Apotex Pty Ltd (formerly GenRx Pty Limited) v Les Laboratoires Servier (No 3) [2008] FCA 1139 (9 July 2008)

Apotex Pty Ltd (formerly GenRx Pty Limited) v Les Laboratoires Servier (No 3)

Trade Practices Act 1974 (Cth) s 52

Apotex Pty Ltd (formerly GenRx Pty Limited) v Les Laboratoires Servier (No 2) [2008] FCA 607 considered
Aristocrat Technologies Australia Pty Ltd v Vidtech Gaming Services Pty Ltd (2006) 68 IPR 229 cited
Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) 35 IPR 635 cited
Hospitals Contribution Fund of Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1987) 78 ALR 483 cited
Makita (Australia) Pty Ltd v Black & Decker (Australasia) Pty Ltd [1990] FCA 166; (1990) 18 IPR 270 cited

APOTEX PTY LTD (FORMERLY GENRX PTY LIMITED) v LES LABORATOIRES SERVIER and SERVIER LABORATORIES (AUST) PTY LTD ACN 004 838 500

NSD 208 OF 2007

BENNETT J
9 JULY 2008
SYDNEY

1. The Second Respondent caused to be published an advertisement that contained a representation as to the significance of improved stability of new Coversyl, that, in trade or commerce, is misleading or is likely to mislead medical practitioners within section 52 of the Trade Practices Act 1974 (Cth) (s 52), in contravention of s 52.

2. The Second Respondent caused to be published an advertisement that contained representations in relation to the time at which new Coversyl became indicated for stable coronary artery disease and the indication of generic products for that condition, that, in trade or commerce, are misleading or are likely to mislead medical practitioners, within s 52, in contravention of s 52.

3. The Second Respondent issued a stamp to doctors to be printed on prescriptions, the imprint of which contained representations as to substitutability of generic products for new Coversyl that, in trade or commerce, are misleading or likely to mislead pharmacists and patients within s 52, in contravention of s 52.

(a) of the advertisements annexed to these orders and marked Annexure A and Annexure B (the Advertisements); and

(b) of the stamp, the imprint of which is annexed to these orders and marked Annexure C (the Stamp);

5. Within 30 days of the date of this order, the Second Respondent take all reasonable steps appropriate to recall all copies of the Stamp including those distributed to medical practitioners.

6. The matter be stood over for further directions on 5 September 2008 in relation to a damages enquiry for damages pursuant to section 82 of the Trade Practices Act 1974 (Cth).

7. The Respondents pay the Applicant’s costs pursuant to order 2 of the Court’s 11 April 2007 orders forthwith.

8. The parties forward to the chambers of Justice Bennett and exchange short written submissions on the percentage proportion of costs which should be awarded in relation to the Trade Practices Act claims in this proceeding, based on her Honour’s indication that each party should be awarded costs on the issues in relation to which they were successful, by 7 August 2008.

9. The bank guarantee provided by the Applicant in favour of the Respondents in the amount of $100,000 as security for the cross undertaking given by the Applicant in the Court’s 11 April 2007 orders be released to the Applicant.

10. The Respondents, jointly and severally undertake to the Court, whether by themselves or their directors or their employees or agents or otherwise, to refrain permanently from:

(c) publishing or otherwise disseminating in any advertising (including trade materials and product brochures), packaging, instruction manuals or any other means of communication the express statements listed in Annexure D to these orders; and

(d) publishing or otherwise disseminating any advertising (including trade materials and product brochures), packaging, instruction manuals or any other means of communication the representations listed in Annexure E to these orders.

11. The Respondents gave an undertaking on 11 April 2007 to refrain permanently from further publishing the advertisement which is annexed to these orders and marked Annexure F.

(a)	COVERSYL perindopril arginine ... THERE IS NO SUBSTITUTE FOR IMPROVED STABILITY compared to perindopril erbumine;
(b)	COVERSYL perindopril arginine . . . NOW INDICATED FOR STABLE CORONARY ARTERY DISEASE.

(a)	Improved stability is relevant to the substitutability of New COVERSYL as against perindopril erbumine products;
(b)	Improved Stability and/or Increased Shelf Life is a distinction with significance to doctors, who prescribe perindopril products;
(c)	Increased Shelf Life is relevant to substitutability of New COVERSYL as against perindopril erbumine products;
(d)	Previous COVERSYL was not indicated for stable coronary artery disease;
(e)	New COVERSYL has only recently been indicated for stable coronary artery disease;
(f)	There are no other perindopril products indicated for stable coronary artery disease;
(g)	There are no other perindopril products substitutable with New COVERSYL for stable coronary artery disease.

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

1 On 8 May 2008 I delivered reasons in Apotex Pty Ltd (formerly GenRx Pty Limited) v Les Laboratoires Servier (No 2) [2008] FCA 607 (‘Apotex v Servier’) following Apotex Pty Ltd’s (‘Apotex’) application to the Court in relation to a claim that Les Laboratoires Servier and Servier Laboratories (Australia) Pty Ltd (together ‘Servier’) had breached ss 52, 53 and 55 of the Trade Practices Act 1974 (Cth) (‘the Act’) in the course of advertising and promoting one of its drugs, Coversyl. The subject matter was a stamp distributed to doctors by Servier which contained the phrase "brand substitution not permitted" and four advertisements (two banner advertisements and two full page advertisements). Apotex alleged that they each contained representations which were misleading or deceptive or likely to mislead or deceive under the Act.

2 My findings are set out in Apotex v Servier at [151]. For convenience and in summary those findings were:

• that the stamp issued by Servier to doctors to be printed on prescriptions for Coversyl contains representations that are misleading or deceptive or likely to mislead or deceive pharmacists and patients within s 52 of the Act;

• that Servier is liable for the stamp representations and has thereby contravened s 52 of the Act;

• that representations contained in the first and second banner advertisements were not misleading or deceptive or likely to mislead or deceive medical practitioners;

• that the first whole page advertisement caused to be published by Servier contained a representation as to improved stability that is likely to mislead or deceive medical practitioners within s 52 of the Act and Servier has thereby contravened s 52 of the Act; and

• that the second whole page advertisement caused to be published by Servier contained a representation in relation to the indication for Coversyl for stable coronary artery disease that is likely to mislead or deceive medical practitioners within s 52 of the Act and Servier has thereby contravened s 52 of the Act.

3 The parties requested that they be given the opportunity to submit draft orders to give effect to the reasons for judgment and written submissions were filed.

4 The parties have agreed on the form of declarations. I will make those declarations.

5 Apotex submits that it is appropriate to make orders restraining the further distribution of the stamp and the further publication of the two full page advertisements. It also seeks orders restraining Servier from publishing or otherwise disseminating the representations contained within the stamp and the two full page advertisements that were found likely to mislead or deceive within s 52 of the Act.

6 Servier points to the undertakings given by it on 3 April 2007 in respect of the advertisements and the stamp and in respect of any reference to the "improved stability" of Coversyl. Those undertakings were given without admissions and until final determination or until further order. Servier proffers those undertakings permanently.

• any further advertisements which make reference to the improved stability of Coversyl ‘in the context of influencing medical practitioners not to allow brand substitution’.

The undertakings also relate to any further advertisement which contains the words ‘now indicated for stable coronary artery disease’ or any substantially similar phrase which includes the word "now".

8 In relation to this aspect of the proposed orders I make the following observations. First, as to whether there should be orders or whether undertakings are sufficient:

• The undertakings reflect what Apotex has called ‘the Court’s disapproval of the respondents’ conduct’ and also reflect the outcome of the proceedings.

• The undertakings, which are in place and have been since April 2007, are offered on a permanent basis. They are no longer made without admissions. They cover the same ground as the proposed injunctions concerning the representations; a matter referred to by Wilcox J in Aristocrat Technologies Australia Pty Ltd v Vidtech Gaming Services Pty Ltd (2006) 68 IPR 229 at [100].

• There is no suggestion that Servier has breached the undertakings since they were given in April 2007.

• It is not for the Court to consider the potential forensic benefits to either party of making orders in the form of injunctions, rather than accepting undertakings.

• The orders proposed by Apotex would restrain Servier from using any part of the advertisements. Those advertisements, especially with respect to the first full page advertisement, contained representations that were not found to be misleading or deceptive or likely to mislead or deceive. The proffered undertakings focus more on the actual representations that were found to be in contravention of s 52 of the Act. It is the representations that should be the subject of any proposed undertakings and not the advertisements themselves. On the other hand, the proposed undertakings seek only to restrict the placing of any further advertisements which make reference to "improved stability" or to the Europa trial. I see no reason to limit the undertaking or order to the placing of advertisements which contain only the offending words or expressions. If the undertakings are not extended to mirror the wording of Apotex’s proposed revised orders that relate to the representations, I would be minded to make orders in those terms.

9 Apotex seeks orders for the destruction of a range of material. If the undertakings are in place, Servier cannot use the advertisements. I accept that it is appropriate that Servier destroy all copies of the offending advertisements and the offending stamp in its possession. I do not, however, have sufficient evidence to enable me to comprehend what is encompassed by the destruction of the other material referred to in Apotex’s proposed order, such as instruction manuals, and I do not propose to extend an order for destruction to those materials.

10 The offending stamps are in the possession of third parties, doctors, who may continue to use them despite the provision of a different version of the stamp of which Apotex does not complain. It is appropriate that Servier take all reasonable steps to recall the offending stamps.

11 While the Court has the power to make an order for corrective advertising, it must consider the nature and likely effect of the proposed advertising. The time which has elapsed since the publication of the misleading advertising will usually be relevant (Makita (Australia) Pty Ltd v Black & Decker (Australasia) Pty Ltd [1990] FCA 166; (1990) 18 IPR 270 at [282] per Wilcox J; Hospitals Contribution Fund of Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1987) 78 ALR 483 at 491–492 per Morling J). I do not see the benefit in corrective advertising. I do see that it is likely to create confusion. The stamp has been replaced. That itself is a form of correction. The advertisements were published in medical magazines. The offending representations formed only part of those advertisements. There is no evidence of the numbers of doctors who read those advertisements or of doctors who were misled by them. In my view corrective advertising, in particular in the form suggested, would create more confusion. The advertisements have not been published for some time and the public does not need current protection. It is unlikely that there are current incorrect or false impressions that require correcting and it is not, in my view, in the public interest to order corrective advertising.

12 As to the stamp, I am not satisfied that the pharmacists or patients likely to have been confused by its use on a single prescription will currently have a false impression of the substitutability of Coversyl. The patient’s doctor will either have continued to prevent substitution, or will have used the new stamp, or will have permitted substitution. The evidence of confusion on the part of a pharmacist was of transient confusion. I do not accept that pharmacists, who are fully aware of generic substitution, would require corrective advertising. There can reasonably be no current misapprehension as a result of the stamp (Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) 35 IPR 635 at 640 per Tamberlin J).

13 Further, the corrective advertising sought goes well beyond pharmacists and patients who may have seen a stamped prescription. The proposed corrective advertising, to all pharmacies that sell Coversyl, is likely to confuse those patients with the characteristics that led to the conclusion that they would be likely to have been confused by the stamp in the first place.

14 No reason has been advanced for not standing the matter over in relation to a damages inquiry. I will hear from the parties as to the course of that part of the proceedings.

15 On 11 April 2007 Apotex provided a bank guarantee in favour of Servier as security for any orders for the payment of compensation pursuant to an undertaking for damages for the grant of interlocutory relief. It is likely that Servier will have some liability to Apotex for damages. I see no reason for the bank guarantee provided by Apotex to remain. Any damages for which Apotex is liable in respect of the first banner advertisement, shown in conjunction with the first full page advertisement, can be offset against any damages for which Servier is liable. In any event, Apotex’s undertaking as to damages was in respect of the interlocutory order and interlocutory undertakings offered by Servier.

16 I note that there is no dispute that Servier pay Apotex’s costs pursuant to order 2 of the orders of 11 April 2007 and those costs should be paid forthwith.

17 The full page advertisements were found to have contained representations published in contravention of s 52 of the Act. Apotex also challenged those advertisements in respect of representations found not to be misleading or likely to mislead. This is not a question of costs being allocated on the basis of issues in respect of a single allegation. These proceedings were, in effect, five separate proceedings in respect of the stamp and four separate advertisements. For the full page advertisements different representations were the subject of dispute. In the circumstances, I am of the view that each party should be awarded costs on the claims for which they were successful. That encompasses all the differently phrased representations as outlined in the statement of claim in respect of "improved stability" and "now indicated for stable coronary artery disease" or any reference to the timing of the Europa trial.

18 I should note that while the detail of the calculation of costs is not for me, I do not necessarily accept or understand why Servier says that it has succeeded totally on the issue of patient confusion. I note in particular my findings in respect of the use of the stamp in Apotex v Servier at [151].

19 The parties have indicated that they wish to make some further submissions on costs. Accordingly I will make the orders as currently determined and a specific costs order will follow.

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Counsel for the Applicant:	D K Catterns QC and S Goddard

Solicitor for the Applicant:	Freehills

Counsel for the Respondents:	A J L Bannon SC and A J Ryan

JUDGE:	BENNETT J
DATE OF ORDER:	4 AUGUST 2008
WHERE MADE:	SYDNEY

Date of Hearing:	16 to 20 July 2007; 27 August 2007

Date of Final Submissions:	30 July 2008

Date of Judgment:	9 July 2008

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 208 OF 2007

JUDGE:	BENNETT J
DATE:	9 JULY 2008
PLACE:	SYDNEY

Federal Court of Australia

Apotex Pty Ltd (formerly GenRx Pty Limited) v Les Laboratoires Servier (No 3) [2008] FCA 1139 (9 July 2008)