IN THE HIGH COURT OF AUSTRALIA MR. JUSTICE OWEN. 6th, 7th, 8th and 9th May, 1968.

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1 301 IN THE HIGH COURT OF AUSTRALIA Before MR. JUSTICE KITTO, MR. JUSTICE TAYLOR, MR. JUSTICE MENZIES, MR. JUSTICE OWEN 6th, 7th, 8th and 9th May, BEECHAM GROUP LIMITED V. BRISTOL LABORATORIES PTY. LIMITED Patent-Infringement-Australia-Interlocutory injunction-prima facie case of infringement-preservation of status quo-appeal allowed and interim injunction granted. The plaintiffs sought an interlocutory injunctions to restrain the defendants from 10 infringing their patents relating to a novel type of penicillin. The defendants did not seriously challenge the validity of the patents in suit, but they strenuously resisted the allegation of infringement, and they contended that the balance of convenience was against the grant of an interim injunction. The judge at first instance refused the plaintiffs an injunction, the defendants undertaking to keep an account of profits. 15 On appeal; Held, allowing the appeal, that the established authorities showed that on application for an interlocutory injunction, the practice of the courts was to do what it could to preserve the status quo until the trial of the action, particularly where, as here, the plaintiffs had shown a substantial probability of succeeding in the action. 20 The defendants had only recently entered the market with the allegedly infringing product, forewarned that the plaintiffs proposed to defend their rights. If not restrained now, they would be able to damage the plaintiffs' trade by competition with a product they claimed to be superior in some respects. In no meaningful sense could matters be said to be kept in status quo if in these circumstances the defen- 25 dants were left free to pursue their course, and accordingly an interim injunction would be granted. This was an appeal to the High Court of Australia from an order refusing the plaintiffs, Beecham Group Limited, an interlocutory injunction to restrain the defendants, Bristol Laboratories Pty. Limited, from infringing their patents. The 30 facts of the case so far as material appear from the following judgment of the court. K. Aickin, Q.C. and Patrick Graham, Q.C., instructed by Whiting & Byrne, appeared for the plaintiffs. R. K. Fullagar, Q.C., instructed by Mallesons, appeared for the defendants. Judgment-This is an appeal from an order refusing an application for an injunc 35 tion pending the trial of an action in this court for infringement of certain of the claims in each of three patents.

2 302 REPORTS OF PATENT, DESIGN AND TRADE MARK. CASES [1968] The patents are for the penicillin nucleus in isolation, called for short 6-APA, for a semi-synthetic penicillin known as ampicillin which is a broad-spectrum antibiotic derived from 6-APA, and for certain processes for their production. The alleged infringements consist in the advertising, offering for sale, selling and supplying in Australia of a semi-synthetic penicillin preparation called hetacillin (or VERSAPEN) 5 which is manufactured out of Australia. Hetacillin is of a chemically different structure from that of ampicillin, but it is produced by a process which starts with 6-APA, though not in isolation, and in the course of which ampicillin comes into existence and is treated with acetone. When the resultant substance, hetacillin, is taken into the human 'body, the process is reversed; the hetacillin dehydrolyses, or 10 breaks down, to produce ampicillin again; and to that, at least in the main, its therapeutic effects are apparently due. The plaintiff contends that if hetacillin were produced in Australia some of the claims of the patents would be infringed both by the manufacture and by the use of the substance. This it alleges on the two grounds that ampicillin is used in the manufacture of hetacillin and that, since it is released 15 in the use of hetacillin, the latter is to be considered substantially an equivalent of ampicillin, In fact it is produced elsewhere, under a licence which does not in terms extend to Australia, but the plaintiff says that nevertheless its sale in Australia is an infringement. The defendant's main defences may be summarized as being that hetacillin is a different substance from ampicillin and is not in any relevant sense 20 an equivalent of it; that the temporary or transient production of ampicillin in the process of obtaining hetacillin and the ultimate production of ampicillin in the human body are irrelevant to any question of infringement of the plaintiff's patents; and that no infringement is involved in any use in Australia of a substance which has been produced abroad under the licence referred to. 25 Thus there are substantial questions of fact to be determined, and at least two questions of law will arise for consideration, namely whether the principle of the Saccharin eases, Saccharin Corporation Ltd. v. Anglo-Continental Chemical Works Ltd. (1900) 17 R.P.C. 307, Saccharin Corporation v. Reitmeyer & Co. (1900) 17 R.P.C. 606, Wilderman v. Berk & Co. Ltd. (1925) 42 R.P.C. 79 applies in respect 30 of a patent for a substance, and whether the present case is governed by the principle of Betts v. Willmott (1871) L.R. 6 Ch. App. 239 or of the Tilghman case (1883) 25 Ch.D.l. It is as well to begin consideration of the appeal by recalling the principles to be observed in dealing with applications for interlocutory injunctions in patent cases. 35 The jurisdiction is discretionary, being a part of the jurisdiction under section 31 of the Judiciary Act, (Fed.) to make all such orders as are necessary for doing complete justice fin the cause. The court addresses itself in all cases, patent as well as other, to two main inquiries. The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a 40 probability that at the trial of the action the plaintiff will be held entitled to relief: Preston v. Luck (1884) 27 Ch. D. 497 at 506; Challender v. Royle (1887) 36 Ch. D. 425 at 436. How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks. Thus, if merely pecuniary interests are involved, " some" probability 45 of success lis enough: Attorney-General v. Wigan Corporation. (1854) 5 DeG. M. & G. 52 at 53-4, 43 E.R. 789; and in general it is right to say, as Roper, C.J. in Eq, said in Linfield Linen Pty. Ltd. v. Nejain (1951) 51 S.R. (N.S.W.) 280 at 281: " There are disputes of fact as to a number of matters... but this being an application for an interlocutory injunction I look at the facts simply to ascertain whether 50 the plaintiff has established a fair prima facie case and a fair probability of being able to succeed on that case at the hearing." Thus where the defendant goes into

3 303 evidence on the interlocutory application, the court does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case. James, L.J. explained the general attitude of the court when he said, in Plimpton v. Spiller (1876) 4 Ch. D. 286 at 289, in relation to a patent action 5 where there was no outstanding issue as to validity: "... the court, not forming an opinion very strongly either one way or the other whether there is an infringement or not, but considering it as a fairly open question to be determined at the hearing, and not to be prejudiced by any observation in the first instance, reserves the question of infringement as one which will have to be tried at the hearing, and 10 which it will then have to consider." And he proceeded to discuss what was the best mode of keeping things in status quo: "for that," he said, "is what the court has to do-to keep things in status quo-until the final decision of the question." This is generally true, but ill a particular case it lnay be that although the plaintiff has shown a probability of success, other considerations make it unjust to grant an IS injunction, especially if another form of interlocutory relief is possible. The second inquiry is directed to this aspect of the matter. It is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted. It is of course to be remembered that if an injunction be 20 granted it will be upon terms of the plaintiff submitting, in the event of his ultimately failing to such order as to damages as the court may make in order to compensate the defendant for any injury caused by the injunction; and likewise it is to be remembered that if the injunction be refused the defendant may be required to keep an account of the profits he makes from the course of conduct of which the plaintiff 25 complains, so that, if he loses the case and the plaintiff elects under section 118 of the Patents Act to recover the amount of those profits rather than damages, the quantum will be readily ascertainable. The first of those inquiries in the present case is not complicated by the special considerations which generally arise in a patent aotion where there is a substantial 30 issue to be tried, as to the validity of the patent. In such an action the plaintiff's prima facie case must be a strong one so far as the question of validity is concerned, for he asserts a monopoly and must give more proof of the right he claims than is afforded by the mere granting of the patent: Smith v. Grigg [1924] 1 K.B. 655 at 659 per Atkin, L.J.; 41 R.P.C. 149: Bonnella v. Espir (1926) 43 R.P.C The 35 general practice in that kind of case has long been to refuse an interlocutory injunction unless either the patent has already been judicially held to be valid, or it has stood unchallenged for a long period: Smith v. Grigg Ltd. [1924] 1 K.B. 655 at 658; 41 R.P.C Even if the patent is an old one-which for this purpose is generally taken to mean more than six years old-it has been said that an interlocutory 40 injunction will generally be refused provided that the defendant shows by evidence " some ground" for supposing that he has a chance of successfully disputing the validity of the patent at the trial: Marshall and the Lace Web Spring Co. Ltd. v. Crown Bedding Co. Ltd. (1929) 46 R.P.C. 267 at 269. This should be 'read, however, with Sir George Jessell's statement in Dudgeon v. Thomson (1874) 30 L.T which divides into three classes the cases in which an injunction may be granted before the hearing in such a case. They are: (1) cases where the patent is an old one and the patentee has been in long and undisturbed enjoyment of it; (2) cases where its validity has been established elsewhere and the court sees no reason to doubt the propriety of the result; and (3) cases where the conduct of the defendant is such as 50 to enable the court to say that, as against the defendant himself, there is no reason to doubt the validity of the patent. As to the first, it is enough to say in the present case that the plaintiff has adduced strong prima facie evidence in support of the

4 304 REPORTS OF PATENT, DESIGN AND TRADE MARK CASES [1968] validity of the patents. As to the second, it is to be observed that the complete specifications were lodged in July, 1958, September, 1959 and May, 1961 respectively; the patents are convention patents, the convention dates being in August, 1957, May, 1959 and May, 1961; and the priority dates of the relevant claims range from 2nd August, 1957 to 25th August, Thus the element of age is present in all 5 cases, and during the life of the patents the plaintiff has been in active and undisturbed enjoyment of its rights thereunder. Moreover, although the validity of the patents has not been judicially established either in Australia or elsewhere, the courts of several countries, notably the Court of Appeal in England, have considered the plaintiff's rights to be sufficiently strongly supported to warrant the granting of 10 interlocutory injunctions. Thirdly, the defendant's attitude on the question of validity before the learned primary judge and in the course of the appeal provides ample ground for inferring that the plaintiff is very likely to establish the patents at the trial; for before the judge the defendant's counsel, while not conceding validity, expressly disclaimed any intention of attacking it, and in this court he modified, or 15 perhaps explained, his disclaimer to the extent of arguing that the first claim in the complete specification for the first patent (which is a claim for a product) should be construed, so as to avoid invalidity, as impliedly referring not to the product in general, as it purports to dro, but only to the product when produced by one or more of the processes referred to in other claims of the same specification or in the 20 body of it. This argument is prima facie unimpressive. While this appeal has been pending the defendant has obtained leave to amend its defence so as to put validity in issue, but no particulars of invalidity have yet been given, and so far as appears the new defence is contemplated purely in support of the argument as to construction. In view of all these considerations, the case presents itself as one in which the 25 issue of validity ought not to be regarded as standing in the way of an injunction. The chief questions to be decided at the trial concern the issue of infringement. We have had in the course of the argument a detailed review by counsel of the respective contentions of the parties under this head, but we think it neither necessary nor desirable to discuss them here. All that can be said, without danger of prejudic- 30 ing the ultimate decision, is that upon the material at present before the court the plaintiff has shown, in our opinion, so substantial a probability of succeeding in the action that it is 'entitled to have the status quo preserved. The defendant offered before McTiernan, J., and has offered again on this appeal, to submit to an order that it keep full and proper accounts of all sales of its substance hetacillin, showing 35 the quantities sold, the sale prices, the profits therefrom and the manner of calculating the profits, every sale of hetacillin being treated as baving been made in place of a sale of the plaintiff's substance ampicillin. The order under appeal, as drawn up, is a bare order that the defendant keep an account of all moneys received or to be received by it by reason of the sale or use of hetacillin in Australia. A variation 40 of the order would therefore be necessary in any event; but the substantial question is whether the balance of convenience will be better served in the circumstances of the case by adopting that course or by granting an injunction until the trial. The learned judge expressed the opinion that on the evidence it would seem that the balance of oonvenience would be strongly against the grant of an injunction, but 45 he did not elaborate the statement W!ith great respect, wre think the problem ought to be considered as Brett, J.A. considered the corresponding problem in Plimpton v. Spiller (1876) 4 Ch. D. 286 at 292. He said: "... if you assume that the defendant is in the right, there is no doubt that an injunction is a great hardship upon him; but if you assume that the plaintiff 50 is right, then the mere keeping of an account by the defendant seems to me to

5 305 be a great hardship on the plaintiff, for he would be driven to commence actions against the purchasers from and customers of the defendant, which would obviously lead to a multiplication of suits. There will be a hardship on the one side or on the other, and the question is, on which side does the balance appear 5 to lie? Now if the trade of a defendant be an old and an established trade, I should say that the hardship upon him would be too great if an injunction were granted. But where, as here, the trade of the defendant is a new trade, and he is the seller of goods to a vast number of people, it seems to be less inconvenient, and less likely to produce irreparable damage, to stop him from selling, 10 than it would be to allow him to sell and merely keep an account, thus forcing the plaintiff to commence a multitude of actions against the purchasers. Therefore, as a rule of conduct, I think that in such a case as this it is better, where the trade of the defendant is a new one--and not an old established tradeand where there are likely to be many customers of the new trade, to say that 15 you will act against the new trader by injunction, whereas if he were carrying on an old trade you would act in the other way." The facts which appear to us to be decisive on this question may be stated quite briefly. In April, 1967, after the plaintiff had been building up in Australia a substantial business in ampicillin over a period of several years, the defendant 20 announced its intention of marketing hetacillin in Australia. The plaintiff, on loth May, 1967, warned the defendant that if it began to do so proceedings for infringement of the patents would be taken. It was in the face of this warning that the defendant commenced the acts now complained of, and the action was thereafter instituted without delay. Any goodwill the defendant may since have built up for 25 hetacillin would of course be destroyed or damaged by granting an injunction, but that was a risk the defendant took with its eyes open. If it be not restrained, it will presumably take advantage of the time before the hearing to subject the goodwill of the plaintiff's established trade in ampicillin to the prejudice of competition from a product which the defendant maintains has some points of superiority. In no 30 meaningful sense could matters be said to be kept in status quo if in these circumstances the defendant were left free to pursue its course, merely keeping an account of the 'profits iit makes. There is a further point. The defendant's conduct out of which this action arises is a part only of a campaign in which the defendant and its associated companies, 35 after having worked for some years under agreements designed to divide the world market in ampicillin between the plaintiff and its associates on the one hand and themselves on the other, have set out to capture for hetacillin the trade which the plaintiff and its associates have enjoyed under those agreements. The campaign has resulted in litigation in several jurisdictions, in 'each of which, outside Australia, an 40 interlocutory injunction has been granted to the present plaintiff or the party corresponding with it, after f'ull xonsideraeion of the balance of convenience. We are persuaded upon the like consideration that the interests of justice will best be served by adhering to the general pattern of granting the patentee an injunction to keep the invader of its existing market at bay until a decision has been reached as 45 to whether the invasion is lawful or not. For these reasons we allow the appeal, discharge the order appealed from, and make an order as sought in the notice of motion.