FEDERAL COURT OF AUSTRALIA Pfizer Corp v Commissioner of Patents [2006] FCA 164 PRACTICE AND PROCEDURE – joinder of parties / party to be joined – appeal from decision of Commissioner to rectify Register of patents – party to be joined has no present cause of action – proceedings by party seeking to be joined for rectification in the event that the appeal is successful – no prejudice to applicant – application for joinder supported by Commissioner – matters of law can adequately be dealt with by Commissioner – matters of fact not able to be challenged by Commissioner and can be addressed by party seeking to be joined Patents Act 1990 (Cth) ss 70, 75, 192, Federal Court Rules O 6 rr 2, 8, 17 Patent Regulations 1991 (Cth) Reg 10.7 Bishop, R v Bridgelands Securities Ltd (1990) 25 FCR 311 H Lundbeck A/S v Commissioner of Patents [2005] FCA 1718 Merck & Co Inc v Arrow Pharmaceuticals Limited [2002] APO 13 (17 April 2002) Merck & Co Inc v Sankyo Co Ltd (1992) 23 IPR 415 News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 R v Australian Broadcasting Tribunal; ex parte Hardiman (1980) 144 CLR 13 Wellness Pty Ltd v Pro Bio Living Waters Pty Ltd [2003] FCA 1048 PFIZER CORP v COMMISSIONER OF PATENTS NSD 1955 OF 2005 BENNETT J 1 MARCH 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD1955 OF 2005 ON APPEAL FROM THE COMMISSIONER OF PATENTS BETWEEN: PFIZER CORP FIRST APPLICANT PFIZER LTD SECOND APPLICANT PFIZER INC THIRD APPLICANT PFIZER RESEARCH & DEVELOPMENT COMPANY N.V/SA FOURTH APPLICANT AND: COMMISSIONER OF PATENTS RESPONDENT JUDGE: BENNETT J DATE OF ORDER: 1 MARCH 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Spirit Pharmaceuticals Pty Ltd be joined as second respondent. 2. The costs of Spirit's motion, brought by amended notice of motion filed 20 December 2005, be 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 NSD1955 OF 2005 ON APPEAL FROM THE COMMISSIONER OF PATENTS BETWEEN: PFIZER CORP FIRST APPLICANT PFIZER LTD SECOND APPLICANT PFIZER INC THIRD APPLICANT PFIZER RESEARCH & DEVELOPMENT COMPANY N.V/SA FOURTH APPLICANT AND: COMMISSIONER OF PATENTS RESPONDENT JUDGE: BENNETT J DATE: 1 MARCH 2006 PLACE: SYDNEY REASONS FOR JUDGMENT 1 In this appeal from a decision of the Commissioner of Patents (by her delegate the Deputy Commissioner of Patents) to amend entries in the Register of Patents, Spirit Pharmaceuticals Pty Ltd ('Spirit') seeks to be joined as a respondent pursuant to Order 6 rules 2(a) and (b) and O 6 r 8(1) of the Federal Court Rules ('the Rules'). In the alternative to the order for joinder, Spirit seeks an order that it be granted leave to intervene in the proceedings pursuant to O 6 r 17 or, alternatively, to appear in the proceedings as amicus curiae. 2 The effect of the Commissioner's decision is that the Register will be amended to record the term of Pfizer's Patent No 540769 as expiring on 14 April 2007, rather than 26 February 2008, as is presently recorded on the Register. While three other patents are also the subject of the Commissioner's decision, only Patent No 540769 ('the patent') is of interest to Spirit. If Pfizer's appeal is successful, the amendment to the patent will not be made. Accordingly, the effect of the relief sought by Pfizer in these proceedings is that the Register will record the term of the patent as expiring more than 10 months later than would otherwise be the case. 3 Spirit's application for joinder is opposed by Pfizer and supported by the Commissioner. 4 Spirit had sought leave to appear and make submissions at the hearing before the Deputy Commissioner. Leave was refused on the ground, inter alia, that there was no basis under the Patents Act 1990 (Cth) ('the Act') or the Patent Regulations 1991 (Cth) ('the Regulations') for such an appearance. In contrast to the Commissioner, whose powers are governed by the Act and the Regulations, the Court has broad powers under the Rules to permit the joinder of parties to proceedings where appropriate. 5 Order 6 of the Rules deals with the addition of parties. Order 6 rule 2 provides: 'Two or more persons may be joined as applicants or respondents in any proceeding: (a) Where (i) if a separate proceeding were brought by or against each of them, as the case may be, some common question of law or of fact would arise in all the proceedings; and (ii) all rights to relief claimed in the proceeding (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or (b) where the Court gives leave so to do.' 6 Relevantly, a person may be joined as a respondent: · where, if separate proceedings were brought against the person some common question of law or fact would arise in all the proceedings and all rights to relief claimed in the proceeding are in respect of the same transaction (O 6 r 2(a)); · where a person ought to have been joined as a party (O 6 r 8(1)(a)); · where joinder of that person is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon (O 6 r 8(1)(b)); · where the Court gives leave so to do (O 6 r 2(b)). 7 It seems to me that O 6 r 8(1) is not applicable in this case. It cannot be said that Spirit ought to have been joined as a party or that its joinder is necessary in these proceedings. Spirit's rights will not be directly affected by this appeal (cf Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 at 55-56 approved in News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 524 - 525). The contrary proposition was not ultimately pressed by Mr Burley, who appears with Mr Dimitriadis for Spirit. 8 Order 6 rule 2(a) sets out defined criteria for joinder that are cumulative. The language of O 6 r 2(a)(i) and (ii) is directed to an applicant who wishes to determine who may be joined as a party. Order 6 rule 2(b) gives the Court a general and unconfined power and discretion to join a party as an applicant or respondent. The criteria in O 6 r 2(a) may be considered as relevant discretionary matters for the purposes of O 6 r 2(b). 9 The principles that guide the exercise of the discretion in O 6 r 2(b) were discussed by Wilcox J in Bishop, R v Bridgelands Securities Ltd (1990) 25 FCR 311 at 314-315 and the basic principle identified as the adoption of whatever course that seems most conducive to a just resolution of the disputes between the parties but having regard to the desirability of limiting the costs and delay of the litigation. Other considerations are the likelihood of additional evidence, the number of claims proposed to be joined and the representation of the parties. Wilcox J stressed that the Court should be affirmatively satisfied that joinder would be unlikely to result in unfairness to any party. Joinder under O 6 r 2(b) 10 The parties have raised a number of factual matters relevant to the exercise of the discretion in O 6 r 2(b). Spirit has no present cause of action/Spirit may commence proceedings for rectification of the Register if Pfizer is successful in the appeal 11 If Pfizer is successful in the appeal, Spirit will be entitled to commence proceedings for rectification of the Register under s 192 of the Act. Those proceedings would raise the same questions of fact and law as those arising in this appeal. 12 Pfizer submits that, as a result of the Commissioner's decision to amend the Register, Spirit has no present cause of action, as its application for rectification can only commence if Pfizer is successful in the appeal. No amendments will, however, be made pending determination of the appeal and the Register remains unamended. 13 If Spirit were not joined and Pfizer were successful, fresh proceedings would result in an undesirable multiplicity of proceedings. Mr Webb SC, who appears with Ms Howard for Pfizer, undertakes that no estoppel would be raised against Spirit or other steps taken to prevent Spirit arguing the same matters as determined in these proceedings, if Spirit were to commence proceedings under s 192 of the Act. This does not answer the waste of Court time and the difficulties that arise where two judges determine the same matter. Spirit's interest in this appeal 14 The issue in these proceedings concerns s 70(5) of the Act and Regulation 10.7 and a determination of the first regulatory approval date of a particular pharmaceutical product ,being the date of commencement of the first inclusion of that product in the Australian Register of Therapeutic Goods ('ARTG'). The product was registered for "export only" and the question is whether such listing for "export only" constitutes an inclusion in the ARTG. 15 Spirit's commercial interests are affected by the expiry of the term of the patent. If Pfizer is successful in its appeal, the date of expiry of the patent will be 10 months later than the date proposed by the Commissioner. The evidence is that this could mean a loss of profit to Spirit in the order of $5.5 million. 16 Spirit's legal interest in the appeal relates to its entitlement to bring proceedings for rectification. The appeal will determine if the Commissioner's decision is correct. Pfizer concedes that Spirit's rectification proceedings, if brought after a successful appeal, would raise precisely the same questions of law that fall to be determined in this appeal. They will then have been determined by a judge of the Court, which is likely to affect a subsequent determination of the same issues, whether or not estoppel is pleaded by Pfizer. Spirit wishes to make submissions on those issues when they are first before the Court. 17 There has been correspondence between Pfizer and Spirit in which Pfizer may have threatened infringement proceedings with respect to products said to be encompassed by the claims of the patent. That may give rise to a question of unjustified threats of infringement in the event that this appeal is unsuccessful. 18 Spirit has not commenced proceedings for unjustified threats under s128 of the Act or for rectification of the Register. Spirit has, however, affirmed its intention to commence rectification proceedings and proceedings for unjustified threats of infringement if denied joinder in this appeal. 19 Pfizer relies upon the lack of provision in the Act or the Regulations for a right of appearance of a party other than the patentee and submits that the Act does not envisage or permit a third party to oppose the patentee in proceedings of this nature. Pfizer submits that, as Spirit did not avail itself of the opportunity to oppose the grant of an extension of term of the patent under s 75 of the Act, it should not be permitted now to be joined as a party and achieve a de facto opposition. This, it is submitted, would create a new avenue for interference not contemplated by the Act. Spirit's explanation for its failure to oppose the extension of term was that it did not exist as a corporation at the time for opposition. Spirit submits that this should be taken into account in the exercise of discretion. It is not in dispute that Spirit was incorporated in 2004, after the opposition period expired. 20 Pfizer relies upon the fact that, while the decision of the Commissioner has been made and not overturned, there is a direction to rectify the Register. That, it is submitted, renders an action by Spirit "inchoate" or a mere possibility. If Pfizer proceeds with an application for a stay of the amendment, Spirit would have an interest in opposing the stay and, if it were to be granted, pursuing an undertaking as to damages. Prejudice to Pfizer 21 Pfizer asserts that joinder would result in prejudice to it, namely unnecessary costs and time arising from the introduction of an additional respondent. Spirit has undertaken to pay any such additional costs and offers a "cost neutral" situation for Pfizer. A costs order can be fashioned to achieve that outcome. Spirit will not seek costs if joined and successful. 22 If Spirit were to institute fresh proceedings under s 192 of the Act without waiting for the result of this appeal, common questions of fact and law would arise. If such proceedings were to be heard and determined together with these proceedings, it is difficult to see how Pfizer would be disadvantaged by the matters being resolved in a single proceeding. 23 There may be some strategic advantage to Pfizer in being in a position where the Commissioner is the only contradictor. The Commissioner is likely to have more limited resources than Spirit. The Commissioner's position on Spirit's joinder 24 Mr Webb submits that the key question is whether the Commissioner is an adequate contradictor and contends that the Commissioner is competent to make full submissions in opposition to Pfizer's appeal and contends that no factual issues arise. The Commissioner has stated an intention to make full submissions on legal issues. Accordingly, it was submitted by Pfizer that the Commissioner was able to fulfil the role of respondent or contradictor in all matters relevant to the proceedings. As to questions of law, this may well be the case. 25 Mr Burley pointed to the evidence filed by Pfizer before the Commissioner going to the nature of the ARTG and its operations. In the absence of a contradictor at the hearing before the Commissioner, there was no evidence in answer. Mr Burley submits that it would not be for the Commissioner to adduce such evidence in the appeal. 26 Mr Bezzi, who appears for the Commissioner, expressed the Commissioner's position succinctly. He observed that the Commissioner is in a position to address legal and procedural questions but not able to present evidence from a commercial perspective on any issue that might arise in consideration of the notice of appeal and related applications. Mr Bezzi pointed to the factual matters that the Commissioner accepted at first instance because of the absence of a contradictor, in particular the evidence about the ARTG. Those matters are discussed in the Commissioner's decision. It has not been suggested that these matters will not arise again. This is more persuasive than the submission that Spirit's participation is necessary to supply all the extrinsic materials. 27 In written submissions, Mr Bezzi submitted that if, as Pfizer contends, no factual issues arise and Spirit is not joined, Pfizer should not be permitted to raise any factual issues at the hearing of the appeal or to amend the notice of appeal. Pfizer has not acceded to that suggested condition. Consideration 28 As a general rule, the Commissioner does not seek to present a substantive argument to support her decision (Merck & Co Inc v Sankyo Co Ltd (1992) 23 IPR 415 at 417; R v Australian Broadcasting Tribunal; ex parte Hardiman (1980) 144 CLR 13 at 35-36). In Merck at 418 Lockhart J considered the role of the Commissioner in an appeal from her decision. In normal circumstances, the Commissioner should be heard fully on questions concerning her powers and procedures but her role should be limited when there are parties in the proceeding pursuing active roles. Where there is no party in opposition to the applicant on the appeal, the Commissioner is deemed a party with the full rights of a party. That does not, however, take into consideration the ability of the Commissioner to present evidence and submissions on all aspects of a matter. 29 Although Spirit was not a party to the proceedings before the Commissioner, it did put submissions in writing and provide additional extrinsic material and send them to the Commissioner. They were not specifically cited in the decision and it is not clear whether or not they were considered. It seems to me that, to the extent that reference is appropriately to be made extrinsic material, Mr Bezzi would be well placed to refer to and to deal with it. 30 The Commissioner referred in her decision to evidence adduced by Pfizer as to the history and practice of listing goods on the ARTG and as to a difference between registered and listed goods. The Commissioner was not in a position in a hearing before the Deputy Commissioner to adduce evidence, whether in support, rebuttal or qualification of Pfizer's evidence. As there was no other party to those proceedings, the evidence was uncontradicted and unqualified. Mr Bezzi points out that the Commissioner was obliged to accept the evidence in the absence of any contrary evidence or submissions. The Commissioner says that she is not in a position to know whether, for example, the commercial evidence referred to in the decision or relevant to the appeal was able to be challenged. Spirit proposes, if joined, to answer and address this evidence. 31 The effect of the Commissioner's decision is that the Register will be amended to record the term of the patent as expiring on 14 April 2007. If Spirit were not joined and Pfizer were successful in this appeal, the institution of fresh proceedings, which could, in turn, result in an appeal by either party, could well result in a lack of certainty that would affect Spirit's decision to launch its own product which falls within the scope of the claims of the patent. 32 It is not in dispute that common questions of fact and law arise in these proceedings and proceedings under s 192 of the Act. The claimed relief of rectification arises out of the same transaction or series of transactions as are the subject of the Commissioner's decision. It is clear that, if such fresh proceedings were brought, another Judge of the Court would be asked to consider the same questions. 33 Pfizer does not accept that Spirit can bring proceedings for unjustified threats of infringement and submits that no such cause of action can arise. I do not need to decide that question for the purpose of this application and where the Commissioner has determined that the shorter term of the patent is correct. 34 In H Lundbeck A/S v Commissioner of Patents [2005] FCA 1718 Lindgren J considered an application by Alphapharm Pty Ltd ('Alphapharm') for joinder in an appeal from a decision of the Commissioner to rectify the Register. Lindgren J considered that O 6 r 2(b) was the governing rule, not O 6 r 2(a) or O 6 r 8 and said at [24] that the only issue was whether the Commissioner would be an adequate contradictor. 35 In Merck & Co Inc v Arrow Pharmaceuticals Limited [2002] APO 13 (17 April 2002) a decision of the Commissioner by her delegate the Deputy Commissioner, recorded at [25] that there was disagreement between the parties about what constituted the ARTG. The Deputy Commissioner made his own enquiries, by consent, in that case and took the results of those inquiries into account. This specific question may not arise in the present case but it does highlight factual matters that may arise in considering entries in the ARTG, which may necessitate or make advisable evidence from more than one party. 36 Pfizer submits that Spirit should not be permitted to achieve a de facto opposition by virtue of seeking to be joined as a party in the present proceedings. The Commissioner determined that the patents legislation does not envisage or permit a third party to be heard in the proceedings the subject of this appeal. It is the case that the Act does not envisage certain avenues for opposition by third parties to decisions under the Act. It is also the case that the rules envisage that joinder of a party may be appropriate in a variety of circumstances. The Court is given a wide discretion to balance the competing considerations, of which the prescribed procedures under the Act and the Regulations are an important but not decisive aspect. 37 Pfizer may, understandably, be seeking to take advantage of the position where the Commissioner but no additional party opposes its appeal. Spirit's interests are, however, affected by the determination of the appeal. The reason why Spirit was not in a position to be heard in opposition to the extension of term of the patent under s 75 of the Act has been explained. I am of the view that the loss of the strategic advantage to Pfizer of denying Spirit the opportunity to present evidence and submissions is not the kind of prejudice that Wilcox J had in mind in Bishop and not sufficient of itself to outweigh the factors in support of joinder. 38 In Lundbeck Lindgren J was concerned at the possibility that he would be invited to determine a construction of the Act and the Regulations that would be inconsistent with a construction to be advanced by Alphapharm in subsequent proceedings. His Honour considered that, in those circumstances and where common questions of fact or law or both arise in the existing and proposed proceedings, it would be appropriate for Alphapharm to be joined. As his Honour said at [33]: 'After all, it would be at least embarrassing and wasteful if the Court were to be led to construe legislation in conformity with the position adopted by Lundbeck and the Commissioner in the regulation 10.7(7) proceeding, only to be asked by Alphapharm to construe it differently in the revocation proceeding.' 39 Unlike Alphapharm in Lundbeck, Spirit has not commenced separate proceedings. Spirit's commercial and legal interests are, however, affected by the outcome of these proceedings that determine the term of patent. As the Commissioner's decision stands and if the appeal fails, rectification proceedings are not appropriate or necessary, the Register will be rectified. Spirit asserts that it intends to commence proceedings for rectification if the appeal fails and that such proceedings involve the same questions of law and fact as this appeal. These matters are not challenged and would result in a multiplicity of proceedings (Wellness Pty Ltd v Pro Bio Living Waters Pty Ltd [2003] FCA 1048 at [13]). 40 It seems to me that the course most likely to achieve a just resolution of the disputes between the parties with minimum costs, delay and use of Court time is to permit Spirit to be joined in these proceedings. Both Spirit and the Commissioner have pointed to factual matters that were relevant to the Commissioner's decision and which were not able to be challenged before her. The Commissioner submits and I accept that she is not an adequate or appropriate contradictor of those matters. With the undertaking that has been given by Spirit about costs, Pfizer has not established any unfairness if Spirit is joined. 41 In my opinion, it is appropriate for Spirit to be joined in the proceedings. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. Associate: Dated: 1 March 2006. Counsel for the First, Second, Third and Fourth Applicants: R J Webb SC, K Howard Solicitor for the First, Second, Third and Fourth Applicants: Spruson & Ferguson Solicitor for the Respondent: M Bezzi, Australian Government Solicitor Counsel for Spirit Pharmaceuticals Pty Ltd S C G Burley, C Dimitriadis Solicitors for Spirit Pharmaceuticals Pty Ltd Blake Dawson Waldron Date of Hearing: 20 December 2005 Date of Judgment: 1 March 2006