England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
MR JUSTICE LADDIE

		Royal Courts of Justice Strand, London, WC2A 2LL Friday 9th February 2001

LORD JUSTICE ALDOUS:

1. Novartis Pharmaceuticals UK Ltd and Novartis Pharma AG (Novartis) appeal against the judgment and order of Laddie J of 18th December 2000. By that order the judge refused the application by Novartis for an order that Fisons Ltd should give disclosure of certain documents pursuant to CPR Part 31.17.
2. Novartis are defendants in a patent action brought by Professor Sir Roy Calne, the patentee, and American Home Products Corporation, the exclusive licensee. The patent EP (UK) 0401747 claims as its basic invention "use of rapamycin for the preparation of a medicament for inhibiting organ or tissue transplant rejection in a mammal in need thereof." Novartis denied infringement and alleged that the patent was invalid because it lacked novelty, was obvious and insufficient.
3. The parties agreed that the issues of infringement and insufficiency should be tried first. Those issues came initially before Laddie J (2000 RPC 547) and subsequently before this Court. This Court decided (27th July 2000, unreported) that the alleged infringement, a derivative of rapamycin called SDZ RAD, did not infringe as the claims of the patent did not cover such a derivative. Upon that construction of the claims, the attack of insufficiency failed. After that decision the proceedings were re-activated so that the issues of novelty and obviousness could be determined. They are due to be heard in June of this year.
4. The relevant attack on novelty is the alleged disclosure by Professor Sir Roy Calne to Dr William Cressman of Wyeth-Averst Research, now part of American Home Products, in a letter dated 14th October 1987. It stated:

"I came across a paper from your department from a Canadian journal of physiology and pharmacology, 55, 1977, on the fungal antibiotic rapamycin. I would be very interested to try some of this compound on animals with experimental organ grafts to determine whether it has immunosuppressive potential. I am not aware of any such studies having been published but if you have any information I should be most grateful to be informed.

If studies have not been done I wonder if you could let me have some of the compound to study the effect in rats with heart grafts and dogs with kidney transplants."

5. Professor Sir Roy Calne accepts that he wrote the letter, but it appears from parallel proceedings in Germany that the claimants contend that the information in the letter was disclosed to Dr Cressman in confidence. If so, it could not form the basis of a novelty attack. Thus at trial the judge will need to examine the circumstances surrounding the letter and decide whether the recipient was under an obligation of confidence.
6. Novartis's case on obviousness starts from cyclosporin which had been known to be an immunosuppressant for use in transplant medicine since the late 1970's. That was acknowledged in the patent which pointed out that it had the unsatisfactory side-effect of nephrotoxicity in man. However cyclosporin had the advantage, over previous used treatment, of a more specific action. Novartis contend that the success of cyclosporin prompted a major search for more suitable medicaments. The next significant step was FK-506 which was disclosed in a patent published in 1986 as an immunosuppressant with the ability to inhibit graft rejection. It is said to have been a major advance from cyclosporin and has been patented by Fujisawa. Fisons Plc were licensees.
7. Novartis's argument proceeds as follows. As acknowledged in the patent in suit rapamycin was known to have immunosuppressant activity. At the relevant date in 1989, it was common knowledge that FK-506 was a potent inhibitor of transplant rejection because of its immunosuppressant activity. Further it was well-known that rapamycin was a close structural analogue of FK-506. With that knowledge Novartis allege that it was obvious to try rapamycin for the claimed second medical use, namely inhibition of transplant rejection.
8. In general terms, the claimants accept that there was at the priority date of the patent an interest in trying to produce a better medicament than cyclosporin for use in transplant treatment. They also accept that FK-506 had been suggested as a successor to cyclosporin. Their case as pleaded in their reply is as follows.

"(k) By the date of the patent in suit cyclosporin was one of Sandoz's best-selling drugs. There was and had been for many years a great incentive to pharmaceutical companies and other investigators including Sandoz to discover other methods of preparing medicaments which could be used instead of or together with cyclosporin to inhibit rejection of transplant organs or tissue. Not only was the existing market valuable and expanding, but there was a great potential for further expansion if a more acceptable medicament could be found and these facts were well-known.

(l) Despite the aforesaid, nobody made the invention in the patent. …"

9. In essence the claimants assert that despite the "building blocks" relied upon by Novartis being available, nobody investigated rapamycin until that was suggested by Professor Sir Roy Calne with the results shown in the patent. That investigation was not obvious. They will submit to the trial judge that Novartis's case should be rejected because it depends upon hindsight.
10. The application for specific disclosure of documents from Fisons Ltd arose from a meeting in May 2000 between Mr David Brown, the partner in Bristows who has the conduct of the case on behalf of Novartis, and Dr Gordon Wright who is a patent attorney with the firm Elkington and Fife.
11. Dr Wright told Mr Brown that he had worked as an in-house patent agent with Fisons during the 1980s and that FK-506 had been the subject of collaboration between Fisons and Fujisawa. Dr Wright told Mr Brown that he was aware that there were files, held at Fisons' premises, which would be likely to contain material of interest to the allegation that rapamycin was an obvious candidate to try in transplant therapy in the light of the disclosure of FK-506 and its effect in transplant treatment. Dr Wright said that he was on good terms with his former colleagues at Fisons and it was arranged that he would try to inspect the documents on an informal basis. According to his evidence, Dr Agnew of Fisons collected together all of the documents which, in his opinion, related to the collaboration between Fisons and Fujisawa. Dr Wright carried out an inspection in the early part of 2000. He reviewed the documents that had been collected together which were subsequently placed in a box. According to Mr Brown, Dr Wright told him that the documents revealed the following facts and matters.

"(1). Professor Calne, co-claimant in this action was one of the three leading transplant surgeons were who engaged by Fisons to test FK-506 from about early 1986. Professor Calne showed great interest in FK-506 when invited to test the compound;

(2). Regular meetings were held between Professor Calne and Fisons and alternatives to FK-506 were discussed;

(3). As early as March 1987 or possibly earlier, Fisons and Fujisawa realised that FK-506 was structurally extremely similar, possibly uniquely similar, to another biologically active molecule, rapamycin;

(4). Fisons requested a sample of rapamycin from Ayerst in 1987. Fisons received a response from Dr William Cressman in relation to their request on 30th September 1987. Ayerst subsequently merged with Wyeth (the predecessor to AHP);

(5) In November 1987 Fisons received 100mg of rapamycin from Ayerst; and

(6) By April 1988 Fisons had tested rapamycin and demonstrated that it had potential utility in transplantation."

12. Novartis concluded that those documents were relevant to the issues of obviousness and novelty. They therefore sought access to the documents in the box. When this was requested from Fisons they contacted Fujisawa. The attitude of Fujisawa can be gauged from their letter of 24th October 2000 to Dr Wright. They said:

"As you are aware, Novartis, which is your client, is the biggest competitor to our company in the field of immunosuppressants and in the past there was some unfortunate troubles between Novartis and our company concerning FK-506.

Therefore, even if your and your clients' interests are concentrated on rapamycin, not FK-506, we are forced to say that Fujisawa cannot assist Novartis's business. Accordingly, please do not disclose any information, which came from the research collaboration between Fisons and Fujisawa, to any third parties including Novartis.

We are sorry that we could not provide you with favourable reply to you, but please understand our position."

In the light of that letter, Fisons decided not to provide the documents for use in these proceedings.

13. On 17th November 2000 Novartis issued the application the subject of this appeal. In it they sought an order that Fisons Ltd should give "specific disclosure of certain documents which relate to the validity of European patent (UK) 0401747 which were identified by Dr Gordon Wright of Elkington and Fife in a visit to Fisons Ltd's offices at Holmes Chapel in or around June 2000 and separated by him into a box."
14. Fisons Ltd did not serve any evidence and did not appear at the hearing before the judge. They did not oppose the application nor did they consent to it. They left it to the court to decide what should be done. However the claimants did appear before the judge and successfully submitted that an order for disclosure should not be made.
15. Prior to the substantive hearing, the judge had indicated during a telephone summons that it might not be appropriate to order disclosure of a selection of documents made to support the allegations of Novartis. To meet that possible conclusion Novartis filed two further witness statements, one of Mr Brown and one of Dr Wright. Dr Wright explained that the collaboration between Fisons and Fujisawa had terminated early in 1996 and that he had asked Fisons for and was shown the records of the patent department of the pharmaceutical division of Fisons in respect of that collaboration. They included the minutes of the supervisory committee responsible for the collaboration between the two companies. He believed that the files were complete. He said:

"(1) I asked to see all the patent department collaboration files.

(2) I have no reason to believe that I was not provided with all of them.

(3) All of them, and not just those which I considered to be of relevance, were put into a box and separated from the other non-collaboration documents held at Holmes Chapel.

(4) I do not believe that it is likely that other documents relating to the collaboration will be held by Fisons Ltd other than the patent department collaboration files."

16. The judge rejected the application for disclosure by Fisons on three grounds. First he concluded that he had no jurisdiction to make the order under CPR 31.17 as the order for specific disclosure included documents which were not relevant. To come to that conclusion he relied upon the evidence of Dr Wright which I have just quoted. He then said:

"It is quite clear that the documents in the box of which disclosure is sought here are not all relevant. It is conceded that there will be some, perhaps many of them which will not be relevant to the issues before the court even if the inquiry in relation to obviousness is given the broadest scope. What is said is that the box will contain some documents which are likely to be relevant."

17. The judge went on after citing a passage from a judgment of Pumfrey J in In re: Howglen [2000] 1 AER 376, 382-3:

"If the order covers disclosure which, on any basis, includes material which is accepted to be irrelevant, then I do not think the court has the power to make the order."

18. Second, the judge concluded that the documents went to what he called a secondary issue, namely whether other persons at or before the priority date had done that which, or had thought of doing that which, the patentee said was his invention. The disclosure of what Fisons did would have to be assessed against the background of their depth of knowledge as a whole which could involve inquiry into details of what Fisons and Fujisawa were thinking. He said:

"I am not convinced that the wide-ranging disclosure of that sort would be necessary in order to dispose fairly of the claim or to save costs. It seems to me to be likely that even if I were to make an order for wide-ranging disclosure, it would be of secondary significance to the issues in this case."

19. Third, he came to the relevance of the documents to the issue of novelty. He said:

"I have difficulty in seeing how the contents of the documents passing between Fisons and Fujisawa can shed any light whatsoever on whether or not Wyeth thought it was covered by an obligation of confidence. It is not suggested, for example, that Wyeth had the slightest inkling that Professor Calne was also engaged in collaboration or discussions with Fisons or Fujisawa."

20. The judge concluded that the application raised important questions as to the scope of CPR 31.7 and section 34 of the Supreme Court Act 1981. He decided, for the reasons that he gave, that he neither had the power to make the order for general disclosure, which he thought was being sought, nor did he believe that the disclosure was necessary in order to dispose fairly of the claim or to save costs. Indeed he said that if disclosure were ordered, it would be more likely to increase costs than to save them and would not add significantly to the ability of the court to dispose fairly of the substantive issues before it.
21. The judge went on to consider the alternative submission of Novartis that if the application was too widely drawn, it should be limited to disclosure of the documents relevant to the matters set out in the witness statement of Mr Brown which I have already cited. As to that, the judge said:

"However even in relation to the narrower classes, (iii) seems to be no more than an application for general discovery in relation to an issue as opposed to identifying any particular document or class of documents. The same applies to (vi). Numbers (iv) and (v) could well be restricted to specific documents. For example, in relation to (iv) it would be possible to limit an order for disclosure to the response from Dr Cressman on 30th September 1987. Similarly, it would be possible to make an order that Fisons disclose the receipt of documents (assuming such exist) relating to the 100mg sample of rapamycin from Ayerst.

I accept Mr Tappin's [counsel for the claimant's] submissions in relation to these. Such limited disclosure would advance the issues before the court not at all. In my view they would not make a significant contribution to the disposal of the issues of obviousness in this case. They have no relevance to the issue of novelty. They are not necessary in order to dispose fairly of the claim or to save costs."

22. Mr Carr QC who appeared for Novartis submitted the judge was in error in concluding that some of the documents in the box were not relevant. He accepted that some of the documents might not be probative of the Novartis case that the invention was obvious because of the similarity between FK-506 and rapamycin. But it had never been conceded that the documents in the box would not be relevant. The view of Dr Wright as to the relevance of certain documents was not intended to be determinative as to whether in a broad sense all the documents were relevant. To decide the weight to be placed on particular documents, they needed to considered in context. That meant that the patent department files in the box should be disclosed in full. In any case the judge had wrongly concluded that there was no jurisdiction to order disclosure of a class of documents just because the class included a document or documents that would not be relevant, in the sense of being probative, upon a particular issue. As an example he referred to the need to be able to order disclosure of medical records in personal injury cases. No doubt such records would contain documents if read in isolation which were irrelevant, e.g. inconsequential notes and memoranda: but that did not mean that the court could not order disclosure of the medical records as a class. The notes and memoranda were part of a relevant class of documents.
23. Mr Carr also submitted that the judge had wrongly exercised his discretion. He had failed to take account of the attitude of Fisons. They had not opposed the application. Further he had failed to take account of the fact that the documents had already been collected together and would be made available at the cost of Novartis and subject to such conditions of confidentiality as the court thought fit. Thus the order would not impose an undue burden upon Fisons. This was not a fishing expedition. The documents had already been inspected by Dr Wright.
24. There was, Mr Carr submitted, no evidence to support the case put forward by the claimants that the documents were not relevant to the issue of obviousness. The weight to be placed on them would depend upon the evidence given at trial, but to exclude them, which was the result of the judge's order, could have a material effect upon the case advanced by Novartis.
25. Mr Carr also submitted that the judge was wrong to conclude that the documents were not relevant to the issue of novelty. When deciding whether a communication was subject to an objection of confidence, it was necessary to consider the intention of the person making the disclosure, and that of the recipient in the light of the surrounding circumstances. (See Thomas Marshall v Guinle [1979] 1 Ch 277 and Carflow Products Limited v Linwood Securites Limited [1996] FSR 424). That had not been the approach of the judge as he had only considered whether the documents sought to be disclosed could throw light on the position of the recipient of the letter.
26. Mr Carr submitted that the nature of the collaboration between Professor Sir Roy Calne and Fisons was plainly relevant to consideration of whether he regarded the information in his letter of 14 October 1987 as confidential and therefore intended to impose an obligation of confidence on the recipient. That was particularly the case when the pleaded letter was considered in the context of the involvement of Professor Sir Roy Calne in the collaboration between Fisons and Fujisawa. Thus the documents were important to place the letter in context.
27. Mr Baldwin QC, counsel for the claimants, supported the conclusion and reasons of the judge. He submitted that when the class of documents sought included documents which were irrelevant, a court had no jurisdiction to order disclosure. He also drew attention to the evidence which suggested that the box contained documents relating to the collaboration which ended in 1996. He submitted that if that was correct, the box must contain irrelevant documents as what happened in 1996 could not be relevant to the issue of obviousness which had to be judged as of 6th June 1989.
28. Mr Baldwin also supported the judge's conclusion that it would be inappropriate to order disclosure of documents unless the documents were specifically identified as such would place an undue burden upon the holder of the documents.
29. The jurisdiction to order a third party to give disclosure of documents is contained in section 34 of the Supreme Court Act 1981 which before amendment re-enacted section 32 of the Administration of Justice Act 1970. That section limited the jurisdiction to cases of personal injury and death. The amendment made by Statutory Instrument 1998 No. 3132 L.17. pursuant to section 4 of the Civil Procedure Act 1997 removed that limitation. As amended the relevant parts of section 34 are in these terms:

"34.(2) On the application, in accordance with the rules of court, of a party to any proceedings …, the High Court shall, in such circumstances as may be specified in the rules, have power to order a person who is not a party to the proceedings and who appears to the court to be likely to have in his possession, custody or power any documents which are relevant to an issue arising out of the said claim –

(a) to disclose whether those documents are in his possession, custody or power; and

(b) to produce such of those documents, as are in his possession, custody or power to the applicant or, on such conditions as may be specified in the order –

(i) to the applicant's legal advisers; or

(ii) to the applicant's legal advisers and any medical or other professional adviser of the applicant's; or

(iii) if the applicant has no legal adviser, to any medical or other professional adviser of the applicant.

…

(4) The preceding provisions of this section are without prejudice to the exercise by the High Court of any power to make orders which is exercisable apart from those provisions."

30. As was pointed out by the House of Lords in O'Sullivan v Herdmans Ltd [1987] 1 WLR 1047, the section contains two requisites, namely that the application should be made in the form specified by the rules and the circumstances are such as laid down in the rules. If such pre-requisites were met the court had an unfettered power to order production of any documents which were relevant to an issue arising out of the claim. Lord MacKay said at page 1055:

"Where such an unfettered power is given, in my opinion, it is to be construed as a power to be exercised when its exercise would help to achieve the purpose of the act which is the proper administration of justice or, to put the matter negatively, in the words of Lord Diplock in McIver v Southern Health and Social Services Board [1978] N.I. 1, 10; [1978] 1 WLR 757, 760, the court can decline to make an order

'if it is of the opinion that the order is unnecessary or oppressive or would not be in the interests of justice or would be injurious to the public interest in some other way.'"

31. It is not in dispute that the application was made in accordance with the CPR. The circumstances for making such an order are contained in CPR 31.17 which is as follows:

"(1) This rule applies where an application is made to the court under any Act for disclosure by a person who is not a party to the proceedings.

(2) The application must be supported by evidence.

(3) The court may make an order under this rule only where—

(a) the documents of which disclosure is sought are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings; and

(b) disclosure is necessary in order to dispose fairly of the claim or to save costs.

(4) An order under this rule must—

(a) specify the documents or the classes of documents which the respondent must disclose; and

(b) require the respondent, when making disclosure, to specify any of those documents—

(i) which are no longer in his control; or

(ii) in respect of which he claims a right or duty to withhold inspection.

(5) Such an order may—

(a) require the respondent to indicate what has happened to any documents which are no longer in his control; and

(b) specify the time and place for disclosure and inspection."

32. I accept Mr Baldwin's submission that section 34 only provides jurisdiction to order disclosure of "any documents which are relevant to an issue." That is emphasised by CPR 31.17 which enables the Court to make an order "only where …. documents … are likely to support the case for the applicant or adversely affect the case of one of the other parties to the proceedings." I therefore turn to consider whether the documents sought by Novartis to be disclosed by Fisons are relevant in the sense that they meet the criteria laid down by CPR 31.17.
33. At trial a major dispute between the parties will concern the allegation that it was obvious to try rapamycin as an immunosuppressive in transplant treatment having regard to the knowledge of FK-506. I accept, as Mr Baldwin pointed out, that evidence of what Fisons and Fujisawa did and thought at around the priority date of the patent could not be determinative. However such evidence could support the case of Novartis that the step from FK-506 to rapamycin was obvious. If both Fisons and Fujisawa appreciated the similarity between FK-506 and rapamycin and the likelihood that they could have similar properties, that could support the evidence of a Novartis expert that the step from FK-506 to rapamycin was obvious and could help to rebut the attack on such evidence that it was based on hindsight reasoning. Thus in principle the evidence of Mr Brown establishes that the box contains relevant documents which the Court has power to require to be disclosed.
34. Subject to the question of date, I reject Mr Baldwin's submission that the evidence establishes that there are documents in the box that are not relevant. Dr Wright's view of "relevance" cannot be determinative particularly when clearly he was considering the stature of individual documents, rather than the class. To decide what weight to place on any particular document, it will be necessary to consider it in a context. If so, a selection limited to documents Dr Wright thought were individually relevant or even those that Fisons thought were relevant could provide a false picture. In my view the collaboration of Fujisawa and Fisons is relevant to the proceedings. No doubt particular documents may turn out to be more relevant than others; some individual documents may not be "relevant" at all.
35. As to date, the evidence suggests that the collaboration between Fisons and Fujisawa continued until 1996. Therefore the box probably contains documents which came into existence at about that date. That being so, Mr Carr accepted, rightly in my view, that such documents could not be relevant to what was obvious to the skilled person at the priority date of the patent in June 1989. He accepted that some limitation as to date was needed so that the order was limited to the relevant documents. He suggested that the limitation should be either the priority date or two years after it: the latter being the date for standard disclosure in paragraph 9.2 of the practice direction governing patent proceedings in the High Court.
36. Although limitation to the two year period after the priority date is in a sense arbitrary, it is that applicable to the standard disclosure in patent actions. Absent special factors, that appears to me to be a good reason for applying it to disclosure under CPR 31.17. I therefore conclude that the order should only relate to documents that came into existence before 6th June 1991.
37. I realise that the order will require Fisons to disclose such of the documents that came into existence before 6th June 1991. To avoid that selection, Fisons may wish to disclose all the documents in the box.
38. I also believe that the documents are relevant to the issue of novelty. The surrounding circumstances would appear to me to be a useful guide to decide whether the pleaded letter of 14th October 1987 contained confidential information. From the evidence of Mr Brown, it seems that Fisons requested a sample of rapamycin in early 1987 and received a response on 30th September 1987 and a sample in November. The pleaded letter was written on 14th October 1987 and it may be that it was prompted by the Fisons collaboration with Fujisawa. In any case the question of confidentiality is best resolved in context.
39. The judge indicated that even if he had considered that he had jurisdiction, he would have refused to order disclosure in the exercise of his discretion. That was a wrong exercise of the discretion. As was pointed out in O'Sullivan, the power given by section 34 is to be exercised when disclosure will help to achieve the proper administration of justice. No doubt that requires it to be exercised so as to achieve the objects of the CPR.
40. In the present case Fisons do not object to the order for disclosure and the documents have already been selected and seen. It is therefore not a fishing expedition. It follows that the costs involved in complying with the order are very small. In those circumstances I can see no reason why relevant documents should not be disclosed.
41. As I have said, the claimants supported the decision of the judge. They sought to have the documents excluded from the trial by preventing the order for disclosure. That cannot be a good ground for refusing disclosure if the documents be relevant, as they are. Once disclosed, the trial judge will need to consider how and whether any particular document should be admitted. Of course, extra evidence could lengthen the trial and put up the costs. But if that evidence is relevant to the ultimate decision, then it is one that the court should not refuse to consider it except in exceptional circumstances.
42. For the reasons I have given I believe that the appeal should be allowed. For my part, I would make an order that Fisons should disclose within, say, 21 days, the documents that came into existence prior to 6th June 1991 relating to the collaboration between Fisons and Fujisawa that were selected by Dr Agnew and were subsequently placed in a box after the visit of Dr Wright to Fisons in June 2000.
43. Finally I come to the request of the claimants for an order that the exhibits to the affidavit of Mr Brown should be kept confidential. Such an order would be contrary to the normal practice of the Court of Appeal in that hearings in the Court of Appeal are heard in Open Court. Thus this Court will not make such an order unless there are compelling commercial or other reasons for it. In the present case there does not appear to me to be compelling or other reasons for making such an order, save perhaps in respect of exhibits DJCB 4 and 7 to Mr Brown's first witness statement. In the absence of objection by Novartis, I would be prepared to make a confidentiality order restricted to those exhibits as such an order would not materially impinge upon the practice of this Court.

LORD JUSTICE ROBERT WALKER:

44. I agree.

SIR ANTHONY EVANS:

45. I also agree.
Order: Appeal allowed with costs, to be the subject of detailed assessment if not agreed; the order for costs made by the judge below to stand; counsel to lodge a draft minute of the order. (Order does not form part of the approved judgment)