FEDERAL COURT OF AUSTRALIA Albany Molecular Research Inc v Alphapharm Pty Ltd (No 2) [2011] FCA 425 Citation: Albany Molecular Research Inc v Alphapharm Pty Ltd (No 2) [2011] FCA 425 Parties: ALBANY MOLECULAR RESEARCH, INC v ALPHAPHARM PTY LTD (ACN 002 359 739) File number: VID 219 of 2007 Judge: JESSUP J Date of judgment: 4 May 2011 Cases cited: Albany Molecular Research Inc v Alphapharm Pty Ltd [2011] FCA 120 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Date of hearing: Heard on the papers Date of last submissions: 11 March 2011 Place: Melbourne Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 9 Counsel for the Applicant: Mr A Archibald QC with Mr A Ryan SC and Ms K Beattie Solicitor for the Applicant: Phillips Ormonde Fitzpatrick Counsel for the Respondent: Mr D Catterns QC with Mr N Murray Solicitor for the Respondent: Mallesons Stephen Jaques IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 219 of 2007 BETWEEN: ALBANY MOLECULAR RESEARCH, INC Applicant/CrossRespondent AND: ALPHAPHARM PTY LTD (ACN 002 359 739) Respondent/Cross-Claimant JUDGE: JESSUP J DATE OF ORDER: 4 MAY 2011 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application be dismissed. THE COURT DECLARES THAT: 2. So far as it relates to Claims 1, 6, 7, 8, 9 and 10, Australian patent No 699799 is invalid. THE COURT FURTHER ORDERS THAT: 3. So far as it relates to Claims 1, 6, 7, 8, 9 and 10, Australian patent No 699799 be revoked. 4. Upon the applicant by its counsel undertaking – (a) to prosecute any appeal expeditiously; (b) during the period of the stay, not to threaten any person with proceedings for infringement of claims 1, 6, 7, 8, 9 or 10 of the said patent; and (c) during the period of the stay, not to seek to amend any claims of the said patent otherwise than in the course of or in connection with this proceeding; the operation of Order 3 above be stayed – (i) for 21 days; and (ii) if the applicant has, within that 21day period, lodged an appeal against the making of that order, until the hearing and determination thereof or further order. 5. The cross-claim otherwise be dismissed. 6. Subject to Order 8 below, the applicant pay the respondent's costs of the application. 7. Subject to Order 8 below, save for – (a) 85% of the costs incurred in relation to the allegation that the prior art referred to in the reasons of the court given on 18 February 2011 as "Carr 129" set out an effective means for the preparation of fexofenadine; and (b) costs incurred only in connection with the allegations that the invention did not involve an inventive step, that the claims did not define the invention, that the claims were not clear and succinct, that the priority date was later than 24 June 1993, that the invention was not a manner of manufacture, that the complete specification did not describe the invention fully and that the claims were not fairly based on the matter described in the specification, the cross-respondent pay the cross-claimant's costs of the cross-claim. 8. There be no order as to the costs incurred by the parties after 18 February 2011 in connection with their submissions as to the orders proper to be made to give effect to the court's reasons of that date or as to costs, or in connection with the appearances associated with those submissions, those orders or costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 219 of 2007 BETWEEN: ALBANY MOLECULAR RESEARCH, INC Applicant AND: ALPHAPHARM PTY LTD (ACN 002 359 739) Respondent JUDGE: JESSUP J DATE: 4 MAY 2011 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 On 18 February 2011, I gave judgment in this proceeding: Albany Molecular Research Inc v Alphapharm Pty Ltd [2011] FCA 120. The parties have since filed written submissions with respect to the orders that should be made to give effect to my reasons published on that day, and as to costs. These reasons deal with those matters. 2 The parties are agreed that the application be dismissed, that claims 1, 6, 7, 8, 9 and 10 of the patent in suit be declared invalid and revoked, and that the crossclaim otherwise be dismissed. They are agreed that, subject to the applicant offering certain undertakings, there should be a stay of the order revoking those claims for such period as will permit it to file an appeal, should that be its preferred course. The applicant seeks a stay of 28 days, while the respondent consents to a stay of 21 days only. I shall express the stay in terms which would provide for its continuation if an appeal is lodged within 21 days, in which circumstances I consider that a 21day stay will be sufficient. 3 On the question of costs, the respondent was successful in resisting the infringement proceeding brought against it, in which circumstances it would have the conventional expectation of securing its costs. It is submitted on behalf of the applicant, however, that its failure to secure judgment in the infringement proceeding depended wholly upon the respondent's success on its cross-claim, and that, accordingly, the court should award the applicant its costs of the proceeding as such, or at least should make no award for costs in that regard. This was, in my view, a particularly ambitious submission. As a party whose proceeding for infringement is defeated because of the invalidity of the relevant claims in the patent in suit, the applicant is in no position to resist the respondent's application for costs. 4 Turning to the costs of the cross-claim, here again the respondent was successful, and would normally be entitled to its costs. It was pointed out on behalf of the applicant, however, that the respondent succeeded only on the novelty point and on one dimension of the false suggestion point, the balance of the grounds in the crossclaim being rejected. The respondent submitted that it had succeeded in the result (ie the relevant claims in the patent in suit were revoked) and that costs should follow the event. 5 The applicant also pointed out that, on purely factual aspects, even the respondent's novelty case was rejected. That is to say, the respondent succeeded on its want of novelty ground by reference only to the law as expounded by the Full Court, but failed in its endeavour to demonstrate that Carr 129 provided an effective means for the preparation of fexofenadine. The respondent rejoined that it was only with respect to Example 5(B) that Mr Gugger's work was found to have been unsuccessful. It also pointed out that Mr Gugger's work with respect to Examples 2 and 3 was crucial in my finding that the patent in suit had been obtained by false suggestion. The latter is, in my view, a valid point. But the former is not: the respondent undertook the task of demonstrating that fexofenadine could be synthesised by following the method laid out in Carr 129, subject only to routine departures from that method. In this it failed, and I can think of no good reason to require the applicant to pay the costs of that failure. Subject only to making an appropriate allowance for the utility of Mr Gugger's work to the respondent's false suggestion case (which I estimate at 15%), I shall carve out of the respondent's entitlement to costs so much as were incurred seeking to demonstrate that Carr 129 provided an effective means of preparing fexofenadine. 6 Of the respondent's other grounds which failed, that which involved the largest measure of factual investigation was the point that the invention did not involve an inventive step. This was a discrete ground which ran in parallel with, rather than in support of, the respondent's case on novelty. There was, of course, some factual cross-over between the respondent's novelty case and its inventive step case. Although the work of Mr Gugger, and much of the evidence of Prof Wild, was primarily directed to the matter of novelty, ultimately the respondent relied upon each in its inventive step case as well. To that extent, the respondent was unsuccessful. I consider that it would be neither just nor appropriate to require the applicant to pay the respondent's costs incurred only in prosecuting so much of the crossclaim as alleged want of an inventive step. 7 On the other hand, I am not disposed to award the applicant its own costs of resisting the respondent's inventive step case. To make such an award would necessarily diminish the value of the costs orders which are properly made in favour of the respondent. The applicant sued on claims which were held to be invalid, in which circumstance it was obliged to anticipate that every arguably available point of defence or crossclaim would be raised against it: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. As the party which lost generally in the proceeding, the applicant ought not, in my view, receive this part of its costs from the generally successful respondent. 8 I propose to take the same approach with respect to the remaining invalidity points advanced by the respondent, save, of course, that relating to false suggestion. I do not propose that the applicant should recover any part of its costs of resisting these points. 9 The submissions made by the parties subsequent to final judgment on 18 February 2011 have been of some substance, notwithstanding that they related only to the form of the orders to be made and to costs. Having regard to the matters determined in these reasons, and to the measure of success which each side achieved, I have decided that there should be no order as to the costs of those submissions or, save for the occasion upon which final judgment was delivered on 18 February 2011, as to costs of the appearances associated therewith. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate: Dated: 4 May 2011