Apotex Pty Ltd v ICOS Corporation (No 4) – and in other news…

Patents – penal notices and injunction against guarantees of supply for Pharmaceutical Benefits Scheme (“PBS”) listing

In Apotex Pty Ltd v ICOS Corporation (No 4) [2018] FCA 1316, Besanko J held that it was appropriate, where an injunction was being granted to restrain Apotex from exploiting its erectile dysfunction product, to append the orders with a penal notice.

On a less salacious note, and following the determination of questions as to liability (our note of which can be found here), Besanko J considered whether Apotex should be restrained from making or maintaining any commitment or guarantee in connection with any application to list any tadalafil product on the Schedule of Pharmaceutical Benefits, wherein the commitment or guarantee is to supply the product during the term of the patent in question. As part of making application to list a product on the Schedule of Pharmaceutical Benefits, it is necessary for the sponsor to provide the relevant Minister with a guarantee that it will be able to supply the product to the market.

Apotex contended that the prohibition should not be made because the making or maintaining of such a commitment or guarantee is not an infringement of a patent, in light of the Full Court’s decision in Warner-Lambert Company LLC v Apotex Pty Ltd [2017] FCAFC 58; (2017) 249 FCR 17 at [18]-[19].  There, the Full Court held (at [18]) that:

assurance to the Minister that sufficient stock of the product to meet demand will be available to allow for delivery to PBS dispensers (eg pharmacies, hospitals or other dispensers) in time for the PBS listing day is not an offer to the Minister to supply those third parties during the guaranteed period.  It is an assurance that the responsible person will be able to supply those third parties during the guaranteed period if requested to do so.  The guaranteed supply provisions do not operate on the making of an application.  As is apparent from the definition of “guaranteed period” in s 99AEA, which cross-refers to ss 99AEC(3) and 99AED(3), it is the coming into force of a determination which starts the guaranteed period. It is during that period that the responsible person guarantees supply under s 99AEB. Until that time, however, there is merely the application accompanied by the required assurance.

Characterising the application as involving a statutory bargain, as the appellants urge, does not advance the matter. If there be a bargain, it is an assurance by the applicant for listing that the applicant will have sufficient stock to meet demand on the listing day (the coming into force of the determination) in exchange for a listing which will enable the product to be part of the PBS. An assurance of this kind is not an offer to the Minister to sell or otherwise dispose of the products to wholesalers and pharmacists. It is nothing more than what it purports to be, an assurance that stock will be available to meet demand. To adopt the appellants’ approach of arguing by way of analogy, party A does not offer to supply to party B merely by assuring party C that, when the relevant time comes, party A will be able to supply party B.

ICOS contended that its proposed prohibition was different to the scenario before the Full Court because of the rider “wherein the commitment or guarantee is to supply the product during the term of the patent in question”.  ICOS submitted that in Warner Lambert the supply was after the term of the patent had expired.  ICOS further submitted that making such a guarantee would be a threat of infringement and the order was appropriate as ancillary to the other orders.

Justice Besanko considered (at [6]) that making such a guarantee “could be a threatened infringement” or would be a proper ancillary order but was not satisfied that it was appropriate to make such an order, because Apotex advised that it had not applied for PBS listing and could not fathom why it would do so given it was restrained from selling the drug.  His Honour did not explain why he, potentially, agreed with ICOS.

And in other news:              

• Justice Beach has used a discovery fight in a pharmaceutical patent revocation and infringement case as an opportunity to remind litigants that an order for discovery is “not a right but a privilege”, that “intellectual property litigation has no favoured status over other commercial litigation when dealing with discovery, notwithstanding its additional forensic complexity and more numerous legal issues”, and that “the Peruvian Guano paradigm has no relevance to contemporary case management theory and practice”. His Honour refused two particular categories of discovery (one relating to United States of America (“US”) proceedings involving different, albeit related parties and a patent with inventors in common with the patent in suit, and the other to certain clinical trials) sought by the applicant for revocation on the basis that they covered material that was not directly relevant to the issues in the case.  Depending on the evidence filed in the proceeding, his Honour might be minded to allow “targeted” notices to produce or subpoenas.  In the meantime, the applicant could always ask the US parties for copies of the documents it sought: Apotex Pty Ltd v Cipla Ltd (No 2) [2018] FCA 1393.
• After five years of unsuccessfully trying to persuade the operators of the “Hairy Little Sista” and “Hairy Canary” bar/restaurants to Be My Baby and obtain a licence, Phonographic Performance Company of Australia Limited (“PPCA”) has obtained declarations and injunctions restraining them from playing certain songs, whether on Saturday Night or otherwise.  Judge Baird was Hooked On A Feeling that the respondents had decided to Blow off the case, considering their failure to communicate with PPCA or the Court, or to file any documents.  Her Honour adopted a licence fee approach to assessing damages for copyright infringement of AU$35,529.87, and also considered an award of additional damages to be appropriate, in the amount of AU$150,000.  This reflected six years of unauthorised use by the respondents, and the need for deterrence; an award of that size might make future  respondents opt for a more involved approach to litigation: Phonographic Performance Company of Australia Pty Ltd v Hairy Little Sista Pty Ltd [2018] FCCA 2794.

This post was initially posted by The Hon Peter Heerey AM QC, Tom Cordiner KC and Alan Nash on IPForum.