f), in respect of any failure by Servier to disclose the best method known to it of performing the invention as required by s 40(2)(a), as I explained in Apotex Pty Ltd v Les Laboratoires Servier (No 2) [2014] FCA 751 at [3]-[14]. Having lost that battle, Servier sought an amendment, initially on a more limited basis, and ultimately in a form that would include in the complete specification the description of the 1986 and 1991 methods as expressed in the declaration that I made on 29 May 2004 (see: Apotex (No 2) [2014] FCA 751).
173 First, there is some force in the opponents' argument that Servier was on notice about the possibility of the need to seek an amendment to the patent after Apotex had been given leave to amend on 2 August 2013 to rely on the asserted failure to disclose the best method. However, both Apotex and Servier wished to preserve the hearing that had been fixed to commence on 8 October 2013. That was why Apotex had confined its case on failure to disclose the best method to just the 1986 and 1991 methods. From about 17 July 2013, Servier's solicitors had senior counsel's advice in his note (see [24] above) and, no doubt, formed the view based on that advice that there was no need to seek an amendment. Both senior counsel and Servier's solicitors are well experienced in this area of law. I am satisfied that any failure of Servier to seek an amendment prior to the trial was an error reasonably made in good faith on the basis of that advice: Smith Kline [1989] 1 FSR at 569.
174 Had Servier applied to amend, the fixture could not have proceeded. The amendment application had to be advertised and third parties had to be given an opportunity to appear and to oppose the amendment. As it was, that process took some time in 2014. After the advertisement appeared in late March 2014, Actavis only appeared in late May 2014. Thereafter, Servier and the opponents had to formulate the grounds for the amendment and opposition. Servier had provided affidavit evidence as early as Dr Jaguelin's 7 March 2014 affidavit. But in the end, both it and the opponents relied on more documentary and expert evidence.
175 I would not have allowed the hearing date to remain because the whole of the issues would have been unclear, including the issues that the experts had to address. In closing address senior counsel for Apotex submitted that he would have sought an adjournment of the trial date if Servier had applied to amend the complete specification before the trial. While I accept that that submission was honestly made, both parties made tactical choices as to how they would deal with matters. Shortly before 2 August 2013, Servier had opposed Apotex' original attempt to plead that Servier had not described the best method known to it without any limitation. Servier based that opposition on its solicitor's evidence that extensive discovery and evidence would be necessary to meet such a claim. That was the context in which Apotex agreed to limit its claim under s 40(2)(a) to a failure to disclose only the 1986 and 1991 methods and so preserve the hearing dates.
176 And Apotex had every reason to maintain the hearing date because it was restrained from launching its generic perindopril arginine product. In those circumstances, having regard to the interests of the parties in a prompt trial, the consequences of an adjournment and in light of the long period since the grant of the patent, I am unpersuaded that Servier's failure to seek an amendment earlier than it did has any substantive impact on the exercise of the discretion under s 105(1).
177 Secondly, for the reasons I have given, Servier's obligation of disclosure was confined to explaining why it sought the amendment: Oxford Gene [2001] RPC 18 at 317 [19]. I reject the opponents' arguments that that obligation was more extensive. The consequence is that the opponents carried the onus of proof on the issues that they raised about the 2002 method and all of the other respects in which they challenged the grant of the amendment.
178 I have accepted Dr Jaguelin's evidence as to Servier's reasons for seeking the amendment (see [67] and [171] above). I have also found that the opponents have not established that:
Servier knew, at 27 February 2003, that the 2002 method was as good as, or better than, the 1986 and 1991 methods, or that the 2002 method had to be disclosed in the complete specification ([69] -[72]);
the 2002 method was, or produced a crystalline form that was, similar or strikingly similar to the ⍺ method or alpha-crystalline form (see [116]);
Servier had characterised any form of perindopril arginine ([96]);
Dr Jaguelin, as the relevant person in Servier, intended to gain some advantage by the non-disclosure of the 1986 and 1991 methods. (Rather, she thought, correctly, that based on what she knew was involved in those two methods, each was a simple and routine classical salification ([36]).)
179 Thirdly, I do not accept that Servier has been guilty of any relevant delay causing prejudice to anyone in applying for the amendment since I published my reasons on 24 December 2013. From that time, the reasons for judgment provided the public with notice of the detail of the 1986 and 1991 methods and, no doubt, those in the pharmaceutical industry with any interest in the matter were than able to understand how to make a useful form of the salt.
180 Last, however, I am of opinion that Dr Jaguelin's response of 20 December 2004 to Ms Harris' recommendation to include a method of manufacture of the new salt in the complete specification cannot be gainsaid, as Servier argued, as being directed only to sufficiency. I accept that Dr Jaguelin did not think that such a disclosure was necessary (see [33], [43]), but that was an error on her part. Ms Harris' recommendation was clear. Dr Jaguelin, on behalf of Servier, chose not to amend the complete specification to add a description of either of the 1986 or 1991 methods that Servier knew, at 27 February 2003, would enable a skilled addressee to make a form of salt that could be used in pharmaceutical compositions.
181 As I have found, it was possible to amend the complete specification before the grant to add the best method. In substance, Dr Jaguelin's decision not to act on Ms Harris' recommendation but to "see later" was a calculated risk about a potentially very valuable asset, were the patent granted without the recommended amendment. Although Dr Jaguelin honestly did not consider it necessary to act on the recommendation, she did not suggest that, had she done so, Servier would have suffered any disadvantage. The amendment would have been simple and straightforward. I am not satisfied that it was reasonable for Dr Jaguelin to decide not to act on Ms Harris' recommendation. In Smith Kline [1989] 1 FSR at 577, Aldous J said, in a passage applied by Merkel J in Novartis AG v Bausch & Lomb (Australia) Pty Ltd (2004) 62 IPR 71 at 106-107 [135]:
Although I accept that nobody suffered any detriment by the delay in seeking amendment, I do not believe that the plaintiffs ever considered whether or not their inaction would cause detriment. At all times they were concerned to enforce their patent rights, and they have not established that they ever considered whether others would suffer detriment by any failure to amend. The plaintiffs never considered the position of others except with a view to preventing them marketing cimetidine.
The fact that nobody has suffered detriment due to the control of cimetidine by the generic and master patents is not, in my view, a ground for failing to amend for eight years. That fact was not the reason why the plaintiffs did not seek to amend; it was the consequence of the ambit of the generic and master patents. If there be delay in amending by a patentee who knows or ought to know of the need to amend, as is the position in this case, then he must establish a reason for his decision not to amend or to do nothing and also that the reason was reasonable. It is not sufficient to show that nobody has been hurt by the delay, as that is not a reason for the delay. Even if it be assumed that it be a reason, it is not a reasonable reason in that it disregards the public interest in ensuring that patents are amended promptly when the need arises, so that the public can rely on patents as representing that to which the patentee believes he is entitled. Further, if the plaintiffs had decided not to amend earlier because they had concluded that nobody would suffer damage by the delay, that would not have been a reasonable ground for the delay as it disregarded the public interest. (emphasis added)
182 Similar considerations apply here. The policy of the requirement in s 40(2)(a) is that the patentee disclose, as part of the statutory bargain to secure the monopoly conferred by the patent, the best method of performing the invention known to him, her or it. I found in Apotex [2014] FCA 1426 at [185] (and see too at [177]-[187]:
Servier had used a particular method or methods of classical salification and parameters that produced a guaranteed result. The complete specification described a broad and very general method of performing the invention that left to chance whether the skilled addressee would choose, from among the very large range of variables identified by the first joint expert report, the method (or one of the 1986 or 1991 methods) that the patentee knew actually worked to enable the API to be used in a tablet form. (emphasis added)
183 I am of opinion that the damage to the public interest involved in Servier's failure to disclose the 1986 and 1991 methods in the complete specification, even after Ms Harris' recommendation, was not reasonable and outweighs the proprietorial interest of Servier in being able to save the patent from revocation under s 138(3)(f).