The Australian Federal Court has enhanced its approach to preliminary discovery in pharmaceutical patent disputes, establishing a streamlined process under Rule 7.23 that has become a critical tool for patent holders investigating potential infringement cases.
Rule 7.23 Framework for Patent Disputes
Under Rule 7.23 of the Federal Court Rules, prospective applicants may seek preliminary discovery orders from potential infringers when three key criteria are met. Patent holders must reasonably believe they may have the right to obtain relief for patent infringement, demonstrate that reasonable inquiries have failed to provide sufficient information to decide whether to commence proceedings, and show that the prospective respondent controls documents directly relevant to determining their right to relief.
The Federal Court has discouraged parties from using preliminary discovery applications as "dress rehearsals" for subsequent infringement proceedings. Courts will not form preferences between expert witnesses and rely on expert evidence solely to assess the reasonableness of the patentee's belief in potential infringement.
Pharmaceutical Patent Applications
These orders hold particular relevance for pharmaceutical patents because details of potential infringers' formulations or manufacturing processes are unlikely to be publicly available. Patent holders can utilize preliminary discovery when they suspect patent infringement but require additional information to establish a basis for infringement claims, or when seeking to understand potential damages before initiating proceedings.
The patentee must establish an objectively reasonable belief in potential infringement based on available information. This can be demonstrated through evidence from in-house counsel and expert evidence identifying specific claim elements that may be infringed based on information published by the potential infringer. The belief remains reasonable if supporting evidence shows it is not untenable or baseless, even when challenged as incorrect.
Scope and Confidentiality Protections
Preliminary discovery orders target specific document categories sought by prospective applicants, limited to documents necessary to overcome information insufficiency preventing decisions on infringement proceedings. Patent disputes commonly require documents to be produced under appropriate confidentiality regimes, with access typically restricted to external lawyers and independent experts.
Defense Strategies and Alternatives
Potential respondents can defend against preliminary discovery applications by demonstrating that the patentee lacks the required belief or that no reasonable basis exists for believing they may be entitled to relief. However, applications for preliminary discovery are rarely refused, making this an uphill battle for potential respondents.
Alternative approaches include offering undertakings not to engage in conduct the patentee believes may infringe the patent, or providing confidential information about products or processes to discourage pursuit of the application. Parties may also retain independent expert witnesses to provide confidential opinions on whether claimed features have been incorporated into the potential respondent's product or process.
Current Legal Landscape
The Federal Court has taken steps to streamline Rule 7.23 applications in patent matters, with preliminary discovery applications continuing to be deployed by patentees across Australia. Despite courts routinely ordering preliminary discovery, potential respondents should carefully scrutinize the categories of documents sought, which can be wide-reaching, ensuring they provide only what is necessary for the patentee to form a view on infringement.
The Rules effectively permit document production in circumstances that might otherwise be considered fishing expeditions, making it insufficient for potential infringers to argue that applications are merely speculative.
