20 July, 2012

 

Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd [2012] FCA 239

 

In brief

 

• On 25 January 2012, Otsuka Pharmaceutical Co., Ltd ("Otsuka") and Bristol-Myers Squibb Company ("BMS") sought an interim injunction to restrain Generic Health Pty Ltd from infringing two patents owned by Otsuka and licensed exclusively to BMS.
• On 16 March 2012, Yates J of the Federal Court of Australia granted the interim injunction on the basis that Otsuka and BMS had established a prima facie case of threatened patent infringement by Generic Health Pty Ltd and that the balance of convenience weighed in favour of granting the relief sought.
• On 23 April 2012 Katzmann J ordered that Generic Health's application to appeal the injunction decision be heard by the Full Court.

 

Background

 

The two patents in suit, owned by Otsuka both claim therapeutic uses for an antipsychotic drug, aripiprazole, in the treatment of patients with schizophrenia and other disorders of the central nervous system.

 

BMS is the exclusive Australian licensee of Otsuka which manufactures and markets products containing aripiprazole under the product name ABILIFY®.

 

On 15 December 2011, Otsuka and BMS became aware that Generic Health Pty Ltd (the "Respondent") intended to launch a generic version of their ABILIFY® products ("Generic Products") on the Australian market and had applied to list the Generic Products on the Australian Government's Pharmaceutical Benefits Scheme ("PBS").

 

On 25 January 2012, Otsuka and BMS commenced proceedings against the Respondent seeking an interim injunction to restrain the Respondent from launching the Generic Products on the market as well as orders that the Respondent withdraw its application to list the Generic Products on the PBS.

 

Otsuka and BMS argued that the Generic Products would infringe the patents in suit and that irreparable harm would be caused to them if the Generic Products were permitted to launch on the Australian market. The irreparable harm would be caused, in part, by an irreversible 16 per cent reduction in the price of ABILIFY® products if the Generic Products were approved for listing on the PBS.

 

The Respondent denied that the Generic Products infringed the patents and cross claimed against Otsuka and BMS for invalidity on a number of grounds, including lack of novelty.

 

In considering whether to grant the injunction, Yates J followed the reasoning of the Full Federal Court in Samsung Electronics Co Limited v Apple Inc. [2011] FCAFC 156, a judgment which his Honour co-authored. In so doing his Honour carefully and thoroughly weighed the attendant factors necessary to establish whether a prima facie case could be made out and whether the balance of convenience favoured the granting of the injunction.

 

Prima Facie

 

Case Otsuka's and BMS's Claims of Infringement

 

In evaluating the strength of Otsuka's and BMS's substantive case for infringement, his Honour considered the construction of the Swiss-style claims contained in the patents in suit. The Swiss-style claims relate to the "use" of aripiprazole "for the production of a medicament" effective in the treatment of schizophrenia or other disorders.

 

The Respondent contended that it did not infringe the Swiss-style claims as it did not "use" aripiprazole "for the production of a medicament". The Respondent argued that it could not otherwise infringe the Swiss-style claims on the basis that the Swiss-style claims do not disclose, with sufficient specificity, an invention that is either a product, method or process. Consequently, the Respondent further argued that it could not be deemed to have exploited the invention of Otsuka given that the definition of "exploit" in Schedule 1 to the Patents Act 1990 (Cth) (the "Act") relates only to inventions which are products, methods or processes.

 

His Honour held that a final determination on the construction and interpretation of Swiss-style claims in Australia should be left to a final hearing. However, his Honour made the observation that the definition of "exploit" in the Act is phrased inclusively and may not be exhaustive. His Honour also noted that the word "use" in Swiss-style claims may arguably disclose an invention in the form of a "method" or "process" such that would support Otsuka's and BMS's claim for infringement.

 

Yates J found that, notwithstanding the controversy relating to the Swiss-style claims, there was a sound basis for indirect infringement of one of the patents in suit by the Respondent under section 117(1) of the Act.

 

Respondent's claims of invalidity

 

In evaluating the strength of the Respondent's case for invalidity his Honour considered the application of the so-called "Gillette defence". This defence is derived from the case of Gillette Safety Razor Company v Anglo American Trading Company Ltd (1913) 30 RPC 465 and operates by providing a complete defence to the infringement of the patents in suit if the alleged infringer can establish that their allegedly infringing acts were merely those described in the prior art. The Respondent raised the defence on the basis that the allegedly infringing acts claimed by Otsuka and BMS were disclosed in six items of relevant prior art. Otsuka and BMS contended that the Gillette defence was not a discrete defence available to the Respondent and denied that the acts disclosed in the prior art destroyed the relevant novelty of claims of the patents in suit. His Honour agreed with Otsuka and BMS and stated that there was "a real doubt" about whether the Gillette defence exists as a discrete defence in Australia independently of the grounds of invalidity provided for by section 138(3) of the Act. His Honour was also not convinced that any of the prior art put into evidence by the Respondent was novelty destroying such that would support a prima facie case for invalidity.

 

Balance of convenience

 

His Honour noted that, consistent with recent case law relating to interim injunctions, the question of whether the applicant has made out a prima facie case is closely related to an assessment of where the balance of convenience lies.

 

His Honour weighed a number of attendant factors in assessing the balance of convenience and ultimately granted the injunction sought by Otsuka and BMS. Those factors considered by his Honour included that:

 

• ABILIFY® products had been on the Australian market for eight years whereas the Generic Products were not yet on sale in Australia;
• listing of the Generic Products on the PBS would cause an irreversible 16% reduction in the price of ABILIFY® products;
• Otsuka and BMS would likely suffer significant and unquantifiable damage if the injunction was granted; and
• the Respondent entered the market with its "eyes wide open" to the possibility that it could face a claim for infringement.

 

Orders

 

On 22 March 2012, his Honour made various orders, including that the Respondent be restrained from importing, selling or otherwise dealing with the Generic Products in the Australian market. The Court also ordered that the Respondent withdraw the PBS application pending a final hearing on infringement and invalidity issues.

 

Appeal

 

On 23 April 2012 Katzmann Jordered that Generic Health's application to appeal the injunction decision be heard by the Full Court. The appeal is listed for hearing on 30 July 2012.

 

Lessons

 

• In cases concerning products which are listed on the PBS, courts are more likely to grant injunctions in order to restrain the entry of an allegedly infringing generic product on the basis that the entry of the generic product into the market will cause a significant and irreversible reduction in the price of the PBS listed product.
• The validity of Swiss-style claims and the availability of the Gillette defence in Australia remain uncertain, and may be the subject of future judicial consideration in the final hearing of this case.