A Costly Secret: When Confidentiality Applications Go Too Far
Published 12 November 2026
Overview and Outcome
In the recent Federal Court decision of Janssen-Cilag Pty Ltd v Arrotex Pharmaceuticals Pty Ltd (Interlocutory Costs) [2026] FCA 1611, the Court considered costs consequences of an interlocutory application wherein two interested-parties, Cipla Australia Pty Ltd (Cipla) and Seekwell Pty Ltd (Seekwell) (the non-parties), sought suppression orders over allegedly confidential materials in three patent infringement proceedings.
Although Cipla and Seekwell ultimately abandoned their position during oral arguments, the Court determined that their unreasonable conduct justified an adverse costs order. The Court ordered Cipla and Seekwell to pay the applicants’ and respondents’ costs of the interlocutory application.
Background and Relevant Facts
The underlying proceedings concerned allegations of patent infringement involving generic pharmaceutical products containing macitentan for the treatment of pulmonary arterial hypertension.
The applicants, Janssen-Cilag Pty Ltd (Janssen) and Actelion Pharmaceuticals Ltd, had commenced separate proceedings against the respondents, Arrotex Pharmaceuticals Pty Ltd, Nova Pharmaceuticals Australasia Pty Ltd and MSN Laboratories Australia Pty Ltd. The applicants were seeking interlocutory injunctions against each of the three respondents, with the interlocutory dispute scheduled for hearing on 19 November 2026.
In parallel, Cipla proposed to launch its own macitentan product in Australia, with Seekwell acting as its distributor. As such, both Cipla and Seekwell had a commercial interest in the proceedings, notwithstanding that neither had been included into the infringement proceedings brought by the applicants.
Accordingly, Cipla and Seekwell were granted leave to appear for the limited purpose of seeking suppression orders of materials proposed to be introduced by the applicants. In particular, Cipla and Seekwell sought orders that would have prevented the respondents, including their external legal representatives, from accessing certain allegedly confidential material without their written consent.
These materials (Draft Undertakings), were described as being prepared to ensure that Cipla and Seekwell’s proposed macitentan product launch would not infringe a particular patent owned by Janssen. Cipla and Seekwell contended that disclosure of these materials to competitors in the generic pharmaceutical market would adversely affect their commercial interests.
The Court’s Decision and Reasoning
In this decision Jackman J considered that the orders initially sought were unreasonable because they would have prevented the respondents’ external legal team from examining evidence that appeared relevant in the pending interlocutory injunction applications.
When the matter first came before the Court, the applicants and respondents sought to have the material made available to the respondents’ external legal representatives to examine so that they could properly respond to the evidence relied upon in the interlocutory injunction applications, while reserving liberty to apply subsequently for wider access. However, Cipla and Seekwell initially opposed this limited access arrangement. The Court therefore had to consider the reasonableness of maintaining restrictions that would prevent the respondents’ legal team from examining evidence that appeared relevant to the determination of the injunction applications, on balance with the commercial impact to Cipla and Seekwell.
In his decision, Jackman J considered that the position initially adopted by Cipla and Seekwell was “plainly unreasonable”, noting the proposed orders would have prevented the respondents’ external legal team from examining evidence that appeared relevant, notwithstanding that the applicants intended to rely upon it and the respondents did not propose to object to the evidence on relevance grounds.
In contrast, it was considered the position adopted by the applicants and respondents to be entirely reasonable. Their proposal was simply to allow the respondents’ external legal team access to the material, for the purpose of preparing their cases in the pending interlocutory injunction proceedings, while reserving the possibility of seeking wider access subsequently.
It was ultimately put to Cipla and Seekwell to elect between having their application determined on the evidence then available, which in the view of the Court appeared inadequate to support the orders sought, or submitting to the respondents’ external legal teams being granted access to the allegedly confidential material.
Cipla and Seekwell ultimately elected to consent to the materials being provided to the respondent’s legal teams. In effect, complying the applicants and respondents initial proposed arrangement for the confidential materials.
Costs Following Resolution
Cipla and Seekwell sought to have the costs of their interlocutory application reserved until after determination of the substantive interlocutory injunction applications scheduled for 19 November 2026.
Jackman J rejected this proposal, stating that he could see no fairness, efficiency or utility in that course, noting:
“Ordinarily, a resolution by agreement, rather than by a determination on the merits, would entail each party bearing their own costs, assuming each had acted reasonably.”
However, the Court considered that Cipla and Seekwell had acted unreasonably in commencing and pursuing the interlocutory application in its extreme terms and maintaining that position until well into the oral argument during the hearing. Further noting that the matter was ultimately resolved, in effect by Cipla and Seekwell capitulating on the orders sought in their interlocutory application and agreeing to the terms initially provided by the respondents’ and applicants.
In those circumstances, Jackman J considered it appropriate that Cipla and Seekwell bear the costs incurred by both the applicants and the respondents for the interlocutory application. In addition, it was also considered practicable and reasonable for the costs to be determined on a lump sum basis.
Conclusion and Further Thoughts
This brief judgement provides useful guidance concerning the costs consequences of interlocutory applications brought by non-parties in patent proceedings.
First, the decision illustrates that non-parties granted leave to participate in patent proceedings may be exposed to adverse costs orders. Cipla and Seekwell were not defendants to the infringement proceedings or involved in the primary interlocutory hearing, and their participation was limited to seeking confidentiality orders. Nevertheless, their conduct in pursuing the suppression of confidential material resulted in an order requiring them to pay the costs of both the applicants and respondents.
Second, the decision highlights the importance of ensuring that confidentiality restrictions sought are proportionate. While Cipla and Seekwell had a commercial interest in protecting information concerning their proposed generic product launch, the Court considered their proposed restrictions unreasonable when taking into account the position of the respondents in preparing their defence, particularly when presented with the alternative of allowing limited access to the materials though the respondents’ external legal representatives (the position initially put forward by the respondents and ultimately adopted by Cipla and Seekwell).
Third, the decision demonstrates that resolving an interlocutory application without a determination on its merits does not necessarily mean that each party will bear its own costs.
Finally, whilst perhaps not material to the decision, it is noted two opposing parties being represented by the same legal representatives, or non-parties and respondents as in this case, raises issues regarding confidentiality and information barriers. These questions are further compounded when opposing parties are seeking to negotiate opposing terms such as the open sharing of alleged confidential materials.
If you require representation and advice on confidentiality, interlocutory injunctions, or patent opposition proceedings, contact MBIP. Our attorneys are experienced in contentious matters and the life sciences/pharma space.
