We previously reported on the 21 March 2017 decision of Burley J of the Federal Court of Australia in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCA 285, in which his Honour dismissed Pfizer’s application for preliminary discovery of documents relevant to determining whether a registered biosimilar product might infringe one or more patents claiming manufacturing processes. Pfizer appealed the decision of Burley J and on 29 November 2017, the Full Court of the Federal Court of Australia (Allsop CJ, Perram and Nicholas JJ) delivered its decision upholding Pfizer’s appeal: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193. Accordingly, the Samsung Bioepis parties (SBA and SBK) will now be required to give preliminary discovery, although the matter has been remitted to Burley J for determination of the final form of the orders, including any questions of confidentiality, and the question of the costs of the application at first instance.
Issues in the Full Court appeal
The dispute concerns Pfizer’s patents claiming a process relevant to making a biological medicine, etanercept, which treats autoimmune disorders including rheumatoid arthritis, juvenile rheumatoid arthritis and psoriatic arthritis, plaque psoriasis and ankylosing spondylitis. Pfizer’s established etanercept product is sold in Australia under the name ENBREL. SBA obtained regulatory approval for, and subsequently launched commercially, an etanercept product under the name BRENZYS. The regulatory approval was obtained on the basis that it was a “biosimilar” of ENBREL.
The key issues in Pfizer’s appeal were:
- the standard of proof and belief that Pfizer, as prospective applicant, had to demonstrate to obtain preliminary discovery orders under rule 7.23 of the Federal Court Rules 2011 (Cth); and
- whether the opinion evidence of Pfizer’s in-house scientific expert that Pfizer’s own ENBREL product was produced by processes falling within Pfizer’s patents should have been admitted into evidence in circumstances where the primary documents relating to Pfizer’s own manufacturing processes had not been produced to support the expert’s opinion.
The Full Court’s reasons regarding the standard of proof and belief for preliminary discovery
The parties’ competing positions were neatly summarised by Allsop CJ at [22]-[23]:
“Simply put, Pfizer submitted that the evidence revealed that the biosimilarity of ENBREL and BRENZYS and the close similarity of the glycosylation profiles of the two products led [Pfizer’s internal scientific expert] Dr Ibarra (and so, [Pfizer’s Assistant General Counsel] Mr Silvestri) reasonably to believe that SBA may be using the same process in phase (b) as Pfizer and so may be using the patents. Crucial to this belief were three considerations: first, the close similarity of the two glycosylation profiles; secondly, the likelihood of that close similarity deriving from the similarity of process used by both companies in phase (b); and thirdly, the fact that Dr Ibarra’s view (which she conveyed to Mr Silvestri) was that Pfizer’s process was in accordance with the patents (or one or more of them).
SBA in answer, simply put, contended [with support from experts, particularly a Professor Gray] that the close similarity in the glycosylation profile of the two products was a feature of biosimilarity which could have been brought about by matters concerned with phase (a) or phase (c) or phase (b) or a combination of them all and that it was insufficient to lead one reasonably to believe that SBA may be infringing the patents.”
As can be seen from this passage, the manufacturing process for etanercept involved three phases (a), (b) and (c). Pfizer’s patents covered only phase (b). Dr Ibarra’s evidence attributed the glycosylation profile of BRENZYS, and its similarity to the glycosylation profile of ENBREL, to a manufacturing process which included Pfizer’s patented “phase (b)”. SBA contended that the similarity could equally arise from similarities in phases (a) and/or (c) of the product process, or any combination of the various phases. A key aspect of Burley J’s decision was that, having considered the competing expert evidence, Dr Ibarra’s opinion was “not persuasive”. The Full Court identified this aspect of Burley J’s approach as involving error.
The Full Court emphasised the summary nature of a preliminary discovery application, as provided by words of Rule 7.23, and the need to act accordingly. As Allsop CJ put it at [69], “[t]here appears to be a real scientific contest about that in the particular circumstances here…[t]here has been no trial of the issue, no cross-examination and the presentation of competing views…Dr Ibarra may be wrong, but it is difficult to see how her views can be put to one side as unreasonable or untenable in a hearing such as took place”.
As articulated by Allsop CJ at [70], “[t]he correct question was not who was more persuasive or to be preferred, but whether Dr Ibarra’s views so lacked foundation that reliance on them by Mr Silvestri did not demonstrate that he reasonably believed that Pfizer may have a right to obtain relief” (emphasis added). Similarly, Perram J explained at [134] that “[t]he question was not whether Professor Gray was right and Dr Ibarra was wrong [but] whether the belief held by Mr Silvestri, the Assistant General Counsel and directing mind of Pfizer, was reasonable (either on what was before him or subsequently, the Court)”.
Each judge of the Full Court was satisfied that Mr Silvestri, informed by the evidence of Dr Ibarra, held the requisite reasonable belief that Pfizer’s process patents may have been infringed by SBA and SBK in the manufacture of BRENZYS.
The Full Court’s reasons regarding Pfizer’s expert evidence
SBA objected to the admission of Dr Ibarra’s evidence that Pfizer’s own ENBREL product was produced by processes falling within Pfizer’s patents, arguing that there was a failure to lay a foundation for the evidence because Pfizer had not produced its primary documents relating to its own manufacturing processes. Clearly, Pfizer did not want to disclose its manufacturing processes to a competitor, even under a confidentiality regime. The Full Court was satisfied that the evidence was admissible to prove that Pfizer in fact believed it may have a right to relief, as Mr Silvestri had read and relied upon the affidavit of Dr Ibarra, knowing her technical expertise and particular familiarity with Pfizer’s patents. The Full Court was also satisfied that, once it had been admitted into evidence (without any restriction as to how it could be relied upon), the Court was entitled to consider Dr Ibarra’s evidence in evaluating the reasonableness of Pfizer’s belief. Because the only issues were whether Pfizer held the requisite belief and that belief was reasonable, the Court did not need to consider whether Dr Ibarra’s evidence in fact proved that ENBREL was made using Pfizer’s patented process, and therefore any lack of foundation was not relevant.
Implications
Although each judge delivered separate reasons, this Full Court decision provides clarity as to the requirements for prospective applicants seeking preliminary discovery of documents bearing on whether they may have a claim for patent infringement, as well as to prospective respondents resisting such preliminary discovery applications. The following summary by Perram J at [120]-[121] is particularly instructive (emphasis in original judgment):
“The following propositions about preliminary discovery applications should be accepted:
(i) the prospective applicant must prove that it has a belief that it may (not does) have a right to relief;
(ii) it must demonstrate that the belief is reasonable, either by reference to material known to the person holding the belief or by other material subsequently placed before the Court;
(iii) the person deposing to the belief need not give evidence of the belief a second time to the extent that additional material is placed before the Court on the issue of the reasonableness of the belief. That belief may be inferred;
(iv) the question of whether the belief is reasonable requires one to ask whether a person apprised of all of the material before the person holding the belief (or subsequently the Court) could reasonably believe that they may have a right to obtain relief; and
(v) it is useful to ask whether the material inclines the mind to that proposition but very important to keep at the forefront of the inclining mind the subjunctive nature of the proposition. One may believe that a person may have a case on certain material without one’s mind being in any way inclined to the notion that they do have such a case.
In practice, to defeat a claim for preliminary discovery it will be necessary either to show that the subjectively held belief does not exist or, if it does, that there is no reasonable basis for thinking that there may be (not is) such a case. Showing that some aspect of the material on which the belief is based is contestable, or even arguably wrong, will rarely come close to making good such a contention”.
It is clear, therefore, that the threshold for patentees seeking preliminary discovery regarding suspected infringements is lower than that imposed by Burley J. The approach expounded by the Full Court is consistent with the wording of Rule 7.23, the summary nature of a preliminary discovery application and steps that a patentee might reasonably be expected to take to show a reasonable belief that there may be an infringement. Patentees, particularly for process patents, can be encouraged by this decision when considering potential preliminary discovery applications in future.
Many will see this important decision as not only correcting (by pulling back) the standard of proof and belief required of prospective applicants for preliminary discovery, but also as a statement by the Full Court that parties should not, to paraphrase Allsop CJ at [84], “over-refine” their evidence and arguments in contesting preliminary or interlocutory disputes. In particular, Allsop CJ sought at [2] to “…highlight the way the existing authorities appear to have been influencing these applications into a form of mini-trial here a form of fact finding takes place, well beyond the mandate of the words of the rule”, that “…the words of the rule are the framework of analysis for deciding applications under the rule” and that “…these are summary applications not mini-trials”. This is consistent with the approach to litigation his Honour has championed in recent years since becoming Chief Justice, including by establishing specialised national practice areas and issuing a suite of pragmatic new practice notes to guide the conduct of different types of disputes as efficiently as possible.
If SBA and SBK wish to seek special leave to appeal this Full Court decision to the High Court of Australia, they must do so by 27 December 2017 (which is a public holiday, so any application is likely to be filed before Christmas).