Pharmacia LLC v Juno Pharmaceuticals Pty Ltd

REASONS FOR JUDGMENT 1 INTRODUCTION [1] 2 DECLARATIONS AND INJUNCTIONS [7] 2.1 The submissions [7] 2.2 Consideration [11] 3 COSTS [31]

1. INTRODUCTION 1 On 15 February 2022 I delivered reasons addressing the substantive disputes in these proceedings, and made orders that the parties confer and provide draft short minutes of order giving effect to those reasons: Pharmacia LLC v Juno Pharmaceuticals Pty Ltd [2022] FCA 92 (judgment or J). The parties have been unable to agree on three aspects of the orders concerning the infringement case advanced against the respondents, namely: (1) whether declarations of infringement should be made; (2) whether injunctions should be granted; and (3) who should pay the costs of the proceedings. These reasons assume familiarity with the judgment, and adopt the definitions used within it. 2 The applicants contend that the following declaratory and injunctive orders should be made: THE COURT DECLARES THAT:
   1. Exemplar batches 31604, 31605 and 31606 of the Respondents' parecoxib products (the Infringing Exemplar Batches) contain a composition as referred to in claims 1, 4, 5, 11, 14, 15, 17, 18, 19, 20, 21, 24, 34, 35, 36, 37, 38, 39, 40 and 41 of Australian Patent No. 2002256031 (the Patent).
   2. Exemplar batches 31601, 31602 and 31603 of the Respondents' parecoxib products (the Non-Infringing Exemplar Batches) do not contain a composition as referred to in claims 1, 4, 5, 11, 14, 15, 17, 18, 19, 20, 21, 24, 34, 35, 36, 37, 38, 39, 40 and 41 of the Patent. 2A. Exemplar batches 31601, 31602, 31603 31604, 31605 and 31606 of the Respondents' parecoxib products do not contain a composition as referred to in claims 7, 26, 27, 28, 30 and 42 of the Patent.
   3. The First Respondent (Juno) has infringed and threatened to infringe each of claims 1, 4, 5, 11, 14, 15, 17, 18, 19, 20, 21, 24, 34, 35, 36, 37, 38, 39, 40 and 41 of the Patent, including by offering for sale, selling and supplying in Australia, without the licence or authority of the Applicants, parecoxib products corresponding to the Infringing Exemplar Batches.
   4. The Second Respondent (Neo) has infringed and threatened to infringe each of claims 1, 4, 5, 11, 14, 15, 17, 18, 19, 20, 21, 24, 34, 35, 36, 37, 38, 39, 40 and 41 of the Patent, including by supplying in Australia, without the licence or authority of the Applicants, parecoxib products corresponding to the Infringing Exemplar Batches. THE COURT ORDERS THAT:
   5. Juno (whether by itself, its directors, officers, servants, agents or howsoever otherwise) be restrained, during the term of the Patent, from infringing claims 1, 4, 5, 11, 14, 15, 17, 18, 19, 20, 21, 24, 34, 35, 36, 37, 38, 39, 40 and 41 of the Patent, including without limitation from, without the licence or authority of the Applicants, importing, making, using, offering to sell, supply or otherwise dispose of, selling, supplying or otherwise disposing of, keeping for the purpose of sale, supply or other disposal, or otherwise exploiting, parecoxib products corresponding to the Infringing Exemplar Batches.
   6. Neo (whether by itself, its directors, officers, servants, agents or howsoever otherwise) be restrained, during the term of the Patent, from infringing claims 1, 4, 5, 11, 14, 15, 17, 18, 19, 20, 21, 24, 34, 35, 36, 37, 38, 39, 40 and 41 of the Patent, including without limitation from, without the licence or authority of the Applicants, importing, making, using, offering to sell, supply or otherwise dispose of, selling, supplying or otherwise disposing of, keeping for the purpose of sale, supply or other disposal, or otherwise exploiting, parecoxib products corresponding to the Infringing Exemplar Batches. 3 The applicants also contend that, having regard to the outcome of the hearing, the respondents should pay their costs of the claim and the cross-claim. 4 The respondents contend that no declaratory or injunctive relief should be ordered and that there should be no order as to costs. 5 The parties have proposed that I make an order that the time for any party to seek leave to appeal from any declarations or orders be extended until further order. 6 For the reasons set out below declarations set out in Orders 1, 2 and 2A should be made, but not declarations 3 and 4 or the injunctions in proposed Orders 5 and 6. I consider that the respondents should be required to pay the costs of the cross claim, but will defer making orders on the question of costs on the infringement claim, pending the resolution of the assessment of the respondents' liability for pecuniary relief. Although a draft order proposes, by consent, that I make an order in relation to the time for the parties to seek leave to appeal, I do not propose to do so, as it is a matter for each party to make such an application in accordance with the usual requirements, should they choose to do so.

2.1 The submissions 7 The applicants submit that the hearing of the infringement aspect of the case was conducted by reference to documents relating to six exemplar batches (batch records) which were produced by the respondents during the course of the preparatory stages of the proceedings. Those documents were exhibited to an affidavit given by Mr Tyacke on 16 October 2020 and, having regard to the correspondence to which that affidavit refers, the applicants contend that the production of the batch records amounted to an admission that they were representative of products that Juno supplies in Australia under ARTG registrations No. 282353 and 282354. The applicants submit that the proceedings and the hearing were conducted on that basis, noting that an attempt by the respondents during the hearing to tender further documents concerning the composition of the Juno products failed. 8 The applicants submit that the Court found, at J[14], that three of the six exemplar batches fell within the scope of certain claims of the patent, and three did not, and concluded that the applicants are entitled to injunctive relief to restrain infringement. They submit that the proposed declarations sought in Orders 1 and 2 (and a later notified Order 2A) reflect the findings made in relation to the batches, and that it is appropriate for the Court to also make the declarations in Orders 3 and 4 having regard to the Court's findings and the admissions made by the respondents. They submit that the injunctions to restrain infringement in Orders 5 and 6 are warranted but accept that given the then impending expiration of the patent, they would not oppose an order staying those injunctions. 9 The respondents submit that declaratory relief is not appropriate for three reasons. First, because it is beyond the applicants' pleaded case broadly because none of the exemplar batches were ever imported into Australia under the two ARTG registrations held by Juno. Secondly, because it is inappropriate to make declarations that have no utility which, the respondents contend, would be the case here because none of the exemplar batches were ever imported into Australia and, as such, cannot be considered to be "infringing" under the Patents Act 1990 (Cth). Thirdly, they submit that the patent expires on 2 April 2022 in any event. 10 The respondents also submit that orders for injunctive relief are inappropriate because the making of such orders would be futile or bereft of any utility. In this regard, the respondents rely on: (1) the imminent expiry of the patent; (2) the contents of an affidavit affirmed by Scott William Voller of 8 March 2022 (which was the subject of objection) which, the respondents contend, reveal that none of the Juno products actually imported into Australia infringed the patent having regard to the conclusions on construction reached by the Court in the judgment; and (3) the fact that Neo no longer has any registrations in respect of parecoxib products on the ARTG which, the respondents submit, accordingly demonstrates that Neo could not exploit parecoxib products in Australia in any event.

2.2 Consideration 11 In order to consider the outstanding issues it is necessary to have regard to the case as pleaded, the admissions made by the respondents prior to the trial, and the manner in which the hearing was conducted. 12 In their amended statement of claim filed on 4 November 2020 the applicants identified the impugned "Juno Products" by reference to two ARTG listings and gave particulars of infringement by reference to the ARTG listings and also the batch records that the respondents had supplied. 13 Prior to the filing of this document the parties had exchanged correspondence concerning the production of documents by the respondents going to the way that the Juno products were made. On 12 June 2018, the patent attorneys acting for Juno took steps to ensure that documents in the possession of its supplier, Neo, would be made available to the solicitors acting for the applicants. On 25 October 2018, Juno's patent attorneys provided, on a confidential basis, documents to the applicants said to "relat[e] to the manufacture and composition of the Neo Parecoxib Formulation". Included in the documents produced were the batch records. On 26 June 2020, the solicitors for Juno provided some additional information "relating to the process of lyophilisation undertaken in the production of the Juno Products". On 10 August 2020, the solicitors for the applicants wrote to the respondents noting that Neo had obtained, and subsequently transferred to Juno, ARTG registrations for seven additional parecoxib sodium products. They sought confirmation that the information provided earlier "applies equally to each of the New Juno Parecoxib Products". The solicitors for Juno provided that confirmation in a letter dated 24 August 2020. 14 In his affidavit, which was read during the trial, Mr Tyacke annexed this correspondence. 15 There can be little doubt that in providing the batch records to the applicants together with the correspondence to which I have referred, the respondents admitted that the batch records were representative of the characteristics of the Juno products offered for sale and supplied in Australia (the admission). It is apparent that the applicants proceeded to conduct their case on the basis of the admission in the legitimate expectation that the disputes between the parties concerning questions of infringement could be resolved by reference to them. The experts were shown the batch records and the infringement issues were debated at trial on that basis. 16 On the first day of the trial the respondents attempted to tender further batch records. That course was resisted by the applicants for a number of reasons, including because of the admission made. After some discussion between the parties, instead of pressing the tender, the parties made a joint proposal to the court. As summarised by Mr Ryan SC, who appeared for the respondents: …we can resolve that dispute and we would do so on this basis: the parties jointly request, your Honour…in your Honour's reasons, to make a determination at the outer limit of about 90 per cent. If your Honour were to do that, then the parties can themselves, hopefully without any further assistance from the court, work out which of the 50-odd batches that have been made over the last several years fall inside or outside of that limit. And if that were the case, we wouldn't need to pursue the tender. 17 Later, the parties committed their joint proposal to writing, which took the following form: The parties respectfully request that the Court, in its reasons for judgment in the proceeding, make a finding as to the upper limit, or the manner of calculating the upper limit, of the range "about 30% to about 90% by weight" as expressed in claims 1 and 26 of the patent in suit. 18 Again, it is apparent from this joint position that the parties proceeded on the basis that the batch records would form the foundation for any findings of infringement in relation to the Juno products. 19 A few days later the respondents were granted leave to amend their defence to include the following: 13. They admit paragraph 13 thereof but say for the avoidance of doubt that Juno Products manufactured in 2016 in batch numbers 31601 to 31606 were not sold or supplied in Australia nor brought into Australia at all. 14. They admit paragraph 14 thereof. As to paragraph 14 thereof, they admit that Neo supplied Juno Products to Juno for sale on the Australian market until August 2020 but say for the avoidance of doubt that Juno Products manufactured in 2016 in batch numbers 31601 to 31606 were not supplied for sale in the Australian market nor brought into Australia at all. 20 That amendment cannot be seen to be, by a side-wind, an application for the withdrawal of the admission made on 24 August 2020 or to alter the basis upon which the trial was being conducted. Indeed in answer to this, in their reply to the amended defence the applicants pleaded, by reference to the correspondence to which I have referred, that the respondents have admitted that the batch records were representative of the Juno products offered for sale and supplied in Australia, and otherwise joined issue with the averment. Notably, the respondents adduced no evidence in support of the amendments made to their defence set out above. Accordingly, there was no factual basis advanced upon which the Court might consider that the admission might have been withdrawn. Nor did the respondents make an application to withdraw the admission. 21 Against this background, the judgment identifies in [23], [176] and [420] that the case as presented at trial was that the batch records (defined in the judgment as forming part of the "Neo confidential documents") were representative of the commercial batches imported into, and sold within, Australia and, on that basis, could be subsequently used by the parties to determine the extent of any infringement by the respondents. As I noted in the concluding paragraph of the judgment: [420] I have found that certain of six exemplar batches of the Juno products would, had they been made or imported into Australia, have infringed each of claims 1, 4, 5, 11, 14, 15, 17, 18, 19, 20, 21, 24, 34, 35, 36, 37, 38, 39, 40 and 41 but not claims 7, 26, 27, 28, 30 and 42 and that the challenge to the validity of the relevant claims fails. At trial the parties agreed that such findings will be sufficient for them to reach agreement as to the scope of the infringement by the respondents with regard to the Juno products sold in Australia… (emphasis added) 22 In the result, the respondents submit that the three batches that I found to fall within the claims of the patent were never imported into Australia. They seek leave to rely on the Voller affidavit to provide a fresh factual basis for me to make a finding that none of the Juno products infringe because, they submit, all of the batches actually imported into Australia fall on the non-infringing side of the line. The words emphasised in [420] were made without the benefit of the arguments to which I have referred above. They do not tell the whole story, which I have summarised above. 23 Although the respondents do not put it in this way, it appears to me that in seeking to rely on the Voller affidavit, the respondents seek to reframe the way in which the case had been run and, in effect, re-open the case the subject of the judgment. However, the respondents have not sought to satisfy the requirements for doing so: Smith v New South Wales Bar Association [1992] HCA 36; 176 CLR 256 at 266 and Park v Brothers [2005] HCA 73; 222 ALR 421 at [34] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). As to the withdrawal of admissions, see Selvaratnam v St George - A Division of Westpac Banking Corporation (No 2) [2021] FCA 486 at [27]-[28] (Stewart J); Juno Pharmaceuticals Pty Ltd v Millennium Pharmaceuticals, Inc [2019] FCA 526 at [38] (Besanko J); 24 In my view the applicants are justifiably concerned that this represents something of a volte face by the respondents. Having conducted the trial on the basis that the six exemplar batches reflected in the batch records were representative of the Juno products brought into and sold in Australia, it ill behoves the respondents to contend on the basis of fresh evidence, as they did before me at the final orders hearing, that no declarations are appropriate because each batch of the Juno products actually brought into and sold in Australia falls outside of the scope of the claims of the patent as construed by the Court in the judgment. 25 The applicants contended that, if the respondents are able to reframe the case in this way, this would have the effect of rendering the hearing as being completely hypothetical. Declarations must answer real, not hypothetical, questions. As the learned authors of Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th ed, LexisNexis, 2014) say (at [19-155]-[19-160]): A real question for answer by a declaration is present if there is a particular degree of connection between the law and the facts…One way of testing whether there is a real, not merely hypothetical, question is to ask whether it is foreseeable that the declaration will produce consequences for the parties. 26 As Gaudron J said in Truth About Motorways Pty Ltd v Macquarie Infrastructure Management Ltd [2000] HCA 11; 200 CLR 591 at [52]: …a declaration cannot be made if it "will produce no foreseeable consequences for the parties". That is not simply a matter of discretion. Rather, a declaration that produces no foreseeable consequences is so divorced from the administration of the law as not to involve a matter for the purposes of Ch III of the Constitution. And as it is not a matter for those purposes, it cannot engage the judicial power of the Commonwealth. (citations omitted) 27 On the basis of the matters referred to above, it is tolerably clear to me that the trial was conducted by both parties on the basis that the Court's findings in relation to the six batches exemplified in the batch records would allow the parties to then determine which of the batches of the Juno products brought into Australia infringed the patent. Once this is accepted, it is clear that declarations in respect of the six batches the subject of the batch records will have practical consequences for the parties in that they will enable them to determine the extent of infringement by the respondents' in Australia. 28 The matters to which I have referred persuade me that it is appropriate in the present case to make clear that, on the basis of the way that the parties have conducted the case, the applicants have established that three, but not all six, of the exemplar batches the subject of the batch records fall within the scope of certain of the claims of the patent. Accordingly, I will make declarations as set out in proposed Orders 1 and 2. The later proposed declaration 2A falls within the same reasoning. However, having regard to the ambiguous drafting of the declarations set out in proposed Orders 3 and 4, and in particular the reference to "corresponding to", I do not consider that it is appropriate to make those declarations. 29 A further order that I will make, which is not the subject of dispute, is that the proceedings must be listed for case management so that directions can be made in relation to the applicants' claim for pecuniary relief. This is an adjunct to an Order that will be made later for the proceedings be listed for hearing on the question of the assessment of the quantum of relief to be paid by the respondents to the applicants. It is at that stage of the proceedings that the matters raised in the affidavit of Mr Voller may be raised and tested. 30 It is neither necessary nor appropriate to grant the injunctive orders that the applicants sought at the final orders hearing. In the brief period since that hearing was conducted, the patent has expired. At the final judgment hearing the applicants themselves did not oppose the staying of any injunction ordered because of the imminent expiration of the patent. The Court would not make an order that is futile.

3. COSTS 31 The applicants note that in the judgment at [420] I expressed the preliminary view that the applicants, having succeeded in all but relatively limited respects, should have their costs of the claim and cross-claim. They submit that there is no basis upon which I would change that view. 32 The respondents rely on the Voller affidavit to demonstrate that the success of the applicants was pyrrhic. They submit that the relevant "event", and practical and commercial result of the proceedings, is that the applicants have failed to establish infringement of any claim, in circumstances where the respondents' cross-claim was brought defensively. They submit that, in circumstances where the parties agreed at trial that the Court's findings as to claim construction using the exemplar batches would be applied to determine the scope of infringement, and where the result of that application is that no products imported into Australia and sold infringed any claim of the patent, each party should bear its own costs. 33 On the basis of the information and admissions supplied by the respondents and also batch records, the applicants expended significant time (and no doubt costs) in their efforts to establish that the six exemplar batches fell within the asserted claims. On the same basis, the applicants succeeded in establishing that three of those batches fell within the scope of a number of the claims of the patent. 34 The respondents submit that the Voller affidavit demonstrates that none of the batches imported and sold infringed. That is a subject that is in contest and cannot be resolved now. However, even if correct, it cannot be said to be irrelevant to the question of costs that the applicants, who accepted the batch records as representing products imported and supplied, were unaware that potentially no batches imported would infringe, even if half of the samples fell within the scope of the claims. 35 However, the exercise of the discretion as to whether or not to award costs, and the appropriate quantum of such costs if awarded, is broad: Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 at [3] (Nicholas, Beach and Burley JJ). In that context it also cannot be said to be irrelevant to the exercise of discretion that, in the result, the applicants may fail to establish an entitlement to receive any pecuniary remedy at all. 36 Accordingly, in my view, it is appropriate that the question of costs of the infringement claim be deferred until the quantum aspect of the proceedings has been resolved and the argument can be considered having regard to the Voller affidavit and any responsive material that the applicants wish to bring forward. 37 In relation to the revocation case, although characterised by the respondents as "defensive", the fact is that the respondents elected to pursue their cross-claim in addition to advancing their non-infringement arguments. Having failed to establish the invalidity of any of the relevant claims, the appropriate order is that the respondents pay the costs of the cross-claim. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Burley.

SCHEDULE OF PARTIES NSD 1370 of 2019 Cross-Claimants Second Cross-Claimant: NEO HEALTH (AUSTRALIA) PTY LTD ACN 605 322 763 Cross-Respondents Second Cross-Respondent PFIZER AUSTRALIA PTY LTD ACN 008 422 348