CSL Limited v Novo Nordisk Pharmaceuticals Pty Ltd

JUDGE: BESANKO J DATE: 4 December 2013 PLACE: ADELAIDE VIA VIDEO LINK TO MELBOURNE

REASONS FOR JUDGMENT - FOR PUBLICATION 1 This is an application by the applicants in a proceeding in this Court (VID 154 of 2009) for leave to use documents discovered by the respondents in the proceeding for a purpose other than a purpose connected to the proceeding. In Hearne and Another v Street and Others (2008) 235 CLR 125 Hayne, Heydon and Crennan JJ said (at 154 - 155 [96]) (citations omitted): Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence. 2 The documents in issue in this application were not received into evidence in this proceeding. In fact, the proceeding did not proceed to trial and, subject to questions of costs, has been finalised. 3 The respondents oppose the application for leave. They submit that there are no special circumstances justifying a grant of leave and they submit that they will be prejudiced if the applicants are permitted to use the documents in issue in the manner in which they propose to use them. 4 The affidavit material tendered on the hearing of the application was as follows: Applicants Mr Richard Hamer (Solicitor), two affidavits Mr Andrew Sheard (Patent Attorney) Mr John Cox (Consultant Scientist) Mr Huw Hallybone (Patent Attorney) Respondents Ms Hazel Ford (Patent Attorney) Dr Lars Nordholm (Scientist and Project Vice President of the second respondent) Mr Lars Nielsen (General Counsel of the second respondent) Mr Christopher Schlicht (Lawyer) 5 For reasons which will become clear, it is necessary for me to determine this application as a matter of urgency. In these circumstances, I will not refer to all of the evidence put forward on the application some of which is complex technical and scientific evidence. 6 The background to the application is as follows. The applicants held an Australian Patent relating to an invention entitled "Stabilised growth hormone formulation and method of preparation thereof" (Australian Standard Patent No 716747). For present purposes it is sufficient to say that an important feature of the alleged invention related to the concentration of the buffer or stabilising agent(s) in the formulation. This was referred to as the "2x concentration requirement". The respondents manufactured, supplied and sold liquid hGH products called Norditropin SimpleXx (a human growth hormone solution ready for injection) and Norditropin NordiFlex (a human growth hormone solution ready for injection in a prefilled pen for administration). The respondents' Norditropin products entered the market in 1999/2000. The applicants considered that the respondents' products may have infringed its Australian Patent and on 21 November 2008 they sought an order for what was then known as preliminary discovery under O 15A r 6 of the Federal Court Rules 1979 (Cth) from the respondents (VID 979 of 2008). They were provided with certain documents subject to confidentiality undertakings in about November and December 2008. They then brought this proceeding in March 2009 claiming relief in relation to the alleged infringement of their Australian Patent. The respondents brought a cross-claim claiming a declaration of invalidity of the Australian Patent on grounds relating to the alleged priority date, alleged lack of novelty, alleged lack of inventive step, alleged lack of utility, insufficiency and other grounds. Relevantly, discovery orders were made on 28 August 2009 and 15 September 2011 and lists of documents dated 31 December 2009, 18 October 2010, 28 October 2011 and 20 January 2012 respectively were filed. 7 On 24 May 2012 the following order was made by consent in the proceeding: 1. Within 14 days of the date of these orders, the Applicants/Cross-Respondents offer to the Commissioner of Patents to surrender Australian Patent No 716747 pursuant to section 137(1) of the Patents Act 1990 (Cth). 2. The Commissioner of Patents have leave to accept the offer to be made by the Applicants/Cross-Respondents under Order 1. 3. Leave is granted to the: (a) Applicants to discontinue their Application; (b) Cross-Claimants to discontinue their Cross-Claim. 8 The claim and cross-claim were each discontinued in early September 2012. 9 The documents in issue were discovered and produced by the respondents in the preliminary discovery proceeding or in this proceeding. They were all the subject of confidentiality undertakings. Speaking broadly at this stage, they were created in the course of the respondents' research and development work leading to its Norditropin products. 10 There are other proceedings between the applicants and the respondents in the European Patent Office (EPO). They relate to European Patent No EP-B-0889733 (application No 97902109.4-2123) "Stabilised Growth Hormone Formulation and Method of Preparation thereof". The 2x concentration requirement is also an aspect of this patent. The patentees are the applicants and the opponent is the second respondent in this proceeding, Novo Nordisk A/S. The European Patent proceeding is at the appeal stage. The second respondent's opposition was successful and on 23 November 2009 the Opposition Division revoked the European Patent. The applicants have appealed from that decision and their appeal has been listed for an oral hearing before the Technical Board of Appeal on 14 January 2014. In accordance with the procedure of the Board, the applicants have filed statements and submissions in support of the appeal and the opponent has filed statements and submissions in response. Each party has filed an expert's declaration dealing with the results of experiments carried out by the expert. The expert on the applicants' side is Dr Heidi Elmer who is an employee of the first applicant and the expert on the second respondent's side is Dr Mats Reslow who is an employee of the second respondent. A chronology of events is set out later in these reasons. 11 The procedure of the Technical Board does not allow for discovery of documents or for the cross-examination of witnesses and that means that the documents in issue on this application could not be obtained by an order in the European proceeding, nor could the information in the documents be put to Dr Reslow in cross-examination. However, the documents or the information in the documents could be put before the Technical Board by way of a statement. In this case that would require the leave or permission of the Technical Board because the applicants would be seeking to amend their case at a late stage in the appeal process. Each party put forward opinion evidence on this application as to the likelihood of the Technical Board granting such leave or permission. 12 As I have said, there was a good deal of complex technical and scientific evidence before me about the significance of the documents in issue or the information contained in the documents to the issues before the Technical Board. Plainly, that is a relevant matter on the application for leave. If an applicant for leave can show that documents are likely to be highly significant in a second proceeding then that would be a factor, perhaps a powerful factor, in favour of a grant of leave. By contrast, if the documents are very unlikely to be of any significance in a second proceeding then leave would almost certainly be refused. Within these extremes there are obviously a large range of possibilities. It seems to me that in a case such as the present it is difficult to be precise about the likely significance of the documents to the European proceeding. That is so not only because it involves a prediction as to how another body operating under a different system is likely to approach the matter, but also because I have conflicting evidence before me of a technical and scientific nature which, of necessity on an application of this nature, has not been tested by cross-examination. Nor have I had the benefit of detailed submissions on the technical and scientific evidence. 13 Nevertheless, I must make some assessment and I start by outlining the applicants' submission as to the significance of the documents. The applicants submit that the documents are likely to be significant in the European proceeding for the following reasons: (1) xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx (2) xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx (3) xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxxxxxxxxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxxxxxx xxxx xxxx (4) A statement in the second respondent's submissions in the European proceeding about what was a routine and general approach in 1995 is contradicted by its records that it spent the years from 1993 to 1998 trying to develop a suitable excipient-free hGH for the purpose of adding it to the relevant formulation. 14 In summary, the applicants contend that the second respondent's own documents contain information that supports the applicants' case about the effect of experiments, contradicts Dr Reslow's evidence, supports the validity of Dr Elmer's results and contradicts a statement by the second respondent about what was a routine and general approach in 1995. It is for these reasons the applicants seek to use the respondents' documents in the European proceeding. 15 In Hearne v Street supra at 159 - 160 [107] Hayne, Heydon and Crennan JJ said that although the obligation not to use documents produced on discovery (among other processes) for a purpose outside the proceeding can be released or modified by the Court, the dispensing power "is not freely exercised, and will only be exercised where special circumstances appear". 16 In Springfield Nominees Pty Ltd v Bridgelands Securities Limited (1992) 38 FCR 217 Wilcox J said that an applicant for leave to use documents for a purpose outside the proceeding in which those documents were obtained needed to show a special feature for modifying or releasing the undertaking and that if and when that was done the question became one of discretion. His Honour said that the relevant discretionary factors included the nature of the document and the circumstances in which it came into existence, the attitude of the author of the document and any prejudice the author may sustain, whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain, the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information), the circumstances in which the document came into the hands of the applicant for leave "and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding" (at 225). 17 The decision of Whitford J and then on appeal the Court of Appeal in Halcon International Inc v The Shell Transport and Trading Co and Others [1979] RPC 97 involved facts similar to this case and it was relied on by the respondents. It is necessary to consider the case in some detail. 18 Halcon International Inc ("Halcon") claimed against The Shell Transport and Trading Co ("Shell") an injunction to restrain Shell from threatened infringements of patents owned by Halcon in the United Kingdom. There were also proceedings in Holland involving an application for a patent (closely related to the United Kingdom patents) by Halcon which was opposed by Shell. In the English proceeding, Shell claimed Halcon's United Kingdom patent was invalid on the ground, among others, that the invention described therein was obvious. Shell also claimed in the proceedings in Holland that Halcon's invention was obvious and it succeeded in establishing that claim in the Patents Office. Halcon appealed to the Dutch Appeal Board. 19 The appeal to the Dutch Appeal Board involved what would be understood in English law as a hearing de novo. The other feature of the Dutch system was that there was no power to order discovery or production of documents in opposition proceedings. 20 Shell had made discovery in the English proceeding and Halcon sought the leave of the Court to use some of the documents so discovered in the proceeding before the Dutch Appeal Board with a view to showing that Shell itself was trying to solve the problem addressed in Halcon's Patent, but was unable to do so. 21 Whitford J dismissed Halcon's application and that dismissal was upheld by the Court of Appeal. Whitford J decided Halcon's application by reference to a number of considerations, whereas the Court of Appeal's decision was more narrowly based. 22 Whitford J formulated the test on the application before him as being whether there were very strong grounds for dispensing with or modifying the undertaking. 23 His Lordship addressed first the confidentiality of the documents which he described as documents in the red file. The question of confidentiality was important because the parties in the English proceeding had treated the documents as confidential (i.e., confidentiality undertakings were exchanged) and if they were used in the Dutch proceeding and Halcon's appeal was successful, then they were likely to become public. His Lordship considered whether the documents in the red file were in truth confidential. In the end he doubted that they were. However, his Lordship said confidentiality considerations did not end there because there was a risk that Shell would lose confidentiality in other documents it put forward to correct any mistaken impression created by the documents in the red file. In other words, the tender of the documents in the red file might create a mistaken impression, or tell only half the story, and Shell might feel compelled to tender other documents which they would otherwise wish to keep confidential. 24 Whitford J said that having regard to the evidence put before him, he accepted that the documents in the red file may be of assistance to the Dutch Appeal Board. His Lordship said the following as to justice before the Dutch Appeal Board (at 111): I do not think that the private interests of Halcon ought to be allowed to prevail and so far as justice before the Dutch Appeal Board is concerned I imagine that the law of Holland safeguards by its rules the practice and procedure. It may be that arguments could be advanced before the Dutch Appeal Board based upon the red file documents and it may well be that it will be of assistance to Halcon in that proceeding to make reference to these documents, but I would assume that so far as opposition proceedings in Holland are concerned, if it was thought essential to the deliberations, either at first instance or on appeal, that there should be some procedure by which documents of this kind should be made available, steps would have been taken to ensure that they could be available, and that the authorities in Holland are satisfied that they can do justice between the parties without material of this kind. 25 His Lordship concluded by saying that Halcon had not established any overriding interest either in their own right or as a matter of public interest which would make it appropriate to make an order which would permit the use of the documents in the appeal proceeding in Holland. 26 On appeal, Megaw LJ said that he was prepared to assume a number of matters in Halcon's favour. I do not need to set them out. However, Megaw LJ said certain matters of Dutch law were decisive. First, the Dutch courts had no power to order the discovery or production of documents. Secondly, documents became part of the Dutch Appeal Board's file and if Halcon was successful on the appeal, the documents would be available to the public. That would include any answering evidence put forward by Shell. Megaw LJ identified the following considerations as critical to his decision to dismiss the appeal (at 122): It will, I hope, be understood that I am not in any way offering any criticism of of (sic) the Dutch procedure as being unfair or undesirable. I am suggesting nothing of the sort. But the provision of that procedure that, if this appeal is allowed, all documents that have been made available to the Netherlands court shall be made available without restriction to the public is justifiable only as a concomitant of the other provision of Netherlands law: namely, that a party cannot be required by compulsion of law to disclose documents. If in the present case it could properly be said, on the evidence, that there is nothing which Shell are likely reasonably to be required or to wish to produce if the court were to permit the red file to be made available in the Dutch proceedings, then we would indeed come on to these other questions of principle which have been debated. But if, on the material before us, it appears that there is a real possibility - I do not mean mere speculative or remote possibility, but a real possibility - that, as a result of the contents of the red file being made available as evidence, put in by Halcon in the Dutch court, Shell would be faced with the dilemma, either of not putting forward confidential documents which might reasonably be material in order to explain or amplify the contents of the red file or, on the other hand, of putting in those documents, with the consequence that, if the appeal succeeded, they would be made available to all the world, it would, in my judgment, be contrary to the proper exercise of the court's discretion to allow the contents of the red file to go in. 27 Shaw LJ said that Whitford J was correct and that he agreed with what Megaw LJ had said in support of it. 28 Waller LJ based his decision on a number of grounds including those identified by Megaw LJ. 29 In their evidence and submissions the parties focused on three matters. I turn to address those matters. 30 The first matter is the significance or relevance of the documents in issue to the proceeding before the Technical Board of Appeal. On the one hand, I have the confidential annexure ("RWH-24") to Mr Richard Hamer's affidavit sworn on 18 November 2013, the confidential annexure ("JCC-7") to Mr John Cox's affidavit affirmed on 18 November 2013 and the confidential annexure ("HGH-1") to Mr Huw Hallybone's affidavit sworn on 25 November 2013 all of which suggest that the documents may affect or influence the Technical Board's decision with respect to at least some of the issues before it. On the other hand, I have the confidential annexure ("LN-1") to the affidavit of Dr Lars Nordholm and the confidential annexure ("CDS-1") to the affidavit of Mr Christopher Schlicht sworn on 27 November 2013 which suggest that when read in context, the documents do not support the applicants' case as they contend. It is not possible for me to resolve the conflict on an application of this nature. 31 The respondents submit that irrespective of the resolution of the conflict between experts, I should conclude that the documents are of no significance or relevance to the appeal before the Technical Board of Appeal. They rely on two matters. First, they contend that the applicants would not be permitted to put the documents before the Board because it is too late for them to do so. Secondly, they contend that the documents are not relevant to an issue which is decisive of the applicants' appeal and will mean that the appeal will be dismissed. 32 Mr Andrew Sheard is a United Kingdom Chartered Patent Attorney and a European Patent Attorney. He describes the steps taken in the European proceeding and they may be summarised as follows: (1) Notice of Opposition by the second respondent: 26 June 2007; (2) Response to Opposition by the applicants: 11 April 2008; (3) Decision of Opposition Division: 23 November 2009; (4) Statement of Grounds of Appeal by the applicants: 1 April 2010; Main Request in relation to the European Patent and First Auxiliary Request and Second Auxiliary Request: 1 April 2010; (5) Second respondent's Response to Appeal: August 2010. 33 I note from Mr Hallybone's affidavit that Dr Elmer's declaration is dated 1 April 2010 and Dr Reslow's is dated 23 August 2010. 34 It is common ground between the parties that the submission of further documents by the applicants at this stage would constitute an amendment of the applicants' case before the Technical Board of Appeal which would require the Board's leave under Article 13 of the Rules of Procedure of the Boards of Appeal. That Article is in the following terms: Article 13 Amendment to a party's case (1) Any amendment to a party's case after it has filed its grounds of appeal or reply may be admitted and considered at the Board's discretion. The discretion shall be exercised in view of inter alia the complexity of the new subject-matter submitted, the current state of the proceedings and the need for procedural economy. (2) Other parties shall be entitled to submit their observations on any amendment not held inadmissible by the Board ex officio. (3) Amendments sought to be made after oral proceedings have been arranged shall not be admitted if they raise issues which the Board or the other party or parties cannot reasonably be expected to deal with without adjournment of the oral proceedings. 35 Mr Sheard said that the "fundamental point" was that the admissibility of the documents in issue was a matter of discretion for the Technical Board. Mr Hallybone said that he agreed with Mr Sheard and that the Board may admit the evidence if it regards the evidence as such that it will materially alter the outcome. 36 Ms Hazel Ford is a European Patent Attorney and a fellow of the Chartered Institute of Patent Attorneys. She also refers to Article 13 and in addition she quotes Article 12(2) which is in the following terms: The statement of grounds of appeal and the reply shall contain a party's complete case. They shall set out clearly and concisely the reasons why it is requested that the decision under appeal be reversed, amended or upheld, and should specify expressly all the facts, arguments and evidence relied on. 37 Ms Ford expresses the opinion that it is "very unlikely" the Board will exercise its discretion to allow an amendment to the applicants' case. She bases that opinion on the case law where the new matter a party wishes to raise is complex, either technically or as a matter of law. She also expresses the opinion that the applicants would have to explain to the Technical Board the reasons the application was not made some time ago. The applicants' Australian solicitors have had the documents for some time. 38 On the latter point the position appears to be as follows. The Opposition Division handed down its decision approximately four years ago and the second respondent filed its response and Dr Reslow's declaration over three years ago. The applicants have had some of the second respondent's confidential documents in their possession for 18 months and other documents they have had for either two or three years. The applicants have not put forward any evidence of the reasons for the delay in making this application and in making an application in the European proceeding. They have said in their written outline of submissions on this application that the applicants' Australian lawyers "only became aware of the fact that the Respondents had made arguments in the EPO that were contradicted by the documents discovered in the Australian proceedings in late September 2013". However, that is not evidence. 39 Having regard to the evidence which I have summarised, I think the applicants would face a substantial hurdle in seeking to persuade the Technical Board to allow them to amend their case to introduce the documents in issue. 40 I turn now to the respondents' second submission. The submission is based on a proposition enunciated by Ms Ford in her affidavit to the effect that as a matter of European law, there needed to be evidence of a technical advantage within the Patent itself. That issue had gone against the applicants and the respondents contend that the applicants have no serious case on the appeal that that decision was wrong. The applicants would fail on that point and the documents in issue are irrelevant to that issue. The respondents may prove to be correct, but I am not prepared to decide the issue in their favour on an interlocutory application where there has been no cross-examination of witnesses or detailed submissions. 41 The second matter is the confidentiality of the documents in issue and any answering documents that the second respondent may wish to put forward. Ms Ford's evidence as to the effect of the documents being filed with the EPO or received in evidence was not contradicted by any of the applicants' witnesses and was to the following effect: (1) It is the practice of the EPO to upload to a publicly accessible online file all documents within a few days of their submission to the EPO. The default position is that the documents become publicly accessible within a short period after filing and there are very limited exceptions to public accessibility. Based on the relevant articles and case law, it would be difficult to obtain a non-publication order; and (2) Even if the documents were ultimately held to be irrelevant, there is a significant risk that they would become publicly available simply by reason of the fact that they were submitted to the EPO. 42 The applicants sought to counter the confidentiality arguments of the respondents by submitting that I should find that in truth the documents are not confidential. They pointed to the fact that the documents relate to the period from 1991 to 1998. It was submitted that that is sufficiently long ago that I ought to conclude that there is nothing confidential in the documents. I note the evidence of Mr Lars Nielsen to the contrary. Even in the absence of that, I am not prepared to draw that inference for which the applicants contend. Prima facie the nature of the documents is such that they would be considered confidential and the parties to date have treated them in that way. I would not infer against the second respondent that the documents are no longer confidential. In any event, even if I am wrong, there is in this case, like there was in Halcon, the consideration that there is a substantial risk that if leave is granted and the documents are placed before the Technical Board, the second respondent will be placed in the dilemma of not answering the applicants' case and preserving confidentiality in answering documents or answering and losing confidentiality in those documents. All the evidence before me and, in particular, that of Dr Nordholm satisfies me that there is a substantial prospect that the second respondent would have a not insignificant case in response if the documents in issue were put before the Technical Board. 43 The third matter is the interests of justice before the Technical Board of Appeal. I think the observations of Whitford J in Halcon (set out in [24] above) have relevance to this consideration. It seems to me that I should assume that the EPO is satisfied that it can do justice between the applicants and the second respondent without material of the kind presently in issue. 44 Turning now to the application of the relevant principles to the facts, the first point I would make is that it is not immediately apparent what would constitute "special circumstances" in the many and varied cases where a question of leave to use documents for a purpose outside the proceeding in which they were provided arises. Perhaps that is why the Full Court of this Court in Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) 218 ALR 283 at 289 [31] said that the notion of special circumstances did not require some extraordinary factors. It might be said that there are special circumstances where similar issues arise in two proceedings between the same parties or their agents and it is sought to use relevant documents discovered in one proceeding in the other proceeding. The difficulty in applying that type of analysis to this case is that I think that it is highly relevant here that the European proceeding does not allow for discovery. In other words, that system assumes that justice can be done without discovery. In this case, I think the discretionary factors clearly weigh in favour of a refusal of leave so that I can go straight to them. There is the consideration I have already mentioned. There are the confidentiality issues I have already mentioned, particularly the dilemma which the second respondent may face. As against these considerations there is the significance or relevance of the documents to the proceeding before the Technical Board of Appeal. In practical terms there is no appeal from the Technical Board. However, insofar as the significance or relevance of the documents is to be weighed in the applicants' favour, it must be heavily qualified by the substantial chance that the Technical Board would not allow the applicants to amend their case at this late stage. 45 In my opinion, the weight of the relevant matters in this case is in favour of a refusal of leave. Except to the extent provided for in the orders made by Davies J on 13 November 2013, the applicants' interlocutory application dated 1 November 2013 is dismissed. I will hear the parties as to costs and any other orders. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.