Interpharma Pty Ltd v Aventis Pharma SA [2011] FCA 32

In a salient warning to patentees about the dangers of delaying the enforcement of their patent rights, Justice Jagot of the Federal Court of Australia recently refused an application by aventis for interlocutory injunctions against two generic pharmaceutical companies, Interpharma and Hospira, in relation to their proposed sale of dosage forms of docetaxel, an anti-cancer drug used for treatment of various forms of cancer including breast and prostate cancer.

Facts of the case

The docetaxel patents

Aventis is the registered proprietor of Au 666,859 (the Dosage Patent) (due to expire on 8 July 2012) in relation to a pharmaceutical dosage form for Taxol (paclitaxel) and Taxotere (docetaxel), two compounds of the taxane family which are used in the treatment of cancer. Aventis is also the registered proprietor of AU 591,309 (the Compound Patent) for the compound docetaxel, which expired on 6 February 2011.

The events leading up to the injunction application

The events and proposed conduct giving rise to the application for interlocutory injunction commenced almost 10 months before Aventis applied for injunctive relief.

Aventis’ dealings with Interpharma and Hospira

In February 2010, Aventis became aware that Interpharma had listed generic docetaxel products on the Australian register of Therapeutic Goods. At around the same time, hospira notified Aventis of its intention to launch a generic docetaxel product into the market after 6 February 2011 (the expiry date of the Compound Patent) and sought confirmation that its product would not infringe Aventis’ patents.

Between February and May 2010, an exchange of correspondence then followed between Aventis, Interpharma and Hospira. Aventis requested on several occasions that Interpharma and Hospira give undertakings not to infringe Aventis’ patents, and threatened to apply for an interlocutory injunction if the undertakings were not given. Interpharma and Hospira refused to give the undertakings, but Aventis did not take any further action. Approximately 5 months later, in October 2010, Interpharma notified Aventis that it intended to launch its generic docetaxel product in Australia, as soon as possible after 7 February 2011.

The patent revocation proceedings

In October and November 2010, approximately five or six months after the last substantive correspondence with Aventis, Interpharma and Hospira each separately instituted proceedings in the Federal Court of Australia seeking to revoke the Dosage Patent.

The patent infringement proceedings

On 7 December 2010 Aventis and its Australian exclusive licensees filed crossclaims in both proceedings, alleging that Interpharma and Hospira had threatened to infringe at least claims 1 to 4 and 6 of the Dosage Patent. Aventis also applied for an interlocutory injunction against Interpharma and Hospira to restrain them from engaging in their proposed conduct.

Interpharma and Hospira had both stated their intention to commence manufacture and production of their generic docetaxel products as soon as possible after the Compound Patent expired. The interlocutory application was accordingly heard on an urgent basis in late January 2011, approximately two weeks before the expiry of the Compound Patent, in order to obtain a decision on the interlocutory injunction application before that date.

The decision

Why the Court refused to grant an interlocutory injunction

Justice Jagot noted that Aventis’ application for interlocutory injunctive relief was to be assessed against three well-established principles:

  1. whether there was a serious question to be tried in relation to patent infringement;
  2. whether Aventis and/or its exclusive licensees would suffer irreparable harm for which damages would not be an adequate remedy, if the injunction was not granted; and
  3. whether the balance of convenience favoured the granting of the interlocutory relief.

In the end, the Judge refused to grant the interlocutory relief sought by Aventis, on the following grounds:

  • Aventis had not established that damages would not be an adequate remedy to compensate Aventis if infringement of the Dosage Patent was ultimately proven; and
  • Aventis had not established that the balance of convenience favoured the granting of an interlocutory injunction, because Aventis had not offered an adequate explanation for its delay in seeking the injunction.

Was there a serious question to be tried?

Justice Jagot noted that the earlier decision of Interpharma Pty Ltd v Commissioner of Taxation1 established that, when considering whether there is a serious question to be tried on patent infringement, the question of validity takes on lesser importance. Notwithstanding this, Interpharma and Hospira argued that their case alleging that the Dosage Patent was prima facie invalid, was sufficiently strong to displace any argument that there was a serious question to be tried on infringement issues.

In light of Justice Jagot’s findings in relation to the adequacy of damages and the balance of convenience (as discussed below), her honour dealt only briefly with the issue of whether there was a serious question to be tried. however, ultimately Justice Jagot found that although many of Interpharma’s and Hospira’s arguments regarding validity were arguable or had persuasive force, she was unable to conclude that there was not a serious question to be tried regarding infringement.

Were damages an adequate remedy?

Justice Jagot agreed with Aventis’ submissions that Interpharma’s and Hospira’s proposed sales of docetaxel in Australia after 6 February 2011 and before 3 July 2012 (the expiry date of the Dosage Patent) would cause Aventis and its licensees to lose “substantial sums of money”2 in sales which it would otherwise make. The Judge also accepted that further losses would be incurred by Aventis as a result of price discounting due to the entry of competing parties into the docetaxel market in Australia.

Notwithstanding these views, Justice Jagot did not accept Aventis’ submissions as to why an award of damages at the conclusion of trial would not adequately compensate Aventis for any lost sales or decreased profits suffered as a result of Interpharma’s and/or Hospira’s continuing conduct (assuming that patent infringement was proven). Justice Jagot held that the amount of the lost sales or decreased profits could be easily calculated at the conclusion of trial, if infringement was proven, because the market for docetaxel was not highly competitive, nor was it subject to socioeconomic conditions which might affect demand for the product. Further, the Judge held that the size of the market or market shares of potentially competing products was unlikely to change as a result of the generics’ entry into the market.

The Judge also did not accept Aventis’ submissions that it would suffer other types of damage which would be unquantifiable, if Interpharma and Hospira were not restrained. For example:

  • Aventis argued that although no price reduction under the PBS would be required by entry of generic products into the market, the generics’ entry would trigger PBS price disclosure requirements resulting in increased reporting obligations and ex-manufacturer approved price reductions. Justice Jagot held that although Aventis would be required to comply with PBS reporting obligations earlier than would otherwise be the case, there was no evidence to suggest that price reduction would automatically occur. In addition, the reporting obligations would in fact assist the calculation of damages, if infringement was ultimately proven.
  • Aventis argued that hospitals would be entitled to issue fresh tenders for supply agreements which could result in lost sales or discounted prices. The Judge held that such damage was quantifiable.
  • Aventis argued that because of the losses likely to be suffered by Aventis as a result of Interpharma’s and Hospira’s entry into the docetaxel market, Aventis would be forced to cut back on its medical and patient support services, potentially compromising patient care and the ability to support oncology trials. The Judge held that in light of the Dosage Patent’s expiry within 18 months, and Aventis’ planned launch of two further docetaxel products prior to the expiry of the Dosage Patent, it was likely that Aventis had already planned for these eventualities, and that any resultant loss would not be as serious as Aventis suggested. Further, the Judge held that any cuts to support services were wholly within Aventis’ control and therefore Aventis could minimise such damage. The Judge also rejected Aventis’ arguments regarding the likely cost and time required to reassemble its support teams if the patent was ultimately found to have been infringed by Interpharma and/or Hospira.
  • Aventis argued that it would lose goodwill as a result of factors including the loss of its support services, doctor and patient confusion, loss of customer loyalty and reduction in brand visibility. The Judge held that any such loss was “highly speculative” given the nature of the product and its market. Justice Jagot also noted that doctor and patient confusion, loss of customer loyalty and reduction in brand visibility was highly unlikely because of the nature of the product and the manner in which it is administered to patients.

Accordingly, the Judge held that most of the classes of unquantifiable loss identified by Aventis were either unlikely to occur, were unlikely to be as serious as Aventis contended, or were largely within Aventis’ own control. The Judge also noted that, in any event, Aventis would face similar consequences in July 2012 when the Dosage Patent expired.

As a result, Justice Jagot held that any harm that was likely to be suffered by Aventis as a result of Interpharma’s or Hospira’s conduct, was reparable by damages if patent infringement was ultimately established.

Aventis also argued that it was concerned about its ability to recover damages from Interpharma if patent infringement was proven. In response, Interpharma proffered an undertaking to put in place a bank guarantee with an Australian bank in the sum of $10 million as security for any damages that might ultimately be awarded to Aventis.

Did the balance of convenience favour the granting of interlocutory injunctions?

In assessing where the balance of convenience lay, Justice Jagot held that Aventis had not provided a reasonable explanation for why it had waited approximately 10 months after first learning of Interpharma’s and Hospira’s intended conduct, before seeking any interlocutory injunction.

Aventis argued that it had no basis for believing that there was a clear and imminent threat of patent infringement by either of the parties (and therefore no basis for seeking an interlocutory injunction), until October 2010 when Interpharma and Hospira each applied to revoke the Dosage Patent, and notified Aventis of their intention to have their proposed generic docetaxel products listed on the PBS. Aventis relied on the fact that without PBS listing, supply of the generic products would not be commercially viable.

Justice Jagot refused to accept Aventis’ arguments. The Judge held that from as early as February 2010 it was apparent to Aventis that Interpharma and Hospira intended to launch their generic docetaxel products in Australia in around February 2011 or shortly afterwards.Consequently, the Court found, from around February or March 2010, Aventis was “confronted with a clear and imminent threat of infringement of the patent immediately after 6 February 2011.”3 Justice Jagot held that whether or not Interpharma and/or Hospira had applied for PBS listing or had applied to revoke the Dosage Patent was immaterial. her honour stated:

“… the Aventis parties sat on their hands for more than 10 months knowing that Interpharma and Hospira planned to act in respect of their own products as soon as possible after 6 February 2011 … and knowing that its own position was that so doing would constitute an infringement of the patent.” Justice Jagot also held that given Aventis’ apparent belief in early 2010 that Interpharma and Hospira intended to infringe the patent after 6 February 2011, Aventis had an obligation to “move with all due expedition”4 (and should have done so by mid-April 2010 at the latest) to protect its rights against the threatened infringement. In fact, had Aventis done so, the questions of infringement and patent validity might have been decided on a permanent and final basis well before 6 February 2011, without the need for the Court to consider whether to grant any interlocutory relief.

Accordingly, Justice Jagot held that Aventis’ delay in seeking interlocutory relief was not reasonable and had not been adequately explained, and that in the circumstances, the balance of convenience did not favour the granting of interlocutory injunctions against Interpharma and Hospira.

Broader lessons for patentees

Aventis’ experience demonstrates that even in a case where parties are at least 12 months away from carrying out their threats to engage in infringing conduct, the requirement that patentees take action quickly still remains, even though there may be good commercial reasons for delaying any such action.

A court is unlikely to grant interlocutory injunctive relief unless a patentee has moved expeditiously to protect its rights, as soon as it becomes aware of the patent infringement or threatened infringement, and unless the patentee can point to some form of loss that will be suffered and which cannot be rectified by an award of damages, if the infringing conduct is not restrained