A Full Federal Court bench of prominent patent judges has refused Novartis leave to appeal from an order excluding evidence from three expert witnesses. This refusal was on the basis that the evidence was duplicative of a fourth expert affidavit that was allowed. The decision is part of a shift towards more active case management, in pursuit of faster, cheaper patent litigation.

Key takeouts

Australian Courts hearing patent cases already have broad discretion to make case management orders (including to limit expert evidence) and an obligation to promote the quick, inexpensive and efficient resolution of disputes.

Litigants should be astute to the possibility of applying to the Court for unusual (and even "imaginative") case management orders, as Pharmacor did here, as early as possible in the proceeding.

Equally, litigants should avoid preparing and filing overlapping evidence from experts in the same field, as Novartis did here. If the evidence is found to be duplicative, it will be excluded and the wasted costs could be substantial (including liability for the other side's costs).

Reducing the costs and increasing the speed of patent litigation is a common goal for many clients and their lawyers. Mirroring this are the obligations on the Court and its litigants to promote the quick, inexpensive, and efficient resolution of disputes under the Federal Court Act and various Practice Notes. In practice however, patent litigation in Australia can be expensive and slow compared to other jurisdictions, in part because the parties often file voluminous written evidence from multiple experts, who then prepare a joint report, and are all cross-examined at trial (usually concurrently). Against this backdrop, the decision in Novartis v Pharmacor is a step in the right direction towards faster, cheaper patent litigation. The expert opinion evidence of three Novartis witnesses was excluded two and a half months before the trial and before Pharmacor had to file its evidence in reply.

In contrast, in most cases, the judge decides whether or not to admit particular expert affidavits at the trial, by which time the counterparty has already responded to all of the evidence (often at great expense). Judges may do this on the basis that they are not able to assess admissibility before they have considered all of the evidence and submissions, and to try to make their judgments "appeal-proof" because they have considered every issue raised. But it can mean that much of the expert evidence before the Court is not ultimately relevant to resolving the dispute. Following the trial, the counterparty can apply for a costs order for the costs of responding to evidence that was excluded or given little weight, but by this time the costs have already been incurred and the time already spent. Obtaining such orders is not straightforward and the risk of an adverse cost order may not dissuade a party with deep pockets from running expert evidence on every possible angle.

Novartis v Pharmacor – first instance decision of Burley J

Returning to Novartis v Pharmacor, in response to one expert affidavit filed by Pharmacor in its patent revocation claim, Novartis had filed four affidavits from experts in the same field (neurology). In our experience, this may have given Novartis's experts "strength in numbers" in the joint expert report (prepared without lawyers' involvement) and in the concurrent evidence session at the trial (often referred to as a "hot tub"). At first instance however, Burley J ruled that only one of Novartis's affidavits was admissible in its entirety, two were excluded, and one was limited to its factual evidence. Burley J did not issue written reasons, but said the reasons were in the transcript of the case management hearing. His Honour said that Novartis's evidence involved "overlapping witnesses" and was “substantially duplicative”.

Novartis v Pharmacor – joint appeal judgment of Yates and Moshinsky JJ

Less than a week later, Novartis applied for leave to appeal, and a week and a half after that, the Full Federal Court heard and decided Novartis's application. Novartis's appeal concerned one of the excluded affidavits and the affidavit that had been limited to its factual evidence. The Full Court (comprising Yates, Moshinsky, and Beach JJ) agreed with Burley J that Novartis's evidence was “substantially duplicative”, in that the experts had the same titles (Professor of Neurology) and expertise, discussed the same common general knowledge, considered the same prior art, and expressed substantially the same opinions. The differences in the experts' backgrounds and experience did not displace this conclusion, because such differences were inevitable and the notional skilled person is a tool for guiding the Court in determining obviousness, "not an avatar for experts whose testimony is accepted".

Justices Yates and Moshinsky's joint judgment was based on the established principles applicable to all applications for leave to appeal from interlocutory decisions (insufficient doubt as to the primary decision and no substantial injustice to Novartis). Only on the final page of their judgment did Yates and Moshinsky JJ briefly comment that the decision was consistent with "modern case management" and the purpose expressed in Part VB of the Federal Court Act (in which section 37M requires the Court "to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible").

Novartis v Pharmacor – appeal judgment of Beach J

Justice Beach agreed, but took the opportunity to elaborate, citing Novartis v FH Faulding [2004] FCAFC 254 that “an imaginative approach to case management in complex technical cases such as patent cases should be encouraged”. It is notable that His Honour apparently had to go back 18 years to find a patent judgment including a statement to this effect, well before Pt VB of the Federal Court Act commenced in 2010. Even then, in Novartis v FH Faulding the Full Court dismissed an application for leave to appeal which would have led to an "imaginative" case management order (to have separate questions determined before trial).

Beach J set down the following principles to preclude duplicative expert evidence in the Federal Court:

1. The default position is that a party should not adduce evidence from more than one expert in any one discipline, without communicating its intention to the other party and the Court at the earliest opportunity.

2. If this default position is to be departed from, it should be raised with the other party and the Court and justified before the expert evidence is filed. This will require the party seeking to rely on the evidence to establish that the experts were posed different questions or have substantially different knowledge and experience before the priority date, and that as a result of such difference, the evidence is not substantively duplicative.

3. Proper case management requires ensuring effective use of expert evidence and eschewing unnecessary and potentially duplicative evidence, in accordance with the Federal Court's Practice Notes on IP and on Expert Evidence. The IP Practice Note provides that the "key objective of case management is to reduce costs and delay so that there is/are: fewer issues in contest; effective use of expert evidence; in relation to those issues, no greater factual investigation than justice requires; and as few interlocutory applications as necessary for the just and efficient disposition of matters." His Honour commented that "the Court has a smorgasbord of powers to achieve these objectives".

4. Even if the parties agree to it, judges are unlikely to accept evidence from multiple overlapping experts in the same discipline.

Despite Beach J's comment at point 4, in our experience it is very rare for judges in patent litigation to proactively exclude evidence, without the other party moving to have the evidence excluded. This judgment is however a welcome encouragement to litigants to apply for unusual and imaginative case management orders, particularly to limit expert evidence.

Other examples of active case management

This is not the first time Beach J has expressly championed active case management. His Honour previously proposed "severely" confining the volume of court books and imposing a "chess clock" to limit patent hearings to days rather than weeks (SNF v BASF [2019] FCA 425). Implicit in those comments was that the extent of evidence should be reduced to accommodate shorter hearings with fewer documents. Other case management strategies in patent litigation include limiting the patent claims pleaded, limiting the pages of expert evidence (in Novartis v Pharmacor, Burley J ordered 45 pages per expert affidavit, excluding annexures), and requiring agreed technical primers (which may allow a judge to decide a case more quickly, avoiding multiple expert affidavits setting out the same technical background). In light of this shifting judicial approach, parties should take the opportunity to devise and propose case management orders that go beyond those regularly rolled out by the Courts.