Case: Appleton Papers Inc v Tomasetti Paper Pty Ltd (1983) 3 NSWLR 208
Outcome: followed
do not agree that damages will be adequate compensation for Wyeth simply because it will be able to recover lost royalties in reliance on the undertaking, or that potential loss to Wyeth Australia is irrelevant. Similar arguments were rejected by McLelland J in Appleton Papers Inc v Tomasetti Paper Pty Ltd (1983) 3 NSWLR 208 ( Appleton ) at 219: The defendant points out that in substance the plaintiff uses its patent to license the manufacture of paper by others and receives a once-only royalty upon manufacture. It is submitted that if an account of sales by the defendant is kept the damage suffered by the plaintiff is precisely quantifiable. It is also submitted that a distinction should be drawn between the plaintiff and other members of the group in which the plaintiff operates and that it is only the position of the plaintiff that matters. It is submitted that loss of sales or loss of market position by parties further down the distribution chain (whether or not connected with the plaintiff) do not bear upon the balance of convenience between the parties to this litigation. I am unable to accept that potential losses to others with whom the plaintiff is in a relevant commercial relationship dependent upon the validity of the patent, and its effectiveness in conferring a monopoly, are irrelevant to the question of the granting of interlocutory relief. The ability of a party to effectively prevent infringements of its patents must necessarily affect the value of those patents and its commercial standing vis-&agrave;-vis others with whom it deals in relation to those patents, and this is not a matter to be ignored, particularly as this kind of injury does not lend itself to ready calculation in monetary terms. The present case is stronger than Appleton because Wyeth is Wyeth Australia's ultimate holding company. Loss to Wyeth Australia thus feeds through directly to Wyeth itself. It is likely that Wyeth Australia (and thus Wyeth) will suffer a loss of market share from Sigma's possible acquisition of up to 50% of the market for venlafaxine products at the expense of Efexor-XR. It was common ground that unlike originator companies that market to medical practitioners, generic companies market direct to pharmacies. Ms Braithwaite, Wyeth Australia's Pharmaceutical Business Director, said that in view of the size of Sigma's sales force and the presence it has at the pharmacy level, which is where the decision and incentive to substitute a generic product for Efexor-XR lies, Sigma's product has the ability to quickly take market share from Efexor-XR, "with consequent considerable and irreparable damage to Wyeth's business". In addition Wyeth Australia is likely to be forced to reduce the price at which it sells Efexor-XR due to discounting by Sigma. The balance of convenience favours the grant of relief. At best Sigma's trade in Evelexa-XR has just commenced. It launched its product on 1 May 2009, the same day on which Wyeth commenced its cross claim. Sigma has commenced taking orders on the basis that the product will be delivered to pharmacies for sale by 1 June 2009. However there is no evidence that any supply contract has been entered into. On the other hand Wyeth has an established trade. It is much more likely to suffer from a disturbance of the status quo than is Sigma. The relevance of this comparison between a new entrant and an established participant in a market is shown by cases such as Appleton (1983) 3 NSWLR at 219 and Pharmacia Italia SpA v Interpharma Pty Ltd (2005) 67 IPR 397 ( Pharmacia Italia ) at [52].