Aventis Refused Injunction in New Zealand Targeting Generic Docetaxel

Aventis Pharma SA v Pharmaco (NZ) Ltd [2010] NZHC 860 (4 June 2010)

Patent infringement - application for interim injunction - whether damages would be appropriate remedy - Amendment of patent - whether granted and unopposed amendment application subject to judicial review

BACKGROUND

The New Zealand government operates a system for subsidising the cost of certain approved prescription pharmaceutical products, one of which is (or was) the cancer treatment drug Docetaxel, distributed in New Zealand under the brand name Taxotere by Sanofi-Aventis New Zealand Ltd under license from Aventis SA (collectively "Aventis").

Subsidised medications are purchased on behalf of the New Zealand government by its agency Pharmac.  Pharmac issues multi-product tenders annually for the supply of selected drugs.  In December 2007 the annual tender included Docetaxel, which had been supplied by Aventis since 1994.

Pharmaco (NZ) Ltd is a company engaged in sale, marketing, warehousing, distribution etc on behalf of numerous suppliers of pharmaceutical products.  The second respondent, InterPharma (NZ) Ltd is a generic drug manufacturer whose products are distributed by Pharmaco.

Aventis contends that New Zealand Patent no. 243469, which relates to "compositions containing Taxane derivatives", covers Docetaxel and generic equivalents.

InterPharma responded to Pharmac's December 2007 tender, offering to supply its generic Docetaxel EBEWE at a substantially lower cost than Aventis' Taxotere.  Aventis did not respond to the tender.

Regulatory approval of Docetaxel EBEWE was granted in September 2009, and Pharmac subsequently awarded the Docetaxel tender to InterPharma for the period from 1 December 2009 to 30 June 2011.

Aventis almost immediately applied to amend its patent.  The requested amendment was allowed, and was not opposed by InterPharma, which had failed to learn of the application.

Aventis sent InterPharma a notice to cease and desist, to which InterPharma responded by filing an application in the New Zealand High Court for review of the Commissioner's decision to grant the amendment.  In response, Aventis applied to the court alleging patent infringement and seeking an interim injunction against Pharmaco and InterPharma.

AMENDMENT

Since this decision relates to interlocutory applications, it does not go into details of the amendments made by Aventis, except to explain that claim 1 was amended and a new claims 2 added.  According to the New Zealand Patent Office records, claim 1 prior to amendment was as follows:

1. A composition suitable for injection comprising a water-insoluble taxane derivative dissolved in a surfactant which is a polysorbate, a polyoxyethylene glycol ester, or an ester-ether of polyethylene glycol and castor oil, and containing less than 5% by volume of ethanol.

After amendment, claims 1 and 2 read as follows:

1. A composition suitable for injection, being a stock solution, comprising a water-insoluble taxane derivative dissolved in a surfactant which is a polysorbate and containing less than 5% by volume of ethanol.

2. A composition suitable for injection, being a perfusion, comprising a water-insoluble taxane derivative dissolved in a surfactant which is a polysorbate and containing less than 2% by volume of ethanol.

We freely admit to having no technical competence to determine what the import of this amendment may be.  On the one hand, the amended claims are narrowed in scope in the sense that the options of the "surfactant" being "a polyoxyethylene glycol ester, or an ester-ether of polyethylene glycol and castor oil" have been removed.  On the other hand, the introduction of the limitations of "stock solution" in claim 1 and "perfusion" in claim 2 seem somewhat arbitrary, except that Aventis alleges that only claim 2 is infringed, which seems suspicious considering that this claim was only introduced after Aventis became aware of InterPharma's successful bid for the Docetaxel tender.

For its part, Aventis' explanation for the amendment was that:

The proposed amendment to add new claim 2 is by way of disclaimer or explanation. The term 'composition' in claim 1 encompasses 'perfusion' within its scope. This amendment, together with the amendment to claim 1, represents the division of original claim 1 to two claims… These amendments are made to exclude from the claims embodiments where there is a possibility of a validity argument due to prior art. While this point is disputable, we wish to make the amendment to remove all doubt.

APPLICATION FOR REVIEW OF DECISION TO ALLOW AMENDMENT

As noted above, InterPharma failed to oppose the allowance of the amendments to the patent within the period allowed under the Patents Act 1953.  It contends instead that the Commissioner's decision to allow the amendments was made in the exercise of a statutory power, and are subject to judicial review and may be quashed if the action taken was not in accordance with that power.  In particular, InterPharma contends (at [20]) that:

1. the addition of claim 2 was not made by way of "disclaimer or explanation";
2. the amendments were allowed contrary to the provisions of the Act; and
3. contrary to internal practice notes of the Patent Office, Aventis' amendments were allowed despite Aventis not having properly disclosed its reasons for amendment.

Aventis, for its part, contends (at [23]) that there is "a statutory prohibition against challenges to amendments in the absence of fraud", and that failure to oppose is fatal to InterPharma's case.

DECISION ON APPLICATION FOR INTERIM INJUNCTION

The court first considered Aventis' application for an interim injunction.  It applied the "orthodox tripartite test", namely:

1. whether the applicant (Aventis) has raised a serious question for trial;
2. the balance of convenience, and in particular whether damages could be an adequate remedy if Aventis is ultimately success in establishing infringement at trial; and
3. the overall justice of the case.

The court found in the affirmative on the first question (at [25]), and had no relevant evidence on the third (at [46]).  Therefore the decision turned on the second question.

The facts in this case are interesting.  It was established (at [30]) that there would be no significant market for Taxotere if it was not subsidised.  Sales would fall from in excess of NZ$4.7m in the 2008 calendar year to almost nil.  Assuming a 30% net profit, Aventis' net loss would be at least NZ$3m up until the expiry of its patent on 17 July 2012 (at [32]).  Aventis contended that this would necessitate significant restructuring, and making three staff redundant (at [33]).  It was considered unlikely that it would be worthwhile for Aventis to re-enter the market in any event (at [34]), and given that a final determination in the proceedings is unlikely prior to expiry of its patent, there would be no prospect of Aventis ever being able to recapture its position in the market even if successful (at [35]).

Nonetheless, the court found that damages would be a sufficient remedy, and refused to grant the injunction (at [37]).  This decision appears to have been influenced by InterPharma providing a bank guarantee of up to NZ$5m.  It also did not hurt that the New Zealand taxpayers stand to save about NZ$95,000 per month, regardless of the ultimate outcome.

Another factor was the possible uncertainty regarding the validity of claim 2, which is the only claim said to be infringed (at [42]).

DECISION ON REVIEW OF ALLOWANCE OF AMENDMENT

The court decided that "the justiciability or otherwise of the Commissioner's decision is a closely contestable issue" (at [43]), and therefore declined to issue an interim decision on this issue.

COMMENT

The decision appears hard on Aventis (and particularly, if true, those three personnel who will be made redundant as a result).  However, Aventis' conduct in this matter does not appear to be entirely exemplary.  It might reasonably be inferred that it was relying on its patent in not responding to Pharmac's tender, and the timing of its amendment application was always likely to raise questions for the court.  Barring extremely coincidental timing, either Aventis was previously aware of the possible validity issue with claim 1, but took no action until infringement was imminent, or its explanation for the amendment is somewhat disingenuous.  Either way, there may be a lesson here in the benefits of turning up to court with clean hands. 

InterPharma, on the other hand, has been successful in taking the initiative of firing the first shot in court, and in providing a substantial bank guarantee in support of its opposition to the grant of an injunction.  Had it been truly on the ball from the outset, it would not have missed the opportunity to oppose Aventis' amendments, but having done so this would seem to be a reasonable save.

We expect that it will be some time before we see a final decision on the merits.

Tags: Amendments, Infringement, Interlocutory injunction, New Zealand