Australia: Reasonable belief threshold for proving a right to preliminary discovery

In brief - Pfizer successful in Full Federal Court appeal

In Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193, the Full Federal Court has clarified that a party who applies for preliminary discovery of documents from a prospective respondent need only prove a reasonable belief that they may have the right to relief from the prospective respondent.

Pfizer files preliminary discovery application to assist in determining a possible process patent infringement action

The applicants (Pfizer) manufacture a biological medicine called ENBREL, which is used to treat autoimmune diseases. The active ingredient in ENBREL is etanercept. Until July 2016, ENBREL was the only product registered on the Australian Register of Therapeutic Goods (ARTG) containing etanercept. In July 2016, Samsung Bioepis AU (SBA) obtained registration from the ARTG for BRENZYS, a product also containing etanercept.

Pfizer believed that the manufacture of BRENZYS might infringe upon their process patent. In order to determine whether they should commence proceedings, Pfizer filed an application for preliminary discovery, seeking access to the confidential documents SBA had lodged with the ARTG.

Rule 7.23 of the Federal Court Rules 2011 (Cth) allows applications for preliminary discovery where the applicant:

• reasonably believes that he or she may have the right to obtain relief from a prospective respondent, and
• after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding, and
• reasonably believes that the respondent has, in their control, documents relevant to the question of whether the prospective applicant has a right to obtain relief, and inspection of the documents by the prospective applicant would assist in making the decision

At first instance, Court finds that Pfizer fails to meet requisite grounds under Rule 7.23 of Federal Court Rules

The test for reasonable belief was examined through the eyes of a representative of Pfizer, who based his belief that Pfizer may have a claim for relief on the evidence of Pfizer's expert, Dr Ibarra. Dr Ibarra stated that the similarity in the glycosylation profiles of the two products demonstrated a potential similarity in the production process (and therefore a possible infringement of Pfizer's process patent).

The primary judge accepted that the evidence of Dr Ibarra may have led Pfizer to a subjective belief of having a right to relief, however, when considered in light of the evidence of SBA's experts, the belief could only be classified as a "mere suspicion". Therefore, the Court held that Pfizer did not meet the requisite grounds to satisfy Rule 7.23.

Reasonable belief clarified by the Full Court

Chief Justice Allsop and Justices Perram and Nicholas each gave separate reasons for judgment, agreeing to grant orders that the applicant be granted leave to appeal and the appeal be allowed. Importantly, the way in which Rule 7.23 was to be construed was agreed. Allsop CJ stated that a reasonable belief was one that was founded upon a "consideration of the views reasonably open" (at [69]) and was therefore not necessarily determined, as was the case here, on whether one scientific view was more or less persuasive than another. Further, His Honour emphasised that the belief was about something that may be the case, not something that is the case (at [8], emphasis in the original) and therefore the analysis of the available evidence was not to be to the same standard as a final finding of fact.

Similarly, Perram J stated that the rule authorised "fishing expeditions" as the goal was not to find proof of a case already known to exist, but instead to ascertain whether a case existed at all (at [108]). As Dr Ibarra's evidence was not shown to be "outlandish or absurd", it was reasonable for Pfizer to believe, on that evidence, that they may have a claim against SBA.

Takeaways for prospective applicants and respondents

1. Applications for preliminary discovery should be less complex going forward, as the threshold for reasonable belief has been clarified and lowered. Indeed, the Court stated that the applications should be summary in nature, not "mini-trials" which defeat the purpose of the application.
2. To successfully oppose a claim for preliminary discovery, a respondent will need to go beyond proving that the applicant's basis for the belief of a potential right to obtain relief is contestable (as "contested" view may nevertheless be one that is still "reasonably open"), and will need to prove the applicant's belief is not formed on a reasonable basis or is baseless.

Preliminary discovery may also be obtained through the common law

In addition to obtaining preliminary discovery pursuant to prescribed civil procedure rules in some Australian jurisdictions, potential claimants may also rely upon the common law.

Australian courts have shown a willingness to follow the decision in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 and to allow preliminary discovery in order to identify a potential defendant. You can read more about this in our previous article Pre-Litigation Discovery in Queensland: Is It Possible?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.