Does Div 2 prevent the Commonwealth from recovering under the usual undertaking as to damages where the requirements of the section are not satisfied?
91 It is not in dispute that Div 2 of Pt 3-2 of Chapter 3 of the TG Act does not include any express restriction which prevents the Commonwealth, or any other person, from recovering under the usual undertaking as to damages in the ordinary way in circumstances where the patentee fails to obtain a final injunction but is not shown to have engaged in any relevant misconduct, or where no notice has been given to the patentee under s 26B(1)(b)(iii). The Sanofi Parties contend that in the case of the Commonwealth such a restriction arises by implication.
92 Div 2 cannot be construed without giving some consideration to the effect of the relevant provisions upon the claims of other persons besides the Commonwealth. It is not a satisfactory answer to say that the question whether other persons' claims are also excluded does not arise because the question posed for consideration by the Full Court is directed only to the Commonwealth's claims. The proper construction of the relevant provisions cannot be ascertained on that narrow basis.
93 If the Commonwealth's claim is precluded by operation of an "exhaustive code" found in Div 2 then, as a matter of statutory construction, it is difficult to see why the claim of the applicant for registration which gave the relevant s 26B(1)(b)(iii) notice is not also precluded. In our view, the notion that Div 2 might operate as an exhaustive code in respect of the Commonwealth's claim but not the claim of the applicant for registration, does not reflect a rational legislative choice.
94 The Sanofi Parties submitted that the Parliament may have sought to curtail a patentee's liability under the usual undertaking as to damages where a supplier (the "generic supplier") has elected to rely on evidence or information to establish the safety or efficacy of its goods that another person (the "originator") previously submitted to the Secretary. As we understood this submission, the Parliament may have sought to limit the patentee's liability to a generic supplier (which had given the s 26B certificate) under the usual undertaking as to damages as a quid pro quo for allowing the generic supplier to rely on an originator's evidence and information (so-called "springboarding"). We reject this submission, as explained below.
95 Sections 26B, 26C and 26D were enacted in response to Australia's entry into the FTA. As we have pointed out, it requires Australia to provide for a patentee to be given notice of a request for marketing approval in certain circumstances. There is nothing in the FTA that gives us any reason to think that Parliament might have considered it necessary or desirable to deprive a person giving a certificate under s 26B of the right to recover under the usual undertaking for loss occasioned by the grant of an interlocutory injunction founded upon an invalid patent. In the circumstances, we do not think that Div 2 can be interpreted to operate as an exhaustive code that curtails the rights of such a person to recover compensation under the usual undertaking as to damages in an appropriate case.
96 The contrary view of Div 2 is likely to produce results that are inconvenient and unjust. The prescribed courts invariably award interlocutory injunctions on the premise that the usual undertaking will permit the court to compensate the respondent for any injury caused by the interlocutory injunction if the plaintiff loses the case: see Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 623. From the generic supplier's perspective, it would mean that it could be kept out of the relevant market for a very lengthy period until such time as the infringement proceedings were finally determined and without any redress if the patent was eventually held invalid. From the patentee's perspective, it could be particularly difficult for a patentee to persuade a judge that there should be a grant of an interlocutory injunction in circumstances where there was a serious question to be tried as to whether or not the respondent was threatening to infringe a valid claim of the patent: cf. Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at [19] per Gleeson CJ and Crennan J, [65]-[72] per Gummow and Hayne JJ.
97 Mr Walker submitted that Div 2 dealt with the generic supplier and the Commonwealth rather differently, from which it might be inferred that the Parliament intended to create an exhaustive code for the Commonwealth, but not for the generic supplier that had not given the s 26B(1)(b)(iii) notice. In this regard, he sought to distinguish the Commonwealth from the generic supplier by reference to s 26C(8) which provides the Commonwealth (but not the generic supplier) with a limited right to recover compensation for damages sustained by it as a result of the grant of an interlocutory injunction.
98 It is true that the Commonwealth is given a right to claim compensation in the circumstances referred to in s 26C(8) whereas the applicant for registration is not. However, the Commonwealth's right under s 26C(8) is not linked to the undertaking as to damages, but is instead a purely statutory right that is enlivened where the patentee provides a certificate under s 26C(2) that is false or misleading in a material particular or where the certificate contains an undertaking by the patentee that is breached. Section 26C has nothing to say about the entitlement of the Commonwealth to recover under the usual undertaking as to damages. In particular, ss 26C(5)-(8) are essentially concerned with ensuring that certificates given under s 26C(2) are given in good faith, and on reasonable grounds, and permitting the Commonwealth and the States and Territories to recover damages where a false or misleading certificate is given by the patentee prior to commencing proceedings in which an interlocutory injunction is obtained.
99 We do not think the distinction relied upon by Mr Walker justifies the conclusion that Div 2 may have been intended by Parliament to act as an "exhaustive code" in relation to the Commonwealth but not the generic supplier which gave the s 26B(1) notice in the first place.
100 In Chippendale Printing Co Pty Ltd v Commissioner of Taxation (1996) 62 FCR 347 (Sheppard, Tamberlin and Lehane JJ) the Full Court upheld the primary judge's (Lindgren J's) decision that the relevant provisions of the Sales Tax Assessment Act (No 1) 1930 (Cth) and the Sales Tax Assessment Act 1992 (Cth) were intended to be an exhaustive code of taxpayer's rights to recover an overpayment of tax. Sheppard J said at 348-349:
Much of the argument before us was taken up with an interesting consideration of the circumstances in which a common law right to recover moneys for an overpayment of tax could coexist with a statutory right for that recovery. There was a good deal of consideration given to the question whether the legislation in point contained what might be described as a code thus reflecting an intention on the part of the legislature to oust other forms of recovery. Plainly the matter is one of statutory interpretation. It would seem to me to be an odd state of affairs if the legislature, in the circumstances which exist here, intended to restrict the right to recover under the statute as it has and yet to allow an unrestricted right deriving from the common law to remain available at the same time. I think that the legislation reflects a sufficiently clear intention to warrant the conclusion that it did not intend there to be available for an overpayment such as was made in this case any remedy other than the statutory one for which the legislation provides.
Tamberlin J said at 359:
It must be borne in mind that the obligation to pay sales tax and the procedures by reference to which such tax is to be assessed, paid, collected and adjusted, arises from statute and not from agreement or from the general law. The subject matter of the tax is a statutory debt. The whole regulatory framework is legislative and not consensual in character. Against this background it is not inappropriate that the statutory regime should be interpreted to cover the field and not allow actions under the general law where the result would be to bypass carefully formulated legislative controls.
…
The existence of these entitlements, conditions and procedures also lends support to the conclusion that the legislative regime under the 1930 Act as amended was intended to be exhaustive as to the way in which, and the basis on which, claims for refunds of overpaid sales tax could be obtained. It is unlikely, to say the least, that these procedures and entitlements would be cast in such a comprehensive and detailed form if it was envisaged that alternative rights under the general law could also be availed of with the consequence that the procedural machinery was bypassed.
Lehane J was also of the opinion that the relevant provisions established an exhaustive code with respect to the recovery of overpayments of sales tax. His Honour was particularly influenced by the fact that one of the relevant provisions explicitly required the Commissioner not to make a refund of any overpayment unless one of a number of specified conditions was satisfied.
101 Chippendale was distinguished by the New South Wales Court of Appeal in Bromley v Forestry Commission of New South Wales (2001) 51 NSWLR 378 on the basis that the legislation in issue in Chippendale occupied the same field as the common law right and that it did so in a manner that was incompatible with an untrammelled common law right: see Mason P (at [49]) (with whom Heydon JA and Ipp AJA agreed).
102 In our view Chippendale is distinguishable from the facts of this case. In the present case there is no inconsistency or incompatibility that arises by holding that a prescribed court can make an award of compensation under the usual undertaking as to damages in accordance with the general principles discussed in Air Express and European Bank in circumstances where a s 26B(1)(b)(iii) notice has been given.
103 Monro v Revenue and Customs Commissioners [2009] Ch 69 raised a very similar question to that dealt with in Chippendale. In Monro the question was whether the taxpayer could maintain a common law action to recover a mistaken overpayment of capital gains tax or whether it was precluded by s 33 of the Taxes Management Act 1970 (UK). Section 33(1) provided that a taxpayer could make a claim for the repayment of such an overpayment, and s 33(2) conferred on the Board the power to grant relief in respect of such a claim. However, s 33(2A) excluded the relief available in two specific situations. The taxpayer's claim was within s 33(1) but his right to relief was excluded by s 33(2A). The Court of Appeal upheld the trial judge's decision that the taxpayer's common law claim was precluded.
104 Arden LJ held (at [6]) that the obvious purpose of s 33(2A) was to protect the public finances. She described (at [7]) s 33 as "its own code for repayments to which s 33(1) applies" and "a parallel universe to the common law remedy." Arden LJ also said at [22]-[23]:
[22] In my judgment, the authorities give clear guidance that if Parliament creates a right which is inconsistent with a right given by the common law, the latter is displaced. By "inconsistent" I mean that the statutory remedy has some restriction in it which reflects some policy rule of the statute which is a cardinal feature of the statute. In those circumstances the likely implication of the statute, in the absence of contrary provision, is that the statutory remedy is an exclusive one.
[23] Undoubtedly, Mr Monro paid money under mistake of law, and a remedy at common law in general exists in that situation. Such a right can, however, be excluded by express words or necessary implication. In this case the implication arises because Parliament has created a specific remedy with a limitation to exclude payments made under generally accepted practice. That limitation would be defeated if the court permitted an action to be brought at common law. That principle applies even though the statute is a taxing statute which must be interpreted so as not to impose burdens on the taxpayer unfairly. I have already discussed the obvious purpose of subsection (2A). It would make a nonsense of that purpose if it were possible to bring an action at common law for the recovery of money in circumstances where s 33(1) applies.
Longmore LJ concluded at [40] that Parliament intended s 33 to cover all mistakes coming within the section and that it was to that extent intended to supersede and displace the common law. Mummery LJ (at [43]) agreed with both judgments.
105 Monro is distinguishable from the facts of this case for the same reason that Chippendale is distinguishable: there is nothing inconsistent or incompatible with permitting recovery by the Commonwealth (or any other person) pursuant to s 26D(5) while not excluding recovery under the undertaking as to damages in the ordinary way. Nor is there any other reason to suggest that ss 26B-26D were intended to supersede or displace a person's right to recover on the undertaking in the ordinary way.
106 The other authorities relied upon by the Wyeth Parties, including the Anthony Hordern case and the Boilermakers' case, do not assist. The principle of statutory construction referred to in those cases does not in terms apply here because we are not concerned with a situation in which the statutory instrument contains both specific and general provisions such that a choice must be made as to which of them is to apply in a given case. In any event, as Gummow and Hayne JJ explained in Nystrom at [54]:
Underlying Anthony Hordern and later cases is the notion "that affirmative words appointing or limiting an order or form of things may have also a negative force and forbid the doing of the thing otherwise". This statement was made by Dixon CJ, McTiernan, Fullagar and Kitto JJ in R v Kirby; Ex parte Boilermakers' Society of Australia [(1956) 94 CLR 254 at 270 … ] and applied to Ch III of the Constitution as a "very evident example". Counsel for the Minister, in oral argument, invoked the maxim expressum facit cessare tacitum (when there is express mention of certain things, then anything not mentioned is excluded), and its affinity with the above statement will be apparent. But, whilst "rules" or principles of construction may offer reassurance, they are no substitute for consideration of the whole of the particular text, the construction of which is disputed, and of its subject, scope and purpose.
107 As previously mentioned, Mr Lloyd submitted that the Commonwealth had no right to recover on the undertaking as to damages in respect of loss suffered by it as a result of a generic supplier being kept out of the market by an interlocutory injunction founded upon an invalid patent and that, at the very least, the Commonwealth's right of recovery was the subject of considerable uncertainty that Parliament sought to eliminate by the enactment of ss 26B-26D.
108 It seems to us that at least some of the uncertainties in relation to the Commonwealth's entitlement to recover under the undertaking as to damages are more imaginary than real. For example, the Wyeth Parties suggested that the Commonwealth might not be able to recover on the undertaking as to damages given by them because the Commonwealth granted the patent that was in suit in the Wyeth Proceedings. While it is not necessary for us to express a view as to the correctness of this particular argument, we seriously doubt that this is a matter that is likely to have been troubling the Commonwealth at the time ss 26B, 26C and 26D were enacted. In any event, it is not an uncertainty that could explain the reference to the States and Territories in s 26D(5)(c) since none of them is involved in granting patents.
109 It was also faintly suggested by the Wyeth Parties that the Commonwealth might not be a "person" within the meaning of the undertakings that they provided to the Court. We do not think that can be correct. The ordinary and natural meaning of the word "person" includes the Crown: McGraw-Hinds (Aust.) Pty Ltd v Smith (1979) 144 CLR 633 at 649 per Stephen J citing Lord Tucker in Madras Electricity Supply Corporation Ltd v Boarland [1955] AC 667 at 692. Given that the usual undertaking as to damages is required to be given in a wide range of situations (including where the Commonwealth is a respondent), there can be no possible justification for adopting an interpretation of the words "any person" that includes some legal entities (eg. a corporation) but not others (eg. a body politic).
110 The Wyeth Parties also suggested that the Commonwealth may have been concerned that it may not be able to recover any loss suffered by it as a result of having to pay higher prices under the PBS than would be the case if a generic supplier could have achieved a PBS listing for its products but for a patentee obtaining an interlocutory injunction based upon a patent ultimately held invalid. The argument, as we understood it, was that the Commonwealth causes its own loss in such circumstances because the price reductions triggered by the listing of a generic supplier's products on the PBS Schedule are mandated by Commonwealth legislation (the NHA).
111 We do not propose to enter into any discussion of the merits of this argument which will be for a Judge hearing the Commonwealth's claims to consider. Nevertheless, even if this argument were correct, this is again not a matter that would explain the reference to the States and Territories in s 26D(5)(c). In any event, there is nothing that the Wyeth Parties can point to that suggests that ss 26B, 26C and 26D were enacted as a response to any uncertainty surrounding the Commonwealth's entitlement to recover under the usual undertaking as to damages. Further, although s 26D(5)(b) would certainly enhance the Commonwealth's prospects of recovery in circumstances where it was engaged, it does not follow that it was also Parliament's purpose to preclude the Commonwealth from recovering under the undertaking in the ordinary way in circumstances where s 26D(5) was not engaged.
112 As already explained, ss 26B, 26C and 26D were introduced into the TG Act by the US Free Trade Agreement Implementation Act 2004. As the long title to that Act suggests, its principal purpose was to make amendments to Commonwealth legislation (including the TG Act) consequent upon Australia and the United States entering into the FTA.
113 There is nothing in the FTA or any other aspect of the relevant legislative history to suggest that ss 26B, 26C and 26D were intended to curtail the right of any person, including generic suppliers of pharmaceutical products who had given a certificate under s 26B(1), the Commonwealth, or the States or Territories, to recover on a usual undertaking as to damages given by a patentee as a condition of obtaining an interlocutory injunction. In particular, the proposition that it was Parliament's intention to reduce the scope for a patentee to be held liable in a case where a generic supplier engaged in "springboarding" (by making use of an originator's evidence or information) finds no support in the language or legislative history of the relevant provisions.
114 If Parliament intended by the enactment of ss 26B, 26C and 26D to curtail the prescribed court's power to make an award under the usual undertaking as to damages then we would expect it to have done so by express words or necessary intendment. It has not done so by express words, and we are satisfied that there is no necessary intendment manifest in Div 2.
115 The Sanofi Parties referred to Parliamentary Debate in the Senate in relation to the US Free Trade Agreement Implementation Bill 2004 and a legal opinion tabled in the Senate by Senator Conroy on 9 August 2004 which he said supported the Opposition's proposed amendments to the Bill (Senate Official Hansard, 9 August 2004, p 25,933). Nothing said in the Senate, or in the tabled legal opinion, provides any support for the Sanofi Parties' or the Wyeth Parties' arguments.
116 To the extent that it might be considered permissible to have regard to these extrinsic materials (see ss 15AB(1), (2)(h) and (3) of the Acts Interpretation Act 1901 (Cth)), they do no more than confirm the conclusion we have reached. Speaking in support of the proposed amendments to the Bill, which were later enacted in the precise form in which they now appear in ss 26B, 26C and 26D, Senator Conroy said:
The current law requires that a court cannot grant an interlocutory injunction unless the applicant provides an undertaking as to damages. Amendment (3) [ie. proposed s 26D] enhances the entitlement to damages for the generic company and for the Commonwealth, states and territories. If the patent-holding company wants to take injunction proceedings after being notified by the generic company that it is bringing a generic drug onto the market, it will be liable for damages: if the case is discontinued by the patent-holding company, if the case is dismissed and the court determines the patent-holding company did not have reasonable grounds to believe it would succeed in the overall action or to believe that each of its claims was valid, or if the basis of the injunction was vexatious, not reasonably made or unreasonably pursued. The court can award damages to the generic company, including on the basis of the patent-holding company's gross profits on its drug during the period of the injunction.
Let us be clear: if a court finds that a drug company has got a bodgie patent and has been deliberately keeping generic drugs off the market, the court can order that all profits made by that company on that drug be taken from them. This is a seriously punitive penalty. That is what is necessary to make sure that this practice, prevalent in the US, does not come to Australia. It is not something that the Labor Party wants and it is not something the Australian community wants. This amendment puts in place a serious disincentive for companies to engage in this bodgie practice.
(Senate Official Hansard, 12 August 2004, pp 26,297-26,298, emphasis added.)
117 Whether or not s 26D(5) permits a "punitive" award against a patentee which has engaged in misconduct of the type referred to in s 26D(4)(c), as Senator Conroy suggested, is something that we do not need to decide. What is significant for present purposes is that Senator Conroy's remarks indicate that s 26D was seen by him as "enhancing" the rights of the generic suppliers, the Commonwealth, and the States and Territories.