Roche Therapeutics, Inc v GenRx Pty Ltd [2007] FCA 83 (9 February 2007)

INTELLECTUAL PROPERTY – pharmaceutical patent – interlocutory hearing seeking injunctions to prevent alleged infringement – whether serious question to be tried as to whether there will be infringement – whether patent is invalid – whether impugned products would infringe patent even if valid – where balance of convenience lies

National Health Act 1953 (Cth)
Patents Act 1990 (Cth) ss 7, 18, 117, 138
Therapeutic Goods Act 1989 (Cth)

Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 50 FCR 1 referred to
Gillette Safety Razor Company v Anglo-American Trading Co Ltd (1913) 30 RPC 465 referred to
Hexal Australia Pty Limited v Roche Therapeutics Inc [2005] FCA 1218 referred to
Re BA’s Application (1915) 32 RPC 348 referred to
Rescare Limited v Anaesthetic Supplies Pty Limited (1992) 25 IPR 119 referred to

Macquarie Dictionary, 4^th ed, Macquarie University, 2005
Shorter Oxford English Dictionary, 5^th ed, Oxford University, 2002

Gilbert EM, Olsen SL, Mealey P, Volkman K, Garrabee P, and Bristow MR "Is beta-receptor up-regulation necessary for improved LV function in dilated cardiomyopathy?" (Paper presented at EMH Milan, 1991).
Kelly DT, "Carvedilol in Heart Failure", Cardiology 1993, 82 (Suppl 3). 45-59.
Metra M, Nardi M, Giubbini R, Dei Cas L, "Effects of Short- and Long- Term Carvedilol Administration on Rest and Exercise Hemodynamic Variables, Exercise Capacity and Clinical Conditions in Patients with Idiopathic Dilated Cardiomyopathy" J Am Coll Cardiol vol 24, no 7, 1994.

ROCHE THERAPEUTICS, INC & ORS v GENRX PTY LTD

NSD2429 OF 2006

EMMETT J
9 FEBRUARY 2007
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD2429 OF 2006

BETWEEN:	ROCHE THERAPEUTICS, INC First Applicant F HOFFMAN-LA ROCHE AG Second Applicant ROCHE PRODUCTS PTY LTD Third Applicant
AND:	GENRX PTY LTD Respondent

JUDGE:	EMMETT J
DATE OF ORDER:	9 FEBRUARY 2007
WHERE MADE:	SYDNEY

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD2429 OF 2006

BETWEEN:	ROCHE THERAPEUTICS, INC First Applicant F HOFFMAN-LA ROCHE AG Second Applicant ROCHE PRODUCTS PTY LTD Third Applicant
AND:	GENRX PTY LTD Respondent

JUDGE:	EMMETT J
DATE:	9 FEBRUARY 2007
PLACE:	SYDNEY

1 The first two applicants are the joint proprietors of Australian patent number 702106 (‘the Patent’). The claimed invention of the Patent relates to the use of the compound known as carvedilol for the manufacture of a medicament for decreasing mortality resulting from congestive heart failure and to a method for decreasing such mortality comprising the administration of carvedilol. The third applicant is the exclusive licensee of the Patent in Australia. I shall refer to the applicants jointly as ‘the Patentees’. The Patentees claim that the respondent (‘GenRx’) is threatening to infringe the Patent and seek interlocutory relief restraining such infringement.

2 GenRx contends that the Patentees’ claims of infringement are so weak that there is not even a serious question to be tried as to whether there is an infringement. GenRx puts its contentions on two bases. The first is that the Patent is invalid on several grounds. The second is that their threatened actions would not infringe the Patent, assuming it is valid. Assuming that the Court concludes that there is a serious question to be tried as to whether GenRx’s threatened actions would infringe a valid patent, it will be necessary to determine where the balance of the convenience of granting or not granting relief lies.

3 Congestive heart failure is a condition in which the heart is unable to pump forward strongly enough such that kidneys, muscles and other parts of the body are denied adequate blood flow. The condition causes congestion in the lungs, veins and liver and other parts of the body. The weakness of the heart muscle, which leads to the condition, is often caused by an insufficient supply of oxygen to the muscles in the heart brought about by one or more underlying heart or blood vessel problems.

4 Congestive heart failure may develop gradually over several years or develop quickly as a result of a heart attack or a disease of the heart muscle. Commonly, patients suffering from congestive heart failure suffer fluid retention. The inadequate blood flow results in the release of hormones that result in the body holding on to sodium and water. In the short term, that leads to an increase in blood volume providing the kidneys with sufficient blood for their normal activity. However, over time, the blood vessels of the body cannot hold all of the extra blood volume and fluid starts to exude out of the blood vessels and into the tissues of the body. Such fluid retention is normally treated with a diuretic drug, which increases urine formation and output.

5 A pharmaceutical product may not be marketed, supplied, offered for sale, sold or distributed within Australia unless it is listed or registered on the Register of Therapeutic Goods maintained under the Therapeutic Goods Act 1989 (Cth). The registration for a pharmaceutical product must include at least one indication for the product within Australia.

6 The Pharmaceutical Benefits Scheme is maintained by the Commonwealth under the National Health Act 1953 (Cth) in order to provide all Australian residents with access to subsidised prescription medicines. The Commonwealth Government will only reimburse retail pharmacies for the difference dispensed price of a product and the patient co-payment if a pharmaceutical product is first listed under the Pharmaceutical Benefits Scheme and is prescribed to the patient in accordance with its listed scheme restriction.

7 An Australian pharmaceutical company that manufactures or distributes pharmaceutical products in Australia, termed a sponsor, may apply for listing of any one or more of its prescription pharmaceutical products under the Pharmaceutical Benefits Scheme. However, a pharmaceutical product must be registered on the Register of Therapeutic Goods before listing can occur under the Pharmaceutical Benefits Scheme.

8 The Schedule of Pharmaceutical Benefits (‘the Schedule’) is published by the Department of Health and Aging. It lists all of the pharmaceutical products included under the Pharmaceutical Benefits Scheme. The schedule sets out pricing information, product strengths and the indication or restriction for the product. The primary purpose of the Schedule is to indicate how pharmaceutical products are priced.

9 In order to obtain listing under the Pharmaceutical Benefits Scheme of an innovative pharmaceutical product that contains a new chemical entity as the active compound, the sponsor must lodge a submission to the Pharmaceutical Benefits Advisory Committee (‘the Advisory Committee’). The Advisory Committee is an independent statutory body with the function of recommending to the Minister the drugs and medicinal preparations for subsidy under the Pharmaceutical Benefits Scheme. Comprehensive guidelines are published for the filing of such a submission, including the information required to support such a submission.

10 Each submission comprises several sections. One of those sections includes a clinical evaluation of the new pharmaceutical product, which considers the relative efficacy and safety of the product, compared with the standard of care. Another section includes an economic evaluation of the new pharmaceutical product, where the cost of treating a patient using the new product is assessed with respect to the benefit gained by treating the patient for that cost. That economic evaluation enables the cost effectiveness of the new product to be assessed. It is mandatory for the submission supporting an application for listing of a new drug or new indication for a currently listed drug to include an economic evaluation.

11 Once a submission for listing of a new pharmaceutical product is lodged with the Advisory Committee, a detailed evaluation of both the clinical benefit and the economic value of the product is conducted. The process for obtaining listing of a new pharmaceutical product takes at least nine months from the date of submission to the time of listing in the Schedule. Approximately 17 weeks of those 9 months are spent on the evaluation of the submission by the Advisory Committee and the provision of responses by the sponsor.

12 However, a submission for listing of a generic brand of a pharmaceutical product already listed in the Schedule in respect of the same indication or restriction is simpler and takes about 10 weeks from lodgement to listing in the Schedule. The sponsor of the generic product does not need to present a full submission to the Advisory Committee. In particular, there is no need for a clinical evaluation and an economic evaluation since that would have been provided in respect of the original product.

13 The information to be lodged by a generic sponsor includes copies of the relevant registration certificates for the generic product issued by the Therapeutic Goods Administration and a copy of the product information sheet approved by the Therapeutic Goods Administration in respect of the generic product. The generic sponsor must also provide a guarantee that it will supply the product by the proposed listing date.

14 The Pharmaceutical Benefits Pricing Authority (‘the Pricing Authority’) is an independent non-statutory body. It makes recommendations to the Minister for Health and Aging on prices for new items that have been recommended by the Advisory Committee for listing on the Schedule under the Pharmaceutical Benefits Scheme. In addition, the Pricing Authority reviews prices of all items listed on the Schedule at least once each year. The Pricing Authority’s objective is to secure a reliable supply of pharmaceutical benefits items at the most reasonable cost to Australian taxpayers and consumers consistent with maintaining a sustainable, viable and responsible pharmaceutical industry in Australia.

15 Following recommendation of products for listing, sponsors are contacted by the Pricing Authority and asked to provide cost information and invited to supply any other data that the sponsor considers relevant for consideration by the Pricing Authority. The cost information data and the advice from the Advisory Committee are evaluated by the Pricing Authority.

16 Price negotiations with the sponsor are then undertaken by the Pricing Authority on behalf of the Minister. Any agreement is subject to Ministerial approval. If a price is not agreed between the Pricing Authority and the sponsor, then the product is not listed. When aspects in relation to a new listing have been finalised, the Advisory Committee informs the company approximately one month before listing in the Schedule. The deadline for finalisation of all details relating to listing is approximately three months before the release of the Schedule, which takes place on 1 April, 1 August and 1 December in each year. There are over 2,600 different branded products listed in the Pharmaceutical Benefits Schedule.

17 Once a patent expires for a medicine, other pharmaceutical manufacturers can produce equivalent products, called generic medicines, and can have them listed in the pharmaceutical benefits schedule under their own brand name. Some of those manufacturers offer a reduction to the price of their medicine, thereby setting a new benchmark price. However, most do not. Therefore, price reductions are usually fewer and less than should be expected. The Government therefore often pays higher prices for medicines than it should need to pay. For that reason, the Commonwealth Government implemented a new policy to reduce the amount it pays for new brands of medicines.

18 In that context, manufacturers seeking to list the first new brand of a medicine already included in the Pharmaceutical Benefits Scheme are required to offer a minimum 12.5 per cent price reduction in the Government price for the medicine. The 12.5 per cent price reduction applies for new brands listed in the Schedule on or after 1 August 2005. The price reduction will apply only to the first new generic brand of any medicine listed on or after 1 August 2005 and applies once only for each medicine.

19 In May 2006, the Pricing Authority published a document entitled ‘Policies, Procedures and Methods used in the Pricing of Pharmaceutical Products’ (‘the Guidelines’). The Guidelines indicate that drugs that are used to treat the same condition or have similar action are grouped in therapeutic sub groups in the schedule to the Guidelines. The Guidelines deal with, among other things, the pricing of new brands of existing items.

20 The Guidelines provides that the 12.5 per cent price reduction will only be triggered by an application to list a new generic brand of a medicine. According to the Guidelines, that includes:

21 An application to list new generic brands is referred to the Pricing Authority to finalise pricing aspects. That includes contacting the sponsors of other brands of the drug in the reference pricing group that are directly affected by the listing of the generic product at a lower price. Those sponsors are required to indicate either that the sponsor will accept and reduce the price to pharmacist of their own branded pharmaceutical product to equal the price to pharmacist for the generic product or that the sponsor will reduce the existing price but will need to apply a brand premium above the price of the generic brand.

22 Items on the Schedule are divided into therapeutic groups, with drugs that are used for the same purpose being reviewed at the same time. Reference pricing groups are determined by the Pricing Authority, based upon recommendations from the Advisory Committee regarding the cost effectiveness of medicines. Generally, they are groups of medicines that have been recommended for listing on a cost minimisation basis by the Advisory Committee on the basis that they are no worse than their comparator. When a medicine is listed on the basis of such a recommendation it will form part of a reference pricing group with its comparator medicine and any other medicines related to the comparator. Medicines in reference pricing groups are considered to provide similar health outcomes. As such, one of the principles that is applied to those groups is that the Commonwealth will only pay a similar price for similar health outcomes. The level of Government subsidy is set at the price of the lowest priced medicine in the group. That medicine is referred to as "the benchmark medicine".

23 There are three reference pricing groups under a heading ‘BETA BLOCKING AGENTS’. Group 22 consists of bisoprolol fumarate, carvedilol and metoprolol succinate. A comment made in the Schedule of reference pricing groups in relation to Group 22:

24 The Commonwealth Government has announced that, from July 2007, it will introduce a number of changes to protect patients from higher out of pocket costs and get better value from market competition among brands of generic, off-patent, medicines. The fundamentals of the Pharmaceutical Benefits Scheme are not to change. The main changes will be the way in which the Government prices medicines that are operating in a competitive market. Such medicines will take a series of price drops and eventually will move to a system where the price at which they are actually being sold on the market will reflect the price that the Government pays.

25 From 1 August 2007, medicines on the Pharmaceutical Benefits Scheme will be separated into two groups, each subject to different pricing arrangements. The first group will be medicines where there is only a single brand and will contain both on patent and off patent medicines that are not substitutable with other brands or medicines. There will be no mandatory price reductions for those medicines and existing price linkages will be retained within that group.

26 The other group will consist of medicines where there are many brands listed and groups of medicines that are interchangeable between patients. From 1 August 2008, a further reduction in the prices of the medicines that attract the 12.5 per cent price reduction will be required. Where price competition between brands is low, there will be a price drop of 2 per cent a year for three years. Where price competition between brands is high, there will be a one off price drop of 25 per cent.

27 The separating of the second group into those with low competition and those with high competition has already occurred. That was done on the basis of information provided to the Department by persons involved in the selling and purchasing of pharmaceuticals.

28 The Department has released the list of drugs in the two groups and the two sub-groups described above. Group F1 is the medicines where there will be no mandated price reductions. Group F2 is divided into F2A, where there will be mandatory annual 2 per cent price reductions for three years. Group F2(T) is the group that will receive a mandatory 25 per cent price reduction on 1 August 2008. The 12.5 per cent price reduction policy will continue to be triggered by the entry of a new brand of medicine that has not already had a 12.5 per cent price reduction. The list shows carvedilol in F2A group as at 19 December 2006.

29 The third applicant has two pharmaceutical products registered on the Register of Therapeutic Goods that contain the active ingredient carvedilol. Those products are marketed, supplied, offered for sale, sold and distributed within Australia under the brand names ‘DILATREND’ and ‘KREDEX’. They are available in a range of strengths.

30 DILATREND was the first of the Patentees’ pharmaceutical products containing carvedilol as its active ingredient and was registered on the Register of Therapeutic Goods on 21 January 1998 in strengths of 6.25 mg, 12.5 mg and 25 mg and, on 28 November 2000, in the 3.125 mg strength. The product information sheet for DILATREND approved by the Therapeutic Goods Administration sets out the indication for the product as follows:

31 DILATREND was first listed in the Schedule of Pharmaceutical Benefits on 1 May 1998. That listing for DILATREND shows that DILATREND is indicated only for use in relation to the treatment of ‘moderate to severe heart failure in patients stabilised on conventional therapy which must include an ACE inhibitor if tolerated.’

32 By way of example of pricing, the current Schedule of Pharmaceutical Benefits shows the following pricing information for DILATREND 25 mg tablets:

Those figures indicate that there is a $72.92 difference between dispensed price of the tablets and the payment made by the patient. Thus, if a doctor were to prescribe DILATREND 25 mg tablets to a patient in Australia for hypertension, which does not constitute a restriction for that product under the Scheme, the Commonwealth Government would not reimburse a retail pharmacy for the difference and the patient would be required to pay the dispensed price, namely, $106.42. That is to say, a reduction in price to the consumer is only available if the product is prescribed in accordance with the restrictions in the Schedule.

33 The same registrations and listings have been obtained by the third applicant in respect of its KREDEX carvedilol product. The same observations as have been made above concerning DILATREND also applies to KREDEX.

34 Neither DILATREND nor KREDEX has been marketed in Australia for hypertension. Without a listing under the Schedule for hypertension, sales of DILATREND or KREDEX for an indication of hypertension would not be commercially viable. Many different drugs are available for the treatment of hypertension, all of which are included in the Schedule and are therefore subsidised by the Commonwealth. There is no evidence that any medical practitioner would request or prescribe DILATREND or KREDEX for the treatment of hypertension.

35 In the week commencing 20 November 2006, GenRx informed over 5,000 pharmacists that it was proposing to sell carvedilol tablets in 3.125 mg, 6.25 mg, 12.5 mg and 25 mg dosages, commencing on 1 February 2007. It claimed that it would supply such products in February 2007. That announcement prompted the present proceeding.

36 After 31 October 2006 and before 27 November 2006, GenRx obtained registration on the Register of Therapeutic Goods of several products containing carvedilol as the active ingredient. The carvedilol products sponsored by GenRx are included in the Register of Therapeutic Goods with the following indications:

That is identical to the indication shown for the Patentees’ products in the Register of Therapeutic Goods.

37 On 14 November 2006, the Therapeutic Goods Administration approved the proposed product information sheet of GenRx in respect of its carvedilol tablets. That document describes carvedilol as "a non selective beta blocker" and states that each carvedilol tablet is intended for oral administration and contains 3.125 mg, 6.25 mg, 12.5 mg or 25 mg of carvedilol. Other ingredients are also described.

38 Under the heading "PHARMACOLOGY" the product information sheet contains the following statements:

It then referred to four United States studies and an Australia/New Zealand study as follows:

40 The product information sheet then set out the specific details of the results of the United States and Australia/New Zealand trials. A table included in the product information sheet set out adverse events in one of the trials. One of those adverse events was sudden death. The table demonstrated that a percentage of the occurrence of sudden death in patients treated with carvedilol was 3.9 per cent as distinct from a percentage of 6.1 per cent in respect of patients who were not treated with carvedilol but with a placebo.

41 Dosage and administration was dealt with in the product information sheet, both in relation to hypertension and symptomatic congestive heart failure. The recommended starting dose in relation to symptomatic congestive heart failure was stated to be 3.125 mg twice daily for two weeks. If that dose is tolerated, the dosage was to be increased, at intervals of not less than two weeks, to 6.25 mg twice daily, followed by 12.5 mg twice daily, then 25 mg twice daily. Dosing should be increased to the highest level tolerated by the patient. The recommended maximum dose was 25 mg twice daily in patients with mild or moderate CHF weighing less than 85 kg. In patients with mild or moderate CHF weighing more than 85 kg, the recommended maximum daily dose was stated to be 50 mg twice daily. For all patients with severe CHF, the recommended maximum daily dose was 25 mg twice daily.

42 GenRx has sought approval of an amended product information sheet but no approval has yet been given by the Therapeutic Goods Administration. The amended product information sheet deletes the words ‘and reduce the risk of death’ under the heading ‘CLINICAL TRIALS’ and deletes the detailed description of the results of the trials. However, it retains the general description of the trials set out above and the table of adverse events that occurred in relation to one of the trials.

43 By letter of 14 November 2006 to the Advisory Committee, GenRx requested that its 3.125 mg, 6.25 mg, 12.5 mg and 25 mg carvedilol tablets be listed under the Pharmaceutical Benefits Scheme. The letter said:

The letter requested that the products be flagged as interchangeable with ‘the innovator brand, Dilatrend’. A copy of the approved product information sheet was attached.

44 On 20 December 2006, the Department informed GenRx that the listing of its product was going ahead ‘at the current price’. The communication said that the decision ‘not to trigger 12.5% price reductions is based on the information provided in your application’.

45 On 2 January 2007, the Department of Health and Aging informed GenRx that its products would be made available as pharmaceutical benefits as from 1 February 2007. The letter said that the 1 February 2007 edition of the Schedule of Pharmaceutical Benefits would show particular dispensed prices for the GenRx products and would be the same prices for the equivalent products of the Patentees.

46 The Patent asserts that congestive heart failure is a well known cardiac disorder, which results ‘in an excess mortality’. Therefore, the Patent claims, therapeutic agents that would decrease the mortality resulting from congestive heart failure of patients suffering from that condition would be highly desirable.

47 The human heart muscle and artery walls contain adrenergic receptors. Receptors are structures on surface or inside a cell that selectively receive and bind a specific substance. The binding of such a substance to a receptor is likened to an operation of a lock and a key. The substance is the key and the receptor is the lock. The binding of the substance to the receptor unlocks the cell’s response. The adrenergic receptors are classified as α-receptors and [beta]-receptors.

48 US Patent Number 4,503,067 discloses certain compounds including carvedilol. Carvedilol acts on [beta]-receptors and is described as a vasodilating [beta]-blocker. Those actions of carvedilol are said in the Patent to be useful for the treatment of hypertension. The Patent states that the antihypertensive action of carvedilol is mediated primarily by decreasing total peripheral vascular resistance without causing concomitant reflex changes in heart rate commonly associated with other hypertensive agents.

49 The Patent claims that it has recently been discovered in clinical studies that compounds such as carvedilol are effective therapeutic agents for treating congestive heart failure. The Patent claims that such use was surprising because, in general, [beta]-blockers are contraindicated in patients suffering from heart failure because [beta]-blockers are known to have undesirable cardiodepressive effects. The Patent claims that carvedilol was found to decrease the mortality resulting from congestive heart failure by about 67 per cent.

50 The Patent asserts that compounds such as carvedilol, which have the dual properties of being a [beta]-blocker and a vasodilator, are preferably administered following a three stage application scheme: incremental dosages of the active ingredient are administered to patients over a certain period of time until the regular maintenance dosage is received. The Patent asserts that, in the case of carvedilol, dosing for the treatment of congestive heart failure, according to the claimed invention, should not exceed a dosage range from about 3.125 mg to about 50 mg of carvedilol, preferably given twice daily. The Patent asserts that one of ordinary skill in the art would readily comprehend that a patient should be started on a low dosage regimen and monitored for well known symptoms of intolerance. Once the patient was found to tolerate such a compound, the patient should be brought slowly and incrementally up to the maintenance dose.

51 The Patent asserts that the preferred course of treatment is to start the patient on a dosage regimen with formulations that contain either 3.125 mg or 6.25 mg of active compound per single unit, preferably given twice daily, for 7 to 28 days. The choice of the initial dosage is to be determined by the practitioner using ‘well known medical principles’. The Patent then asserts that, if the patient exhibits medically acceptable tolerance for carvedilol for two weeks, the dosage should be doubled at the end of the two weeks and the patient should be maintained at the new, higher dosage, for an additional period, preferably two more weeks. If no signs of intolerance are observed, that course would be continued until the patient is brought up to maintenance dose. The Patent asserts that the preferred maintenance dose is 25.0 mg of active compound per single unit, preferably given twice daily, for patients having a body weight of up to 85 kg; for patients having a body weight of over 85 kg, the maintenance dose is between 25 mg and about 50 mg, preferably given twice daily.

52 The complete specification for the Patent contains 26 claims. The first 13 relate to the use of carvedilol for the manufacture of a medicament for decreasing mortality resulting from congestive heart failure in mammals. The other 13 claims are for a method for decreasing mortality resulting from congestive heart failure in mammals comprising the administration of carvedilol to a subject in need thereof. Claims 2 to 13 inclusive are dependent upon claim 1 and claims 15 to 26 inclusive are dependent upon claim 14.

53 Claims 8 and 21 specifically refer to a regimen for the administration of carvedilol as follows:

54 The language of the claims of the Patent is not without difficulty. All claims refer to either a medicament or a method ‘for decreasing mortality resulting from congestive heart failure in mammals’. It is a curious use of language in so far as the word mortality suggests death on a large scale or an abnormal frequency of death, such as from war, pestilence or famine (see Macquarie Dictionary, 4^th ed, Macquarie University, 2005 and Shorter Oxford English Dictionary, 5^th ed, Oxford University, 2002). Indeed, the operation of the alleged invention is not limited to humans but refers to mortality in mammals generally. The curiosity of the language of the claims gives rise to difficulties concerning the allegations of infringement by GenRx. I shall return to those difficulties shortly.

55 GenRx has filed a cross-claim in the proceeding, seeking an order that the Patent be revoked as being invalid. GenRx contends that its arguments that the Patent is invalid must be taken into account in assessing the weakness of the Patentees’ infringement case. In the present application, GenRx relies on the following grounds:

56 Section 18(1)(b)(i) of the Patents Act provides that an invention is a patentable invention only if, amongst other things, when compared with the prior art base as it existed before the priority date, the invention is novel. Relevantly, s 7 of the Patents Act provided that an invention is to be taken to be novel when compared with the prior art base, unless it is not novel in the light of prior art information made publicly available in a single document or through doing a single act. The basic test for novelty is whether the alleged anticipation would infringe a patent if the patent were otherwise valid.

57 GenRx alleges anticipation of the claimed invention of the Patent by prior publication. Three separate publications are independently relied upon as follows:

There is evidence that each of those three publications was publicly available in Australia prior to the priority date of the Patent.

58 The Olsen publication reports on an evaluation of carvedilol in a randomised placebo controlled trial in 27 patients suffering from idiopathic dilated cardiomyopathy. It reports that the study medication was initiated at a dose of 6.25 mg bi-daily and increased over one month to 25 mg per patient below 75 kg or 50 mg for a patient over 75 kg, twice daily. That dosage was then continued for three additional months. The publication reports that chronic beta-blocker therapy may improve symptoms and hemodynamics in such a condition.

59 GenRx points to the dosage regimen as anticipating the regimen specified in the Patent. It is significant, however, that no mention is made of a decrease in mortality or prolongation of life in patients treated. Rather, the publication refers to improving symptoms of congestive heart failure.

60 The Kelly publication states that sustained oral treatment with beta-blockers has been shown to improve symptoms in patients with chronic heart failure. It states that the rationale for such treatment is the advanced adrenergic stimulation present in heart failure which results in decreased sensitivity and density of myocardial [beta]-receptors. It reports that carvedilol, in addition to its beta-blocking properties, is a vasodilator and is theoretically more suitable than earlier compounds of its potential to decrease left ventricular afterload. It says that recent studies have demonstrated symptomatic improvement with carvedilol with heart failure and refers to the design of a multi-centre trial to evaluate its efficacy and safety.

61 The publication states that a multi-centre trial has been designed and approved, which will involve patients who have ischaemic heart disease as a cause of heart failure. The study will look to see whether beta blockade has the same type of effect in ischaemia as it does in cardiomyopathy. It states that patients would be given a test dose of 6.25 mg of carvedilol and then, if satisfactory, the dosage would be increased to a maximum over a period of two to three weeks. The publication says:

62 The Kelly publication refers to the design of a further study with carvedilol in patients with congestive cardiomyopathy stabilised on ACE inhibitor therapy, the purpose of which was said to be to establish whether beta blockade can improve patients further both objectively and subjectively when they are stable on ACE inhibitor therapy. It states that carvedilol will be given in the standard dose of 3.125 mg building up to a final dose of between 25 and 75 mg per day.

63 Once again, while the dosage regime of the Patent may be anticipated by the Kelly publication, no mention is made in the Kelly publication of a decrease in mortality or a prolongation of life. Rather it refers to improvements in symptoms.

64 The Metra publication reports on a study to evaluate the effects of short and long term administration of carvedilol in patients with idiopathic dilated cardiomyopathy. It reports that carvedilol or a placebo was added to standard therapy, starting with a dose of 6.25 mg twice a day with weekly increments up to the maximum of 25 mg twice a day. Patients were re-evaluated after four months. The publication reported results showing that, compared with the placebo patients, carvedilol produced a short term reduction in heart rate and pulmonary artery and pulmonary wedge pressure and, after long term administration, increased both rest and peak exercise cardiac, stroke volume and stroke work indexes, with a further reduction in right atrial, pulmonary artery and pulmonary wedge pressures. Long-term carvedilol administration also improved rest left ventricular ejection fraction, submaximal exercise capacity, quality of life and New York Heart Association functional class. The conclusion of the publication is that short-term carvedilol administration reduces heart rate and mean pulmonary artery and pulmonary wedge pressures whereas it improves both long-term rest and exercise left ventricular systolic function, reduces heart failure symptoms and improves submaximal exercise tolerance in patients with idiopathic cardiomyopathy. Once again, there is no mention of decrease in mortality or prolonging life. On the other hand, the dosage regimen can be seen to have similarities with that described in the Patent.

65 GenRx also relies on the acts carried out in the trials described in the publications as anticipating the claimed invention of the Patent. However, that contention stands or falls with the contentions based on the publications. It was not suggested that the actual trials went beyond what was disclosed in the publications themselves.

66 The Patentees point to the absence of any discussion or teaching in any of the publications concerning the use of carvedilol to improve survival or decrease mortality in patients with congestive heart failure. GenRx responds with the proposition that, even if the publications do not expressly refer to a decrease in mortality, if that is the necessary consequence of the administration of carvedilol according to the regimen disclosed, that is sufficient anticipation of the Patent. That contention involves somewhat intricate questions of law.

67 Under s 18(1)(a) of the Patents Act, an invention will not be a patentable invention if it is not a manner of manufacture within the meaning of s 6 of the Statute of Monopolies.

68 Many of the claims of the Patent are criticised by GenRx for disclosing nothing. Thus, Claim 1 simply refers to the use of carvedilol ‘for the manufacture of a medicament for decreasing mortality resulting from congestive heart failure in mammals, alone or in conjunction with one or more other therapeutic agents...’. Nothing is disclosed in that claim as to what particular use is made of carvedilol. For example, no mention is made of dosage. That observation can be made of many of the Claims of the complete specification of the Patent.

69 On the other hand, Claims 8 and 21, as indicated above, set out a specific regimen. Whether or not the Patent is subject to revocation as regards some claims, the criticism presently under consideration is not applicable to Claims 8 and 21.

70 GenRx says that Claims 8 and 21 do no more than describe a mere new use for an old thing. Once a substance is known, its methods of production ascertained, its characteristics and its constituents well defined, the use of that substance for a purpose that was hitherto unknown cannot be patented (Re BA’s Application (1915) 32 RPC 348 at 349).

71 GenRx also contends that none of the Claims can amount to any more than a direction to doctors and pharmacists on how to treat the patients with carvedilol. GenRx says that the only new component of the Claims is the reference to the fact that the treatment is ‘for decreasing mortality’ and says that the fact that treatment with carvedilol may decrease mortality is a mere discovery, since it is an inherent feature of carvedilol. GenRx says that the only act apparently done in relation to the invention was to provide some funding for trials that comprised long-term treatment with known compounds in known dosages for a known condition. GenRx contends that, at most, what is disclosed is mere confirmation of the existing properties of carvedilol in known dosages.

72 There is cogency in GenRx’s arguments. However, they raise questions of law that it may be inappropriate to resolve in an interlocutory proceeding such as the present.

73 Under s 18(1)(c) of the Patents Act, a claimed invention will not be a patentable invention unless it is useful. A claim for an invention will not be useful if the invention as claimed, does not meet one or more of the stated objectives of the invention. There will be inutility of a claim if the invention of that claim fails to meet the result promised for it by the Patent (Rescare Limited v Anaesthetic Supplies Pty Ltd (1992) 25 IPR 119 at 143).

74 GenRx again draws attention to the terms of the Claims that do not disclose a dosage regimen. GenRx says that there is no evidence that carvedilol has any beneficial effect on mortality or otherwise unless it is administered according to the specified regimen over a sufficient period of time. However, it is for GenRx to establish lack of utility. It is not incumbent upon the Patentees to establish that the claimed invention works. GenRx says that the evidence indicates that only administration according to a regimen such as is described in Claims 8 and 21 will have any effect. However, while some claims may be challenged on that basis, Claims 8 and 21 would not be subject to that challenge and would be sufficient to support the allegation of infringement.

75 In relation to Claims 8 and 21, GenRx points out that there is a reference to the final administration as ‘a maintenance dose’, the Claims do not specify in terms that the maintenance dose must be continued for a period in the order of 100 days. It points to evidence that such continued dosage is required for effectiveness. However, it is tolerably clear that the reference to maintenance dose means that that dosage is maintained indefinitely. Indefinite maintenance of the dose is shown to have a beneficial effect on mortality.

76 GenRx contends that there is no serious question to be tried concerning infringement of the Patent, assuming it is valid.

77 First, GenRx relies upon what it describes as its Gillette defence (see Gillette Safety Razor Company v Anglo-American Trading Co Ltd (1913) 30 RPC 465). That is to say, the dosage regimen for the GenRx products is the regimen disclosed in the Kelly publication and the Metra publication. GenRx says that, if the supply of its products would infringe the Patent, the Patent must be invalid as lacking novelty because that regimen was anticipated in those publications. On the other hand, if the publications do not anticipate the Patent, GenRx is not infringing because it is doing no more than was disclosed in the earlier publications.

78 However, the argument fails to take account of the matter already referred to above concerning the question of whether the publications do, in truth, anticipate the claimed invention of the Patent. That is to say, the element of ‘decreasing mortality’ is not present in the publications but it is at least reasonably arguable that it would be an element in the threatened actions of GenRx. I am not persuaded that the so-called Gillette defence is a clear answer to the Patentees’ allegations of infringement such that there is not a serious question to be tried.

79 The Patentees contend that the proposed exploitation by GenRx of its carvedilol products is for decreasing mortality in patients suffering from congestive heart failure and that, accordingly, there will be an infringement of Claims of the Patent. They say that listing of the GenRx products under the Pharmaceutical Benefits Scheme for the treatment of mild to severe congestive heart failure was obtained on the basis that the effect of carvedilol in the products on decreasing mortality arising from congestive heart failure was shown to be cost justified having regard to such a clinical outcome. The Patentees contend, therefore, that, since GenRx obtained listing under the Pharmaceutical Benefits Scheme as a bio equivalent of the Patentees’ products, they have done so on the basis that the cost-justification for the listing of GenRx’s products under the Pharmaceutical Benefits Scheme is a decrease in mortality for patients suffering from congestive heart failure. The Patentees contend that, having regard to the basis upon which GenRx has obtained listing under the Pharmaceutical Benefits Scheme, the GenRx products are medicaments for decreasing mortality resulting from congestive heart failure in humans. Claims 1 to 13 are for the use of carvedilol for the manufacture of such medicaments.

80 Under the Patents Act, it is an exploitation of an invention as claimed to import, sell or otherwise dispose of a product resulting from the method or process for manufacture that is the subject of the claim. Claim 14 is directed to a method of treatment using carvedilol to decrease mortality resulting from congestive heart failure. The dosages for which registration has been obtained for the GenRx products and the listing under the Pharmaceutical Benefits Scheme that has been obtained in relation to those products are clearly in relation to treating human patients suffering from congestive heart failure. The Patentees say that such treatment is clearly ‘with the objective of decreasing mortality resulting from such congestive heart failure’.

81 Under the dictionary in Schedule 1 to the Patents Act, ‘exploits’ in relation to invention includes:

82 GenRx says that there is no product resulting from the working of the invention claimed in any of the claims of the Patent and that paragraph (a) therefore has no application.

83 Section 117(1) of the Patents Act provides that, if the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent. Under s 117(2), such a reference to use of a product by a person is a reference:

84 The Patentees contend that it can be concluded that carvedilol, in the dosages intended to be supplied in Australia by GenRx, has only one reasonable use, namely, as part of a known specific dosage regimen for treating patients with congestive heart failure. Accordingly there is infringement by the operation of ss 117(1) and 117(2)(a).

85 However, that contention depends upon the conclusion that such a use of the GenRx products is for ‘decreasing mortality resulting from congestive heart failure’. The Patentees say that conclusion should be drawn because of the basis upon which the GenRx products have obtained registration under the Therapeutic Goods Act and listing under the Pharmaceutical Benefits Scheme.

86 Whether s 117 can apply to a process or method claim, where no product results from the use of the method or process, may be an open question. GenRx says that the Patentees’ rights are restricted by paragraph (b) in the definition of "exploit" referred to above, namely, to use the method or process or do any acts mentioned in paragraph (a) in respect of a product resulting from such use (see Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 50 FCR 1 at 24).

87 In any event, GenRx says, it cannot be said that the GenRx products are capable of only one reasonable use. Carvedilol is indicated for the treatment of hypertension and treatment of patients with symptomatic mild to severe congestive heart failure. That is the claim made by GenRx in the product information document published in respect of the GenRx products.

88 Further, carvedilol is a useful and beneficial medication for treating the symptoms of congestive heart failure itself. One of the major advantages of carvedilol is that a decrease in heart rate may be achieved, which immediately provides a significant symptomatic benefit to the patient. The information published by the Patentees in respect of DILATREND indicates that administration of carvedilol will cause a significant reduction in systematic blood pressure and heart rate and that it has been shown to reduce cardiovascular hospitalisation, improve patient well being and slow the progression of congestive heart failure. GenRx says, therefore, that they are reasonable uses for carvedilol that are not decreasing mortality.

89 GenRx also contends that the Patentees products are staple commercial products within the meaning of s 117(2)(b). However, it is by no means clear that that is so and it is at least reasonably arguable that they are not staple commercial products. Having regard to the basis upon which the GenRx products have been registered and listed as bio-equivalents of the Patentees’ products, it is at least reasonably arguable that GenRx has reason to believe that its products will be used for decreasing mortality resulting from congestive heart failure. As I have indicated, the GenRx product information sheet refers to death.

90 The Patentees also contend that, by offering to supply the GenRx products in the dosage forms specifically referable to treatment of congestive heart failure, GenRx is authorising the use of its products for the treatment of congestive heart failure. The Patentees say that it is clear that medical practitioners prescribing the GenRx products must be doing so with the object of prolonging human life and that that is the same as decreasing mortality. Once again, that conclusion is dependent upon the basis upon which the Patentees have obtained registration and listing of their products. As I have indicated above, it is at least reasonably arguable that, in having the GenRx products included in the Schedule of Pharmaceutical Benefits on the basis that they are the equivalent of DILATREND, decreasing mortality is a use for the GenRx products. In the circumstances, I am satisfied that it is reasonably arguable that by supplying its product to pharmacists with the object of its being dispensed to patients suffering from congestive heart failure, GenRx will be authorising that conduct.

91 I do not understand GenRx to contend that its case on invalidity is so strong that the Court should determine, in effect summarily, that the Patent is invalid. Rather it says that the strength of its contentions on invalidity should be weighed cumulatively with the strength of its contentions that its actions do not constitute infringement of the Patent, assuming validity. Detailed arguments have been advanced on behalf of GenRx concerning the questions of validity. However, having regard to all the circumstances, I do not consider that it is an appropriate use of the Court’s time to examine those issues in any greater detail than I have above.

92 In proceedings in the Court in 2005, the Patentees alleged infringement of the Patent by Hexal Australia Pty Limited and Alphapharm Pty Limited, other threatened suppliers of carvedilol products. Stone J examined grounds of invalidity raised in those proceedings and concluded that there was a serious question to be tried as to whether the Patent is valid and as to whether there was infringement by those parties (see Hexal Australia Pty Limited v Roche Therapeutics Inc [2005] FCA 1218). However, Stone J concluded that there was no likelihood of irreparable injury that could not be adequately compensated by an order form damages or an account and refused interlocutory relief on the basis of the balance of convenience. Those proceedings have now been settled.

93 The grounds of invalidity then relied on do not coincide with the grounds now relied upon by GenRx. Further, the questions of the balance of convenience were of course different, involving different parties at different stages in their preparations for marketing carvedilol products. However, there is a further proceeding currently being conducted in the Court seeking revocation of the Patent (see Arrow Pharmaceuticals Pty Limited v Roche Therapeutics Inc, NSD1203 of 2006). It is desirable, therefore, that no firm view on the question of invalidity be expressed in a proceeding such as the present.

94 A registered patent, although granted following examination by the Office of the Commissioner, is nonetheless liable to revocation. However, until it is revoked, a registered patent stands as a valid patent. There will, of course, be cases where the Court should conclude that a patent is so clearly invalid that there could not be a serious question to be tried concerning infringement of it and GenRx has advanced cogent arguments in support of the invalidity of the Patent. Further, cogent reasons have been advanced on behalf of GenRx in support of its contentions that, even if the Patent is valid, its actions do not constitute infringement.

95 However, notwithstanding the arguments advanced on behalf of GenRx, I am persuaded that I should not conclude, at this stage, that there is not a serious question on infringement to be determined. Having regard to the view I have formed on the balance of convenience, it is not necessary to express a firm view as to the Patentees’ prospects of success in the infringement action.

96 While very short term undertakings were given by GenRx to enable the hearing of the application for interlocutory relief to be completed, there are compelling reasons why the question of such relief should be determined as soon as possible. Those reasons relate to the inclusion of products to be supplied by GenRx under the Pharmaceutical Benefits Scheme. GenRx proposed to commence marketing of products containing carvedilol on 1 February 2007 on the basis that its products would attract a subsidy under the Pharmaceutical Benefits Scheme. That is a factor to be considered in the balance of convenience.

97 Before the conclusion of the hearing, GenRx proffered further undertakings to the Court in the terms set out in the Schedule to these reasons. The terms of the undertakings are of importance in considering the balance of convenience. In particular, the undertakings would ameliorate much of the possible prejudice that might be suffered by the Patentees if interlocutory relief is refused and they are ultimately successful in establishing infringement of the Patent by GenRx.

98 The first question that arises in balancing the interests of the parties is whether, if the Patentees ultimately succeed in establishing that the Patent will be infringed by the threatened actions of GenRx, they will suffer irreparable injury for which damages or an account will not be an adequate remedy. A significant matter relied upon by the Patentees as giving rise to irreparable injury is the possibility of a decrease in price of its carvedilol products under the Pharmaceutical Benefits Scheme.

99 Under the Guidelines, the circumstances that have arisen in the present case are not covered in express terms. That is to say, on the assumption that the Patent is valid, and the supply of the GenRx products would infringe the Patent, neither of the circumstances for the application of the price decrease described above is applicable: the Patent has not expired and the GenRx products, while "still on patent", are not marketed by the Patentees or by another sponsor under an arrangement with the Patentees.

100 Notwithstanding correspondence received from the Department, the Patentees are concerned that the listing of the GenRx products could yet result in a 12.5 per cent reduction. If that fear and concern is ultimately shown to be well-founded, and there is a reduction in the price of the Patentees’ products of 12.5 per cent, that would cause irreparable injury running into millions of dollars on the basis of its current projected sales. The question depends upon administrative policy and the Guidelines simply do not address the circumstances of this case where, if the Patentees’ contentions are ultimately upheld, the GenRx products are covered by the Patent and their listing is without the agreement of the Patentees. Nevertheless, it appears to me to be less than likely, in the light of the correspondence mentioned above, that there will be a 12.5 per cent price reduction.

101 The Patentees are concerned, if the GenRx products are allowed to be marketed, that carvedilol will be moved into the F2(T) group and thereby attract the 25 per cent price reduction rather than the 2 per cent per annum price reduction under the present regime. The manner in which the Government will apply such a reduction, if GenRx is permitted to market its products, must be a matter of some speculation. If that possibility eventuated, the loss to the Patentees could be many more millions of dollars. However, having regard to the approach adopted by the Department in relation to the 12.5 per cent reduction following the entry of the GenRx products, it appears highly likely that the same approach will be adopted in relation to the classification of carvedilol at F2A rather than F2(T).

102 The Patentees point to a number of other factors as indicating irreparable injury that they will suffer, other than the possible price reductions, if the GenRx products enter the market. Thus, the third applicant has expended in excess of $52 million on educational and promotional marketing activities in relation to the Patentees’ carvedilol products in Australia, particularly to educate doctors about the efficacy and safety of carvedilol in the treatment of congestive heart failure. A loss of exclusivity in the supply of carvedilol could involve a loss of some part of that investment. The Patentees have also undertaken very substantial investment in research and development prior to the commencement of the commercial supply of their carvedilol products beyond the amount invested in education.

103 However, the only manner in which the Patentees could recover that investment is through the sales of its products. If GenRx is found to infringe on a final hearing, the Patentees would be entitled to damages for lost sales. There would then be no loss of the investment. So long as GenRx mains comprehensive and verifiable records, as it has undertaken to do, any direct loss of sales to GenRx can be accurately quantified.

104 The Patentees’ marketing strategy and investment have been based on the assumption that the third applicant is the only supplier of carvedilol in Australia. They are concerned that, if, even for a relatively short time, competition is introduced into the market, the value to the Patentees of the marketing investment would be substantially reduced. Doctors who have not yet been persuaded of the clinical benefits of carvedilol will become aware of the existence of a generic version. They contend that, in those circumstances, such doctors may be likely to assume that the lost exclusivity conferred by the Patent reflects poorly on the clinical claims made by the Patentees. However, there is no evidence to support the assertion as such. Damages for lost sales would appear to me to be adequate compensation.

105 The Patentees also express concern that, if GenRx products enter the market, the Patentees’ market share would be eroded by the fact that they will not be able to spend the money they had previously spent on product promotion and other products may be more heavily promoted and therefore gain market share. However, it appears to me that the extent of expenditure on promotion is a matter for the Patentees if it wishes to maintain market share.

106 The Patentees also refer to the possibility that they may elect to increase the price of their products in response to generic listing in the expectation that lost sales will be made up by reason of the price differential, since customers may elect to pay the higher price out of brand loyalty. Current competitors might also elect to do so. The Patentees say that it is impossible to say what effect that might have on market shares. However, while that is a matter that may be difficult to quantify, it is by no means certain that it would be detrimental. In any event, the market share consequences of such elections are measurable at any point by reference to lost sales, prices charged and margins earned.

107 The Patentees assert that it would be difficult to predict the dynamics of the market for the drugs in the price reference group should there be additional competition. They say that the additional competition to be provided by the GenRx products changes the face of the market and exposes the Patentees to an additional risk that is both unpredictable and unquantifiable. Having regard to the speculative nature of the concerns, the more appropriate course would be, if an injunction is refused, to reserve liberty to the Patentees to apply if any of the postulated circumstances arose.

108 At present, the Patentees are the only suppliers of carvedilol in the Australian market. The effect of the GenRx products entering the market will be to introduce a single competitor. The competitor might be in the name of GenRx or brand names of pharmacy groups where GenRx supplies under those brand names. Possible adverse effects can be monitored and the Patentees can apply pursuant to liberty reserved where they think specific detriment can be demonstrated.

109 The Patentees also express concern that any quantification of damage suffered by them might depend upon the way in which GenRx promotes its new range of products. For example, a common marketing technique employed by generic pharmaceutical companies is to offer a "bakers dozen" of generic products, providing volume discounts or other indirect incentives to pharmacies to induce them to order more product from the generic supplier. However, so long as adequate records are maintained by GenRx in respect of its sales and margins, the consequences of such conduct can be quantified. Further, GenRx has proffered an undertaking that it will not "bundle" in that way. That would eliminate the risk for practical purposes.

110 The Patentees presently have licence arrangements with Alphapharm and Sandoz for those organisations to market the Patentees’ products. The Patentees fear that, if GenRx is allowed to enter the market, the licensees may terminate their licences and enter as competitors. Once again, that possibility is speculative. If the possibility eventuates, it will be open to the Patentees to apply on the basis of changed circumstances for further consideration of the possibility of interlocutory relief.

111 The Patentees also point to the possibility that GenRx could, at any stage, make an application to reduce the price of its carvedilol products. That would trigger a price reduction in the Patentees’ products and other drugs within this price reference group. GenRx claims that it has no intention to request such a price decrease and such a possible concern can be dealt with by undertakings not to do so. It has proffered an undertaking not to do so.

112 If GenRx were to be restrained from entering the market, the quantification of its loss of market share during the operation of an interlocutory injunction would be very difficult to evaluate. It may be possible to wait for the period during which the interlocutory injunction operated and assess the position of the market at the end of that time. It might then be possible to demonstrate that that result would have been achieved in the preceding period but for the interlocutory injunction. That, however, would be a much less certain assessment than would be involved in quantifying sales of its products by GenRx during that period on the assumption that no interlocutory injunction is granted.

113 Carvedilol is a key part of GenRx’s strategy in tendering for State hospital supply contracts. The tender cycles in various States mean that, if GenRx is restrained from entering the market, it will have to wait several years before it can tender in some States. It says that hospital tenders are not only of financial importance but they also represent an important strategic aspect of its business in boosting its reputation and business momentum. Such matters are not readily calculable by reference to any monetary sum. Further, the inherent uncertainty of the tender process may mean that GenRx will have lost forever the opportunity of entering into arrangements in one or other of the States whose tender cycles fall due during the period of any interlocutory injunction.

114 The vast majority of GenRx’s supply to pharmacists is by way of pharmaceutical wholesalers. GenRx supplies pharmaceuticals under its own brand, but it also packages and supplies private label pharmaceutical products to Symbion Health Limited under contractual arrangements. Those private labels are "Terry White Chemists" and "Chemart" pharmacy brands owned by Symbion Health Limited. If GenRx is unable to supply Symbion with carvedilol, its reputation with Symbion and its pharmacists could be irreparably harmed at an early and critical stage in the development of a new, long-term commercial relationship.

115 If GenRx is unable to launch carvedilol as planned, its reputation generally will suffer a serious blow. There is a very significant advantage to generic pharmaceutical companies in being the first to market with a generic pharmaceutical product. The first generic product to be marketed obtains, and to a large extent retains, the greatest market share amongst generic competitors. If GenRx were restrained from entering the market, other generic companies could come in and obtain that commercial advantage. The damage to GenRx in those circumstances would be very difficult to measure.

116 Alphapharm and Sandoz have entered into arrangements with the Patentees to distribute the Patentees’ carvedilol products. If GenRx is restrained from entering the market, it may be open to Alphapharm and Sandoz to terminate their arrangements with the Patentees and launch their own generic versions of carvedilol, thereby depriving GenRx of the opportunity of obtaining the benefit of being first to launch.

117 GenRx has a paid up capital of $2 and its holding company has a paid up capital of $2. Its ultimate holding company, however, is a Canadian corporation with substantial assets. While the financial position of GenRx by itself would have been a very significant factor in the balance of convenience, one of the undertakings proffered is to provide a bank guarantee in the sum of $3 million. I am satisfied that that guarantee would cover prospective losses on the part of Patentees in the short-term, so long as they are able to monitor sales by GenRx. It would be open to the Patentees to make a further application if it appeared that the level of sales would justify damages in excess of the amount of the proposed guarantee.

118 The primary answer proffered by GenRx to the allegation of infringement, assuming that the Patent is valid, is the additional element in the claims of the Patent relating to the decreasing of mortality. GenRx eschews any intention to supply its products for purposes other than ameliorating the symptoms of congestive heart failure. The Patentees, on the other hand, rely on the absence of decrease in mortality in the prior art publications as justifying the novelty of the claimed invention of the Patent.

119 On the other hand, in the product information sheet for GenRx products that has been approved by the Therapeutic Goods Administration, there are references to reduction in death in the studies that are described in it. GenRx proposes to seek approval by the Therapeutic Goods Administration of an amended product information sheet that omits the detailed description of the studies and the reference to the reduction of the risk of death under the heading "CLINICAL TRIALS". GenRx has proffered an undertaking to prosecute its application for the approval of its product information sheet in the amended form expeditiously and to inform the Patentees of its progress with that application. However, GenRx does not propose to delete the reference to death in the general description of the studies in the product information sheet. Nor does it propose to delete the table to which I have referred.

120 GenRx has undertaken not to advertise, or otherwise promote, carvedilol for decreasing mortality except that it will not be a breach of that undertaking to supply copies of the product information sheet in the unamended form. I consider that that undertaking affords a sufficient degree of protection to the Patentees, when coupled with the undertaking to keep proper records of sales of the GenRx products, to justify refusal of interlocutory injunctions.

121 As I have said, I am not persuaded that I should conclude, at this stage, that there is not a serious question to be tried on infringement of the Patent. Having regard to the matters considered above in deciding where the balance of convenience lies, I consider that it is appropriate to accept the undertakings proffered by GenRx and refuse any further interlocutory relief. However, the Patentees should have liberty to apply on reasonably short notice if, having regard to information furnished pursuant to the undertakings, it wishes to contend that there has been a sufficient change in circumstances to justify revisiting the question of further interlocutory relief.

122 Upon GenRx giving to the Court the undertakings referred to above, the Patentees’ application for interlocutory relief beyond those undertakings should be refused. Some undertakings had been proffered prior to the commencement of the hearing but others were only proffered in the course of argument. In the circumstances, I consider that it would appropriate for GenRx’s costs of the interlocutory application to be GenRx’s costs of the proceeding and that there be no other order as to the costs of the interlocutory application.

I certify that the preceding one hundred and twenty-two (122) numbered paragraphs and Schedule are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Counsel for the Applicant:	Mr D.M. Yates SC, Mr S.C.G. Burley and Mr A. Fox

Solicitor for the Applicant:	Spruson & Ferguson

Counsel for the Respondent:	Ms A.H. Bowne SC and Mr N.R. Murray

Solicitor for the Respondent:	Freehills

Date of Hearing:	30 and 31 January, 1 and 2 February 2007

Date of Judgment:	9 February 2007

Federal Court of Australia

Roche Therapeutics, Inc v GenRx Pty Ltd [2007] FCA 83 (9 February 2007)