The applicants' submissions
101 The applicants pointed to the fact that the Tribunal's decision was to affirm an extension of approximately 10 years to enable Lundbeck to apply to extend the term of the patent. They submitted that four years of this time represented deliberate delay as a result of a deliberate choice. In this connection, they submitted that there is no doubt that Lundbeck could have chosen, as Ms Sinclair suggested in the Watermark letter, to file an application to extend the term of the patent based on the first inclusion of Cipramil in the ARTG, and an application for an extension of time within which to do so, while maintaining the right to continue to defend the validity of its extension of term application based on the first inclusion of Lexapro in the ARTG. They submitted that, by so doing, Lundbeck would have:
• preserved both its position in the litigation and its ability to argue for an extension of time with effect from that date; and
• given notice to the applicants and the public that Lundbeck reserved the right to apply for a shorter extension of time to 9 December 2012.
102 The applicants contended that, in light of these matters, the Tribunal's exercise of discretion was manifestly unreasonable. Although they contended that the Tribunal's decision involved the errors set out in grounds 8, 9 and 10 of the amended notice of appeal, the thrust of their submissions was that the Tribunal's decision was unreasonable on its face. The applicants submitted that "the result itself bespeaks error": Minister for Immigration and Citizenship v Li and Another (2013) 297 ALR 225 at [85].
103 In Li, the plurality said at [63]-[64]:
[63] … The legislature is taken to intend that a discretionary power, statutorily conferred, will be exercised reasonably.
[64] A standard of reasonableness in the exercise of a discretionary power given by statute had been required by the law long before the first statement of "Wednesbury unreasonableness" in Wednesbury Corporation. In Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002, McHugh and Gummow JJ instanced the 1891 decision of Sharp v Wakefield. In Ex parte Aala, Gaudron and Gummow JJ said that the requirement of reasonableness represents the development of legal thought which began before federation and accommodates s 75(v) to that development.
[Footnotes omitted]
104 Their Honours, citing Wade HWR and Forsyth C, Administrative Law (10th ed, Oxford University Press, 2009) at 296, said (at [67]):
[67] …The legal standard of reasonableness must be the standard indicated by the true construction of the statute. It is necessary to construe the statute because the question to which the standard of reasonableness is addressed is whether the statutory power has been abused.
[Footnote omitted]
105 At [68], their Honours said:
[68] Lord Greene MR's oft-quoted formulation of unreasonableness in Wednesbury has been criticised for "circularity and vagueness", as have subsequent attempts to clarify it. However, as has been noted, Wednesbury is not the starting point for the standard of reasonableness, nor should it be considered the end point. The legal standard of unreasonableness should not be considered as limited to what is in effect an irrational, if not bizarre, decision - which is to say one that is so unreasonable that no reasonable person could have arrived at it - nor should Lord Greene MR be taken to have limited unreasonableness in this way in his judgment in Wednesbury. This aspect of his Lordship's judgment may more sensibly be taken to recognise that an inference of unreasonableness may in some cases be objectively drawn even where a particular error in reasoning cannot be identified. This is recognised by the principles governing the review of a judicial discretion, which, it may be observed, were settled in Australia by House v R, before Wednesbury was decided. And the same principles evidently informed what was said by Dixon J about review of an administrative decision in Avon Downs Pty Ltd v Commissioner of Taxation, which was decided less than 2 years after Wednesbury, at a time when it was the practice of the High Court to follow decisions of the Court of Appeal in England which appeared to have settled the law in a particular area.
[Footnotes omitted]
106 Further, at [72], their Honours said:
[72] The more specific errors in decision-making, to which the courts often refer, may also be seen as encompassed by unreasonableness. This may be consistent with the observations of Lord Greene MR, that some decisions may be considered unreasonable in more than one sense and that "all these things run into one another". Further, in Minister for Aboriginal Affairs v Peko-Wallsend Ltd, Mason J considered that the preferred ground for setting aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to an irrelevant factor of no importance, is that the decision is "manifestly unreasonable". Whether a decision-maker be regarded, by reference to the scope and purpose of the statute, as having committed a particular error in reasoning, given disproportionate weight to some factor or reasoned illogically or irrationally, the final conclusion will in each case be that the decision-maker has been unreasonable in a legal sense.
[Footnotes omitted]
107 Reference should also be made to the remarks of French CJ at [27]-[28], where his Honour said:
[27] In Wednesbury Corporation, Lord Greene MR observed that the word "unreasonable" in administrative law was used to encompass failure by a decision-maker to obey rules requiring proper application of the law, consideration of mandatory relevant matters and exclusion from consideration of irrelevant matters:
If he does not obey those rules, he may truly be said, and often is said, to be acting "unreasonably".
That kind of unreasonableness may be taken to encompass unreasonableness from which an undisclosed underlying error may be inferred.
[28] Beyond unreasonableness expressive of particular error however, it is possible to say, as Lord Greene MR said, that although a decision-maker has kept within the four corners of the matters it ought to consider "they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it." In such a case the court may interfere. That limiting case can be derived from the framework of rationality imposed by the statute. As explained by Lord Greene MR, it reflects a limitation imputed to the legislature on the basis of which courts can say that parliament never intended to authorise that kind of decision. After all the requirements of administrative justice have been met in the process and reasoning leading to the point of decision in the exercise of a discretion, there is generally an area of decisional freedom. Within that area reasonable minds may reach different conclusions about the correct or preferable decision. However, the freedom thus left by the statute cannot be construed as attracting a legislative sanction to be arbitrary or capricious or to abandon common sense.
[Footnotes omitted]
108 Reference should also be made to the remarks of Gageler J at [88]-[89], where his Honour said:
[88] Brennan CJ cited Associated Provincial Picture Houses Ltd v Wednesbury Corporation for the proposition that "when a discretionary power is statutorily conferred on a repository, the power must be exercised reasonably, for the legislature is taken to intend that the discretion be so exercised". He explained the application of "Wednesbury unreasonableness" as a court acting on the "implied intention of the legislature that a [statutory] power be exercised reasonably" to hold invalid "a purported exercise of the power which is so unreasonable that no reasonable repository of the power could have taken the impugned decision or action".
[89] That explanation accords with references in earlier High Court decisions to reasonableness as a condition of the exercise of a discretionary power. It has been approved in more recent decisions. It is an explanation that is well-understood by legislatures and courts alike and that has "stood the test of time". It explains the nature and scope of Wednesbury unreasonableness in Australia.
[Footnotes omitted]
109 The applicants relied on these passages to develop their overarching contention that the Tribunal's decision was unreasonable on its face. They developed this contention in the following way.
110 First, the applicants referred to the subject matter, scope and purpose of the Act in granting time-limited monopolies. They pointed to the dual time requirements of s 71(2) (see [15] above). They also pointed to the statutory requirements for advertising applications and the mechanism of formal notification provided by the Register to enable the public to:
… have an opportunity to know … precisely what the patentee's rights and intentions are and, where relevant, to take steps by way of revocation, rectification, opposition, etc, to protect their own rights. They can also make commercial decisions as to whether and when to launch competing products - as the applicants here did, after the expiry of the [p]atent.
111 The applicants submitted that, in the present case, Lundbeck's conduct was deliberately calculated to:
… leave the public … in the dark as to its intentions, until as late as possible. Consistently with its overall approach, the evidence disclosed that it only gave perfunctory, ambiguous, belated and informal notice of its plans.
[Footnote omitted]
112 Secondly, the applicants submitted that the Tribunal's treatment of the Watermark letter "reflects a fundamental misconception of the obligations of a person seeking an indulgence under s 223(2)(a)". In this connection, the applicants argued that:
… [t]o sweep away Lundbeck's obligation to give prompt and candid notice of its intentions or possible actions at least from July 2005 is, with respect, to act so unreasonably as to commit an error of law. The scope and purpose of the Act does not permit a patentee to refrain from lodging an application for a six year extension of time (even a contingent one) for an additional four years.
[Footnotes omitted]
113 The "six year extension of time" referred to in this quotation is the period of time calculated from the time the application for an extension of term based on the first inclusion of Cipramil in the ARTG was required to be made (26 July 1999) to the date of the Watermark letter (14 July 2005).
114 The applicants also argued that:
Merely for Lundbeck to adhere stubbornly to its position - which, although arguable, was far from certain to be right - was not enough. If Lundbeck were to keep an extension of time as a "fallback" position, then prompt and candid action was required. The possibility of filing an application for an extension of time (duly advertised) was clearly open to it - making such an application would have been the proper course to follow.
115 The applicants submitted that the Tribunal should not have put aside Ms Sinclair's suggestion in the Watermark letter (which the applicants termed as "advice") on the basis that she was "a mere patent attorney". They submitted that, contrary to the Tribunal's statement in [78] of its reasons (quoted in [87] above) above, there was no evidence that Ms Sinclair's suggestion was ever contradicted.
116 It should be said immediately that nowhere in the Tribunal's reasons did it dismiss Ms Sinclair's suggestion on the basis that it was made by "a mere patent attorney". Similarly, nowhere in the Tribunal's reasons did it suggest that there was advice that contradicted Ms Sinclair's suggestion that a contingent application could have been made. Rather, as the quotation from the Tribunal's reasons in [87] above makes clear, the Tribunal accepted Mr Petersen's evidence that he preferred to rely on his consultations with, and advice from, Corrs and that he held the firm belief that Lundbeck should await the final outcome of the proceedings in this Court before taking any further action. It was plainly open to the Tribunal to make that finding.
117 The applicants also challenged the Tribunal's conclusion at [79] of its reasons (also quoted above in [87]) that it was not unreasonable for Lundbeck not to make an application for an extension of time at that point. The applicants submitted that the "inescapable inference" is that commercial and strategic considerations played a part in Lundbeck's conduct.
118 As noted in [98] above, the Tribunal did accept that it was likely that commercial considerations were taken into account by Lundbeck. It concluded, however, that this did not gainsay the fact that Lundbeck reasonably maintained the view that it did not have to submit a contingent application and acted consistently with that view, as well as consistently with the considered advice given by Corrs as to Lundbeck's options. The conclusion expressed by the Tribunal at [79] of its reasons was plainly open to it.
119 Thirdly, the applicants criticised the Tribunal's reliance on the uncontradicted evidence of Mr Caine and Ms Irani. The applicants submitted that the Tribunal's reliance on this evidence to support the reasonableness of Lundbeck's conduct until the Full Court determined the appeal on 12 June 2009 "gives no consideration to the scope and purpose of the Act" and "gives no weight" to the suggestion in the Watermark letter by Lundbeck's own patent attorneys. The applicants also submitted that the Tribunal's reliance on Mr Caine's and Ms Irani's evidence "gives no weight" to the Commissioner's decision on 19 May 2006 (see [31] above) or to the decision of Lindgren J given on 24 April 2008 (see [32] above).
120 It will be necessary to return to these submissions later. However, at this point, it should be noted that there is nothing in the Tribunal's reasons that would show that it gave no weight to the matters to which the applicants refer. It plainly considered each of these matters, as discussed above. Moreover, the Tribunal accepted Mr Caine's and Ms Irani's evidence as supporting the reasonableness of Lundbeck's own view that Lindgren J's decision was wrong and would be overturned on appeal.
121 Significantly, at this point in their submissions, the applicants accepted that, had a contingent application for an extension of term based on the first inclusion of Cipramil in the ARTG been made, it could have been stayed by the Commissioner, as in fact happened on 12 June 2009 when Lundbeck made the extension of time application. However, they submitted that such an application would have been advertised under s 223(4) of the Act, thus giving notice to the applicants and other potential competitors "in the way contemplated by the Act, that an extension of term to December 2012 was being contemplated (even as a 'fallback') by Lundbeck". The applicants submitted that Lundbeck's reluctance to show "apparent or perceived weakness" by filing such an application does not excuse its delay. They submitted:
Once it is accepted that, in this case, a contingent application could have been made before 12 June 2009, it is equally apparent that it should have been made by Lundbeck before that time, at the earliest possible opportunity. To do so would have been consistent with the duty to act promptly to seek the extension, as discussed in the cases. As a general principle, this is irrefutable. It was recognised by Ms Irani in her evidence.
[Footnote omitted]
122 This last-mentioned matter concerns oral evidence given by Ms Irani in which she accepted that it was her practice to apply as soon as possible under s 223 of the Act when it is realised that a deadline has been missed. Ms Irani gave this evidence before the Tribunal:
And why do you regard - why do you do that?---Because once the deadline has - I guess, once its recognised that the relevant deadline has been missed, you try to show good faith and apply for the extension of time as quickly as possible.
And is that a matter of good faith for the tribunal or do you regard there as being a public interest involved?---There would be a public interest involved.
Because the state of the register or the state of how applications are proceeding is a matter of public importance?---That's right.
123 Fourthly, the applicants submitted that it is wrong to suggest that there was no need to file an extension of time application before June 2009. They submitted that there was a need to signal to the public that it was Lundbeck's intention to take that course if it was ultimately unsuccessful in the proceedings before the Court. They argued that the Tribunal's finding (at [96], referred to in [97] above) that "nothing of significance" occurred which should have caused Lundbeck to make its application earlier than it did "involves looking at the matter only from the perspective of Lundbeck". The applicants developed this argument by submitting:
… [t]o sanction such conduct, as the Tribunal did, is contrary to the scope and purpose of the Act and, again, involves placing Lundbeck's interests over those of others whose interests the Act requires be taken into account. It also flies in the face of sound public policy.
124 It can be seen that this submission focuses on the effect on others - specifically, it can be taken, on the applicants - of Lundbeck not making a contingent extension of term application and associated extension of time application on or shortly after receiving the Watermark letter.
125 In this connection, the applicants submitted that the Tribunal "erred in setting aside the position of the applicants in its entirety". The applicants submitted that the Tribunal had "clear evidence to support a finding that all four applicants were parties whose interests would be greatly prejudiced by Lundbeck's delay in taking action". However, having made that submission, the applicants did not point to any evidence of specific prejudice caused by Lundbeck's delay, whether that delay be considered as at 14 July 2005 (the date of the Watermark letter) or as at 12 June 2009 (the date that Lundbeck made the extension of time application), or challenge the correctness of the Tribunal's findings concerning hardship to the applicants. It is necessary to refer to those findings.
126 At [99] of its reasons, the Tribunal found that, in submissions filed for the purposes of the appeal before the Full Court, Lundbeck had given express notice to the first applicant (Aspen Pharma) and to Alphapharm of its intention to apply for an extension of time in the event that it did not succeed before the Full Court.
127 At [21] and [100] of its reasons, the Tribunal found that Lundbeck informed the second applicant (Sandoz) that, if it was unsuccessful before the Full Court, it intended to seek an order that the extended term of the patent should be amended to record the expiry date as 9 December 2012. At [22] and [100] of its reasons, the Tribunal noted that, on 4 June 2009, Lundbeck gave similar notice to the third applicant (Apotex).
128 At [102] of its reasons, the Tribunal dealt with evidence concerning Apotex's position. This evidence was given by Roger Millichamp, Apotex's managing director. The Tribunal recorded Mr Millichamp's view that, at the time that Apotex's products were launched, he considered that the extension of time application was "meritless", and he has maintained that position. The Tribunal also recorded his assertion that Apotex had lost an opportunity to consider and calculate the relevant risks associated with the launch of those products.
129 The last-mentioned finding relates to evidence given by Mr Millichamp through a witness statement used at the hearing before the Tribunal. In that statement, Mr Millichamp said:
20 After [Lindgren J's] decision was handed down, I did not consider that Lundbeck may, in future, be able to file for an extension of time in which to file a second extension of term. If Apotex had been put on notice that Lundbeck may file such an extension application if its appeals were unsuccessful, Apotex would have had the opportunity to consider and calculate the relative risks associated with a launch in circumstances where the existence or non-existence of the [p]atent was arguably indeterminate.
130 In dealing with this evidence, the Tribunal went on to find that, having made that assertion, Mr Millichamp did not give any detail of any specific or particular prejudice.
131 Although the Tribunal did not make a specific finding as to the date when Apotex launched its products, it is clear from Mr Millichamp's witness statement that, on the morning of 16 June 2009, Apotex made its final decision to proceed with that launch. This was after the filing of Lundbeck's extension of term application and associated extension of time application on 12 June 2009, and after receipt of notice on 4 June 2009 of Lundbeck's intentions, as noted above. These intentions were conveyed in a letter from Corrs in which it was stated that, if the Full Court found that the extension of the term of the patent was not valid, Lundbeck would pursue "all further avenues available to it in respect of the extension of term". Corrs said that this would include the steps of filing an application for special leave to appeal to the High Court and, additionally, filing an extension of term application in the Patent Office. In context, this could only refer to a separate and different application to the one that had been the subject of the proceedings in this Court. Filing such an application necessarily included seeking an extension of time within which to bring it.
132 In his written statement, Mr Millichamp said, with respect to the final decision that was taken to launch its products:
45 … When making that decision I had formed the view that Lundbeck was unlikely to succeed in its appeal to the High Court, that Lundbeck would not seek to restrain Apotex from selling the Apotex Products, and that Apotex' competitors were entering the market. I considered that the commercial risk to Apotex of losing market share to competitors outweighed the risk of a successful High Court appeal. Apotex did not obtain advice about the prospects of the extension of time application succeeding prior to making the decision to launch.
133 At [103] of its reasons, the Tribunal dealt with the evidence concerning Alphapharm's position. The Tribunal found that Alphapharm launched its products on 15 June 2009. The Tribunal found that, by 23 February 2009, Lundbeck's position was "clear" to Alphapharm. The Tribunal made the following findings:
104. The hypothetical prejudice advanced by Alphapharm is that it may have received different advice in relation to the stay application made on the morning of 12 June 2009 if it had known earlier of the proposal by Lundbeck to file an application to file an extension of time on that day. The evidence of Mr Fraser did not advance the case for Alphapharm in relation to this aspect beyond a possible specified change of approach to the stay application.
134 The Tribunal then dealt with the evidence concerning Sandoz's position. The Tribunal made the following findings:
105. Mr Sharkey, who was formerly employed by and gave evidence on behalf of Sandoz, indicated that Sandoz took a calculated commercial decision based on timing and commercial pressures. Sandoz took into account the strong commercial advantage of launching early and he gave detailed consideration as to whether the launch should proceed. In relation to prejudice, his evidence was to the effect that if he had been given earlier notice he may have made a different assessment of the risk, and this may have resulted in a delay of the launch of the product. In our view, this speculative and undefined possibility [cannot] be given significant weight on this application for extension of time.
135 The Tribunal went on to deal with the evidence concerning Aspen Pharma's position. The Tribunal made the following findings:
106. In relation to Aspen, Mr Ellis, the former head of Business Development, did not consider that there was any significant risk that Lundbeck would get an extension of time and he took this view into account before the launch of the product on 15 June 2009. The evidence does not indicate that earlier notice would have resulted in a delay or withdrawal of the launch. He was also well aware of the commercial advantage of being the first company to launch a generic product (called "the first mover advantage").
136 It was in light of this evidence that the Tribunal made its findings at [107] and [108], quoted in [99] above. It can be seen that, contrary to the applicants' submission, the Tribunal did not set aside the position of the applicants "in its entirety". The Tribunal had regard to the evidence of prejudice or hardship that the applicants had placed before it. It considered that evidence and concluded that the asserted disadvantages, hardships or prejudice claimed by the applicants individually and cumulatively could not be given significant weight. It was of course for the Tribunal to weigh the evidence before it. The applicants' submission in this appeal that the Tribunal had clear evidence to support a finding that all four applicants were parties whose interests would be greatly prejudiced by Lundbeck's delay in taking action, must be seen in light of the actual evidence and findings referred to above, and the Tribunal's conclusions thereon.
137 Fifthly, the applicants criticised the Tribunal's finding at [94] (referred to in [96] above) that it was neither necessary nor appropriate for Lundbeck to inform the Commissioner's delegate of the preliminary observations or suggestions as to possible courses of action mentioned in the Watermark letter. The applicants submitted that, by making this finding, the Tribunal "disregarded the authorities that require such an application to disclose all of the relevant circumstances, so that all relevant discretionary considerations can be weighed up". They argued, further, that the Tribunal did not have regard to the fact that the evidence Lundbeck put before the Commissioner's delegate was misleading because, by not referring to Ms Sinclair's suggestion in the Watermark letter, Lundbeck omitted key facts and circumstances.
138 The difficulty confronting the applicants in making this submission is that the Tribunal had before it all the relevant facts and circumstances. It was for the Tribunal to come to the correct or preferable decision. Its assessment, which was plainly open to it, was that, notwithstanding the preliminary views, comments and possible strategic suggestions in the Watermark letter, it was not unreasonable for Lundbeck not to make an application for an extension of time at that point. Once again, the Tribunal relied, as it was entitled to do, on Mr Petersen's evidence that he preferred to rely on his consultations with, and advice from, Corrs.