Biosimilars Deals 2021

AFT Pharmaceuticals Limited [2024] APO 41 (8 October 2024)

Highlight

In October 2024, Delegate C. Mitchell of the Australian Patent Office upheld a decision to reject AFT Pharmaceuticals’ (AFT) drug combination patent applications – AU2022201576 (’576) and its divisional child AU2023222825 (‘825) – for lack of inventive step.

The claimed inventions proposed combining:

• paracetamol and ibuprofen (both oral analgesics); and
• xylometazoline (a nasal decongestant spray)

for the treatment of common colds.

History & Key Issues

The claims in the ‘576 application included Swiss-type claims and method of treatment claims reciting existing treatment regimens and routes of administration.  Dependent claims further defined specific dosages, formulations and treatment results.

During prosecution of the ’576 application, AFT failed to overcome the Examiner’s objection that the claimed invention related to mere aggregates of known components which lacked any inventive contribution.

The Examiner reasoned that:

(i) multi-ingredient treatments for cold and flu were well-established before the priority date, with the prior art supporting this position;

(ii) combining well-known cold/flu medications, such as those claimed in the ‘576 application, lacked an inventive step as it was routine practice in the field to administer these medications to treat a common cold, with the combination treatment being common general knowledge (CGK);

(iii) the drugs were administered at known dosages, via conventional routes of administration, and at different times of the day according to each drug’s standard treatment regimen; and

(iv) AFT failed to demonstrate any surprising or synergistic effect from the combined treatment.

AFT requested a hearing on the ‘576 application, and at the same time filed the ’825 application as a divisional from the ’576 application.  The ‘825 application, however, suffered from the same issues as its parent application.  As a result, both applications were considered at the hearing which AFT had requested for the ‘576 application.

At the hearing, AFT argued that:

(i) the prior art did not explicitly suggest the claimed combination or specific dosage regimen;

(ii) side effect concerns from treatment with xylometazoline, such as the “3-day rebound problem” with decongestants would lead a skilled person away from this formulation; and

(iii) secondary evidence, such as improved clinical efficacy and patient convenience, supported the invention’s non-obviousness.

Consideration

Skilled Person and Common General Knowledge

The Delegate uncontroversially determined that the person skilled in the art was likely to be a pharmaceutical scientist who was skilled in formulating a variety of drug formulations, potentially working with pharmacists and clinicians.

The Delegate made a number of findings on the CGK at the relevant priority date.  In particular, the Delegate considered that the evidence showed that:

• Cold and flu treatments were well-established, with both analgesics and decongestants being routinely used in combination.
• Analgesics had long been accepted for their ability to relieve cold and flu symptoms by inhibiting inflammatory processes, with both paracetamol and ibuprofen recognised as safe and effective treatments.
• The CGK around decongestants was well-developed, with documented understanding since the 1980’s about their effects and side effects depending on individual factors and duration of use.

The Delegate also noted that the patent specification lacked commonly known information on multi-ingredient combinations of cold and flu drugs.  For example, it did not refer to common over-the-counter multi-active combination medicaments, such as paracetamol and pseudoephedrine, that had been used for over 60 years as cold and flu treatments.

Inventive Step

The Delegate found that each of the claimed active ingredients, when considered individually, was defined in commonly known dosage formulations.  This raised the question of whether the skilled person would, as a matter of course, prepare a medication combining these known actives in their known dosage formulations for treating cold and flu.  The Delegate concluded they would, noting that analgesics were commonly used together and that it was routine to recommend that nasal decongestants be used with analgesics for cold and flu treatment.

The Delegate also considered the CGK in combination with prior art ‘D1’ (a 2020 edition of a resource by the Institute for Quality and Efficiency in Health Care, summarising key health information from Germany’s national health information portal).  The Delegate noted that, although D1 did not specifically mention xylometazoline, the CGK clearly indicated xylometazoline was an often-recommended decongestant for cold and flu treatment.  The Delegate concluded that D1, together with the CGK, clearly taught the provision of sprayable xylometazoline with oral ibuprofen or paracetamol as a medication for cold and flu treatment.

Secondary Evidence

The Delegate was also unpersuaded by AFT’s secondary evidence, including arguments about improved clinical efficacy and concerns about the “3-day rebound problem” with decongestants.  The Delegate concluded that the supposed improved clinical efficacy would have been achieved given the skilled person would have inevitably arrived at taking the active ingredients together to independently relieve cold and flu symptoms.  Regarding the “3-day rebound problem”, the Delegate gave this little weight as the claimed invention did not specify a duration of treatment, nor was it mentioned in the patent specifications.

Outcome

The Delegate agreed with the Examiner and concluded that the claims merely aggregated known components without offering an inventive contribution.

The Delegate commented that he did not see a path forward for AFT to amend the claims to overcome the objections and so both applications were refused.

Implications

This decision reinforces the standard of inventiveness set by the “Raising the Bar” Patents Act, which exists to ensure that the Australian patent system rewards genuine innovation.  Where a combination patent is directed to existing treatments, a surprising or synergistic effect must be demonstrated to meet the required level of inventiveness.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.

Commonwealth of Australia v Sanofi [2024] HCA 47

Highlight

In a split 3:2 decision, Gordon A-CJ, Edelman and Steward JJ of the High Court (the Majority) has dismissed the Commonwealth’s appeal in which the Commonwealth sought to overturn the decision of Justice Nicholas of the Federal Court of Australia (affirmed on appeal by the Full Court of the Federal Court) that the Commonwealth was not entitled to compensation on an undertaking as to damages given by Sanofi when it obtained an interlocutory injunction preventing Apotex Australia from launching generic clopidogrel products in Australia.

Justices Jagot and Beech-Jones delivered two strong dissenting judgments, finding that there were clear errors in the primary Judge’s and Full Court’s decisions which meant the appeal should be upheld.  Both Judges also warned against bringing the administration of justice into disrepute given the apparent contradictory position which Sanofi put to Justice Gyles when it sought the interlocutory injunction (that is, that Apotex Australia would launch if an interlocutory injunction was not ordered) and later when it resisted the Commonwealth’s application for compensation pursuant to the undertaking as to damages (that is, that no such threat existed from Apotex Australia).

The High Court’s judgment brings to an end 14 years of patent litigation in relation to clopidogrel.

Background

Sanofi was the owner of Australian patent 1988011292 (the Patent) for the drug clopidogrel which is used to treat patients who have suffered or are at risk of a heart attack or stroke.  Sanofi marketed its clopidogrel product under the brand name Plavix®.  Sanofi sued Apotex Australia for patent infringement when Apotex Australia sought to launch generic clopidogrel products in Australia.  On 25 September 2007, Sanofi gave the usual undertaking as to damages upon obtaining an interlocutory injunction against Apotex Australia which prevented Apotex Australia from launching its generic clopidogrel products in Australia.  Apotex Australia separately undertook not to take steps to obtain listing on the Pharmaceutical Benefits Scheme (PBS) of its generic clopidogrel products.  Sanofi was granted a final injunction at first instance.  However, the Full Court of the Federal Court overturned this final injunction on appeal, ordering that the Patent be revoked.  The High Court refused Sanofi’s special leave application.

On 11 April 2013, the Commonwealth commenced proceedings on the undertaking as to damages, alleging that, but for the interlocutory injunction, Apotex Australia would have obtained PBS-listing of its generic clopidogrel products on 1 April 2008 which would have led to a reduction in prices for clopidogrel products.  Justice Nicholas (the primary judge) dismissed the Commonwealth’s application, finding (in summary) that:

• approximately $314 million (out of the Commonwealth’s $325 million claimed loss) was not within the scope of the undertaking as to damages, because “the interlocutory injunction and the undertaking given in support of it were ‘totally eclipsed’ by the grant of the final injunction”; and
• the Commonwealth had not proven on the balance of probabilities that Apotex Australia would have sought and obtained PBS-listing for its clopidogrel products from 1 April 2008 if the interlocutory injunction had not been granted.

The Full Court of the Federal Court (the Full Court) on appeal upheld Justice Nicholas’ decision, unanimously affirming the reasoning and ultimate conclusion of the primary judge.  See here for our report on the Full Court’s decision.

Key Issues and Consideration

Majority Judgment

The Majority framed the two key issues before the High Court as being:

1. The onus of proof in a claim made on an undertaking as to damages, and whether, based on the facts before the courts, the Commonwealth had discharged its onus of proof.  The Commonwealth alleged that the Full Court erred in not holding: (i) that the Commonwealth’s evidential burden was to establish a prima facie case that its loss flowed directly from the interlocutory injunction; and (ii) that, once that was established, an evidential burden shifted to Sanofi to establish that Apotex Australia would not have sought listing on the PBS even if not enjoined.

2. Whether the Full Court erred in failing to find, by inference from the evidence, that, if there had been no interlocutory injunction, it was likely that Dr Sherman (co-founder of Apotex Inc, its Chief Executive Officer and Chairman and the “ultimate controller” of the Apotex group (including Apotex Australia)), would have reconfirmed the plan for Apotex Australia to seek PBS-listing.

The Majority held against the Commonwealth on the first key issue, affirming that no rigid legal rule constrains how the evidential onus may shift in a proceeding assessing compensation on an undertaking as to damages.  The High Court considered that the Commonwealth bore the legal and evidentiary onus of proof on causation of loss within the scope of the damages undertaking during the term of the interlocutory injunction (25 September 2007 when the interlocutory injunction was granted and 19 August 2008 when Justice Gyles ordered the final injunction).  This meant that the Commonwealth was required to establish on the balance of probabilities that Apotex Australia would have sought and obtained PBS-listing but for the interlocutory injunction.

Turning to the second key issue, the Majority stressed the limited circumstances in which the High Court should review findings of fact made by a primary judge, which were not disturbed by the intermediate appellate court.  This meant that, absent any issue as to individual rights or special or exceptional circumstances such as plain injustice or clear error, the High Court would not undertake a detailed review of concurrent (intermediate and ultimate) factual findings of lower courts.  In the Majority’s opinion, the appeal did not raise any issue as to individual rights and the primary judge’s and Full Court’s reasoning was not clearly wrong or productive of injustice.

Ultimately, the Majority held that that the concurrent findings of fact made by the primary judge and the Full Court, which supported the conclusion that Apotex Australia would not have sought and obtained listing of its clopidogrel products on the PBS on 1 April 2008, and so would not have launched its generic products if it had not been subject to the interlocutory injunction, were open and were not clearly wrong.  Further, and in any event, the Majority considered that it was not open to the Commonwealth on appeal to revisit many of the factual findings that it sought to reopen.

The Majority considered that the following four significant reasons established that the concurrent findings were both open, free from clear error and compelling:

• First, the decision as to whether to launch at risk was to be made by Dr Sherman and any intention that Dr Sherman had to launch at risk in September 2007 was conditional.
• Secondly, even if Dr Sherman held an intention in early September 2007 to launch at risk, the concurrent findings of the primary judge and the Full Court were that two unexpected events in September 2007 might have changed Dr Sherman’s mind about launching at risk in Australia.  The first unexpected event was that Apotex Australia inadvertently missed the 1 September 2007 deadline for applications for PBS-listing by 1 December 2007.  The second unexpected event was that Justice Gyles, the judge who would hear the interlocutory injunction, informed the parties of his preference for an expedited final hearing.  Taken together, these two unexpected events meant that the launch at risk would occur, at the earliest, only four weeks before the trial concerning the validity of the Patent and approximately 4 months before a judgment from that trial would be delivered by Justice Gyles (prior to his retirement from the Federal Court).
• Thirdly, the concurrent findings of the primary judge and the Full Court were that a risk/return analysis might have affected a final decision as to whether to launch at risk, particularly given the imminent trial and judgment from that trial which would have removed any risk.
• Fourthly, at the relevant time, and with the benefit of risk/reward analyses, Mr Kay (President of Apotex International Inc) expressed serious doubts about whether to launch at risk, pending an appeal, if Apotex Australia was successful in invalidating Sanofi’s patent.

Justice Jagot

Justice Jagot disagreed with the Majority, holding that:

• This was not a case in which the principle of appellate restraint in the face of relevant concurrent findings of fact by the Courts below was engaged, as the primary judge and the Full Court had not “confronted the evidence and reached a conclusion informed by that confrontation”.
• On the evidence before the Courts, the primary judge’s and the Full Court’s reasoning process involved clear error resulting in plain injustice and demanding the High Court’s intervention. In particular, Justice Jagot considered that the best evidence of what Dr Sherman could or would have done in response to the two unexpected events was what he in fact did (which was to continue to pursue PBS-listing and launch of Apotex Australia’s clopidogrel products on 1 April 2008).
• Given the clear errors in the primary judge’s and Full Court’s decisions, it would have been plainly unjust if the High Court did not consider the whole of the evidence the parties put before it to determine the Commonwealth’s appeal. Further, the potential injustice was all the greater given that the Commonwealth was the only person other than Apotex Australia to have been at a real risk of loss from the (ultimately) wrongful grant of the interlocutory injunction.
• Once the Commonwealth’s case and all of the evidence the Commonwealth relied upon were considered, the unavoidable conclusion was that the Commonwealth proved that, but for the grant of the interlocutory injunction on 25 September 2007, Apotex Australia would have applied for (and obtained) PBS-listing of its generic clopidogrel products and would have launched these products in Australia on and from 1 April 2008.

Justice Jagot also disagreed with the Majority on the risk/return analysis.  In her Honour’s view, the “potentially ruinous damages” which Apotex Australia faced would only arise if Apotex failed to have the Patent declared invalid and revoked, an eventuality which the evidence indicated that Dr Sherman considered was most unlikely.  Against that low risk of Apotex Australia failing to have the Patent declared invalid and revoked, there was an “enormous upside” for Apotex if it obtained PBS-listing and launched its clopidogrel products in Australia.

Justice Jagot went on to provide two warnings:

• First, to warn against the relative unreliability associated with any witness giving hypothetical evidence of what they would have done in a past hypothetical situation, compared to “contemporaneous documentary and other contextual evidence [which] was available in this case to inform the assessment of the possibilities and the probabilities relevant to the ultimate question”. On this point, Justice Jagot noted that Mr Millichamp (Apotex Australia’s Managing Director), who was responsible for implementing Dr Sherman’s decisions in Australia, was called to give evidence.  This meant that, having called Mr Millichamp to give evidence, there would have been no expectation of the relevant kind that the Commonwealth must also call Dr Sherman to give evidence, which would thereby engage the kind of inference considered in Jones v Dunkel.
• Secondly, to warn against bringing the administration of justice into disrepute in circumstances where one judge was persuaded that there was a real threat of potentially unlawful action requiring restraint, only for another judge years later to conclude there was no such threat at all. This issue arose from the apparent contradiction between:
  • Sanofi having sought an interlocutory injunction (with the associated undertaking as to damages), acting in good faith on a reasonable belief that: (a) if not restrained, Apotex Australia would carry out the threatened act; and (b) if it was ultimately wrong about its legal right to prevent that act, it would be liable to not only to Apotex Australia but also to adversely affected third parties; and
  • Sanofi now contending that the very thing which it sought to prevent by obtaining the interlocutory injunction would not have occurred in any event.

Justice Beech-Jones

Justice Beech-Jones agreed with Justice Jagot’s reasoning on all issues, subject to the specific matters his Honour addressed in his judgment.

Like her Honour Justice Jagot, Justice Beech-Jones considered that:

• The primary judge and the Full Court did not properly address the Commonwealth’s case, and that there was both “clear error” as well as a “plain injustice” to the Commonwealth because its case was not addressed on its merits.
• The Commonwealth had “overwhelmingly” proven that, had the injunction been refused, Apotex Australia would have sought and obtained a PBS-listing of its clopidogrel products with effect from 1 April 2008 and launched in Australia.

Justice Beech-Jones also sounded a warning in relation to the apparent contradictory position which Sanofi put to the Court when it sought the interlocutory injunction and later when it resisted the Commonwealth’s application for compensation on the undertaking as to damages.  His Honour stated at [340]:

The premise of the reasoning of the courts below is that if one of those litigants informed a court that, absent an injunction restraining them from doing so, they intended to launch a product on the market when that was not their intention, then that would not be deceitful conduct attracting severe consequences. That premise should not be countenanced. When the unequivocal statements made on behalf of Apotex Australia … to the Federal Court of Australia on 18 September 2007 about its intention to launch its range of clopidogrel pharmaceutical products are understood in that context, then the findings of the courts below cannot be sustained and the appellant, the Commonwealth of Australia, should succeed.

His Honour, however, went on to state that:

• There was no evidence that Mr Millichamp’s evidence did not represent his understanding of Apotex Australia’s intentions or that Apotex’s Senior Counsel’s statements to Justice Gyles did not genuinely represent his instructions.
• While Dr Sherman was its directing mind, Apotex Australia had already committed to PBS-listing and launching at risk by informing Justice Gyles that it would do so.  Although the statements made concerned Apotex Australia’s future intentions, they were made to a court and so could not be withdrawn without good reason.  This meant that there was no scope for any application of Jones v Dunkel or any analogous principle to detract from the evidentiary force of the statements made to Justice Gyles.

Outcome 

So, in a split 3:2 decision, the High Court dismissed the Commonwealth’s appeal in which the Commonwealth sought to overturn the decision of Justice Nicholas (affirmed on appeal by the Full Court) that the Commonwealth was not entitled to compensation on an undertaking as to damages given by Sanofi when it obtained an interlocutory injunction preventing Apotex Australia from launching generic clopidogrel products in Australia.

Implications 

The High Court’s decision sets out the key principles which are applied when the High Court determines appeals from lower courts, such as the Federal Court of Australia.  While the five High Court judges hearing the Commonwealth’s appeal agreed on these key principles, the judges differed in the application of these principles to the facts of the Commonwealth’s appeal.  This ultimately led the Majority to dismiss the appeal, holding that there were no individual rights in issue and no special or exceptional circumstances such as plain injustice or clear error.

In their two dissenting judgments, Justices Jagot and Beech-Jones critically warned against bringing the administration of justice into disrepute given the apparent contradictory position which Sanofi put to Justice Gyles when it sought the interlocutory injunction (that is, that Apotex Australia would launch if an interlocutory injunction was not ordered) and later when it resisted the Commonwealth’s application for compensation pursuant to the undertaking as to damages (that is, that no such threat existed from Apotex Australia).

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.

Abbey Laboratories Pty Ltd v Virbac (Australia) Pty Ltd [2024] FCA 1488

Highlight

Justice Jackman of the Federal Court has refused to grant Virbac (Australia) Pty Ltd (Virbac) an interlocutory injunction to restrain Abbey Laboratories Pty Ltd (Abbey) from launching a generic version of Virbac’s Cydectic Platinum, used to treat and control parasites in beef and dairy cattle.  Justice Jackman’s decision confirms the importance of not delaying when seeking injunctive relief, while also highlighting the relative difficulties faced by each party to quantify its potential losses.

Background

The dispute concerns AU2012227241 (the Virbac Patent) regarding a veterinary topical formulation marketed by Virbac under the name Cydectic Platinum.

In July 2023, Abbey applied to register its generic version of Virbac’s product, Levamox Duo.  In September 2023, Virbac wrote to Abbey informing Abbey that it was aware of the application.  Despite multiple exchanges between the parties in early 2024 which made it clear that the launch of the generic animal health product was imminent, it was not until December 2024 that Virbac sought an interlocutory injunction.  This delay of 10 months between being made aware of Abbey’s application and seeking an interlocutory injunction was terminal to Virbac’s application.

• In July 2023, Abbey applied to register its generic version of Virbac’s product, Levamox Duo. In September 2023, Virbac wrote to Abbey informing Abbey that it was aware of the application.
• Further exchanges followed in February 2024.  Abbey confirmed to Virbac that its application would soon proceed to registration (it in fact achieved registration the following day) and that Abbey was “in the process of getting ready to launch Levamox Duo onto the Australian market”.
• Virbac responded later that month reserving its rights to prevent Abbey’s proposed launch, but did not seek any undertakings to refrain from launching nor threaten an interlocutory injunction.
• In late February 2024, Abbey’s solicitors wrote to Virbac stating that the launch of Levamox Duo would not infringe any valid patent rights and flagged Abbey’s intention to seek revocation of the Virbac Patent if Virbac sought to enforce it against Abbey.
• Virbac responded in April 2024 reserving its right to issue infringement proceedings without further notice if Abbey proceeded with its planned launch.
• In May 2024, Abbey commenced revocation proceedings.
• Virbac’s June 2024 correspondence only indicated an intention to cross-claim for infringement and seek expedition should Abbey launch prior to a final hearing – making no demand for any undertaking nor threatening an application for injunctive relief.
• Throughout 2024, Abbey continued its launch preparations, facing some delays due to regulatory and manufacturing issues.
• By November 2024, Abbey had begun marketing Levamox Duo at industry conferences, considering the December conference season critical for securing orders for 2025.

In December 2024, Virbac sought an interlocutory injunction to prevent the product launch, with the final hearing of the dispute set for May 2025 before Justice Jackman.

Key Issues

There was considerable debate before the judge as to the principles applicable to the question of whether there was a serious question to be tried in relation to the validity of the Virbac Patent.  Justice Jackman considered it unnecessary to decide this question, and instead assumed that there was a serious question to be tried.

So, the only remaining issue to be considered was whether the balance of convenience favoured granting the injunction.  In the animal health space, preliminary injunctions against generic products are not the norm, unlike for human pharmaceutical products where the existence of the compulsory 15% PBS price drop on generic entry significantly impacts the assessment of the balance of convenience.

In this case, in finding that the balance of convenience favoured no preliminary injunction, Justice Jackman focused on:

• the significance of Virbac’s 10-month delay in seeking injunctive relief; and
• the relative ability of each party to quantify its potential losses.

Consideration

Substantial Delay

Justice Jackman gave significant weight to Virbac’s delay in seeking injunctive relief.  His Honour noted that Virbac had known since February 2024 (10 months before seeking injunctive relief) that Abbey intended to launch Levamox Duo in Australia, and that it could have inferred as much since at least September 2023 when Virbac knew of Abbey’s application to register Levamox Duo.

Moreover, his Honour pointed out that Virbac’s solicitors’ email in June 2024 “expressly contemplated the scenario in which Abbey launched Levamox Duo before a final hearing had occurred”.  Despite this, Virbac never sought an undertaking from Abbey not to launch, nor threatened interlocutory relief.  In these circumstances, Justice Jackman considered that Abbey was “fully justified” in thinking no injunctive application would be made, underscoring its decision to continue launch preparations throughout 2024.

Quantification of Damages

Justice Jackman found that the detriment to Virbac if the injunction was not granted would be much more readily quantifiable in damages than the detriment to Abbey if the injunction was granted.

Virbac’s marketing manager gave evidence that, if an injunction was denied:

• Virbac would need to reduce Cydectin Platinum’s price and would lose market share.
• The introduction of a generic animal health product within the first 10–15-year period of an originator coming to market, which is the most profitable period, would negatively impact long-term profitability.
• Virbac would need to substantially shift its sales strategy for Cydectin Platinum, which would involve reductions in price and reallocation of resources.
• The price reductions caused by the introduction of a generic animal health product would likely be permanent, even if that generic were to subsequently be withdrawn from the market, as a later price increase would erode consumer trust in the originator brand and motivate switching to cheaper but less effective alternatives.
• Other generic animal health suppliers would likely launch within 3-6 months of the launch of Levamox Duo.

Justice Jackman considered that although some aspects of Virbac’s potential loss may be more readily quantifiable than others, this was not an insurmountable task, especially given Virbac’s established track record of sales and market share since 2020.

In contrast, his Honour found that Abbey would face significant issues quantifying its losses if injuncted.  Abbey’s evidence highlighted several difficult-to-quantify factors, including:

• The need to notify customers that Abbey would not be able to fill orders already placed, causing financial loss and also reputational damage amongst both its over-the-counter customers, as well as farmers who were expecting to receive the product for use in 2025.
• The reputational consequences would likely extend to Abbey’s other product ranges.
• Abbey would lose its ‘first mover’ advantage.
• It would be difficult to accurately predict the market share a generic might accumulate post-launch as there was no information about the actual market size. Mr Findlay noted that Abbey would need to rely on a “gut feel” to gauge the size of the market, which becomes more difficult if there are additional generic entrants.

Referring to the findings of Burley J in Sanofi-Aventis Deutschland GmbH v Alphapharm Pty Ltd (No 3) [2018] FCA 2060, Justice Jackman noted the “inherent difficulty” and “speculative” nature of trying to prove the extent of lost sales and profits where there is little or no actual market experience involving Abbey’s product.

Outcome 

Justice Jackman dismissed Virbac’s application, finding that the balance of convenience did not favour restraining Abbey’s launch of Levamox Duo.  His Honour was also satisfied that Abbey’s undertaking to maintain detailed accounts of its sales pending final determination of the matter was sufficient.

Implications 

Justice Jackman’s decision emphasises the importance of acting promptly once a patentee becomes aware of a competitor’s intention to launch a generic product.  Patentees cannot adopt a ‘wait and see’ approach while generic manufacturers invest in launch preparations, and then expect to be able to later apply for and obtain injunctive relief.  Simply reserving rights or warning of potential infringement proceedings may be insufficient where the patentee failed to actively protect its rights through clear and timely demands for undertakings and injunctive relief.

His Honour’s decision also emphasizes the “inherent difficulty” and “speculative” nature of trying to prove the extent of lost sales and profits where there is little or no actual market experience.  This was a key factor in Justice Jackman’s determination that the detriment to Virbac if the injunction was not granted would be much more readily quantifiable in damages than the detriment to Abbey if the injunction was granted.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.