Application for preliminary discovery
Potential action for patent infringement by a generic version of medicine to be listed on the PBS
In Newron Pharmaceuticals SPA v Arrotex Pharmaceuticals Pty Ltd (Application for Preliminary Discovery) [2025] FCA 1321 (29 October 2025), Needham J determined an urgent application for preliminary discovery pursuant to r7.23 of the Federal Court Rules 2011 (Cth).
The prospective applicants (Newron and Zambon – collectively, NZ) are the patentee and exclusive licensee of two patents for Xadago, a treatment for Parkinson’s disease. NZ brought an application against Arrotex, which has four registrations before the Australian Register of Therapeutic Goods for products approved as generic versions of Xadago. Arrotex expects its products to be listed on the Pharmaceutical Benefits Scheme (PBS) and available for purchase soon.
NZ sought, from Arrotex, the production of documents and samples of the Arrotex products, for the purpose of deciding whether to commence a proceeding for actual or threatened patent infringement. NZ argued that Arrotex products may contain high-purity safinamide (a component of Xadago) or use NZ’s patented processes (at [31]).
Needham J outlined (at [16]) the principles relating to preliminary discovery, which were set out by the Full Court in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62. These principles include that r7.23 has two features:
- “there must be a reasonable belief as to a particular state of affairs …
- “that state of affairs consists of the possibility (required by the word ‘may’) that the prospective applicant has a right to obtain relief from the prospective respondent” (at [16(d)]).
Further, 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 … or, ‘if it does, that there is no reasonable basis for thinking that there may be (not is) such a case’” (at [16(f)]).
The main issue in dispute was whether NZ’s belief that it may have a right to relief was reasonable. Her Honour turned the question around:
“[G]iven the way the proceedings unfolded, with expert evidence, has the prospective respondent succeeded in showing that there is no reasonable basis for that belief?” (at [44(b)]).
NZ contended that Arrotex had sought to run the contest as a “mini-trial” by bringing substantive expert evidence (at [48]). They contended that they had a reasonable belief on the grounds that the patents protect high-purity safinamide, Arrotex contains safinamide, so there is a reasonable belief there may be a right to relief (at [59]).
They also argued that the Therapeutic Goods Administration had approved Arrotex products, which is “entirely consistent with the proposition” they may contain safinamide at the same purity level as Xadago (at [68]). In addition, the product information documents for Arrotex refer to the same clinical trials and data that were obtained for Xadago (at [69]). Arrotex provided expert evidence to argue that “the purity feature” was not present (at [67]). They also argued that it was standard practice for the TGA to approve text of product information for generics that was essentially the same as the original (at [81]).
Needham J took the view that, given the range of scientific views expressed in the patents and the evidence for the prospective applicants, and the fact that Arrotex does contain safinamide, there was a reasonable basis for the belief that the prospective applicants may have a right to relief. Her Honour determined that the evidence did not “demonstrate that such a belief is ‘unreasonable, untenable, irrational, or baseless’” (at [91]). Her Honour ordered preliminary discovery. Confidentiality orders were also made, given the commercial sensitivity of the matter (at [2]).
Civil penalty
Serious civil contraventions of the NDIS Act – one arising from physical abuse, the other arising from breaches of reporting obligations
On 14 November 2025, Abraham J handed down judgment in two related proceedings:
- Commissioner of the NDIS Quality and Safeguards Commission v Lifestyle Solutions (Aust) Ltd (Hakone House Proceeding) [2025] FCA 1393
- Commissioner of the NDIS Quality and Safeguards Commission v Lifestyle Solutions (Aust) Ltd (Reportable Incidents Proceeding) [2025] FCA 1394.
The judgments are to be read together (Reportable Incidents Proceeding, at [2]).
Both proceedings were brought against a registered NDIS provider (Lifestyle Solutions), which provides services to people with disability, including supported accommodation. The Hakone House Proceeding, in which an employee of Lifestyle Solutions was a second respondent, concerned breaches of rules made under the National Disability Insurance Scheme Act 2013 (Cth) (NDIS Act), being the NDIS Practice Standards and the NDIS Code of Conduct. The breaches related to incidents of physical aggression by residents at a supported accommodation facility, Hakone House.
Those breaches gave rise to contraventions of ss73J and 73V of the NDIS Act – both of which are civil penalty provisions. Section 73J requires registered NDIS providers to comply with their conditions of registration, while s73V requires registered NDIS providers to comply with the NDIS Code of Conduct. The contraventions by Lifestyle Solutions and the employee were admitted, and the parties agreed that a penalty of $2 million was appropriate to impose on Lifestyle Solutions and that declarations of contraventions should be made against both respondents.
Hakone House Proceeding
After reviewing the NDIS legislative regime (at [5]–[29]), as well as the principles applicable to civil penalties (at [30]–[40]) and declaratory relief (at [41]–[43]), Her Honour made observations about each factor, relevant to determining the civil penalty (at [44]–[68]). These factors include the seriousness of the contraventions over a two-year period. The multiple incidents of physical aggression “included instances of wounding, biting, head locks, knocking to the ground, pulling out hair, physical grabbing and property damage” (at [48]). Some incidents were observed as being particularly serious, for which higher penalties were sought, including an incident where one resident bit the face of another while she slept, leaving a wound on the victim’s face and bruising on her cheek, chin and neck (at [49]).
Abraham J noted that the residents of Hakone House “and their families depended on Lifestyle Solutions to care for and protect them. Their families placed their trust in Lifestyle Solutions that it would provide supervision, support and a safe environment, as they were entitled to do. The Residents were entitled to live free from abuse and neglect, and to have their worth and dignity respected. That did not occur” (at [67]).
Her Honour also observed that “for over two years, Hakone House was not a safe environment for the Residents or support workers”, that the primary victim of the aggression “feared for her safety in her own home and what should have been a protected and supportive environment. The distressing nature of the incidents is obvious” (at [68]).
Her Honour stated that:
“To date, there have been few cases considered by the Court brought by the Commissioner against NDIS providers for contraventions of the NDIS … This is the first case … directed towards contraventions that have arisen from abuse of this nature in a supported accommodation facility” (at [69]).
With reference to the findings of the Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability, Her Honour highlighted the importance of deterrence in the penalty to be imposed (at [70]–[71]). Her Honour was satisfied that it was appropriate to impose a penalty of $2 million and make the declarations sought (at [73]–[81]). An agreed costs order against Lifestyle Solutions was also made (at [82]).
Reportable Incidents Proceeding
This proceeding concerned breaches by Lifestyle Solutions of the Reportable Incident Rules under the NDIS Act, which require an NDIS provider to notify the applicant (Commissioner) within 24 hours of certain types of incidents such as death, serious injury, abuse or neglect, or unlawful sexual or physical contact, and five business days in respect of others – specifically the unauthorised use of restraints. Each failure to notify was a breach of a condition of Lifestyle Solutions’ registration and a contravention of s73J. Further, by operation of s93(2) of the Regulatory Powers (Standard Provisions) Act 2014 (Cth), a separate contravention was committed on each day an incident was reported late. A total of 1,811 contraventions were admitted by Lifestyle Solutions, which agreed that a penalty of $500,000 was appropriate with declarations of contraventions.
Her Honour referred to the outline of the statutory scheme set out in the Hakone House Proceeding (at [5]), the Commissioner’s core functions as set out in the NDIS Act and the Commissioner’s registration and reportable incident functions (at [8]), and set out the requirements of the Reportable Incident Rules (at [9]–[13]).
Abraham J referred to reasons set out in the Hakone House Proceeding in respect of the principles relevant to relief (at [22]). In determining the appropriate civil penalty (at [26]–[36]), Abraham J emphasised the seriousness of the contraventions, stating that the “reporting requirements of NDIS providers are of the utmost importance in circumstances where they are providing services to vulnerable people, who are dependent on the provider fulfilling its obligations … The late reporting of incidents by Lifestyle Solutions necessarily impeded the ability of the Commissioner to give effect to” the objects of the NDIS Act (at [28]). Her Honour also referred to delays in reporting, including one related to the primary victim in the Hakone House Proceeding (at [33]). Her Honour determined that senior personnel were necessarily involved in the breaches due to the responsibilities placed on key personnel under the Reportable Incident Rules (at [34]).
Her Honour was satisfied that the total aggregate of proposed penalty of $500,000 was appropriate in all the circumstances and ordered declaratory relief as sought. A costs order was also made.
