Pharmaceutical patent owners are continuing to rely on preliminary discovery in Australia as a strategic tool to assess possible infringement by generic entrants before launch.

A recent Federal Court decision in Newron Pharmaceuticals S.p.A v Arrotex Pharmaceuticals Pty Ltd [2025] FCA 1321 highlights a relatively low threshold a patentee must clear to obtain disclosure, where only limited technical information is publicly available.

For originator companies and their advisers, this judgment is a timely reminder that Australian courts may order preliminary discovery based on a reasonable belief of possible infringement, particularly where a generic manufacturer declines to provide information about manufacturing processes or product characteristics.

Background

This case considered an application for preliminary discovery by Newron Pharmaceuticals, the owner of two pharmaceutical patents, and its exclusive licensee (the Originators), against generic drug manufacturer Arrotex Pharmaceuticals.

The application was triggered by the registration by Arrotex on the Australian Register of Therapeutic Goods (ARTG) of generic versions Xadago, the Originators’ pharmaceutical product for the treatment of moderate to late stage Parkinson’s Disease.

The patents were for methods for producing high purity Safinamide, which is the active ingredient in Xadago, which was the only safinamide product available and on the market in Australia.  Relevantly, the patents covered any method for producing Safinamide with impurities present at a level of less than 0.03% by weight.

Arrotex obtained ARTG registration for its generic product on the basis of bioequivalence with Xadago. Prior to the product becoming listed on the Pharmaceutical Benefits Scheme (PBS) and becoming available on the market in Australia, Newron and the licensee applied to the Federal Court of Australia for an order for preliminary discovery.  The preliminary discovery application sought production of documents and samples relating to and of the Arrotex products, for the purpose of deciding whether to commence proceedings for actual or threatened patent infringement.

Preliminary Discovery

Federal Court Rule7.23, which grants the Federal Court the power to make orders for preliminary discovery, provides the following:

(1) A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:

(a) reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and

(b) after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and

(c) reasonably believes that:

(i) the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent's control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii) inspection of the documents by the prospective applicant would assist in making the decision.

(2) If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).

Evidence

The Originators provided affidavit evidence from several witnesses but primarily relied on an affidavit from the General Counsel of the exclusive licensee of the patents.  

The evidence was that the patents discussed impurities IIa and IIc and suggested possible safety implications arise where impurity levels are found at greater than 0.03% by weight.  In this regard, significant weight was placed on statements in the patents to this effect. Furthermore, because the generic product was registered on the ARTG as a generic version of the Originators’ Xadago product, it was reasonable to infer that the registration was based on bioequivalence to Xadago, and given the potential for toxicity of higher than the required impurity levels, the amount of impurity in the generic pharmaceutical would be less than 0.03% by weight.

As the patents covered any method for producing the pharmaceutical with impurities present at less than 0.03% by weight, the witness gave evidence that they believed, but did not know whether the generic products may have been made using the patented processes and might therefore infringe the patents.

The generic manufacturer Arrotex also filed several affidavits but relied primarily on affidavit evidence from an expert witness with expertise in relation to pharmacology as well as the processes of the ARTG.

The Court noted that as Rule 7.23 envisages a summary or interlocutory procedure, and that consistent with this neither party sought leave to cross-examine the witnesses, applications for preliminary discovery should not proceed as a mini-trial and should not be characterised by extensive scientific evidence of the merits, such as in respect of the validity of the patents.

Nevertheless, the expert witness gave evidence to the effect that the TGA’s assessment of bioequivalence and safety simply required the same active substances in the same dosage forms that meet the same or comparable standards and are silent as to the levels of impurities and in fact do not mention impurities at all.  Therefore, bioequivalence could say nothing about levels of impurities in the generic product. Similarly, although the assessment of safety may have regard to impurities, this is assessed by reference to relevant regulatory limits and not by comparison to the Originators’ product.

Therefore, it was not reasonable for the Originators to conclude that the generic product may have been produced by the patented method so as to include the threshold level of impurity required by the patents.

Notably, however, the respondent did not put forward any evidence as to the process by which the Arrotex products were produced.

Considerations

The Court noted the parties’ acceptance that the Full Federal Court’s decision in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193, is the leading authority on preliminary discovery applications in patent cases, and referred to the formulation of Perram J in Pfizer at [120] of the following questions to be answered:

(a) Does the prospective applicant believe that it may have a right to relief? (Noting that the belief is not whether there is a cause of action; rather, it is a belief in the possibility of relief).
(b) Is that belief reasonable? Or, turning the question around given the way the proceedings unfolded, with expert evidence, has the prospective respondent succeeded in showing that there is no reasonable basis for that belief?
(c) Have they made sufficient inquiries to obtain sufficient information to decide whether to start a proceeding in the Court to obtain that relief?
(d) If so, do they reasonably believe that the prospective respondent has documents directly relevant to the question of whether the prospective applicant has a right to obtain the relief?
(e) Would inspection of the documents assist?
(f) What are the confidentiality provisions which should be imposed on any discovery?

The Court noted that in the present case, a major contest between the parties was in relation to (b) and, as to the test for reasonableness of belief, the Court paraphrased Perram J in Pfizer at [121] and [125] as follows:

In order to defeat a claim for preliminary discovery, the prospective respondent will need to show, either that the subjectively held belief does not exist (which is not put by the prospective respondent in this case), or, “if it does, that there is no reasonable basis for thinking that there may be (not is) such a case” (Perram J at [121]). That may be done by demonstrating that no reasonable person, faced with the evidence relied on by the prospective applicant, would think that a right to relief might exist: Perram J at [125].

Is the Belief Reasonable?

In prefacing its decision, the Court highlighted that Rule 7.23 is a beneficial provision, meaning that it must be applied in a way which gives effect to its purpose, which is to allow a person to make up their mind whether to commence proceedings.  If a party has a sufficient level of certainty about whether there is infringement, then preliminary discovery would not be appropriate and would not be ordered.

The Court explained that the proper approach is to ask:

“Is the belief held by the prospective applicants one which is based on “unreasonable, untenable, irrational or baseless” considerations or views? (see Allsop CJ in Pfizer at [69]).

Some degree of speculation, or reliance on circumstantial evidence, is almost always part of the factual architecture which goes to make up a belief in the possibility of relief, because it is the reasonableness of the belief being tested, not the truth of the facts alleged (see Perram J in Pfizer at [154]). The prospective applicant does not need to establish a prima facie case of patent infringement (see Nicholas J in Pfizer at [180]). Instead, I need to determine whether the expressed belief was reasonable as against the background of the evidence before me, even if that evidence has not been considered by the prospective applicants in coming to their belief…”

The Court concluded that whilst the evidence may not have demonstrated that the necessary level of impurity for safety of safinamide was less than 0.03%, or that bioequivalence with the Originators’ product means the same level of purity, the fact that there were differing views on these technical issues and that the generic product contains safinamide, provided a reasonable basis for a belief that the Originators may have the right to seek relief for patent infringement.

The Court noted particularly persuasive factors were that:

a) the patents would have been infringed by products containing high purity safinamide, regardless of the method of production; and
b) it was not clear that safety considerations imply nothing about the level of impurity, as was suggested by Arrotex.

The Court noted that it was not necessary for it to determine whether safinamide containing impurities greater than 0.03% was safe or not.  Relatedly, the Court noted that just because the TGA may not recognise impurity level as a safety threshold does not mean that the Originator may not have a reasonable belief that Arrotex’s product may contain impurities below the threshold and therefore may infringe the patents.  

Furthermore, there was no evidence ruling out that the patented impurity level may be present.  The Court noted that Arrotex provided no evidence of testing the levels of certain impurities in its generic product.  As such, it was impossible to know what the levels were and this supported a conclusion that the Originators’ belief of possible infringement was reasonable.

Take Aways

The judgment suggests that the Federal Court is willing to exercise its discretion to order preliminary discovery in cases where there is a reasonable risk of patent infringement, and in the absence of evidence demonstrating that there is no infringement.

For a recipient of a preliminary discovery threat, anything short of establishing with evidence that the patented invention is not infringed may be insufficient to avoid an order for preliminary discovery. Relying solely on casting doubt on the patentee’s belief in possible infringement can be a risky strategy, because the threshold for showing that such a belief is “unreasonable, untenable, irrational or baseless” is likely to be high, particularly in the absence of affirmative evidence demonstrating that the patent is not infringed.

If you would like to know more about preliminary discovery in Patent infringement cases then please contact Daniel McKinley or Catrina Olivera.

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