AstraZeneca AB v Alphapharm Pty Ltd

REASONS FOR JUDGMENT 1 On 18 October 2013, AstraZeneca AB and AstraZeneca Pty Ltd (together "AstraZeneca") as prospective applicants issued an originating application under r 7.23 of the Federal Court Rules 2011 (Cth) against Alphapharm Pty Ltd ("Alphapharm") as prospective respondent seeking the discovery and inspection of documents and the delivery of samples relating to products defined in the application as "Alphapharm Products". 2 AstraZeneca distributes in Australia, under the brand name NEXIUM, a product which is a proton pump inhibitor. It has the effect of reducing the production of stomach acid. Commercially, NEXIUM is a very successful product. AstraZeneca apprehends that the Alphapharm Products will or may infringe one or more of a number of patents it holds. 3 AstraZeneca's application came on for argument on 8 November 2013 and I allowed it in part. I made the following order: 1. On or before 4.00pm on Wednesday 13 November 2013 the Prospective Respondent give discovery and inspection to the Prospective Applicants of: (a) pages 3-6 of module 3.2.S.2.2; (b) pages 4-13 of module 3.2.S.1; (c) pages 2-5 of module 3.2.S.4.1 of the Common Technical Document submitted by the Prospective Respondent to the Therapeutic Goods Administration in relation to its NOXICID products. 4 Alphapharm complied with that order, but the documents provided did not satisfy AstraZeneca. 5 AstraZeneca filed and served an Amended Originating Application dated 29 November 2013 in which it seeks the following orders: 1. Within 7 days of the date of these orders, the Prospective Respondent give discovery and inspection to the Prospective Applicants of: (a) a copy of Common Technical Document Module 3: Quality submitted by the Prospective Respondent to the Therapeutic Goods Administration in relation to each of the Alphapharm Products (apart from Section 3.2.P.2.5); (b) a copy of the Drug Master File for the Alphapharm API; (c) copies of any certificates of analysis of batches of the Alphapharm API and the Alphapharm Products referred to in the Prospective Respondent's application to the Therapeutic Goods Administration for registration of the Alphapharm Products; and (d) copies of any batch records for the Alphapharm API and the Alphapharm Products referred to in the Prospective Respondent's application to the Therapeutic Goods Administration for registration of the Alphapharm Products. 2. Within 7 days of the date of these orders, the Prospective Respondent deliver or cause to be delivered to the First Applicant at the following address samples, comprising at least 50 tablets or capsules (as appropriate), of each of the Alphapharm Products: AstraZeneca AB Att. Kurt LÖvgren Pepparedsleden 1 SE-431 83 MÖlndal SWEDEN 3. Such further or other orders as the Court sees fit. For the purposes of this application: Alphapharm API means the active pharmaceutical ingredient used in the tablet and capsule Alphapharm Products. Alphapharm Products means the products covered by ARTG Entry 161342 (for NOXICID esomeprazole 40 mg (as magnesium) capsule blister pack); ARTG Entry 161343 (for NOXICID esomeprazole 20 mg (as magnesium) capsule blister pack); ARTG Entry 161344 (for NOXICID esomeprazole 40 mg (as magnesium) capsule bottle); ARTG Entry 161345 (for NOXICID esomeprazole 20 mg (as magnesium) capsule bottle; ARTG Entry 180344 (for NOXICID esomeprazole (as magnesium) 20 mg enteric coated tablet blister pack); ARTG Entry 180348 (for NOXICID esomeprazole (as magnesium) 20 mg enteric coated tablet bottle); 180349 (for NOXICID esomeprazole (as magnesium) 40 mg enteric coated tablet blister pack); and 180357 (for NOXICID esomeprazole (as magnesium) 40 mg enteric coated tablet bottle). 6 I am satisfied that, subject to the matters identified at the end of these reasons, an order in terms of paragraph 1 should be made. I am not satisfied that an order in terms of paragraph 2 should be made at this stage. My reasons follow. 7 AstraZeneca AB is the registered proprietor of the following patents: (1) Australian Patent No. 722839, entitled "Novel form of S-omeprazole" ("AU839"). This patent contains both product and process claims; and (2) Australian Patent No. 688074, entitled "Process for synthesis of substituted sulphoxides" ("AU074"). 8 AstraZenca Pty Ltd is the exclusive licensee under AU839 and AU074 in Australia and is recorded on the Patents Register as such. 9 Until shortly before the hearing of submissions on the Amended Originating Application, AstraZeneca relied on both of these patents in support of its case that the Alphapharm Products may infringe its rights under the Patents Act 1990 (Cth) ("Patents Act"). Alphapharm gave certain information to AstraZeneca before the hearing, which had the result that, subject to one qualification, AstraZeneca no longer contends that it does not have sufficient information to decide whether to start a proceeding to obtain relief for the threatened infringement of AU074. The submissions proceeded then by reference to AU839. The qualification is that, again shortly before the hearing, Alphapharm advised AstraZeneca that for commercial reasons it has decided to launch an alternative source of esomeprazole magnesium active pharmaceutical ingredient ("Launch API"), although Alphapharm intends "to revert to the API in respect of which preliminary discovery has already been given ("Primary API") at a later stage". At the hearing, Counsel for AstraZeneca told me that his clients had not had sufficient time to consider the position in relation to AU074 and the Launch API and he sought to reserve his clients' position in that regard. 10 Alphapharm proposes to launch its esomeprazole products in Australia in mid-2014. The Alphapharm Products are to appear under the brand name NOXICID and they consist of capsule products and tablet products. 11 There is a history relating to the Alphaharm Products and other patents owned by AstraZeneca. 12 The Therapeutic Goods Administration administers the Australian Register of Therapeutic Goods ("ARTG"). On 24 July 2013, Alphapharm obtained registrations for the Alphapharm Products. On 26 August 2013, AstraZeneca commenced Federal Court proceeding number VID 876 of 2013 against Alphapharm seeking relief for infringement or threatened infringement of the following patents: (1) Australian Patent No. 676337, entitled "Optically pure salts of pyridinylmethyl sulfinyl-IH-benzimidazole compounds" ("AU337" or the "Purity Patent"); and (2) Australian Patent No. 695966, entitled "Multiple unit tableted dosage form I" ("AU966" or the "MUPS Patent"). 13 By its statement of claim dated 26 August 2013, AstraZeneca alleged that Alphapharm's sale of the Alphapharm Products would infringe claims 1 to 3 and 18 to 27 of AU337 and claims 1 to 10 and 12 to 28 of AU966. 14 On 29 August 2013, upon AstraZeneca giving the usual undertaking as to damages, this Court made interlocutory orders against Alphapharm in relation to AU337 and AU966. Subject to the outcome of another proceeding in the Court (VID 1008 of 2011 and, on appeal, VID 426 of 2013 - Ranbaxy Laboratories Limited & Anor v AstraZeneca AB & Anor ("Ranbaxy proceeding")), the interlocutory orders restrain Alphapharm from exploiting the Alphapharm Products until the expiry of AU337 on 27 May 2014, or until the proceeding is dismissed or otherwise determined, or a further order is made. After that date, Alphapharm continues to be restrained from exploiting the Alphapharm tablet products until the expiry of AU966 on 7 June 2015, subject to the same conditions. However, Alphapharm is not currently restrained from exploiting the Alphapharm capsule products after 27 May 2014. 15 On 9 May 2013, this Court certified in the Ranbaxy proceeding that: 17. Pursuant to s 19 of the Patents Act 1990 (Cth), the validity of claims 1 to 3 and 18 to 27 of the Purity Patent was questioned unsuccessfully in this proceeding; and 18. Pursuant to s 19 of the Patents Act 1990 (Cth), the validity of claims 1 to 8, 10 and 12 to 28 of the MUPS Patent was questioned unsuccessfully in this proceeding. 16 The appeal in the Ranbaxy proceeding was ultimately discontinued. 17 AstraZeneca's NEXIUM products are esomeprazole products and the active pharmaceutical ingredient ("API") is esomeprazole magnesium trihydrate. The ARTG entries for Alphapharm's NOXICID'S products indicate that they contain esomeprazole magnesium, but the polymorph is not specified. 18 Rule 7.23 is in the following terms: (1) A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant: (a) reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and (b) after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and (c) reasonably believes that: (i) the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent's control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and (ii) inspection of the documents by the prospective applicant would assist in making the decision. (2) If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i). 19 The argument in this case centred on paragraph (1)(b), that is to say, whether AstraZeneca has sufficient information to decide whether to start a proceeding in the Court to obtain relief for the threatened infringement of AU839. Alphapharm contends that with the documents and information provided pursuant to the order made on 8 November 2013 ("the Alphapharm Extracts"), AstraZeneca has sufficient information, whereas AstraZeneca contends that it does not. It is not suggested that there are any other inquiries AstraZeneca could reasonably be expected to make. 20 The main evidence relevant to this issue consisted of affidavits sworn by two experts. AstraZeneca tendered two affidavits of Dr Shen Yung Luk and Alphapharm tendered an affidavit of Dr Ian Hamilton Pitman. AstraZeneca also relied on the evidence of one of its employees with expertise in the area, Dr Michael Parker. It is not necessary to refer to Dr Parker's evidence in any detail. 21 Dr Luk is the Chief Scientific Officer at Molecular Profiles Limited. That company is based in Nottingham in the United Kingdom. It is a contract research and manufacturing organisation, which provides pharmaceutical development, clinical trial manufacturing, advanced analysis and consulting services for the pharmaceutical industry worldwide. It has been licensed by the United Kingdom Medicines and Health Care Products Regulatory Agency to manufacture products for use in human clinical trials. Dr Luk has been retained on behalf of the companies in the AstraZeneca group to act as an expert witness in esomeprazole and omeprazole-related proceedings in various jurisdictions. 22 Dr Luk was provided with the Alphapharm Extracts and the ARTG entries ("Public Summaries") in relation to the Alphapharm Products. He was asked to review AU839, the ARTG entries and the Alphapharm Extracts and to provide an opinion on the following: a) identify what, if any information in the Public Summaries and Alphapharm Extracts would assist me to form an opinion about the question of whether the active ingredient in the Alphapharm Product (the "Alphapharm API") is a product and/or produced by a process, described and claimed in AU839 (the "Question"); and b) explain what, if any, further information I require in order to form an opinion about the Question. 23 Dr Luk was also asked to provide an opinion on whether the information in the Alphapharm Extracts and the ARTG entries indicate that the Alphapharm API may be a product and/or produced by a process, described and claimed in AU839. He was instructed that he should only express a firm opinion about the Question if he was satisfied that he had sufficient information to do so. 24 In his first report, Dr Luk begins by describing some general concepts which are relevant to the principal claims in AU839. First, he states that AU839 relates to the magnesium salt of S-omeprazole trihydrate which is esomeprazole magnesium trihydrate. As I have said, there are also process claims in AU839 and they relate to the preparation of esomeprazole magnesium trihydrate, for example, by treating a magnesium salt of esomeprazole of any other form with water. Secondly, Dr Luk states that "hydrate" indicates that a substance has a certain number of water molecules associated with it and "anhydrous" indicates that there are no water molecules. The same substance can have varying levels of water and it is possible for substances to interconvert between different hydrated forms. The term "trihydrate" indicates that the magnesium salt of esomeprazole has three water molecules. Esomeprazole magnesium with one water molecule is known as a monohydrate, with two water molecules is known as a dihydrate and so on. Thirdly, Dr Luk states that hydrates may exist in crystalline or amorphous form. He describes the difference in the following terms: A crystalline form of a substance has regular repeating units that form into a particular arrangement and an amorphous form of a substance does not. An amorphous form of a substance can convert to a crystalline hydrate or to an amorphous hydrate, for example, by exposure to water. 25 As I understand the evidence, a substance may appear in one form at one stage and in another form at a later stage. Furthermore, as I understood Dr Luk's evidence, some crystalline esomeprazole magnesium trihydrate might be present in what is otherwise amorphous. 26 Dr Luk performed calculations of the mass of esomeprazole magnesium trihydrate required to deliver 20 and 40 mg of esomeprazole. Those calculations lead him to think that the separate esomeprazole magnesium in the Alphapharm Products is esomeprazole magnesium trihydrate, but he states that without further information he is unable to form a firm opinion about the matter. Dr Parker expresses an opinion to similar effect. 27 Dr Luk also examined each section of the Alphapharm Extracts. He noted that the Alphapharm Extracts and the powder X-ray diffractograms state or suggest that the Alphapharm API is amorphous. However, he states that without further analysis, he is unable to form a firm opinion about whether or not the Alphapharm API is amorphous esomeprazole magnesium trihydrate. Furthermore, he is unable to say whether the powder X-ray diffraction is sufficiently sensitive to detect any crystalline esomeprazole magnesium trihydrate present. He notes that the Alphapharm Extracts contain information relating to samples of the Alphapharm API per se, not the Alphapharm API actually present in the Alphapharm Products. He states that information about the Alphapharm API actually present in the Alphapharm Products would assist him in forming a firm opinion about whether the Alphapharm API is, or converts to, esomeprazole magnesium trihydrate at some stage of the manufacturing process after the synthesis of the Alphapharm API. 28 Dr Luk states that the Alphapharm Extracts suggest that the process of synthesis of the Alphapharm API is similar to the process as set out in AU839. Various matters, which he identifies, suggest to him that esomeprazole magnesium trihydrate may form during a particular stage and that this may be crystalline esomeprazole magnesium trihydrate. However, the Alphapharm Extracts do not indicate how the solid Alphapharm API is precipitated. 29 Dr Luk refers to various monographs indicating that esomeprazole magnesium trihydrate has a water content of 6 to 8%. The Alphapharm Extracts disclose that the Alphapharm API should have a water content of a certain range, which I will not identify because the information is confidential. That range overlaps with the range of 6 to 8%. Dr Luk states that the information suggests that the Alphapharm API may be esomeprazole magnesium trihydrate. However, he again states that without further information he is unable to form a firm opinion about the matter. 30 Dr Luk identifies the further information that would assist him in forming a firm opinion about the question as follows: (1) a detailed description of the manufacturing process and a detailed list of the ingredients used to make the Alphapharm API and the Alphapharm Products; (2) a detailed description of the actual manufacturing processes used and a detailed list of the ingredients used to make batches of the Alphapharm API and the Alphapharm Products; (3) an analysis of the Alphapharm API, the Alphapharm Products and excipients used in the manufacture of the Alphapharm Products; and (4) the results of tests of the Alphapharm API and the Alphapharm Products. 31 Dr Luk identifies where the above information might be found as follows: (1) the Drug Master File for the Alphapharm API; (2) certificates of analysis of the Alphapharm API and the Alphapharm Products. Dr Luk states that he would expect, for example, the certificate of analysis to contain the actual quantities of water used at each step in the manufacture of the Alphapharm API and that that is relevant to the formation of the esomeprazole magnesium trihydrate; (3) batch records for the Alphapharm API and the Alphapharm Products; (4) actual samples of the Alphapharm API, the Alphapharm Products and the excipients used in the manufacture of the Alphapharm Products; and (5) Module 3 of the Common Technical Document submitted by Alphapharm to the Therapeutic Goods Administration in relation to the Alphapharm Products, apart from section 3.2.P.2.5. 32 Dr Pitman is a consultant advising on aspects of chemistry and pharmaceutical chemistry primarily in the pharmaceutical industry. He examined the terms of AU839 and he expresses the opinion that either magnesium salt of S-omeprazole trihydrate cannot exist in amorphous form or alternatively, in such form it does not fall within AU839. He states that the Alphapharm API is amorphous. Therefore, in Dr Pitman's opinion it does not infringe the claims in AU839 because it is amorphous and not crystalline. Dr Pitman interprets Dr Luk's opinion as being to the effect that the claims in AU839 include amorphous esomeprazole magnesium. Dr Pitman disagrees with Dr Luk's opinion, but states that if it is correct AstraZeneca has sufficient information to decide whether to start a proceeding. He then discusses the various categories of materials identified by Dr Luk as necessary before Dr Luk can form a firm opinion. Dr Pitman expresses the view that it is not clear that sampling would produce any useful results. A protocol for the sampling has not been formulated and the testing of samples may produce no useful results while being time consuming and costly. 33 The meaning of the similar but not identical phrase in Order 15A, r 6(b) of the Federal Court Rules 1979 (Cth) "sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief" was considered by the Full Court in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd and Others [2008] FCAFC 133; (2008) 169 FCR 435 ("Optiver"). The trial judge in that case had decided that the requirement in O 15A, r 6(b) was not satisfied if a prospective applicant had sufficient information "to meet the threshold of 'a bare pleadable case'". The Full Court said that in so deciding the trial judge had erred. The Full Court said that the phrase "bare pleadable case" did not appear in O 15A, r 6(b), and furthermore, such a test failed to recognise the fact that the requirement in Order 15A, r 6(b) may be satisfied in circumstances where a prospective applicant shows reasonable cause to believe that the applicant has or may have the right to obtain relief within O 15A, r 6(a). The Full Court identified how undemanding a pleadable case might be, let alone a bare pleadable case. The Full Court concluded its observations as to the meaning of the requirement in Order 15A, r 6(b) with the following observations at 443, [36]: The concept of a "bare pleadable case" is not only a gloss on the text of the rule but is fundamentally inconsistent with its purpose. The policy behind the rule is that even where there is a reasonable cause to believe that a person may have a right to relief, nevertheless that person may need information to know whether the cost and risk of litigation is worthwhile. As Hely J pointed out in St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 at [26], the question does not concern the right to relief but rather "whether to commence proceedings". Inspection of documents in the possession of the proposed defendant may enable a properly informed decision to be made whether to commence a proceeding to obtain the relief. The "bare pleadable case" approach diverts attention from the true purpose of the rule. A person may have a pleadable case, but still not sufficient information upon which to decide whether to embark upon litigation. We are satisfied that his Honour asked himself the wrong question on this ground and that his conclusion cannot stand. There is ample material upon which this Court can consider the ground for itself. 34 Alphapharm referred to the decision in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 1348. That was a decision of Tamberlin J in the same proceeding as the appeal to the Full Court, but it related to a different application. In that decision, Tamberlin J noted the differences between an application for pre-action discovery and an application for discovery in a proceeding. The former case is narrower and put on a different basis than discovery where the proceeding has been instituted and the issues are defined. I do not think Tamberlin J said anything which is inconsistent with what the Full Court said, but even if he did, I would, of course, follow and apply the decision and observations of the Full Court. 35 Although the words used in r 7.23(1)(b) are not precisely the same as the words used in O 15A, r 6(b), the differences are not such as to suggest that the decision and observations of the Full Court in Optiver do not apply to r 7.23(1)(b). 36 I think the answer to Alphapharm's submissions based on Dr Pitman's opinions is as follows. First, Dr Luk is unable to express a firm opinion on the information he was given that the Alphapharm API was not crystalline or partly crystalline at some stage of the process. If it is, then Dr Pitman's opinion that the Alphapharm API is amorphous and not within the claims in AU839 may fall away. AstraZeneca is not bound to conduct litigation on a particular basis where further information might show that basis to be incorrect. Dr Pitman's opinion that an API which is amorphous does not fall within the claims in AU839 shows that whether it is amorphous or crystalline is an important consideration in terms of the costs and risks of litigation. Secondly, in my opinion, AstraZeneca does not have sufficient information as to whether the hydrate is a trihydrate. True it is that Dr Luk has carried out calculations which suggest it is a trihydrate, but I accept Dr Luk's opinion that he is unable to express a firm view and that the further documents he identifies would assist him to do that. Thirdly, in my opinion, AstraZeneca does not have sufficient information as to water content. There is an overlap between the required range and the range stated in the Alphapharm Extracts, but that is not sufficient information for AstraZeneca to decide whether to start a proceeding for a threatened infringement of AU839 within r 7.23(1)(b). Counsel for Alphapharm said in the course of his submissions that any uncertainty would be overcome by the certificates that relate to the testing of the bulk API which should provide information about water content and that Alphapharm would provide the certificates. This offer was made very late and I am not satisfied that it would overcome the uncertainty. In any event, I would make the first order on the basis of the first two matters which I have identified. 37 Counsel for Alphapharm submitted that Dr Luk's references to being unable to form a "firm opinion" on various matters indicated that AstraZeneca was seeking more than sufficient information to decide whether to start a proceeding in the Court. I do not think that is the case. The issue of what is sufficient information within r 7.23(1)(b) is very fact specific and, bearing in mind that the costs and risks of litigation are relevant to the decision whether to start a proceeding, I think the first order falls within r 7.23(1)(b) and does not trespass impermissibly into discovery in a proceeding. 38 The Court has a discretion to refuse to make an order even where the requirements of r 7.23(1) are satisfied (Reeve v Aqualast Pty Ltd [2012] FCA 679 at [64] per Yates J). However, nothing was put by Alphapharm in this case to suggest that an order should be refused where the requirements of r 7.23(1) are satisfied. 39 For the second order, AstraZeneca relied on the Court's power in s 23 of the Federal Court of Australia Act 1976 (Cth). Alphapharm opposed the order on various grounds including the lack of a protocol, a serious intrusion into Alphapharm's confidential commercial affairs, a lack of demonstrated utility and the time and costs involved. 40 Bearing in mind that Dr Luk requires further information before he formulates an experimental design or methodology for the testing of samples, I cannot be satisfied at this stage of the utility and time and costs involved in the testing of samples of the Alphapharm Products. I would not make the second order at this stage. 41 Before making the first order, I will hear the parties on whether the first order needs to be adjusted to include confidentiality undertakings or in some other way so as to accommodate Alphapharm's recent advice about the use of the Launch API. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.