In seeking to diminish the significance of this factor, Apotex relied upon the recent Full Court decision in Smith & Nephew Pty Ltd v Wake Forest University Health Sciences [2009] FCAFC 142 (reported here), in which the Court held that:

it would be an error in considering whether the grant of an interlocutory injunction, in the context of an infringement claim, where the validity of the patent is in issue, to impose on a person who seeks to launch an alleged infringing product, an obligation to ‘clear the way’ by revoking the patent. Equally, the fact that a new entrant is prepared to take the risk of being restrained with its eyes wide open, should not be elevated beyond being a factor in the assessment of the many factors relevant to whether to grant an injunction.

Jessup J considered that taking this factor into account as a discretionary consideration was in the circumstances appropriate, concluding that:

[t]he respondent chose to refrain from challenging the validity of the patent in suit for what I consider to be essentially tactical reasons. To expect it to live with the consequences of that choice does not, I consider, amount to the imposition of a requirement that it “clear the way”.

Accordingly, while not to be elevated above the many factors to be considered in assessing the balance of convenience, a deliberate tactical decision not to challenge the validity of a patent prior to entering the market is likely to weigh in favour of the grant of an interlocutory injunction. Given that the grant of a patent is a prima facie indication of its validity, it is unsurprising that a party who considers its conduct shall not infringe because the patent is bad should be restrained from the allegedly infringing conduct until such time as its case for invalidity is made out.

The Court disagreed that the second invention was a replacement for the first invention.  Allsop P considered that a “replacement” did not broadly mean any commercial alternative. Rather, in this context “replace” properly meant something that replaces the claims of the patent covering the first invention, in the sense that the replacement encompasses the claims of the first invention and thereby takes the place of or substitutes for them: a new product or process with one or more further integers in addition to the relevant claims would be a replacement.  In reaching the same conclusion as Allsop P, Handley AJA also interpreted “replacement” by reference to the claims of the patent covering the first invention.  His Honour reasoned that a replacement meant a new product or process which omitted one of the essential integers of a claim in the patent for the first invention, or one which added a new essential integer to a relevant claim, to give a better result.  As the second invention was not part of the claims of the first invention and only used some of the integers of those claims, the second invention was not found to be a “replacement”.

This case provides a good illustration of how an ordinary word used in a contract (in this case, the word “replace”) may be construed more narrowly by a Court than one of its broad ordinary meanings, in light of the context of the contract.  The case also highlights the need to precisely identify the nature of any future improvements which are the subject of an assignment.

Regarding the appropriate construction of the claim, the Court held the patentee to the construction advanced before the primary judge that the aseptic package was an essential integer of the combination which was the subject of the claim. The Court then considered the decision of Dixon J in Palmer v Dunlop Perdriau Rubber Co Ltd in relation to the notion of a collocation of integers, concluding that:

for the claim of a combination patent to remain valid, the integers must interact to bring about the desired result — in this matter, the application of negative wound pressure.

Assessing whether the packing did so interact, the Court stated:

how, if at all, does the aseptic package interact with the other integers to produce the result of negative wound pressure. It is the mere bag in which the device that ‘does the work’ is stored before use. It is discarded before any negative would pressure is applied. No doubt it is beneficial to have sterile packaging for a therapeutic device, however, the aseptic bag itself does nothing to cause, limit or affect the functional result of negative wound pressure as desired.

While the patentee referred to earlier decisions supporting the proposition that the presence of the additional integer of the aseptic packaging did not affect the validity of the claim, the Court distinguished those cases on the somewhat confusing basis that “those authorities are relevant to an additional integer that limits the scope of the claim, not an integer said to limit the invention”.

The Court concluded that the claim was invalid because:

While the integers that form the actual apparatus might be said to be a new combination, when placed with the essential feature of the aseptic package being part of the invention claimed they form a mere collocation of the apparatus on the one hand and the aseptic package on the other.

While this somewhat confusing decision may be limited to a very specific factual scenario, it illustrates how crucial claim drafting can be. The fact that the claim was directed to an apparatus for a specific purpose rather than just the apparatus itself seems to have played a significant role in the finding of invalidity.

Schutz, a provider of new Composite IBCs as also engaged in the reconditioning of used IBCs and having them recertified.  VIP had entered the reconditioning market and sold “Cross-bottled” Composite IBCs, being IBCs having a Schutz outer case and a VIP inner container.  The exterior casing of the reconditioned Composite IBCs sold by VIP continued to bear Schutz’s trademark and in some instances Schutz’s original UN certification (UN model regulations require Composite IBCs to be tested to ensure that they meet a certain standard.  Only those Composite IBCs that have passed the mandatory tests are certified for use in the transport of dangerous goods and they must bear standardised labelling).Schutz alleged that VIP’s conduct was misleading and deceptive and therefore in breach of sections 52 and 53 of the Trade Practices Act in that consumers could be misled into believing there was an affiliation between Schutz and VIP or that the cross-bottling of the Composite IBC was authorised by Schutz.  The Court accepted that consumers may have been so misled.

Schutz also argued that VIP’s conduct gave rise to a further misrepresentation that the Composite IBC’s supplied by VIP were of the same quality and standard as the Schutz product and continued to comply with UN certification.

The Court found that Schutz’s concerns, as well as concerns that consumers may mistakenly believe that the reconditioned products were suitable for the transport of dangerous goods, were negated by VIP providing undertakings:

a) not to sell the goods as being suitable for this purpose and

b) to affix a warning label on the goods which also explained the nature of Schutz’s and VIP’s connection with the goods and that the goods were not for the storage or transport of dangerous goods.

On the basis of those undertakings, the Court refused to grant interlocutory relief.

The case illustrates that where the issue of potential unrepairable harm can be minimised by practical measures such as corrective labelling, this can stymie an Applicant’s claim for interlocutory relief.

Bennett and Middleton JJ, with whom Emmett J agreed, referred to the recent Full Court decision in Lundbeck v Alphapharm (decided by an identically constituted Court) and identified four principles apposite to the question of anticipation:

1. Where the prior publication discloses exactly what is claimed, there is anticipation.
2. There is anticipation if the skilled addressee would add missing information to what is disclosed in the prior art as a matter of course and without the application of inventive ingenuity or undue experimentation. A disclosure is sufficient if it enables the skilled addressee, in the ordinary course and without invention, to add what is missing in the prior publication to obtain the claimed invention.
3. If the prior art discloses the very subject matter of the invention, the person skilled in the art is assumed to be willing to make trial and error experiments to get it to work. If the disclosure is of an invention which, if performed, would infringe the patent, there is anticipation.
4. The question is whether the disclosure is sufficient to enable the skilled addressee to perceive, understand and, where appropriate, apply the prior disclosure necessarily, but within the ordinary limits of trial and error, to obtain the invention.

The 3rd and 4th propositions combined would appear to constitute and exception to the broad principle enunciated in the 1st, such that under Australian law, prior art must be an enabling disclosure to constitute an anticipation.

Applying these principles to the earlier Sanofi patents, the Court held that:

The enantiomers of PCR 4099 were disclosed and claimed in each of the prior art patents. Further, the prior art patents each contained a direction, recommendation or suggestion which, if followed, would result in the d-enantiomer of PCR 4099. A range of techniques for obtaining enantiomers from a racemate was known and commonly applied prior to 1987. If his Honour were correct in his conclusion that the process used to obtain the enantiomers of PCR 4099 was obvious then, in our view, this further constituted each of the prior art patents as a novelty-defeating disclosure of the d-enantiomer.

As such, the earlier patents constituted an enabling disclosure despite providing no description of how to obtain the d-enantiomer because a person skilled in the art could nevertheless obtain that enantiomer, as directed or suggested, without invention.

While the earlier patents disclosed pharmaceutically acceptable salts of the racemic PCR 4099, there was no disclosure of salts of the d-enantiomer. Accordingly, those claims directed to such salts did not lack novelty.

Apotex had also raised lack of inventive step as a ground of invalidity. The trial judge had found that the claims directed to the salts of the d-enantiomer were not obvious, on the basis that PCR 4099 did not form part of the common general knowledge. However, the Full Court considered that the invention disclosed was the resolution of enantiomers from the racemic PCR 4099 and the formation of salts from those enantiomers. This presupposed that the hypothetical skilled addressee was already aware of PCR 4099. While there was evidence to the effect that the formation of salts once the enantiomers were obtained would require trial and error, the Full Court concluded that:

Trial and error are normal, everyday parts of laboratory work and non-inventive laboratory experiments. … A non-inventive worker in the field, looking to make a pharmaceutically acceptable salt of the d-enantiomer would, on the evidence, choose an acid, such as those readily available and commonly and conventionally used, and apply common processes and techniques to make it. That was obvious, in the sense that the non-inventive skilled worker would have been directly led to those particular salts. There was no inventive step involved.

Accordingly, each claim of the patent in suit was found to lack novelty or inventive step. Should this result stand, Sanofi faces the prospect of not only losing its patent but also a potential damages claim having regard to the earlier grant of an interlocutory injunction to restrain infringement.

Bennett J noted that “The Court does not approach the exercise of its discretion in a manner hostile or antipathetic to amendment. However, the onus is on the patentee to satisfy the Court that the amendments should be allowed.” One factor relevant to the exercise of discretion is whether there has been a full disclosure of all matters relevant to the amendment.

Servier sought to explain the reasons for the amendment via two affidavits from its solicitor. The first identified the reason for the amendment as being a recognition that the specification disclosed matter which could properly be the subject of additional claims. In cross-examination this was admitted to be an incomplete explanation. The second affidavit identified a further reason for the amendment as being to reduce the risk of the patent being invalid by adding narrower claims.

Apotex argued that neither of the explanations for the amendment set out in these affidavits was consistent with the reason set out in correspondence between Servier and its solicitors which had been produced following a waiver of privilege. This correspondence identified the amendments as being designed to overcome potential validity issues raised in related UK proceedings.

Bennett J concluded that the Court should not exercises its discretion to allow the amendments in light of the failure by Servier to provide full and frank disclosure of its reasons for seeking to amend, stating:

Servier should have given its reason for the amendments voluntarily and at the time it sought the amendments. It knew the grounds of Apotex’s opposition to the amendments and it knew of Apotex’s challenge to the validity of the corresponding patent in the UK and its defence to infringement. That clearly raised the scope of the claims and the reasons to amend them … Servier had ample opportunity to amend the AC Patent application if it was of the view that it contained additional claimable matter. It litigated the unamended patent in the UK and pursued the grant of the unamended patent in Australia, abandoning the s 104 amendments. Servier has not sufficiently explained why it took this course. At the time of abandoning the s 104 amendments, Servier was aware of the first instance decision in the UK. Servier’s conduct in relation to the amendments disentitles it from presently amending the AC Patent in circumstances where litigation over the validity of that patent with Apotex was in clear prospect and the contest over the patent had already commenced. The lack of forthrightness in providing Servier’s reasons to amend reinforces that conclusion.

Had Servier pursued the amendment application under section 104, no issue of discretion would have arisen. While any decision regarding amendment must be carefully considered, this decision highlights the difficulties which can arise if amendment is delayed until after the commencement of court proceedings.