Merck & Co Inc v Arrow Pharmaceuticals Ltd [2005] FCA 425

FEDERAL COURT OF AUSTRALIA

Merck & Co Inc v Arrow Pharmaceuticals Ltd [2005] FCA 425 APPEAL – practice and procedure – issue raised in notice of contention – no findings of primary fact made by trial judge – whether issue should be argued on hearing of appeal

Arrow Pharmaceuticals Ltd v Merck and Co Inc (2004) 63 IPR 85 cited Grove Hill Pty Ltd v Great Western Corporation Pty Ltd (2002) 55 IPR 257 cited Biogen Inc v Medeva plc [1997] RPC 1 cited Branir v Owston Nominees (No 2) (2001) 117 FCR 424 cited MERCK & CO. INC V ARROW PHARMACEUTICALS LTD NSD 1563 of 2004 JUDGE: HEEREY J DATE: 13 APRIL 2005 PLACE: MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 1563 OF 2004

BETWEEN: MERCK & CO. INC

APPLICANT

AND: ARROW PHARMACEUTICALS LTD

(ACN 088417403)

RESPONDENT

JUDGE: HEEREY J

DATE OF ORDER: 13 APRIL 2005

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT: 1. The appellant file its outline of submissions in support of its notice of appeal of no more than 20 pages by 22 April 2005. 2. The respondent file its outline of submissions in answer and in support of its notice of contention (other than par 5) of no more than 20 pages by 29 April 2005. 3. The appellant file answering submissions of no more than 10 pages by 6 May 2005. 4. Costs are reserved.

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 NSD 1563 OF 2004

BETWEEN: MERCK & CO. INC

APPLICANT

AND: ARROW PHARMACEUTICALS LTD

(ACN 088417403)

RESPONDENT

JUDGE: HEEREY J

DATE: 13 APRIL 2005

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 This is an application for directions in relation to an appeal to the Full Court against the decision of Gyles J in Arrow Pharmaceuticals Ltd v Merck and Co Inc (2004) 63 IPR 85. Merck challenges his Honour's findings on the issues of manner of manufacture and novelty. However, in a notice of contention Arrow seeks to uphold the judgment on a number of grounds including, in ground 5, that his Honour should have found that the alleged invention as claimed in each of the claims 1, 2, 3, 5, 6, 9 and 10 of the patent did not involve an inventive step. 2 His Honour did not deal with that issue at trial. He said at [124]: "In cases such as this it is often convenient for a trial judge to deal with issues which are not necessary to be decided in an endeavour to avoid a new trial in the event that different views are taken on appeal, notwithstanding that to do so involves judicial time and effort which might be wasted and means the delaying of judgment in the instant and other cases. I have followed that course in relation to a number of grounds already. I do not propose to do so in relation to the alleged lack of an inventive step, or obviousness as it is sometimes called, in relation to the method claims. To do so would involve grappling with a considerable body of evidence. That exercise would have an air of unreality. It will be apparent from what I have said in relation to invention and manner of manufacture that I do not regard the alleged invention as having subject matter. I do not regard a choice between dosage regimes of a patented drug in the circumstances of this case as involving an inventive step sufficient to found a stand-alone patent. Ingenuity might be exercised, but not invention. Furthermore, in conducting that exercise I would have to ignore all of the Lunar News material and much of that which I know about the actual provenance of the alleged invention from the internal Merck material. I should add that I did not gain any significant impression as to the credit of the relevant witnesses from any observation of demeanour as such. In addition to the affidavit evidence, there is a full transcript of the oral evidence and there is much relevant objective documentary material in evidence." 3 In these circumstances, I agree, as Dr Emmerson QC for Merck submits, that it would be unfair for his client and inimical to the efficient disposal of the appeal for the Full Court to have to, in Gyles J's words, "grapple with a considerable body of evidence" in relation to the issue of inventive step. This is but one example of a practice frequently adopted by appellate courts. Specifically in patent cases reference should be made to Grove Hill Pty Ltd v Great Western Corporation Pty Ltd (2002) 55 IPR 257 per Gyles J at [314] and [372], with whom French J at [4] and Dowsett J at [42] agreed. 4 Mr Burley for Arrow says that no questions of demeanour would arise and that it is undesirable to extend the litigation by a possible further trial at first instance. I accept that, as is usually the case in litigation of this sort, questions of demeanour are unlikely to play any real role. However, that does not exhaust the importance of having an analysis of the evidence and findings of primary fact made by the trial judge. The findings of a court at first instance are valued not as a matter of professional courtesy, but because findings of fact will be based on a judge's overall evaluation of the evidence in the trial setting, an environment which cannot be replicated in an appeal court, a point made by Lord Hoffman in Biogen Inc v Medeva plc [1997] RPC 1 at 45, cited with approval by Allsop J in Branir Pty Ltd v Owston Nominees Pty Ltd (No 2) (2001) 117 FCR 424 at [26]. 5 I accept that it would be unfortunate if it turns out that the matter would have to go back to have this further issue tried. One cannot say at the moment of course whether that will happen. However, what is certain is that if inventive step were to be dealt with at the appellate level for the first time, there would be considerable inconvenience and hardship. So in those circumstances, I will make the following directions: 1. The appellant file its outline of submissions in support of its notice of appeal of no more than 20 pages by 22 April 2005. 2. The respondent file its outline of submissions in answer and in support of its notice of contention (other than par 5) of no more than 20 pages by 29 April 2005. 3. The appellant file answering submissions of no more than 10 pages by 6 May 2005. 4. Today's costs are reserved. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.