Conclusion: BALANCE OF CONVENIENCE
131 I am persuaded that the balance of convenience is against granting the interim injunctive relief that Mylan seeks.
132 I accept the likelihood that, if generic fenofibrate pharmaceutical products enter the market and displace LIPIDIL's present monopoly position, Mylan will suffer a significant loss of revenue, and a significant loss of market share with its own flow-on effects for Mylan's revenue. I accept that, once the state of the present market is altered by generic supply, there is a significant likelihood that the price-effects of that supply will not be reversed should Mylan ultimately be successful in its appeal and secure the blanket injunctive relief it seeks. However, the possibility of Mylan securing final injunctive relief must be gauged in light of the matters I have discussed above when dealing with the nature of the appeal that is to be brought.
133 I accept the possibility that any significant loss of revenue may have other consequences for Mylan's business. I accept, for example, that there may be an adverse impact on the extent to which Mylan can financially support its current education and awareness programs, although I do not think that the evidence provides much guidance on that matter. I accept the possibility that cutting back or withdrawing altogether these programs may have some adverse reputational consequences for Mylan, although I find it difficult to accept that, faced with new market entry and new market dynamics, Mylan would not seek to actively market and support LIPIDIL and its own generic fenofibrate product against new competition.
134 I also accept that it is possible that a significant reduction in revenue will have other consequences for Mylan's business of the kind foreshadowed in Mylan's submissions.
135 Further, I accept that, even though the Ranbaxy Products and the Cipla products are not registered on the ARTG for the treatment and/or prevention of diabetic retinopathy, it is possible that there will be supply of those products for those indications. The primary judge found as much when dealing with the question arising under s 117(2)(b) of the Patents Act in respect of the method of treatment claims in the 711 patent: see at [117] - [119].
136 I accept that, if Mylan is ultimately successful in its appeal and the question of damages for infringement arises for consideration, there may be difficulties in calculating damages of the kind to which Mylan referred in submissions. I accept that these difficulties may include the kind of difficulties in estimating forward-looking losses to which I referred in Novartis. I do not accept, however, that these difficulties are such that it can be said that damages are incapable of proper assessment and will not provide a proper and adequate remedy to compensate Mylan for the losses it might suffer.
137 The most compelling reason for the conclusion to which I have come is the difficulty, complexity and uncertainty involved in assessing compensation under an undertaking as to damages given in patent infringement proceedings involving the supply of pharmaceutical products in the Australian market. I accept that the recent experience of the Court has demonstrated that, whatever general views might have been held in the past about the difficulty of that task compared with the task of assessing damages for infringement, the calculation of compensation under an undertaking as to damages can impose burdens and raise uncertainties that are far greater than the burdens and uncertainties involved in assessing damages for infringement. The differential nature of these burdens and uncertainties is captured by Jagot J's observations in Sigma and Lundbeck, which I have quoted above. Mylan sought to distinguish Sigma from the present case on the basis that the present case seeks interim injunctive relief pending the determination of an appeal and after the supply of the Ranbaxy Products has already been restrained. Mylan's arguments do not, however, meet the point that Jagot J was making in Sigma and, indeed, in Lundbeck. Her Honour's observations in Sigma reflect my own view as to the likely difficulty, complexity and uncertainty that would be involved in assessing compensation under an undertaking as to damages in the present case.
138 To elaborate: on the evidence presently before me, the likely state of the market, absent the interim injunctive relief sought, is far from clear. I say this particularly bearing in mind the state of the registrations for fenofibrate on the ARTG and the evidence given in cross-examination by Mr Vigneault. What is clear is that, if interim injunctive relief is granted and Mylan's appeal fails, the task of assessing compensation would likely involve the consideration of multiple counterfactual cases advanced by multiple claimants, including (I can anticipate) the Commonwealth, each seeking to hypothesise what the market would have been like had interim injunctive relief not been granted. In its submissions, Cipla exemplified some of the variables likely to be involved in the different counterfactuals, such as:
(a) the nature of fenofibrate and how readily prescribers and patients might accept brand substitution;
(b) the value of the medicine to pharmacists and whether they could be incentivised sufficiently to stock multiple brands to facilitate substitution;
(c) the identification of the generic products that should be taken as entering the market and whether those products would enter the private script market or the PBS market, or possibly both (take, for example, Sun Pharma's intentions);
(d) the role that authorised generic products might play in shaping the market overall;
(e) the time when various generics should be taken as having entered the market; and
(f) the hypothetical sales strategies and capabilities of different suppliers to capture market share through competitive offerings, not just involving price (such as bundling and the like).
139 The simple point is that the particular difficulty, complexity and uncertainty involved in assessing compensation under an undertaking as to damages in the present case will not be present in an assessment of damages for infringement because, in assessing damages for infringement, the state of the market before generic entry, and at the time damages would come to be assessed, would be known and need not be hypothesised.
140 As to Mylan's contention that the difficulties in assessing compensation have already been realised in Sun Pharma's case, I do not, with respect, see this as a particularly persuasive reason to, in effect, continue the interim relief previously granted when circumstances now point persuasively against granting that relief. In this connection, I should record that the pre-trial interim injunctive relief was granted on consent orders, without any finding as to the balance of convenience.
141 I note that in Otsuka Pharmaceuticals Co., Ltd v Generic Health Pty Ltd [2015] FCA 848 where, pending the hearing and determination of an appeal, a stay was granted of an order discharging the interim injunctive relief that had previously been granted, the consideration which Mylan advances found favour with Nicholas J. But there were also other factors that supported the granting of interim injunctive relief in that case which are not present in the instant case. Further, in the instant case, Cipla has not been adversely affected by the interim injunctive relief that was granted against Sun Pharma. There is, therefore, no realised burden so far as it is concerned.
142 Having reached the views expressed and explained at [137] - [141] above, I do not propose to set out, in these reasons, a detailed analysis of each and every other submission that was advanced by the parties in the course of the hearing. I do, however, wish to comment on the following submissions.
143 First, contrary to Sun Pharma's submission, I do not accept that there has been delay on Mylan's part that would disentitle it to the relief it now seeks. I am satisfied that it has proceeded with due expedition. The fact that Mylan would seek interim injunctive relief to protect its commercial position pending the determination of its appeal was known by Sun Pharma shortly after judgment was given by the primary judge on 22 January 2019. On 28 January 2019, Mylan's solicitors wrote to Sun Pharma's solicitors seeking an undertaking from Sun Pharma that it not launch the Ranbaxy Products before the determination of the appeal that Mylan said it would commence. On 30 January 2019, Sun Pharma's solicitors responded, stating that Sun Pharma would not give the undertaking and that Sun Pharma had commenced all necessary activities to enable it to launch and commence supplying the Ranbaxy Products. Thus, Sun Pharma's recent commercial activities directed to commencing supply of the Ranbaxy Products have been undertaken with a full awareness of Mylan's intentions to seek interim injunctive relief.
144 Secondly, contrary to Mylan's submission, I do not accept that the "first mover" advantage is illusory on the facts of this matter. Much of that advantage may have been eroded by the passage of time since the granting of interim injunctive relief on 4 May 2016. However, on the evidence before me there is a real possibility that Sun Pharma can still realise that advantage, albeit on a more limited basis than might otherwise have been the case. I accept that, if interim injunctive relief is granted now, that advantage will likely disappear completely.
145 Thirdly, I accept that there is likely to be some advantage to Cipla in being an early mover in the market for generic fenofibrate pharmaceutical products. This advantage is not as pronounced as Sun Pharma's "first mover" advantage, but this does not mean that it is not commercially valuable to Cipla and not equally worthy of protection.
146 The preservation, to the extent possible, of Sun Pharma's possible "first mover" advantage, and Cipla's possible early mover advantage, must be seen in the context that there has been a full hearing on the validity of the relevant claims of the 711 patent and the 807 patent, and those claims have been found to be invalid. So too must the interests of other third parties, such as other potential suppliers of generic fenofibrate products and the Commonwealth in relation to its operation of the PBS.
147 Finally, in reaching my view as to where the balance of convenience lies, I have taken into account my assessment of the appeal which is to be brought, bearing in mind, in particular, the observations I have made at [82] and [94] above.