Merck Sharp & Dohme Corporation v Wyeth LLC

Federal Court of Australia|2019-08-30|Before: Burley J

Leave is granted to the applicants to issue a Notice to Produce on the respondent, returnable at 9.30am on 11 September 2019, requiring production of the following: (a) Any documents created on or before 13 November 2017 recording consideration of whether to, and/or the basis for the decision not to, allege infringement by the applicants in Australia of the surfactant claims; (b) Any documents created after 13 November 2017 recording consideration of whether to seek to allege infringement by the applicants in Australia of claim 9 and/or to file the Interlocutory Application on 25 June 2019; (c) All documents (including but not limited to file notes and memoranda) recording or evidencing: (i) the communication between Mr Hamer and Ms Reddy referred to in paragraph 14 of the affidavit of Richard William Hamer sworn 13 August 2019 (Hamer 2); (ii) communications between Ms Reddy and the external service provider after March 2018 in relation to the formulation of the applicants' 15 valent vaccine (referred to in paragraph 14(c) of Hamer 2).
To the extent necessary, compliance pursuant to r 30.28(3) of the Federal Court Rules 2011 (Cth) is dispensed with in relation to the Notice to Produce dated 19 August 2019 issued by the applicants.
Compliance pursuant to r 30.28(3) of the Federal Court Rules 2011 (Cth) is dispensed with in relation to the Notice to Produce issued by the respondent in an amended form and annexed to its submissions dated 20 August 2019.
The respondent pay the applicants' costs of both the respondent's interlocutory application dated 13 August 2019, and the applicants' interlocutory application dated 20 August 2019. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE EVIDENCE 5 On 25 June 2019, Wyeth, which is owned by Pfizer Inc, a company within the Pfizer group of companies, filed its amendment application, together with an affidavit sworn by Richard William Hamer sworn on 23 July 2019, who is a partner of Allens and the solicitor on the record for Wyeth. 6 Mr Hamer explains how, by the time of the trial in December 2018, Wyeth came to sue Merck for infringement of some of the claims of the container patent, but not claims 9, 10 or 11, that are for an invention for a vaccine incorporating a surfactant (surfactant claims). In summary, the affidavit addresses the following matters. (1) Since the commencement of the proceedings and until 18 February 2018, Allens was instructed in relation to the proceedings by Mr Louis Silvestri, Assistant General Counsel, and Mr Shahan Islam, Senior Corporate Counsel, from Pfizer. Mr Silvestri was, and Mr Islam continues to be in the "IP Enforcement group" at Pfizer. (2) On 13 November 2017, Wyeth filed its cross-claim alleging that Merck had threatened to infringe claims 1 - 8, 16 - 18 and 20 - 23 of the container patent. (3) Wyeth did not allege that Merck had threatened to infringe the surfactant claims, because in Mr Hamer's opinion, there was no adequate basis to make such an allegation. He says at [17]: The state of my knowledge, the state of Pfizer's knowledge, and the reason for my conclusion that there was no proper basis to allege that [Merck] had threatened to infringe any of the surfactant claims, is described in more detail below. (4) Mr Hamer then identifies a number of documents that he had read before 13 November 2017. These include Australian Patent No. 2011216095, published on 18 August 2011 (MSD 2011), and International Patent Publication No. WO2012/078482, published on 14 June 2012 (MSD 2012), a book entitled "Plotkin's Vaccines" (7th ed), published in 2017, and an article published in 2011 by Skinner et al. (5) On the basis of these materials, Mr Hamer considered that he could not, consistently with his professional obligations including under r 16.01 of the Federal Court Rules 2011 (Cth) (FCR), certify that there was a proper basis upon which to allege that Merck had threatened to infringe the surfactant claims. (6) He then describes the course of requests for discovery, and admissions made by Merck that obviated the need for the provision during the course of the proceedings of any documents going to the excipients used in Merck's proposed vaccine. (7) Mr Hamer notes that on 12 October 2018, Merck abandoned its challenge to the validity of the surfactant claims, which he considered was "not inconsistent" with his conclusion as to the absence of surfactant in Merck's proposed vaccine. (8) After the trial, on 14 March 2019, Mr Hamer became aware of an article by Stacey et al, but he did not read it then. The article was first published online on 16 January 2019. (9) On 13 May 2019, Merck commenced proceedings NSD 774 of 2019 against Pfizer, seeking orders for the revocation of a further patent, No. 2015208821. On 12 June 2019, in the course of considering that patent, Mr Hamer read Stacey et al, which refers to a phase II clinical trial conducted by Merck prior to 7 June 2018, in which the two formulations of a 15-valent pneumococcal conjugate vaccine (PCV) containing certain CRM 197 conjugates each included a surfactant, the presence of which may be important to the immunogenicity of the PCV. (10) Mr Hamer then considered that there was a proper basis to allege that Merck proposed to make and sell a product that infringed claim 9 of the container patent. Allens wrote to the solicitors for Merck, Corrs Chambers Westgarth, seeking confirmation as to whether Merck's proposed vaccine includes a surfactant, and undertakings not to infringe. Information and undertakings were not forthcoming, and on 25 June 2019 Wyeth filed the amendment application. (11) In the exchange of correspondence with Allens that followed, Corrs indicated that it would resist the application, and drew attention to certain documents that it contends should have alerted Wyeth to the use of a surfactant in Merck's proposed vaccine, one of which is a document identified as the MSD Protocol which Corrs said had been published on a US government website on 16 March 2018. Page 19 of the MSD Protocol identifies the use of a surfactant within the vaccine formulations used in a study, identified as study V114-005, sponsored by Merck Corporation. Mr Hamer gives evidence that he first became aware of the MSD Protocol on 25 June 2019, and on 17 July 2019, he searched the website, and discovered that the MSD Protocol was hyperlinked to the page containing study V114-005, but that the study entry on the website does not mention the excipients used in the vaccine formulations the subject of the study. (12) Corrs also supplied Mr Hamer with a copy of a patent application referred to as the 098 application, a patent that fell within the family of MSD 2012 which Mr Hamer considered before preparing Wyeth's cross-claim. 7 After addressing his own knowledge, at [62] of his affidavit Mr Hamer gave the following evidence concerning the knowledge of Pfizer: On 23 July 2019, I had a telephone conversation with Mr Islam, who informed me of the matters in sub-paragraphs (a) to (e) below: (a) The IP Enforcement group at Pfizer is responsible for the management of court proceedings relating to the Pfizer group families of patents relating to pneumococcal conjugate vaccines, including the Proceedings. (b) At all relevant times, no person within the Pfizer group (apart from persons with administrative roles) was required to report to Mr Islam. (c) At all relevant times, Mr Islam intended that Wyeth should assert infringement of each claim of the Container Patent for which there as a proper basis to assert infringement, and he relied on Allens to determine what claims of the Container Patent could be properly asserted under Australian law. (d) Mr Islam did not become, and, as far as he is aware, no member of the IP Enforcement group at Pfizer became, aware of the Stacey [et al] article until after the conclusion of the trial of the Proceedings in February 2019. (e) Mr Islam first became aware of the MSD Protocol in June 2019. 8 Odette Margaret Gourley, a partner at Corrs and the solicitor on the record for Merck, responds to the evidence of Mr Hamer in an affidavit sworn on 6 August 2019. The details of her response are presently immaterial save for the following: (1) When Wyeth served its cross-claim, she observed that it had made a selection of the claims that it asserted that Merck threatened to infringe, and that the surfactant claims were not included. She says at [14]: The basis for the selection was not clear to me, but I was not aware of anything to suggest that the decision as to which claims to assert was anything other than an informed one based on strategic and forensic considerations. (2) Wyeth did not, at the time when Merck deleted the surfactant claims from its invalidity challenge, ask whether or not Merck's proposed vaccine included a surfactant. (3) MSD 2011 and MSD 2012 both mention the use of surfactants, and the MSD 2012 application, which has lapsed, includes claims for formulations containing surfactants. (4) Other Merck patents and patent applications published in the period from August 2018 to February 2019 relating to Merck's proposed vaccine contain formulations include surfactants. (5) In the pharmaceutical industry, it is routine for companies to monitor patent publications of their major competitors as a matter of course, and that either Wyeth, Allens, or a patent attorney firm is likely to have regularly monitored patent filings in relation to Merck's proposed vaccine. Furthermore, Allens patent attorneys were aware of MSD 2012 because it was a citation against the patent in suit in the NSD 774 of 2019 proceedings. (6) As acknowledged by Mr Hamer, the MSD Protocol included reference to a surfactant used in formulations for Merck's proposed vaccine, and could be accessed via the website. (7) In inter partes review proceedings in the United States, Wyeth alleged that Merck Corporation had copied the invention contained in the US equivalent of the container patent, relying on the US equivalent of MSD 2012, including the fact that it includes a surfactant. (8) In Canadian proceedings commenced on 3 August 2017, Merck Corporation and Merck Canada Inc. challenged the validity of three of Wyeth's Canadian patents, one of which includes a surfactant within all of its claims. As part of those proceedings, the plaintiffs state in their statement of claim that they have a "reasonable basis to believe that the manufacture, use and/or sale of V114 [Merck's proposed vaccine] in Canada will be impugned by the Defendant as an infringement of [that patent]". (9) In the United Kingdom on 21 March 2019, Wyeth sued Merck Sharp & Dohme Limited for infringement of the UK equivalent of the container patent, alleging infringement of claims including a surfactant. 9 The affidavit of Ms Gourley goes on to refer to various aspects of the prejudice that she considers it likely that Wyeth will suffer in the event that the amendments sought are permitted. 10 Mr Hamer filed an affidavit in reply, sworn on 13 August 2019, contesting a number of points made by Ms Gourley. It includes evidence that he is informed by Sneha Reddy, the Senior Director/Team Lead of "Global Commercial Development - Prevenar 13 Pediatrics" at Pfizer, who is responsible for monitoring competitor intelligence in relation to Prevenar 13, that: (a) she was not aware of the MSD Protocol prior to June 2019; (b) Pfizer engages and has since before March 2018 engaged an external service provider to undertake competitor research for it ; and (c) after undertaking searches and inquiries, she has located no information received by, or provided to Pfizer prior to June 2019 from that external service provider, which includes or refers to the MSD protocol.

THE NOTICES TO PRODUCE 11 Merck's Notice to Produce, omitting formal parts, seeks production of documents in the following form:
1. All documents (including but not limited to communications between Mr Hamer and Mr Silvestri and/or Mr Islam) created on or before 13 November 2017 evidencing or recording consideration of whether to, and/or the basis for the decision not to, allege infringement by MSD in Australia of the surfactant claims (referred to in the affidavit of Richard Hamer sworn 23 July 2019 (Hamer) paragraph 17).
2. All documents (including but not limited to communications between Mr Hamer and Mr Silvestri and/or Mr Islam) created after 13 November 2017 evidencing or recording consideration of whether to seek to allege infringement by MSD in Australia of claim 9 and/or to file the Interlocutory Application on 25 June 2019 (referred to in Hamer paragraphs 45-47).
3. All documents (including but not limited to communications between Mr Hamer and Mr Silvestri and/or Mr Islam) created on or before 25 June 2019 recording or evidencing the monitoring of the development of MSD's 15 valent vaccine by Wyeth/Pfizer and/or Allens (whether the legal firm or the patent attorney firm).
4. All documents (including but not limited to file notes and memoranda) recording or evidencing: (a) the discussion between Mr Hamer and Mr Islam referred to in Hamer paragraph 62; (b) any previous or subsequent discussions between Mr Hamer or another representative of Allens and Mr Islam or another representative of Pfizer/Wyeth relating to the matters referred to in Hamer paragraphs 62; and (c) consideration of the matters to refer to in Wyeth's evidence on the IA with respect to Pfizer/Wyeth's knowledge concerning whether MSD's 15-valent vaccine contains a surfactant.
5. All documents (including but not limited to file notes and memoranda) recording or evidencing: (a) the communication between Mr Hamer and Ms Reddy referred to in paragraph 14 of the affidavit of Richard William Hamer sworn 13 August 2019 (Hamer 2). (b) communications between Ms Reddy and the external service provider after March 2018 in relation to the formulation of the MSD 15 valent vaccine (referred to in paragraph 14(c) of Hamer 2). 12 Wyeth's Notice to Produce, in its amended form annexed to Wyeth's submissions dated 20 August 2019, with formal parts omitted, is as follows:
6. [Not used].
7. Any legal advice provided on or before 11 December 2017 by MSD's external Australian legal advisors to MSD recording MSD's ability to resist or avoid providing discovery of documents disclosing the composition of the MSD Vaccine, if MSD made the admission in paragraph 12(d)(ii) to MSD's Defence to the Respondent's Statement of Cross-claim.
8. Any legal advice provided on or before 12 October 2018 by MSD's external Australian legal advisors to MSD recording the risks and/or consequences of MSD abandoning its challenge to the validity of any of claims 9 to 11 of the Container Patent in the proposed Second Further Amended Consolidated Statement of Claim by reference to the MSD Vaccine containing surfactant.
9. Any legal advice provided on or before 12 October 2018 by MSD's external Australian legal advisors to MSD recording MSD's ability to assert against the REs one or more of Anshun estoppel, issue estoppel, respondent judicata or abuse of process in respect of any claim for infringement of any of claims 9 to 11 of the Container Patent brought by the Respondent regarding the MSD vaccine containing surfactant, whether in these or future proceedings.
10. Any instructions to MSD external Australian legal advisors indicating MSD was willing to provide information to the Respondent regarding the composition of the MSD Vaccine other than: the Supplied Information; and the information disclosed by means of the admissions made in MSD's defence to the Respondent's Statement of Cross-claim.

THE MERCK NOTICE TO PRODUCE 13 Wyeth, who is represented by Ms Cynthia Cochrane leading Mr Rob Clarke of counsel, contends that there are three reasons why the Court should dispense with compliance with Merck's Notice. First, because Merck's Notice seeks productions of general categories, not documents in accordance with FCR 30.28(1), citing Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2) [2012] FCA 707 at [5] (Jessup J). Secondly, because in many respects the documents sought would benefit from legal professional privilege, which is a basis for rejecting the production, citing Deep Investments Pty Ltd v Casey (No 1) [2017] FCA 1643 at [12] (Gleeson J). Thirdly, because the categories of documents sought are predicated on the assumption that documents exist which would show that Mr Hamer's evidence is false as to the matters to which he had regard in concluding not to allege infringement of claim 9. There is no basis provided by Merck for such an assumption, with the result that the categories amount to no more than fishing, citing Deep Investments at [24] - [25] and other authorities. 14 Merck is represented by Ms Katrina Howard SC leading Mr David Larish of counsel. It presses for production of the documents. It submits that the documents sought are relevant, that Mr Hamer has, or is likely to have waived legal professional privilege in them, and that the form of the Notice to Produce is appropriate. 15 I emphasise that the present issue is not the grant or refusal of the amendment application, but whether or not Wyeth should be excused from compliance with FCR 30.28(1). Nothing I say below is to be understood otherwise. For the reasons set out below, Wyeth should not be excused from compliance. 16 FCR 30.28 provides relevantly: (1) A party may serve on another party a notice, in accordance with Form 61, requiring the party served to produce any document or thing in the party's control: (a) at any trial or hearing in the proceeding; or (b) at any hearing before a Registrar or any examiner or other person having authority to take evidence in the proceeding. … (3) If a notice under subrule (1) specifies a date for production, and is served 5 days or more before that date, the party served with the notice must produce the document or thing in accordance with the notice, without the need for a subpoena for production. 17 Category 1 seeks production by Wyeth of documents, created on or before 13 November 2017, evidencing consideration of whether to allege that Merck infringed the surfactant claims. Category 2 seeks production of documents created after that date evidencing consideration of whether to allege that Merck infringed claim 9, and also documents going to the consideration of whether or not to file the amendment application. 18 The amendment application will be considered having regard to principles relevant to the grant of leave to amend pleadings, and the grant of leave to re-open evidence after the conclusion of a trial. Included within the relevant matters is consideration of the explanation offered by Wyeth for the delay; AON Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175 at [102] - [103] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). Mr Hamer's affidavits address this issue by explaining his thought processes and contending, in effect, that his mind was that of Wyeth's/Pfizer's from the time that the infringement proceedings commenced in November 2017, until the filing of the current amendment application, when his view changed having regard to the content of Stacey et al. 19 Merck correctly points out that that it is not only the knowledge of Mr Hamer that is relevant, but that of his client. The client may very well know of matters relevant to the explanation for delay which are not known by the lawyers; Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2; 332 ALR 199 at [155] (Gilmour, Perram and Beach JJ). Merck wishes to explore the extent to which Mr Hamer communicated his thoughts concerning suit on claim 9 to Wyeth, and the state of knowledge of Wyeth at various relevant points of time, including from the time after 2017 when the Canadian proceedings were commenced, after the MSD protocol was published in March 2018, and after January 2019 when Stacey et al was publicly available. Having regard to the evidence in the current application, including that which I have surveyed above at [6] - [10], it does not appear to me that Merck is merely casting around for documents in a manner that is pejoratively referred to as fishing. 20 Furthermore, whilst this application is not the place to resolve any potential claim for privilege, the position is somewhat removed from that in Deep Investments where production was sought of documents that were manifestly privileged, and where the Court had made a positive finding that privilege had not been waived. It is by no means improbable that any claim for legal professional privilege over documents produced will have been waived in this case. In this regard, the observations of Bennett J in Apotex Pty Ltd (ACN 096 916 148) v Les Laboratoires Servier [2008] FCA 1466 at [19] - [22] are apposite, although the production of documents sought in that case concerned an application under the Patents Act 1990 (Cth) for the amendment of claims of a patent: [19] It must be accepted that the application to amend was made with instructions from Servier. Accordingly, Servier intentionally presented Mr Hamer's affidavits and evidence as evidence of its reasons for making that application. In effect, Servier has disclosed the legal advice of Mr Hamer by presenting that advice as the totality of its reasons for seeking amendment. It is then inconsistent with that presentation to claim legal professional privilege with respect to the communications between Servier and Mr Hamer concerning Mr Hamer's opinion, Servier's instructions, the application for amendment and Servier's reasons for making it (Mann at [34]). ... [21] Further, as Apotex is entitled to challenge Servier's reasons, there is an element of unfairness in Servier proffering only Mr Hamer's reasons as its own and maintaining the confidentiality in the link between them. Apotex is deprived of the opportunity to explore Servier's reasons, for example to ascertain whether or not they are coextensive with those of Mr Hamer. [22] Mr Hamer's evidence concerns his reasons for seeking amendment of the Alpha Crystalline Patent. That is the evidence of Servier's reasons for seeking amendment. Servier has waived privilege on the issues of Mr Hamer's reasons for seeking amendment and advice to and instructions from Servier on that subject. 21 In my view, it is not appropriate to grant relief from compliance with paragraphs 1 and 2 of Merck's Notice, although they should be amended to take the following form: (1) Any documents created on or before 13 November 2017 recording consideration of whether to, and/or the basis for the decision not to, allege infringement by MSD in Australia of the surfactant claims. (2) Any documents created after 13 November 2017 recording consideration of whether to seek to allege infringement by MSD in Australia of claim 9 and/or to file the Interlocutory Application on 25 June 2019. 22 In my view, paragraph 3 of Merck's Notice is simply too broad, whether characterised as a request as a category for discovery or a Notice to Produce. I excuse Wyeth from compliance. 23 During the course of argument, Merck accepted that paragraph 4 of its Notice overlapped with paragraphs 1 and 2. In my view it is unduly repetitive. I excuse Wyeth from compliance with that paragraph. 24 Paragraph 5 does not suffer from that vice, and I do not excuse compliance in respect of that paragraph.

THE WYETH NOTICE TO PRODUCE 25 In written submissions provided the day before the hearing, Wyeth proffered an amended Notice to Produce to avoid the criticism that the paragraphs sought production of a type more aptly described as categories of discovery, in the form set out in [12] above. Merck contends that the remaining four paragraphs suffer from similar vices to those voiced by Wyeth in relation to Merck's Notice. Wyeth responds by submitting that the documents are sought because, if Merck later alleges in its response to the amendment application that Wyeth never asked it whether its formulation included surfactant, then it will become relevant to understand whether or not Merck would have disclosed the surfactant in response to such a query. To that end, paragraph 2 seeks documents that Wyeth alleges would show that Merck's admissions in its defence to the Cross-claim were made to avoid having to give discovery, due to Merck not wanting to reveal the presence of a surfactant. Furthermore, paragraphs 3 and 4 are said to challenge any contention made by Merck that it suffers prejudice, on the basis that any prejudice suffered by Merck by reason of the amendment is of its own making. 26 I am satisfied that it is appropriate to excuse Merck from compliance with all of the paragraphs of Wyeth's Notice. 27 Paragraph 2 seeks documents to address the hypothetical position that if Wyeth had asked Merck before 11 December 2017 for discovery, Merck would have resisted. It seeks legal advice given (if any) concerning that subject. Paragraph 5 concerns a similar hypothetical. Both are speculative requests. The enquiry as to whether the amendment application should be allowed focusses attention on the conduct of Wyeth leading up to its decision to seek to amend. Documents concerning what Merck may have done, had certain requests been made of it (which were not), and what advice may have been given against that prospect, are not sufficiently relevant to require production. Furthermore, the documents sought are plainly privileged. Unlike the position in relation to Merck's Notice, the prospect of privilege being waived is in my view remote having regard to [14] and [23] of Ms Gourley's affidavit, upon which Wyeth relies as the basis for a submission that any asserted privilege has been waived. In my view, the request in paragraphs 3 and 4 that Merck give production of documents as to the external legal advice it received concerning its decision in 2018 to abandon a challenge to the surfactant claims is yet further removed from the issue, and also most probably the subject of legal professional privilege.

DISPOSITION 28 I will grant leave to Merck to issue a Notice to Produce to Wyeth returnable in the Registrar's list at 9.30am on 11 September 2019, requiring production of the following: (1) Any documents created on or before 13 November 2017 recording consideration of whether to, and/or the basis for the decision not to, allege infringement by MSD in Australia of the surfactant claims; (2) Any documents created after 13 November 2017 recording consideration of whether to seek to allege infringement by MSD in Australia of claim 9 and/or to file the Interlocutory Application on 25 June 2019; (3) All documents (including but not limited to file notes and memoranda) recording or evidencing: (a) the communication between Mr Hamer and Ms Reddy referred to in paragraph 14 of the affidavit of Richard William Hamer sworn 13 August 2019 (Hamer 2); (b) communications between Ms Reddy and the external service provider after March 2018 in relation to the formulation of the MSD 15 valent vaccine (referred to in paragraph 14(c) of Hamer 2). 29 To the extent necessary, I will order that compliance with FCR 30.28(3) otherwise be dispensed with in relation to Merck's Notice. 30 I will order that compliance with FCR 30.28(3) be dispensed with in relation to Wyeth's Notice to Produce. 31 Wyeth should pay Merck's costs of both interlocutory applications. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Burley.

Federal Court Rules 2011(Cth)rr 16.01, 30.28

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