Novartis AG v Pharmacor Pty Limited

1. The application for leave to appeal be refused.
2. The applicants pay the respondent's costs of the application for leave to appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

YATES AND MOSHINSKY JJ: 1 This is an application for leave to appeal from a decision of the primary judge on a matter of practice and procedure. The application for leave to appeal was heard together with the appeal (if leave were granted). At the conclusion of the hearing, after a short adjournment, the Full Court announced its decision and made orders that the application for leave to appeal be refused, and that the applicants pay the respondent's costs of the application for leave to appeal. The Court indicated that reasons would be published in due course. The following are our reasons for joining in the orders. 2 In the proceeding at first instance, the respondent (Pharmacor) filed a cross-claim seeking the revocation of the two patents in suit (the Patents). Broadly, the claims in the Patents are addressed to, or include, a method of treating relapsing-remitting multiple sclerosis in which a daily dose of 0.5 mg of fingolimod is administered orally. In November 2021, Pharmacor filed its expert evidence in support of the cross-claim. This included an affidavit of one neurologist, Associate Professor John King. In February and March 2022, the applicants (Novartis) filed their expert evidence in response. This included affidavits of four neurologists: Professor Michael Barnett; Professor Gavin Giovannoni; Professor Fred Lublin; and Professor Pamela McCombe. Pharmacor objected to Novartis calling four neurologists and applied to the primary judge for an order under r 5.04, item 16 of the Federal Court Rules 2011. Rule 5.04(1) provides that, at any hearing, the Court "may make directions for the management, conduct and hearing of a proceeding". Rule 5.04(3) provides that, without limiting subrule (1), the Court may make a direction mentioned in the table. Item 16 of the table is a direction in relation to "[t]he number of expert witnesses to be called". 3 The matter was listed for a case management hearing before the primary judge, who is the docket judge for the matter. The parties filed brief outlines of submissions in advance of the hearing. The case management hearing took place on 18 March 2022. The transcript of that hearing was before the Full Court. On the premise that the applicants' main neurological expert witness was Professor Barnett, the primary judge ruled, in summary, that the evidence of Professor Giovannoni and Professor McCombe should be excluded, and that the evidence of Professor Lublin other than factual evidence (and associated background and contextual evidence) should be excluded. In relation to Professor Lublin's evidence, Novartis was given time to identify the parts of his evidence to be excluded on the basis of the view expressed by the primary judge. During the hearing, Novartis requested reasons for the primary judge's ruling, and the primary judge said that the reasons were in the transcript (T41). On 22 March 2022, the primary judge made orders including the following: 1. The Applicants are not permitted to rely at trial on the affidavit of Professor Giovannoni affirmed on 4 March 2022 (Giovannoni Affidavit), the affidavit of Professor McCombe affirmed on 24 February 2022 (McCombe Affidavit), or the affidavit of Professor Lublin affirmed on 26 February 2022 (Lublin Affidavit), other than those parts of the Lublin Affidavit indicated by the Court at the case management conference on 18 March 2022 to be outside its rulings (Exempt Lublin Evidence). 4 On 22 March 2022, Novartis provided its proposed redactions of the Lublin affidavit to Pharmacor, and Pharmacor indicated that it did not disagree with the proposed redactions. The redacted version of the Lublin affidavit was then provided to the primary judge. The material before the Full Court includes a copy of the Lublin affidavit marked up to show the redacted portions. This shows that the following paragraphs were not excluded: paragraphs 6 to 21 (dealing with Professor Lublin's qualification and experience); paragraphs 56 to 69 (dealing with the Phase III fingolimod multiple sclerosis (MS) trials); and paragraphs 76 to 104 (relating to various matters, including doctors' scepticism about including the 0.5 mg dose in the Phase III trials, the trial results, and the FDA's involvement in relation to fingolimod research). The excluded parts of the affidavit are: substantially all of paragraphs 22 to 42 (dealing with clinical trials in general and MS clinical trials in particular); substantially all of paragraphs 43 to 55 (dealing with the fingolimod transplant trials and the Phase II fingolimod MS trial); and paragraphs 70 to 75 (dealing with certain Novartis press releases relied on by Pharmacor in its cross-claim, and other documents). 5 Novartis has applied for leave to appeal from paragraphs 1, 22, 23 and 24 of the orders made by the primary judge on 22 March 2022. Paragraphs 22, 23 and 24 deal with costs. In support of its application for leave to appeal, Novartis relies on an affidavit of John Collins, a partner of Clayton Utz, the solicitors acting for Novartis, dated 24 March 2022. In opposing the application, Pharmacor relies on an affidavit of Benjamin Miller, a partner of Maddocks Lawyers, the solicitors acting for Pharmacor, dated 29 March 2022. 6 Novartis has provided a draft notice of appeal. This contains three grounds, which are in substance as follows (omitting particulars): (a) the primary judge erred in finding that Novartis is not permitted to rely at trial on the affidavit of Professor Giovannoni and parts of the affidavit of Professor Lublin, on the ground that that evidence involved "overlapping witnesses" (T18-19) or, further or alternatively, "overlapping" or "doubling up" with the affidavit of Professor Barnett (T3, T41); (b) further or alternatively, to the extent (if at all) that it was open to the primary judge to find that any part of Professor Giovannoni's affidavit and the excluded parts of Professor Lublin's affidavit were "substantially duplicative" of other evidence filed by Novartis, or there was otherwise a discretionary basis available on which to make paragraph 1 of the primary judge's orders in respect of that evidence, then his Honour erred in finding (if his Honour did so find) that discretionary factors weighed in favour of making paragraph 1; and (c) further or alternatively, the primary judge erred in finding that Novartis not be permitted to rely at trial on the excluded parts of Professor Lublin's affidavit. 7 The principles applicable to an application for leave to appeal from an interlocutory decision are well established. In general, the tests to be applied are: (a) whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court; and (b) whether substantial injustice would result if leave were refused, supposing the decision to be wrong: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-400 per Sheppard, Burchett and Heerey JJ. 8 Novartis submits that the evidence the subject of paragraph 1 of the orders made on 22 March 2022 is not "substantially duplicative" of other evidence filed by Novartis in the proceeding. Novartis submits that the primary judge approached the exercise of power on the basis that differences in witnesses' background and expertise, and the actual content of their evidence, are not relevant considerations. 9 Novartis submits that the practical effect of the primary judge's order is to force Novartis to limit its defence of the cross-claim to one that only answers the case as framed by Pharmacor's evidence and witnesses, and to prevent Novartis from advancing any alternative positive case based on different material, supported by evidence of witnesses with materially different knowledge and backgrounds. 10 Novartis no longer seeks to rely on the affidavit of Professor McCombe that was excluded by the primary judge. It is therefore unnecessary to consider that affidavit. 11 Novartis makes the following submissions about the evidence of the other neurologists: (a) Professor Barnett is an Australian neurologist who had some involvement with a Phase III fingolimod clinical trial, but not with its Phase II trials or otherwise with fingolimod's clinical development before the priority date (which is in June 2006). He addresses a hypothetical "task" similar to that undertaken by Associate Professor King relating to the development of a new treatment for MS. (b) Professor Giovannoni is a Professor of Neurology in the United Kingdom, who also holds qualifications in pharmacy. He has extensive experience in clinical trials for MS therapies, including the use of animal models in pre-clinical studies, and participated in advisory board discussions with Novartis regarding fingolimod. Unlike Professor Barnett and Associate Professor King, he discusses a body of work published before the priority date reporting on studies of fingolimod in transplant patients (the Transplant Studies). His hypothetical "task" evidence responds to a narrower task than that addressed by Professor Barnett and Associate Professor King, because the task contains an assumption that fingolimod had been identified as a candidate by the research group. Professor Giovannoni had express regard to what he would have understood and taken from the Transplant Studies in the context of that task. (c) Professor Lublin is a Professor of Neurology in the United States. He has knowledge of US clinical trials, FDA processes, and was on advisory boards to Novartis before and after the priority date. He explains that he was likely provided with the Transplant Studies in one of his roles in the Phase II and III clinical advisory boards. He does not give evidence in relation to a hypothetical "task". 12 Novartis submits that the evidence described above (in particular that of Professor Giovannoni) is necessary to enable it to advance a different theory as to the notional skilled team (namely, one that includes a neurologist with the background and level of experience of Professor Giovannoni) and the hypothetical task (namely, the narrower question addressed by Professor Giovannoni). 13 It is convenient to deal first with the factual aspects of Professor Lublin's evidence. In its submissions to the primary judge, Novartis submitted that, to a large extent, Professor Lublin is a witness of fact. This was recognised by the primary judge in the order that he made, which did not exclude significant portions of Professor Lublin's evidence, on the basis that these portions were of a factual nature. In its oral submissions before the primary judge, Novartis indicated that the heart of Professor Lublin's factual evidence was paragraphs 56 to 69, which relate to the Phase III fingolimod MS trials (T31-32). The primary judge did not exclude this evidence. Further, the primary judge gave Novartis the opportunity to identify earlier parts of Professor Lublin's affidavit that should not be excluded, namely parts that dealt with Professor Lublin's qualifications and experience, and parts that gave "content" to his later evidence, including "if he needs to provide a personal explanation of some aspects of the clinical trials that inform or explain" the evidence at paragraphs 56 to 69 (T36, T49). As indicated above, following the case management hearing on 18 March 2022, Novartis prepared a redacted copy of Professor Lublin's affidavit that it considered reflected the view expressed by the primary judge at the hearing. Pharmacor did not disagree with the proposed redactions, and the redacted copy was provided to the primary judge. However, it appears to us that Novartis may have excised more than was necessary to give effect to the primary judge's view at the case management hearing. The redacted copy excises substantially all of paragraphs 22 to 55 of the affidavit. Arguably, at least, a good deal of this material is factual material of a background nature that is necessary to inform or explain the evidence at paragraphs 56 to 69. In our view, it would be open to Novartis to apply to the primary judge to have a substantial part of paragraphs 22 to 55 treated as necessary background and contextual material, and therefore not to be excluded. 14 We now turn to the evidence of Professor Giovannoni and the other parts of Professor Lublin's evidence. 15 Insofar as Novartis submits that this evidence is not substantially duplicative of Professor Barnett's evidence, we do not accept that submission. Each of the three experts has the title Professor of Neurology and has expertise in MS. Each: (a) discusses what was generally known regarding MS and clinical trials at the priority date; and (b) considers the Novartis media release dated 6 April 2006, the Medical News Today article dated 10 April 2006 and the Neurology Today article dated 16 May 2006 (the Articles), which are relevant to Pharmacor's obviousness/novelty case. Each of the experts expresses substantially the same opinions to the following effect: (a) that the Articles indicate that Novartis hoped the benefits of the 1.25 mg dose (rather than the 0.5 mg dose) would be confirmed in the Phase III clinical trial; (b) that the 0.5 mg dose would have been expected to have little or no clinical efficacy; and (c) that it would have been expected that the 0.5 mg dose was included in the Phase III clinical trial in order to better understand the dose-response relationship. 16 Both Professor Barnett and Professor Giovannoni were asked to respond to the whole of Associate Professor King's affidavit. 17 Both Professor Barnett and Professor Giovannoni were instructed to address a hypothetical "task": see Professor Barnett's affidavit, paragraph 66 and Professor Giovannoni's affidavit, paragraph 60. While there is a difference between the tasks (in that Professor Giovannoni was instructed to assume that fingolimod had been identified as a drug that the notional research group was interested in), this difference does not appear to have practical significance as Professor Barnett identified fingolimod as a promising candidate: see paragraphs 80 to 82 of Professor Barnett's affidavit. 18 Insofar as Novartis submits that the practical effect of the exclusion of this evidence is to limit Novartis to responding to the case framed by Pharmacor, as distinct from advancing a different positive case, we are not satisfied that this is the practical effect of the order. A large part of this submission turned on the Transplant Studies. These studies are already part of Novartis's expert evidence through the affidavit of Professor Carl Kirkpatrick, a Professor of Pharmacy Practice, dated 9 March 2022. To the extent that Novartis seeks to have a neurologist express opinions about the Transplant Studies, Novartis accepted before the primary judge that Professor Barnett could express opinions about them (T40-41). The primary judge said that it was open to Novartis to apply to adduce further evidence from Professor Barnett about this. No such application has yet been made, but it remains open to Novartis to make such an application. We note that Novartis submits that Professor Giovannoni was aware of the Transplant Studies at the priority date, while Professor Barnett was not. However, the significance of this may be overstated. Professor Giovannoni states at paragraph 61 of his affidavit that he became aware of the transplant trials through "confidential advisory board discussions with Novartis staff". In paragraph 63 of his affidavit, Professor Giovannoni puts his "actual personal knowledge" of the trials to one side in addressing the hypothetical "task". Thus, the evidence given by Professor Giovannoni is not premised on the notional research group having his personal knowledge of the trials. Further, the factual evidence relating to the transplant trials in Professor Lublin's affidavit could be the subject of an application to the primary judge as discussed at [13] above. 19 Insofar as Novartis submits that there are differences in the background and experience of the three experts, this may be accepted, but it does not suggest error by the primary judge. The differences in background and experience of Professors Barnett, Giovannoni and Lublin are not sufficient to justify the calling of multiple expert witnesses of the same discipline in the circumstances of this case. As the primary judge noted, there are invariably differences between experts' backgrounds. Further, as the primary judge recognised, the notional person is not an avatar for experts whose testimony is accepted; rather, it is a tool of analysis guiding the Court in determining obviousness by reference to expert and other evidence: AstraZeneca AB v Apotex Pty Ltd (2015) 257 CLR 356 at [23] per French CJ. 20 Further, in our view, the approach taken by the primary judge was consistent with modern case management in patent litigation and the purpose expressed in Pt VB of the Federal Court of Australia Act 1976 (Cth): see Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd (2019) 139 ACSR 52 at [12]-[15] per Allsop CJ. 21 For these reasons, we are not satisfied that the order made by the primary judge is attended with sufficient doubt to warrant its being reconsidered by a Full Court, or that substantial injustice would result if leave were refused, supposing the decision to be wrong. 22 It was for the above reasons that we joined in the order refusing leave to appeal at the conclusion of the hearing. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Yates and Moshinsky.