REASONS FOR JUDGMENT
1 This proceeding involves claims for relief in relation to the alleged infringement of claims in a patent. The patent is Australian Patent Number 688074, entitled "Process for synthesis of substituted sulphoxides", and the relevant claims are 1 to 13, 15 to 17, 19, 20, 22, 23 and 28 to 30. The applicants are AstraZeneca AB and AstraZeneca Pty Ltd, and the respondent is Medis Pharma Pty Ltd. The alleged infringing products are the respondent's esomeprazole capsule products (the "Medis Capsule Products"). One of the matters raised in response to the claims is that the patent is invalid. The respondent challenges the priority date which is claimed, and alleges that the alleged invention is not novel and lacks an inventive step. The respondent also alleges that certain claims in the patent are not a manner of new manufacture, lack definition, and lack fair basis and utility. Interim relief was granted with respect to the respondent's Medis Capsule Products on 8 May 2014, and the applicants' application for interlocutory relief has been set down for argument on 19 June 2014.
2 The parties anticipated that confidential information of the respondent would be disclosed during the proceeding, including the Common Technical Document Module 3 Quality for the generic esomeprazole capsule products proposed to be marketed by the respondent ("the Module"), and documents, samples or other information provided by the respondent, or its solicitors, relating to the respondent's generic esomeprazole capsule products, over which the respondent claims confidentiality. They agreed a confidentiality regime, which was then embodied in an order of the Court made on 30 April 2014. The regime involved the specification of the persons who could receive the confidential information, subject to the execution of a written undertaking specified in a schedule to the order. The written undertaking was to be provided to the respondent's solicitors. The group of persons entitled to receive the confidential information are defined in the order as the "Confidentiality Club", and include partners, employees, and administrative and secretarial staff of the applicants' solicitors, counsel and nominated experts, and their administrative and secretarial staff. At present, there is no-one within the Confidentiality Club from the applicants, including the person or persons responsible for providing instructions in this proceeding. The definition of the Confidentiality Club includes the following:
Any other person nominated by the Applicants, subject to obtaining the Respondent's prior written consent, such consent not to be unreasonably withheld.
3 It is implicit in this provision that the Court would resolve any dispute between the parties as to the persons to be included in the Confidentiality Club and, in any event, the Court retains control over the confidentiality of documents.
4 The applicants asked the respondent for its written consent to the inclusion of four persons in the Confidentiality Club. The respondent has refused to provide its consent, and that resulted in the applicants bringing this application for an order of the Court.
5 The four persons the applicants wish to have included in the Confidentiality Club, their qualifications, and employment positions, are as follows:
(1) Mr James Sharkey
Mr Sharkey is in-house counsel at AstraZeneca Pty Ltd (the second applicant) where he holds the position of Legal Director, Australia and New Zealand, AstraZeneca Pty Ltd. He holds a current practising certificate, which entitles him to practice as a solicitor and barrister in the State of New South Wales.
Mr Sharkey has previously been included in confidentiality regimes in Australia, and it has never been suggested that he has not complied with a confidentiality undertaking.
(2) Mr Benjamin McDonald
Mr McDonald holds the position of Assistant General Counsel, Global Litigation, AstraZeneca AB (the first applicant). He is employed by AstraZeneca AB in Sweden, although his responsibilities are global.
Mr McDonald is not a member of the Swedish Bar, but he does not need to be to practice as an in-house counsel or lawyer. He holds a current Victorian local practising certificate.
Mr McDonald has previously been included in confidentiality regimes in the United States, Canada and Australia, and it has never been suggested that he has not complied with a confidentiality undertaking.
(3) Mr Marcus Heifetz
Mr Heifetz is Senior Counsel, Global Litigation, and he is employed by AstraZeneca Pharmaceuticals LP. That company is a related company to the applicants. Mr Heifetz has managed litigation related to Nexium® for almost nine years, and he has led AstraZeneca's Global Nexium® Defence Team for several years. The AstraZeneca group of companies makes decisions about litigation in Australia at a global level and AstraZeneca Pharmaceuticals LP, represented by Mr Heifetz in Nexium®-related litigation, is a key participant in these decisions.
Mt Heifetz is admitted as a lawyer in the State of California and as in-house legal counsel in the State of Delaware. He is in good standing in both States.
Mr Heifetz has previously been a member of many confidentiality clubs, including such clubs in the United States, Canada and Australia. It has never been suggested that Mr Heifetz has not complied with a confidentiality undertaking in any matter at AstraZeneca or in any other matter.
(4) Dr Einar Stole
Dr Stole is a partner at Covington & Burling LLP and he has assisted AstraZeneca with esomeprazole-related litigation throughout the world, including Australia.
Dr Stole is admitted as a lawyer in the State of Maryland, the District of Columbia, and the United States Patent and Trademark Office. He has legal and ethical obligations arising in each of these jurisdictions as a consequence of being a member of the Bar in those jurisdictions.
It has never been suggested that Dr Stole has not complied with a confidentiality undertaking.
6 None of the four persons identified above is involved in the development, improvement, or formulation of manufacturing processes for esomeprazole or esomeprazole products at AstraZeneca or elsewhere and, as such, they do not attend meetings where these matters are discussed. They are not involved in competitive decisions that could be made in light of receiving information about the process and formulation for the Medis Capsule Products, other than decisions relating to litigation over the Medis Capsule Products. In the case of Mr Sharkey, Mr Heifetz and Dr Stole, none of them are involved in the drafting or prosecution of patents relating to esomeprazole, including patents concerning or related to the products and processes described in Australian Patents numbered 688074, 695774 and 722839. In the case of Mr McDonald, it is said that he is not currently, and in the future does not expect to be, involved in the drafting or prosecution of patents relating to esomeprazole, including the Australian patents previously identified.
7 The reference to "competitive decisions" in the context of in-house counsel seems to be a reference to making company decisions that affect contracts, marketing, employment, pricing, product design, or "any or all of the client's decisions … made in light of similar or corresponding information about a competitor" (United States Steel Corporation v United States 730 F2d 1465 (Fed Cir 1984), 1468 (see Conor Medsystems, Inc v The University of British Columbia (No 4) [2007] FCA 324, at [6] per Finkelstein J ("Conor Medsystems")).
8 With respect to each of the four persons identified above, the applicants refer to a security system in place at AstraZeneca Pty Ltd, AstraZeneca AB, and Covington & Burling LLP, as the case may be, for the storage and protection of confidential information.
9 The relevant confidential information, at least at this stage, is contained in the Module, and in broad terms it relates to the process used to manufacture the Medis Capsule Products, including the process used to manufacture the active pharmaceutical ingredient in those products.
10 The relevant legal principles are as follows:
(1) The onus of establishing a claim for confidentiality is on the party making the claim: Alphapharm Pty Ltd v Lundbeck Australia Pty Ltd [2006] FCA 1358 ("Alphapharm v Lundbeck Australia"), at [17] per Lindgren J.
(2) The question of whether a claim for confidentiality should be upheld or refused involves a balancing exercise in which the competing considerations are the risk of inadvertent or accidental disclosure on the one hand, and the benefits of a party having access to relevant information so that appropriate advice can be given to the client and informed instructions received from the client, on the other: Conor Medsystems at [9] per Finkelstein J, referring to Warner-Lambert Co. v Glaxo Laboratories Limited [1975] RPC 354, at 356 per Buckley LJ.
(3) In determining where the balance lies in a particular case, a number of matters are relevant, including the following:
(i) the nature and content of the confidential information: Mobil Oil Australia Ltd and Another v Guina Developments Pty Ltd and Another (1996) 33 IPR 82, at 87-88 per Hayne JA (as his Honour then was);
(ii) the extent to which, if the confidential information is disclosed to a particular person, that person will have occasion to use the information to further a party's commercial interests: Conor Medsystems, at [15]; Alphapharm Pty Ltd v Lundbeck Australia, at [20]. In this context, involvement or lack of involvement in competitive decision-making will be relevant. It will also be relevant to consider whether the person to whom it is proposed to disclose the information owes or may owe contractual, statutory or fiduciary duties to their principal in relation to competitive decisions: Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd (No 3) [2011] FCA 793, at [52] per Perram J;
(iii) the professional attributes of the persons to whom it is proposed to disclose the information and the extent to which they have participated in confidentiality clubs in the past: Conor Medsystems at [15]; Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1422 ("Interpharma v Commissioner of Patents"), at [4]-[7] per Sundburg J;
(iv) the extent to which the Court can be satisfied that, if confidential information is released to a person, that person, or the organisation for which the person works, has in place a security system that will protect the confidentiality of the information: Interpharma v Commissioner of Patents, at [11]-[12];
(v) undertakings given by the proposed recipient of the confidential information or the party seeking disclosure to meet any loss caused by inadvertent or accidental disclosure: Conor Medsystems at [15]; Interpharma v Commissioner of Patents, at [13];
(vi) although the above five matters are directed, primarily at least, to the risk of inadvertent or accidental disclosure of the confidential information and the likely loss if that occurs, on the other side of the equation, it is relevant to consider the extent to which a party's ability to seek advice and provide instructions may be hampered if a claim for confidentiality is upheld. In this context, it is worth noting that a claim for confidentiality in relation to certain persons is not necessarily to be upheld because there is already one person able to seek advice and provide instructions. It may be appropriate for a number of people from within an organisation to have access to confidential information in order to seek appropriate advice and provide informed instructions, particularly in the case of a large organisation and complex litigation. Whether that is so or not depends on the outcome of weighing the relevant factors.
11 I turn now to apply these principles to the facts.
12 As to the applicants' ability to seek appropriate advice and provide informed instructions, I accept without hesitation that that ability will be seriously impaired unless a person or persons from within the applicants is or are included in the Confidentiality Club. It seems to me that, if that does not occur, the applicants' ability to advance the proceeding and to explore an out-of-court settlement will be seriously impaired. The fact that the applicants were able to commence this proceeding without that occurring does not gainsay this proposition as the proceeding and the respondent's invalidity case develops.
13 Mr Sharkey is responsible for providing instructions on behalf of the second applicant in relation to all of AstraZeneca's Australian patent litigation. Mr McDonald is responsible for instructing the applicants' solicitors and their external counsel on behalf of the first applicant in relation to this proceeding. Mr Heifetz is responsible for co-ordinating the applicants' Nexium® litigation globally, including litigation relating to foreign equivalents of the patent. He has substantial experience in such litigation. Dr Stole has assisted the applicants with esomeprazole-related litigation throughout the world, including in Australia. He has substantial experience in such litigation, and is said to be a highly trusted adviser of the applicants.
14 The applicants submit that the Module contains information about the manufacturing process of the Medis Capsule Products. It does not relate to finance or marketing, and it does not identify the third party manufacturer. I accept those submissions. The applicants submit that the respondent has not established that the information is confidential. I do not accept that submission, or at least I do not accept that it is a relevant submission on this application. This is an application by the applicants to include four nominated persons in the Confidentiality Club. It assumes the confidentiality of the information. If the applicants wish to contend that certain information is not confidential, then they must do so by a different application.
15 I think the risk of inadvertent or accidental disclosure in the case of the nominated persons is relatively slight in light of the matters I have identified. That conclusion is reinforced by the professional standing of the nominated persons and the security systems each has or is able to put in place. In addition, the terms of the undertaking which must be given by members of the Confidentiality Club are quite strict.
16 The applicants offered an undertaking, if I considered it necessary, that they would be liable for any direct or indirect loss, damages, costs or expenses to or suffered by the respondent in the event of disclosure by any of the nominated persons to any person other than the members of the Confidentiality Club. I think it appropriate to accept this undertaking.
17 The respondent made a number of submissions in opposition to the application, none of which should be upheld, except in the case of Dr Stole. The first submission relates not to the risk of inadvertent disclosure, but the consequences if it takes place. The patent expires on 15 July 2015 and it is said that there will then be fierce competition between manufacturers of these commercially significant pharmaceutical products. The submission is that, at that point, knowledge of the respondent's manufacturing processes may be particularly valuable. This seems to me to be a fairly remote consideration, but not one which I will leave out of account. The second submission is that neither Mr Heifetz nor Dr Stole are said to be persons who will provide instructions on behalf of the applicants, and neither are within the jurisdiction. For reasons I will give, this is a good point in relation to Dr Stole, but not Mr Heifetz. The third submission is that Mr Sharkey is the company secretary of the second applicant, and, as the respondent put it, "presumably involved in board meetings and commercial decisions relating to the second applicant's esomeprazole products". Furthermore, there is evidence that Mr Sharkey is a senior executive and part of the second applicant's management team for the Australian business, and is involved in assessing the applicants' legal and commercial risks in relation to patent disputes. In my opinion, the answer to these points is that Mr Sharkey is not involved in decisions about manufacturing processes, nor is he involved in competitive decisions in the relevant sense. Furthermore, I do not read the reference to his involvement in assessing the commercial risks in relation to patent disputes as involving any overlap with competitive decision-making. It seems to me to be no more than a recognition that with any commercial litigation there are commercial risks as well as legal risks. The same point is made in relation to Mr McDonald and I reject it for the same reasons. The fourth submission is that Mr McDonald resides outside the jurisdiction. That is a relevant consideration, but not decisive.
18 I am satisfied that Mr Sharkey and Mr McDonald should be included in the Confidentiality Club. The relevant matters are more evenly balanced in the case of Mr Heifetz, but bearing in mind the matters which I have identified, I am persuaded that he should be included in the Confidentiality Club. I am not persuaded Dr Stole should be included in the Confidentiality Club. I accept he has substantial experience and is a highly trusted adviser of the applicants. Nevertheless, he is not a person providing instructions on behalf of the applicants, he is not within the jurisdiction, and provision of the confidential information to him would involve storage on another system, or at another place, with the risks that that involves.
19 I will make orders that have the effect of including Mr Sharkey, Mr McDonald and Mr Heifetz in the Confidentiality Club.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.