In a judgement handed down on Friday, Federal Court Justice John Nicholas granted Neurim’s bid to seek additional damages, made in the middle of a nine-day trial, with conditions.

“In my view [Neurim] should be permitted to amend in order to rely on matters that are arguably capable of justifying an award of additional damages. However, I will not permit an amendment which is likely to require a potentially time consuming and costly exploration of matters by way of discovery and evidence which I consider are not reasonably capable of justifying an award of additional damages,” the judge wrote.

Neurim filed the patent infringement case in May 2017 accusing Apotex and Generic Partners of infringing its patent number 2002326114 for its insomnia drug through the supply of their generic melatonin products.

When the case was filed, the court issued a temporary injunction banning Apotex and Generic Partners from selling or supplying these generic medications pending the outcome of the case. The injunction was discharged by court order in November 2018.

Cross-claims filed by Apotex and Generic Partners in March last year attack the validity of Neurim’s patent and seek revocation of the claims they are accused of infringing.

While Neurim did not claim that the two generic pharmaceutical companies had flagrantly infringed its patent, it nonetheless sought additional damages because of a need for deterrence and because of the alleged substantial benefit Apotex and Generic Partners would gain from selling their insomnia drugs. The two firms commenced supplying the drug in May this year.

These alleged further benefits included discounts gained through “bundling deals” between the two firms, pricing that was made on transactions other than an “arms length” basis, and timing its launch to create a “bridgehead” or “springboard” into the Australian market for their melatonin products.

Justice Nicholas ruled that Neurim could not seek additional damages based on non-arms length transactions, saying there was no evidence that Apotex and Generic Partners had engaged in inappropriate behaviour despite Generic Partners supplying the drug at cost price to Apotex.

“There is no allegation that the pricing arrangements between the respondents were made other than in the ordinary course of business or that such arrangements are unlawful, improper or otherwise inappropriate. In particular, it is not alleged that they have been entered into for the purpose of defeating or frustrating Neurim’s claims for pecuniary relief,” the judge said.

The justification for this claim for damages was described as “elusive” and was tossed by the court.

A claim for additional damages because of the timing of the generic’s product launch was also tossed by Justice Nicholas, who found the timing “[could not] provide any arguable basis” for the sought after damages award.

“As I have explained, it is not alleged that the respondents knew that by supplying their products in the patent area, they would infringe, or even may infringe, the patent or that the affidavit evidence served by the applicant by the time the respondents decided to commence supplying their products should have indicated to them, or reasonable persons in their position, that supply of the products in the patent area without Neurim’s permission would, or was likely to, amount to an infringement of the patent. In the absence of any allegation to any such effect, the timing of Apotex’s product launch is not a matter capable of justifying an award of additional damages,” Justice Nicholas said.

The judge rejected Neurim’s suggestions that additional damages were warranted to deter “similar infringement” because of the lack of evidence put forth in the case.

Neurim was allowed to seek additional damages for benefits gained by Apotex and Generic Partners in excess of that payable by compensation for any losses suffered because of the alleged infringements however.

“[The] breadth of the language in which the discretion to award additional damages is expressed in s 122(1A) of the [Patents Act] appears to permit the making of an award of additional damages in favour of the patentee by reference to benefits obtained by the infringer which the patentee may be otherwise unable to recover under s 122(1) because it has not suffered or cannot prove that it has suffered any corresponding loss,” Justice Nicholas wrote.

Neurim is represented by David Shavin QC and Laura Thomas, instructed by DLA Piper Australia. Generic Partners and Apotex are represented by Neil Murray SC and Ben Mee, instructed by Herbert Smith Freehills.

The case is Neurim Pharmaceuticals (1991) Ltd v Generic Partners Pty Ltd & Anor.

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