Hexal Australia Pty Ltd v Roche Therapeutics Inc [2005] FCA 1218 | Case summary

Hexal Australia Pty Ltd v Roche Therapeutics Inc [2005] FCA 1218 | Case summary | Zoe

[8]

The proceedings 3 In the first proceedings, NSD 984 of 2005 ('the Hexal Proceedings'), the applicant ('Hexal') claims that the Patent is, and has been at all material times, wholly invalid. I will deal with the basis for the claim of invalidity below. Roche has filed a cross claim in the Hexal Proceedings alleging that Hexal has applied, or intends to apply, for listing of a product known as Carvehexal on the Pharmaceutical Benefits Scheme ('PBS'). Roche claims that in such an application Hexal will be forced to make assurances to engage in conduct that Roche alleges would involve infringement of Claims 1-13 and/or 14-26 of the Patent. Roche, by notice of motion filed on 1 July 2005, seeks interlocutory relief to restrain Hexal from applying to list Carvehexal on the PBS and from infringing the Patent. 4 In the second proceedings, NSD 1209 of 2005 ('the Alphapharm Proceedings'), Roche claims that the respondent ('Alphapharm') has applied, or intends to apply, for listing on the PBS for a product known as Dilol. As in the Hexal Proceedings, Roche alleges that in order to comply with assurances required for listing on the PBS, Alphapharm will infringe Claims 1-13 and/or 14-26 of the Patent. Roche seeks an interlocutory injunction directed to Alphapharm in essentially the same terms as that sought against Hexal. 5 The issues under consideration in both these proceedings are, for present purposes, sufficiently similar to be dealt with together. With the consent of all parties, I consequently heard Roche's applications for injunctive relief together. I also ordered, again with the consent of the parties, that evidence in one of the proceedings, for the purposes of the interlocutory applications, be evidence in the other. 6 It is also envisaged by the parties that, subject to the Court, the substantive proceedings will be heard together. In this respect, the parties have submitted that an early hearing date, early in 2006, is sought by all parties. On this basis, it is expected that the substantive proceedings can be heard in April 2006. 7 I should also note that Roche has proffered the usual undertaking as to damages in respect of any injunction granted as against Hexal and Alphapharm.

[9]

The Patent 8 As its title suggests, the Patent is concerned with the use of compounds, which are dual non-selective b-adrenoceptor and a1-adrenoceptor antagonists, for the treatment of congestive heart failure. The preferred compound is said to be carvedilol. The specification for the Patent details that congestive heart failure occurs as a result of impaired pumping capability of the heart and is associated with abnormal retention of water and sodium. 9 The Patent contains both manufacture and method claims. Claims 1-13 of the Patent relate to the 'use of a carvedilol for the manufacture of a medicament for decreasing mortality resulting from congestive heart failure'. The structure of Claims 1-13 is similar to that referred to in Rehm Pty Limited v Websters Security Systems (International) Pty Limited (1989) 81 ALR 79 by Gummow J at 85; that is, they begin with a broad claim and then are progressively narrowed in scope, presumably in the hope that the patentee may find a claim sufficiently narrow to be valid and sufficiently wide to catch an infringer. 10 Claims 14-26 relate to a 'method for decreasing mortality resulting from congestive heart failure in mammals comprising the administration of carvedilol'. The method claims follow a similar structure to the manufacture claims. 11 For present purposes it is sufficient to set out Claims 1 and 14: '1. The use of carvedilol for the manufacture of a medicament for decreasing mortality resulting from congestive heart failure in mammals, alone or in conjunction with one or more other therapeutic agents, said agents selected from the group consisting of an angiotensin converting enzyme inhibitor, a diuretic and a cardiac glycoside. 14. A method for decreasing mortality resulting from congestive heart failure in mammals comprising the administration of carvedilol, alone or in conjunction with one or more other therapeutic agents, said agents selected from the group consisting of an angiotensin converting enzyme inhibitor, a diuretic and a cardiac glycoside, to a subject in need thereof.'

[10]

The PBS scheme 12 These applications come before the Court in the context of applications, either actual or potential, for listing of pharmaceutical products on the PBS. The PBS is administrated pursuant to the National Health Act 1953 (Cth). As set out above at [3]-[4], Roche alleges that Hexal and Alphapharm have applied, or intend to apply, for registration for their respective pharmaceutical products on the PBS. It now appears to be accepted by Roche that no such application has yet been made. As such, Roche's applications for interlocutory relief are made on the basis of Hexal and Alphapharm having an intention to apply for such registration. 13 Prior to seeking listing on the PBS, and quite separately from any PBS listing, pharmaceutical products require the approval of the Therapeutic Goods Administration ('TGA') and registration on the Therapeutic Goods Register in order to be sold in Australia. Both Hexal and Alphapharm have, on the material before the Court, obtained such approval in relation to their respective products, Carvehexal and Dilol. Tendered to the Court was the 'Product Information' in relation to these products. 14 There are three dates each year on which products may be listed on the PBS, namely, 1 April, 1 August and 1 December. For an application to be listed on one of these dates it must have been made by, respectively, 1 January, 1 May and 1 September prior to the relevant listing date. 15 Of particular relevance to the present interlocutory applications is the date, 1 September 2005. In these proceedings Roche have operated on the assumption that Hexal and Alphapharm are intending to apply for listing on the PBS by the 1 September 2005 cut-off so as to be eligible for the 1 December 2005 listing date. Neither Hexal nor Alphapharm has questioned that assumption. It was also not in contention that an application for listing of a product on the PBS must be accompanied by an assurance that the applicant will be capable of supplying the product in question by the listing date and therefore, should Hexal or Alphapharm apply for listing by 1 September 2005, they must give an assurance to the administering authority that they will be able to supply their respective product as at 1 December 2005. 16 I should note that Hexal and Alphapharm have both undertaken not to apply for listing of their respective products on the PBS until judgment on the present applications has been delivered. However, given the importance of the date 1 September 2005, it was appropriate, in my view, that these reasons be provided by that date. If no judgment was delivered prior to 1 September, Hexal and Alphapharm would, even if successful in these interlocutory applications, be unable to apply for listing on the PBS until 1 December 2005. In the circumstances I have confined my reasons to the main issues raised by the parties and have refrained from exploring every aspect and implication of their submissions.

[12]

See Castlemaine Tooheys Ltd v The State of South Australia (1986) 161 CLR 148 ('Castlemaine') per Mason ACJ at 153; American Cyanamid v Ethicon Ltd [1975] AC 396 ('American Cyanamid') per Lord Diplock at 406-407; and Martin Engineering Co v Trison Holdings Pty Ltd (1988) 11 IPR 611 ('Martin Engineering') per Gummow J at 615-618. 18 While Roche is required to satisfy each of these elements, whether there is a serious issue to be tried and whether the balance of convenience favours the granting of the interlocutory relief sought are not issues to be considered in strict isolation. The strength, or otherwise, of Roche's case for infringement can affect the balance of convenience: Aktiebolaget Hässle v Biochemie Australia Pty Ltd (2003) 57 IPR 1 per Sackville J at [31]. See also, Castlemaine per Mason ACJ at 154 and Tidy Tea Ltd v Unilever Australia Ltd (1995) 32 IPR 405 ('Tidy Tea') per Burchett J at 416. 19 It is also pertinent to note that where the validity of a patent is raised in interlocutory proceedings such at these, the onus lies on the party asserting invalidity to show that want of validity is a triable question. In AB Hassle v Pharmacia (Australia) Pty Ltd (1995) 33 IPR 63 ('AB Hassle v Pharmacia'), Ashley J referred to the decision of Gummow J in Martin Engineering and stated at 69-70: 'It is, in my opinion, quite clear that Gummow J considered that it was for the defendant to show that want of validity was a triable question. The mere fact that a defendant attacked validity did not mean, as was the case in times long past, that an interlocutory injunction should be refused. The procedures leading to the grant of a patent were now much more stringent than long ago, and provided good prima facie reason for supposing the patent to be valid. … …I doubt that it is now for the plaintiff to establish a triable question concerning validity in interlocutory injunction applications, where once a challenge is raised. If that is wrong, it is at least open to the plaintiff to rely upon the fact of grant of the patent, to which may be added evidence as to the period of grant and of the absence of challenge thereto. On the other hand, if a strong case for invalidity is provisionally made out, it will be relevant, at least in some cases, to the issue of discretion.' 20 It is also the case that an interlocutory application such as that presently before the Court is not an appropriate forum in which to conduct what may be termed a preliminary trial. In American Cyanamid, Lord Diplock commented at 407: 'It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial.' 21 In Martin Engineering, Gummow J, in the context of a situation where the patentee's right to ultimate relief was uncertain, commented at 615: 'Where the uncertainty depends in whole or in part on a contested question of fact, it is not appropriate for the court to decide that question on the interlocutory application. Where the uncertainty depends in whole or in part on a contested question of law, it may or may not be appropriate for the court to decide that question on the interlocutory application, depending on the circumstances, eg, whether the question is novel or difficult, or is susceptible of resolution on the present state of the evidence, or whether the urgency of the matter renders it impracticable to give proper consideration to the question…' 22 His Honour continued at 618-619 in relation to the respective cases on infringement and validity stating: 'In deciding the seriousness of the questions to be tried, it is not desirable, in advance of a final hearing, that I express detailed views, especially upon the question of validity: Peter Pan Electrics Pty Ltd v Newton Grace Pty Ltd (1985) 8 FCR 557 at 565; 70 ALR 731. In particular, there are several significant issues of patent law which arise and these should not be decided on an interlocutory hearing and without the benefit of full argument.'

[17]

(1) If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent. (2) A reference in subsection (1) to the use of a product by a person is a reference to: (a) if the product is capable of only one reasonable use, having regard to its nature or design - that use; or (b) if the product is not a staple commercial product - any use of the product, if the supplier had reason to believe that the person would put it to that use; or (c) in any case - the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier.' 28 Mr Nicholas submitted that when the method claims are read in conjunction with the Product Information for Carvehexal and Dilol it can be seen that supply of Carvehexal or Dilol to pharmacists, doctors or patients would entail use of the compound for the purpose of reducing mortality from congestive heart failure. He submitted that carvedilol is not a 'staple commercial product' and therefore, pursuant to s 117(1) and (2)(b), such use of Carvehexal or Dilol would involve Hexal or Alphapharm respectively in infringement of the method claims. 29 Hexal and Alphapharm both submitted that Roche had not established that, on the evidence before the Court, there was a serious issue to be tried in respect of infringement of Claims 14-26. They challenged Roche's reliance on s 117 of the Patents Act and submitted that there is a real dispute as to whether or not carvedilol is a staple commercial product. While conceding there was no evidence on this point, Ms Howard contended that on an interlocutory basis such as this, there is at least a real issue as to whether or not Carvedilol is a staple commercial product. Counsel for Alphapharm submitted that, at least on their searches, no authority existed in Australia as to the meaning of 'staple commercial product' in s 117 of the Patents Act. 30 In respect of the meaning of 'staple commercial product', there is a dearth of authority on the topic in Australia. Whatever the position is in other jurisdictions, and the material before the Court is unclear on this as well, an interlocutory application is not the appropriate forum in which to decide questions of law such as this: Martin Engineering per Gummow J at 615. The Court has not had the benefit of full argument on this point and, at least in my view, the position is sufficiently complex and unclear that it should not be decided without the benefit of a full examination of the matter. 31 In any event, Ms Howard and Mr Yates submitted that there was no serious issue to be tried in respect of the claim of infringement for the following reason. They point out that it is an integer of each of the method claims that the method is for 'decreasing mortality resulting from congestive heart failure'. The Product Information for Carvehexal and Dilol both state that the medical indications for the products include hypertension and symptomatic mild to severe congestive heart failure. Consequently, they submit it is not possible to read the Product Information as evidence of infringement because the products are not claimed to reduce mortality from congestive heart failure. I am not yet satisfied that this conclusion is inevitable; it may be that the reduction of mortality is implied, particularly given the reference to the products reducing the risk of death in other parts of the Product Information. Both Alphapharm and Hexal contend that such an interpretation raises logical difficulties and this issue is discussed below at [42] but for reasons given there I do not accept that the logical difficulty identified by Ms Howard is inevitable. In my view there is a serious issue to be tried in relation to infringement; subject of course to the resolution of the question of invalidity.

[18]

Invalidity 32 Hexal and Alphapharm also submit that the Patent is invalid for lack of novelty, obviousness and want of a fair basis. Counsel referred to an article by David T Kelly, published in Cardiology,1993; 82(suppl 3):45-49 ('the Kelly Article'). This article, published before the earliest priority date for the Patent (February 1993) and describing the author's knowledge as at 1991, details recent (as at 1991) evidence from two trials. Kelly states in relation to these trials: 'Carvedilol has been shown to improve haemodynamics in patients with congestive heart failure. … … Carvedilol is a beta blocker affecting both [beta1]- and [beta2]-adrenergic receptors and vasodilatation due to [alpha1]-adrenergic blockade. Arterial [alpha1]-receptors do not appear to be altered in heart failure, and there is no evidence of desensitization or tolerance causing attenuation of the vasodilator response. Vasodilating beat blockers in patients with heart failure are, therefore, an alternative therapeutic option. … …The use of carvedilol would appear to have several attractive therapeutic possibilities. …' 33 In relation to one study, he states: 'Twelve patients completed the study and 5 withdrew. Symptomatic and haemodynamic improvement was demonstrated in 11 of the 12 patients. … These data [sic] suggest that carvedilol may have beneficial effects in patients with chronic heart failure secondary to coronary artery disease.' 34 It stated that two further trials had been designed and approved but not yet started in Australia. The article states: 'These two trials hopefully will help further elucidate [the mechanisms of heart failure] and attempt to answer the questions as to whether these drugs are efficacious in heart failure when it is due to ischaemia rather than cardiomyopathy, and whether the action is solely myocardial or whether there is a favourable peripheral component to the improvement noted in previous trials. …' 35 Also, in relation to further trials Kelly states: 'It is important to see if carvedilol or indeed any other beta blockers will result in chronic improvements in patients already stabilised and improved by ACE inhibitor therapy.'

[20]

The Kelly article commented that the use of carvedilol 'would appear to have several attractive therapeutic possibilities' and referred to two further studies that were proposed to be carried out using carvedilol. 40 Counsel for Hexal contended that if you treat congestive heart failure as described in the Kelly article, the inevitable result is decreased mortality and consequently the Kelly Article, on this view, clearly anticipates the Patent. Ms Howard also submitted that as the House of Lords held in Merrell Dow Pharmaceuticals Inc v Norton & Co Ltd (1995) 33 IPR 1 ('Merrell Dow'), a patentee cannot patent a previously unknown effect. Here, it was submitted, Roche is simply doing what the Kelly Article said had been done, that is treating congestive heart failure with carvedilol with the inevitable result that there will be a reduction in mortality. 41 According to Ms Howard, this poses a logical dilemma for Roche. If, contrary to the submissions of Hexal and Alphapharm, the Product Information could be read as evidence of infringement, then the Kelly Article must be read as anticipating the Patent or rendering the invention obvious and consequently invalid. Alternatively, if the Kelly Article does not demonstrate anticipation or obviousness (and the Patent is valid) because it does not speak in terms of decreasing mortality in congestive heart failure patients, then neither does the Product Information and there is therefore no infringement. Put another way, there is either infringement and invalidity, or validity and no infringement. On this basis, there was said to be no serious question to be tried and the interlocutory relief should be refused on this ground alone. 42 I do not accept that this logical dilemma is so inevitable that the win/win situation postulated by Ms Howard for her client must result. There is an implicit premise in Ms Howard's argument, namely that the Product Information and the Kelly Article must necessarily be interpreted in the same way. Any question of interpretation must take into account the context in which the question arises. The Product Information and the Kelly Article are very different documents and, on the arguments that have been put to me so far, I am by no means confident that they would yield the same interpretation. 43 Mr Yates also submitted that in light of the Kelly Article the Patent, at least so far as Claims 1-4, 8, 14-17 and 21 are concerned, is invalid for want of novelty. He contended that the Kelly Article teaches the use of carvedilol as a medicament in treating congestive heart failure and thus discloses the essential features of the claims referred to above. Mr Yates also argued that the specification in the Patent itself states that the use of carvedilol in the treatment of congestive heart failure will (inevitably) result in decreased mortality resulting from congestive heart failure. Therefore, according to Alphapharm, it follows that using carvedilol as the Kelly Article teaches will inevitably result in decreased mortality from congestive heart failure. Consequently, the Kelly Article is a complete anticipation of Claims 1-4, 8, 14-17 and 21. 44 Hexal provided some evidence, in the form of a letter from a senior librarian at the University of New South Wales library, that the Kelly article is presently available in both electronic form and hard copy throughout Australia. That evidence does not establish that the article was available before the earliest priority date of the Patent. However the unchallenged affidavit evidence of Dr Anne Keogh diminishes the importance of the question of availability because of Dr Keogh's view that the article would not have prompted her to use carvedilol at that time given of the prevailing state of knowledge in the field. 45 Dr Keogh, has been the senior staff cardiologist in Cardiac Transplantation at St Vincent's Public Hospital in Sydney since July 1990. Her curriculum vitae provides evidence of an active research program generating multiple annual publications from 1984 to the present. 46 Dr Keogh evidence concerned her awareness of the use of carvedilol in the treatment of congestive cardiac failure and of the Kelly Article. Dr Keogh recounted how, with other members of the Heart Failure Unit, she was approached in September 1991 about a proposed clinical trial utilising carvedilol. She states that she and other members of the Heart Failure Unit decided not to participate in the trial because of the then prevailing view that beta blockers were contraindicated for congestive heart failure. She stated: 'At medical school we were taught that one must not give beta-blockers to patients with congestive heart failure and it was considered to be a significant medical error.'

[21]

Commenting on her own experience at the time she said: 'I considered the use of beta-blockers to treat congestive heart failure was counter-intuitive and in some cases harmful. This remained my view until late 1995. … I first learnt that Carvedilol improved survival in patients with congestive heart failure after the results of the US Carvedilol Program were presented at the American Heart Association meeting in Anaheim which took place in November 1995. In my view, since that date, Carvedilol has revolutionalised the treatment of congestive heart failure. … I could not have predicted this beneficial result from the information I had about Carvedilol prior to November 1995 and accordingly, before then, I did not use Carvedilol.' 47 Dr Keogh said that, although she had not seen the Kelly article until recently, prior to February 1995 she was aware that some researchers considered that carvedilol had the potential to be useful in the treatment of congestive heart failure. In relation to the Kelly Article she said: 'In my view the article was a discussion paper which contained no new data and no reference to mortality. It would not have changed my view not to use Carvedilol.' 48 In the light of only of that unchallenged evidence of Dr Keogh I cannot conclude that a skilled person would be directed by the Kelly Article, as a matter of course, to try the claimed invention in the expectation that it would produce a useful or desired result: see The Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 at 286 and Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 at [49] et seq. In my view there is in both the Hexal Proceedings and the Alphapharm Proceedings, a serious question to be tried in relation to novelty and obviousness. 49 There was also some disagreement between the parties as to the appropriate test for anticipation. Counsel for Hexal and Alphapharm submitted that the correct approach is that stated in Blanco White, Patents for Inventions, 4th ed, 1974 at 4-102, that is the reverse infringement test. The Court was also referred to General Tire & Rubber Company v Firestone Tyre and Rubber Co Ltd [1972] RPC 457 ('General Tire') at 485-486; Evans Medical Ltd's Patent [1998] RPC 517; Bristol-Myers Squibb Co v FH Faulding & Co Ltd (2000) 97 FCR 524 ('Bristol-Myers') at [66]; ICI Chemicals & Polymers Ltd v The Lubrizol Corporation Inc (2000) 106 FCR 214 at [44]; Merrell Dow at 9-13; and Jupiters Ltd v Neurizon Pty Ltd [2005] FCAFC 90 ('Jupiters') at [137]-[139]. 50 The reverse infringement test was articulated in Meyers Taylor Pty Ltd v Vicarr Industries Ltd (1977) 137 CLR 228 at 235 where Aickin J said: 'The basic test for anticipation or want of novelty is the same as that for infringement and generally one can properly ask oneself whether the alleged anticipation would, if the patent were valid, constitute an infringement.'

[22]

However, relying on comments made Bristol-Myers, Roche submitted that the reverse infringement test was irrelevant for present purposes because it does not apply to paper anticipations. In Bristol-Myers,Black CJ and Lehane J quoted Aickin J's test and observed at [62]: 'In the case of a paper anticipation, the reverse infringement test cannot be applied literally. The hypothetical infringement arises not because of its publication but because someone hypothetically does, or makes, what it describes or suggests. And the words "basic" and "generally" are not to be overlooked. As Gummow J said (with the agreement of Jenkinson J) in Nicaro Holdings Pty Ltd v Martin Engineering Co at 528: "But Aickin J described this test only as 'generally' applicable. Where the alleged anticipation is a paper publication, particularly a prior patent specification, there may be ground for debate in a comparison with the specification in suit as to the presence of inessential integers and mechanical equivalents … There may also be dispute whether what has been disclosed sufficiently reveals an essential integer in the light of the principles in Hill v Evans (1862) 4 De GF & J 288; 45 ER 1195" '. 51 Black CJ and Lehane J then considered Hill v Evans and other authorities and concluded at [67]: 'What all those authorities contemplate, in our view, is that a prior publication, if it is to destroy novelty, must give a direction or make a recommendation or suggestion which will result, if the skilled reader follows it, in the claimed invention. A direction, recommendation or suggestion may often, of course, be implicit in what is described and commonly the only question may be whether the publication describes with sufficient clarity the claimed invention or, in the case of a combination, each integer of it.' 52 Their Honours emphasised the importance of the prior publication needing to 'teach', in the sense of 'direct, recommend and suggest', what the patent claimed. They stated, at [68]: '…the fact that actual use is reported in a prior publication cannot, in principle, make any difference. The question is still, what does the prior publication teach? Each of the reports taught, no doubt, some useful things relating to the administration of taxol. But none of them taught the method of the claims.' 53 Hexal and Roche submit that their Honour's formulation of 'teach' in the sense described in [51] is not a new formulation of the test of novelty but a restatement of the earlier authorities which require 'clear and unmistakeable directions to do what the patentee claims to have invented'. On that basis they submit that the Patent fails the novelty test. 54 Given the view I have expressed in [47] it is not necessary for me to decide between these competing views as to the correct test of novelty nor is it appropriate to do so in the context of an interlocutory application.

[23]

Fair basis 55 Subsection 40(3) of the Patents Act requires that the claims in the Patent must be 'clear and succinct and fairly based on the matter described in the specification.' Counsel for Alphapharm submitted that whatever the situation in respect of infringement, and in addition to claims of invalidity on account of want of novelty or obviousness, the Patent is invalid because it does not comply with this requirement. Mr Yates contended that the Patent's claims are not fairly based on the matter in the specification that discloses the 'invention': Lockwood at [53]. 56 As Barwick CJ said in Olin Corporation v Super Cartridge Co Pty Ltd (1977) 180 CLR 236 at 240: 'The question whether is fairly based is not to be resolved, in my opinion, by considering whether a monopoly in the product would be an undue reward for the disclosure. Rather, the question is a narrow one, namely whether the claim to the product being new, useful and inventive, that is to say, the claim as expressed, travels beyond the matter disclosed in the specification.' 57 As the High Court pointed out in Lockwood at [57]: 'Barwick CJ dissented as to the construction of the patent in suit in Olin but the approval of his statement in Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd means that authorities decided before the enactment of the precursors to s 40(3), … should now be treated as being of very limited assistance in the construction of s 40(3).' 58 The High Court in Lockwood also pointed out that the requirement that the claims be fairly based on the matter described in the specification is a requirement that they be fairly based on the matter in the specification that discloses the 'invention' (which expression includes 'alleged invention'). The written submissions for Alphapharm discussed the claims in some depth. In summary it is submitted that the alleged invention is 'the use of a known medicament for a new purpose, namely to decrease mortality resulting form congestive heart failure.' Hexal and Alphapharm accept that the 'consistory clauses support the general statements in the specification as to the identity of the alleged invention by specifically conditioning the invention to one directed to this purpose.' However, in their view: '…none of the claims 1 to 13, by its language, secures a monopoly limited to the alleged invention disclosed in the specification. Rather those claims, upon their proper construction, extend to the use of carvedilol for the manufacture of a medicament one of the uses of which is to decrease mortality resulting from congestive heart failure. For this reason none of these claims is fairly based on the matter described in the specification. The only claims which, arguably, are fairly based in this sense are claims 14-26 because they are directed to the method of treatment, which is what the specification discloses as the alleged invention.' 59 Mr Nicholas submitted that as the alleged failure to comply with s 40(3) of the Patents Act was effectively confined to Claims 1-13 of the Patent, the Court should not be deterred from granting the relief sought because even if there is an issue of fair basis in respect of Claims 1-13, Roche has, in his submission, demonstrated a serious issue to be tried and an arguable case of infringement of Claims 14-26. 60 Mr Nicholas also relied on the decision of the High Court in Lockwood which, for present purposes, he submitted amounted to this: that prima facie, if in the body of the specification there is a description of the invention claimed, that is, at least at a prima facie level, sufficient. He argued that at this interlocutory stage the Court would not be satisfied, on the basis of his opponents' submissions and the lack of evidence, that there is no fair basis in respect of Claims 14-26. According to Roche, there is, having regard to the claims and the body of the specification, at least textual fair basis. 61 It is not clear to me whether Mr Nicholas was tacitly conceding, at least in relation to Claims 1-13 of the Patent, that there was a triable issue in relation to fair basis. Irrespective of this, however, I am satisfied that, for the reasons articulated by Mr Yates, there is a serious question raised by Hexal and Alphapharm on this issue, at least in relation to Claims 1-13. It is neither possible nor desirable that I try to resolve this issue now.

[24]

Irreparable harm 62 Roche submitted that if Hexal and Alphapharm were permitted to engage in the proposed conduct they would be able to benefit from Roche's enormous investment in promotion and marketing activities in relation to Dilatrend, the Roche carvedilol product. Mr Nicholas contended that Hexal and Alphapharm would be able to take advantage of the investments Roche has made in reliance on their statutory monopoly, in effect getting a 'free ride' on that investment. This would result in a dilution of the investment as it would be appropriated by another company. 63 Mr Nicholas tendered two affidavits of Mr Frederick Andranik Nadjarian, the Managing Director of Roche Products Australia Pty Ltd, sworn on 20 July 2005; one filed in the Hexal Proceedings and the other in the Alphapharm Proceedings. Counsel for Hexal and Alphapharm respectively object to certain paragraphs in these affidavits, the wording of which was identical. The relevant material consisted of statements made by Mr Nadjarian as to the damage likely to be caused to Roche if Hexal and Alphapharm were to sell their respective carvedilol products. Mr Yates and Ms Howard contended that these paragraphs were irrelevant and speculative and should not be read. At the hearing of the interlocutory application, I deferred ruling on these objections until I was better informed about the issues and thus the relevance of the material. 64 Having now considered the objections of Hexal and Alphapharm, I am of the view that these paragraphs should be allowed on the basis that they are evidence of the factors taken into account by Mr Nadjarian estimating the likely effect on Roche, rather than as evidence of the truth of the assertions themselves. 65 Hexal submitted that Roche failed to establish that it will suffer irreparable harm if the injunction is not granted and that any such harm would not be adequately remedied by damages. Ms Howard argued that the only potential loss identified by Roche is purely financial and inherently quantifiable. Reference was also made to the fact that at present Roche has 100% of the relevant market. As a result, any loss in market share from the activities of Hexal would be easily identifiable. Further, while any losses incurred by Roche if the injunction was not granted might be significant, there is no difficulty in quantifying the losses. 66 To the contrary, Hexal submitted that any harm suffered by Hexal from the granting of an injunction is not easily quantifiable. For instance, it was argued that it is impossible to accurately predict what sales Hexal would have made of its Carvehexal product. A further consideration submitted by Ms Howard was that Hexal would suffer a substantial loss of business reputation and a potential loss of business opportunities. 67 Alphapharm contended that they have a meticulous record-keeping system in respect of pharmaceutical products it distributes. As such, if and when Alphapharm distributed Dilol, these systems would be applied to it. This would allow Alphapharm to easily and accurately quantify the revenue from any sales of Dilol. 68 Roche has not demonstrated that unless an injunction is granted it will suffer irreparable harm for which damages will not be adequate compensation. As Ashley J observed in AB Hassle v Pharmacia at 76-77, despite a tendency to treat this requirement as going to the balance of convenience, it is a separate element to be established: see Castlemaine per Mason ACJ at 153. 69 Hexal and Alphapharm have not disputed that, if interlocutory relief is refused, and the Patent is ultimately found to be valid, they will be liable for damages or an account of profits arising from their infringement of the Patent. They submit, however, that in these circumstances the loss suffered by Roche and any profits they might make would be comparatively easy to quantify. I accept this submission. If the Patent is found to be invalid or the infringement claim is unsuccessful, then Hexal and Alphapharm will have engaged in lawful conduct such that any loss suffered by Roche as a result of their incursion into the market would not be compensable. 70 In respect of Roche's submission that Hexal and Alphapharm would benefit from Roche's investment in promotion and marketing activities in relation to Dilatrend, I do not accept that this demonstrates that the potential harm suffered by Roche could not be adequately compensated by damages or that any harm would be irreparable. As set out immediately above, if the Patent is found to be invalid or the infringement claim is unsuccessful, then Hexal and Alphapharm will have engaged in lawful conduct and any dilution of the investment made by Roche would be irrelevant. However, if Hexal and Alphapharm fail to have the Patent revoked and are found to have infringed the valid Patent, then Roche would continue to have its statutory monopoly. As such, any potential dilution of the investment made by Roche would be, in my view, essentially negligible as Roche would 'regain' the monopoly on the market.

[25]

Balance of convenience 71 In relation to Hexal, Mr Nicholas submitted that Hexal had begun the process of registering Carvehexal with the TGA and preparing itself for PBS listing with 'its eyes wide open'. Counsel referred the Court to Hexal's attempt to negotiate a licence from Roche in respect of the Patent on the basis that overseas the same patents had been revoked and Hexal expected the same to happen in Australia. Mr Nicholas also referred to the fact that Hexal has been on notice of the Patent since at least October 2003, yet only in June 2005 did it take steps to challenge the validity of the Patent. 72 In relation to Alphapharm, Mr Nicholas submitted there was no evidence to suggest that it would suffer any significant disruption to existing plans or existing business relationships. Reference was made to affidavit of Patricia Lai Kwon. 73 Counsel for Roche submitted that the status quo should be maintained. The evidence before me shows that although Hexal and Alphapharm have taken certain steps preparatory to having their products listed on the PBS, they have not so far, engaged in the selling of their products. Mr Nicholas submitted that claims about disruption to Hexal's present arrangements are undermined by the lack of any clear evidence as to what these arrangements are. It was further submitted that Hexal, in beginning the process of PBS listing and TGA approval, had acted prematurely with a full appreciation of the risks involved, in that they were aware a dispute would arise in relation to the Patent. Mr Nicholas compared the situation in relation to Hexal to that considered by Burchett J in Tidy Tea. 74 Mr Nicholas also submitted that given an April 2006 hearing date was achievable from the Court's perspective, this was a significant consideration for the Court and minimised any disadvantage that might arise from granting the injunctions and maintaining the status quo. This was not a case, he submitted, that would allow for any interlocutory injunction to drag out for years. 75 While submitting that it was unnecessary to consider the balance of convenience in light of the weakness of Roche's case, Hexel and Alphapharm nevertheless contended that if the balance of convenience were to be considered the weakness, or at least lack of relative strength, in Roche's case was a relevant factor: see Tidy Tea per Burchett J at 416. In the present case, the case for invalidity was so strong, at least according to Hexal and Alphapharm, that the Court should on this basis alone refuse to exercise its discretion to grant the interlocutory relief sought by Roche. To grant the relief sought by Roche would allow Roche to use their rights in respect of the Patent to cause serious harm to Hexal, despite the fact that the Patent is manifestly invalid. This was said to be contrary to the purpose of interlocutory relief, which is to achieve justice between the parties in the circumstances of the particular case: see Appleton Papers Inc v Tomasetti Paper Pty Ltd (1983) 3 NSWLR 208 per McLelland J at 216. 76 Counsel for Hexal and Alphapharm also contended that the public interest was a relevant consideration. This entailed consideration of the public interest against the assertion of invalid patent rights and the public interest in having access to cheaper medicines, a probable result of the entry of Hexal and Alphapharm to the market.

Hexal Australia Pty Ltd v Roche Therapeutics Inc

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