Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd & Ors [2012] HCATrans 357 (14 December 2012)

Last Updated: 17 December 2012

[2012] HCATrans 357

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S219 of 2012

B e t w e e n -

APOTEX PTY LTD (ACN 096 916 148)

Applicant

and

SANOFI-AVENTIS AUSTRALIA PTY LTD

First Respondent

SANOFI-AVENTIS DEUTSCHLAND GMBH

Second Respondent

AVENTISUB II INCORPORATED

Third Respondent

Application for special leave to appeal

FRENCH CJ
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 DECEMBER 2012, AT 9.53 AM

Copyright in the High Court of Australia

____________________

MR D.K. CATTERNS, QC: May it please the Court, I appear with my learned friend, MR N.R. MURRAY, for the applicant. (instructed by Herbert Smith Freehills)

MR R. COBDEN, SC: May it please the Court, I appear with my learned friend, MR C. DIMITRIADIS, for the respondents. (instructed by Jones Day)

FRENCH CJ: Thank you. It might help us, Mr Cobden, to hear from you first since we do not seem to have expressed a concluded view on this on this matter.

MR COBDEN: I am sorry, your Honour?

FRENCH CJ: Since the Court does not seem to have expressed a concluded view on this matter.

MR COBDEN: This Court?

FRENCH CJ: Yes.

MR COBDEN: Yes, your Honour. Your Honour, that patents may be granted for methods of treatment to the human body we submit has been settled at the level of the Federal Court in Australia for almost 20 years, taking into account the Rescare Case, Justice Gummow at first instance, and the Full Court, the majority, Justices Lockhart and Wilcox from 1994 and Bristol-Myers, the unanimous Full Court, Chief Justice Black, Justice Lehane and Justice Finkelstein in a separate decision in 2000 and that even when that decision was reached by those two Full Court’s and by Justice Gummow at first instance, as their Honours pointed out, it was uncontroversial that at that time it was either an established practice or a longstanding practice or a long-established practice to grant such patents.

FRENCH CJ: Does that help us in determining whether there - - -

MR COBDEN: It does, your Honour, in our arguments - - -

FRENCH CJ: In terms of practice, I mean, the relevance of practice to patentability?

MR COBDEN: It does in this way, your Honour. As this Court has said, although it is not by no means a fixed rule in Croner v Interlego I do not think we have your Honours a reference to it. It is a one-paged judgment in 68 ALJR and in the case of copyright then Justices Brennan, Dawson and McHugh said ordinarily, the Federal Court will be the last port of call - - -

FRENCH CJ: I think we said a long time ago that ordinarily the Federal Court would be the last port of call on tax matters as well. It is time to move on – and criminal sentencing I think was another one.

MR COBDEN: They do, your Honour, but to some degree when something is settled by first of all the majority of the Full Court in what Chief Justice Black and Justice Lehane later described as, “a close and persuasive analysis of principle and authority” – that was Justice Lockhart and Justice Gummow in Rescare – and an established practice which has gone on, continues, in something that is as important as the area of monopoly doubtless – and that was a long-established practice as pointed out in 1994, let alone 2000, and here we are, 2013 – doubtless this is the case that there are patents applied for, granted, exploited, licenced, enforced and litigated in reliance on that practice and as Justice Gummow pointed out in Rescare and Justice Lockhart in Rescare – I can give your Honours the references, they are at page 239 and 17, respectively – there is a “lack of evidence” at that point as there remains of any “deleterious consequences” of this practice.

Then the issue is, has it become a matter, if it be something that needs attention, if one accepts that proposition, has it become a matter that is better as a matter of policy dealt with by Parliament as deposed by the court system and that is our primary submission that would be so, and particularly when Parliament has itself frequently revisited the Patents Act in the intervening period, revisited it most recently last April in the amendments to come into effect in the coming April, making fundamental changes to the test for inventive step, a definition of “useful”, major change to requirements of full description and fair basing and the like. Some of those amendments actually referring to section 18(2) but Parliament has not taken the opportunity to – doubtless, of course aware as we must accept Parliament is, of the decisions of the Federal Court in Rescare and Bristol-Myers has taken no step to make this important change, Parliament being, with respect, well placed to handle such a change because when Parliament makes changes of that kind it inevitably includes transitional provisions.

It did so in 1990, it did so in 2001 and it has done so in 2012 when looking after the – if it is going to change what has effectively been a long-established practice or approach in patent law, then it is able to do detailed transitional provisions which the courts of course are not, the result of the appellant succeeding we say they will not for – I will get to the detailed reasons – but it would be that potentially a vast number of patents would be eo instanto, retrospectively invalid. If that is to be, that is a matter better handled, in our respectful submission, by Parliament.

The other curiosity that Parliament was even aware of this particular litigation because in the middle of it, during the hearing, I think, Parliament changed its copyright law to take account of an argument which we were mounting and did in fact win about copyright in product information documents. But, in any event, in our respectful submission, the reasoning, as I quoted a moment ago described by Chief Justice Black and Justice Lehane, that the reasoning in Rescare, close and persuasive analysis of principle and authority by Justices Gummow, in the first instance, Lockhart and Wilcox in the Full Court is in fact so plainly correct. Doubtless, their Honours were supported by the advocacy of Mr Catterns who was advocating in Rescare for the position against which he now contends and doubtless –

KIEFEL J: That is unkind, Mr Cobden.

MR COBDEN: I try not to be unkind, your Honour. I was trying to flatter. But I do not have time in 20 minutes to take your Honours to the passages in Rescare, particularly Justice Lockhart, one can see not only surveys the background in the High Court decisions which are mere mentions of an assumption, we submit – and your Honours have seen what we said about that – but also then articulates, as did Justice Gummow, extremely good grounds as a matter of principle and policy why it should be so that there should be no such blanket exclusion of methods of treatment for the human body.

What our learned friends do really is to mount a two-pronged support of their attack on their broad form of the question and we submit that on each prong their argument falls down in this way. The first prong is an a priori attack - really what I have been talking about for the moment ago - that methods of treatment should be excluded from patentable subject matter. They say it is merely a question of construction and not of policy but it does not take much examination, we respectfully submit, of the authorities. Chief Justice Barwick in the Joos Case is explained by Justice Gummow in Rescare, Chief Justice Davison in New Zealand and even though reversed the New Zealand Court of Appeal Justice Wilcox in Rescare are all accepting that policy decisions are inherent in this sort of issue, and indeed when one looks at what we say is the true basis of many of the decisions which is the phrase “generally inconvenient” that your Honours know from section 6 of the Statute of Monopolies it is hard to see how one would avoid considerations of either public policy or whether something is contrary to public policy in looking at this very question.

FRENCH CJ: It is sometimes reflected upon section 6. It is like a big, old, expensive piece of machinery in which one has invested too much into.

MR COBDEN: Yes. Unfortunately, it is wheeled out repeatedly by Parliament and polished up and given to us afresh, your Honour, so I think we have to, with respect. But our learned friend’s first prong which is the attack which to say that a priori methods of treatment of the human body ought not to be a patentable subject matter is in truth, we respectfully submit, a disguised generally inconvenient argument. It is notable that they pleaded but withdrew the generally inconvenient argument. Chief Justice Keane records that at paragraph 24 of his judgment and the fact that their argument is truly based on generally inconvenient is clear by the fact that the applicant refers and relies on Justice Sheppard in Rescare and his Honour reached his Honour’s view on the generally inconvenient basis.

Indeed, generally inconvenient, if we may respectfully say so, is precisely where the argument belongs, because while it is for another case one can understand the application of general inconvenience to, for example, a method of treatment, a particular method of treatment, that involved the angle of the knife in surgery, just as in the Rolls Royce Case where a particular application of fuel saving methods on take-off was held to be generally inconvenient because a pilot piloting a plane, making a decision whether they would land on the Hudson or go on to Teterboro Airport or something like that, should not have to be worrying whether they are infringing a patent in that instance.

Ditto, surgery has often been referred to as being an example of the generally inconvenient ground, but that is nowhere near the orderly and calm management of a patient’s condition in a consulting room and that is why a general broad policy exclusion of methods of treatment of the human body would be wrong. It would be generally inconvenient. It allows one to look at a particular case of the kinds that I have just given perhaps over vivid illustrations.

The second prong, really, of their argument is that the practice of medicine is non-economic. This was squarely dealt with by Chief Justice Barwick in the Joos Case at page 618. I will not take your Honours to it but his Honour said that:

The national economic interest in the product of good surgery – and therefore in the advancement of its techniques – if in no other respect than the repair and rehabilitation of members of the work force –

it is a rather old-fashioned view –

is both obvious and may be regarded as sufficiently proximate, in my opinion, as to be capable of satisfying the economic element of an invention - - -

FRENCH CJ: All that may be right, but even on your argument there may be some advantage in having the matter settled by a decision of this Court if your argument turns out to be correct.

MR COBDEN: If there was an appropriate vehicle for it, your Honour, but we would submit it is not because the applicant has not squarely faced – and it did abandon the case – on it being generally inconvenient. Justice Wilcox in Rescare also said that it in recent years it has become more apparent but medicine and commerce are not total strangers and that was true in 1994. We would say 20 years on it may be regrettable but it is probably even more correct. Those are our submissions on what is called the broader ground, your Honour. I turn to the narrow ground just briefly.

FRENCH CJ: That is 117?

MR COBDEN: No. There is a second manner of manufacture ground, the narrow ground which is the – this is the second and subsequent medical use.

FRENCH CJ: I am sorry, yes.

MR COBDEN: The second subsequent medical used – and that is a factual issue that this is a second or subsequent medical use – secondly, that second or subsequent medical uses are not patentable subject matter. That is what might be called a classic manner of manufacture argument. It is conducted on the face of a specification. Indeed, when leave was granted to raise what is called the narrow question in the Full Court it was on the basis that it would be done in that way, no further evidence, and as Justice Bennett and Yates say at paragraph 195 applying classic manner and manufacture principles on the factual question:

There is nothing on the face of the specification that would suggest that the invention there described is devoid of the necessary quality of inventiveness to sustain a valid patent.

Her Honour, Justice Jago found the same. Chief Justice Keane did not need to get to that point because of the way his Honour approached it. So, we have current findings by three judges below that as a factual matter the applicant cannot make out its position even if there were a principle that second and subsequent medical uses were excluded from patentability but we would ask then where in the text of this statute or even in that magnificent vehicle, section 6 of the Statute of Monopolies, where is it that one finds a basis to read in this precise gloss, that is to say, somewhere in the statute or section 6, other than second or subsequent medical uses. It is not there and, in effect, the applicant wants this Court to write a subsection or a paragraph of the Patents Act. Again, that would be, in our respectful submission, a task for Parliament.

On the section 117 matters I can be brief, again, your Honours. As your Honours know, we prevailed on section 117(2), paragraph (c) “instructions” and paragraph (b) “reason to believe”, if I can use those short hands without taking it any further. Thank you, your Honour. The straightforward way through this is that setting aside the argument of “reason to believe” which is where our learned friends place most of their weight, our case on section 117(2)(c) “instructions” is this, the Chief Justice and three of the judges of the Federal Court – I am sorry, I will start again.

Their case is this; that the Chief Justice and three judges of the Federal Court have construed a document, the PI document, wrongly and that this Court had four judges against them. They should have another go at persuading five judges to see if they can get a different interpretation of a document. That is not the basis on which special leave is granted, in our respectful submission.

If one then returns to the linguistic analysis to which the applicant subjects the judgments below, they would seek to have your Honours think it is all about a double negative in a sentence, but in fact when one looks closely, particularly at Justices Bennett and Yates, they reach that view on their own and they look at – they also took into account the whole of the PI and Justice Jago, of course, had the usual advantages of the trial judge in having being steeped in PIs and in witnesses in this very area. So, it is not a matter in which this Court would likely simply overturn four judges already agreed on the construction of a document.

On the question of “reason to believe” again, we say there are no prospects or no reasonable prospects of success because section 117, as Justices Bennett and Yates pointed out, operates at a level of abstraction. It

does not look like, for example, as one has in a copyright case, for an actual act of primary infringement to complete the section 117 infringement, it looks at likely classes of infringement and the inquiry turns on Apotex’s “reason to believe” and as their Honours held, it was Apotex’s own PI that would have given them reason to believe that positions would have been intending to treat - an object of intending to treat - psoriasis, as well as PsA because that is what their own PI – copied from ours – said.

That was in evidence and as Justices Bennett and Yates pointed out, it is not an unrelated – an arid instruction, there was actual evidence, their own witness, a rheumatologist, Professor Brooks, the head of the pack in the research area, which was why his views on some prior art were not relevant to the skilled addressee, but as a practising rheumatologist just working day in day out with leflunomide, he said he would intend to treat the patient’s psoriasis. Faced with those two pieces of clear evidence that Apotex would have “reason to believe” Apotex led no evidence at all about what a party in its position did know, or was likely to know, or knew about the activities at the prescribing coal face. So although we would only need to win on “instructions” - paragraph (c) - we would respectfully submit that there would be insufficient prospects of success on paragraph (b) either and so special leave would not be granted. Those are our submissions. May it please the Court.

FRENCH CJ: Thank you, Mr Cobden. We will not need to trouble you, Mr Catterns.

We are of the view that there should be a grant of special leave on ground 2, the notice of appeal, and that ground 3 which is the section 117 point should be referred to an enlarged Bench.

MR CATTERNS: May it please the Court.

FRENCH CJ: Now, estimate of time, Mr Catterns?

MR CATTERNS: Your Honour, to do the matter justice, in terms of the international position, we would think a second day.

FRENCH CJ: Right. Do you agree with that, Mr Cobden?

MR COBDEN: We would say yes, your Honour.

FRENCH CJ: Right. You will see there is an instruction or directions in relation to time limits for filing, appellant’s submissions should be filed by 25 January.

MR CATTERNS: May it please the Court.

FRENCH CJ: Thank you. Call the next matter, please.

AT 10.12 AM THE MATTER WAS CONCLUDED