Merck Sharp & Dohme Corporation v Wyeth LLC (No 3) [2020] FCA 1477

Summary

Australia’s Federal Court has delivered judgment in a dispute concerning patents covering improvements in vaccines against Streptococcus pneumoniae, a leading cause of serious infections, particularly in children.  The judgment provides the first detailed analysis by a Federal Court judge of the Raising the Bar reforms to Australian patent law concerning sufficiency and support.  The decision demonstrates the profound implications of those reforms for permissible claim breadth in Australian patents.

Key takeaways

  • Australian patent law concerning sufficiency of description and support for claims underwent significant changes in 2012 as a result of the Raising the Bar amendments to the Patents Act 1990 (Cth) (Patents Act).
  • Due to generous transitional provisions, the amended law is only now coming before Australia’s Federal Court for interpretation and application.
  • European and UK authorities provide guidance on how the amended provisions of Australia’s Patents Act are likely to be interpreted and applied. In some cases, the amendments will result in a reduction in permissible claim breadth for Australian patents.
  • As a result of the transitional arrangements, many Australian patent disputes between now and least 2033 are likely to involve both patents subject to the pre-Raising the Bar law and patents subject the post-Raising the Bar Amendments may be required to avoid the latter patents being held invalid under the new, more stringent standards of sufficiency and support.

On 14 October 2020, Justice Stephen Burley delivered the judgment of the Federal Court of Australia in Merck Sharp & Dohme Corporation v Wyeth LLC (No 3) [2020] FCA 1477.  The case concerned three patents owned by Wyeth LLC (Wyeth) relating to improvements in immunisation against infection by Streptococcus pneumoniae, a bacterium responsible for meningitis, pneumonia and other serious illnesses, especially in children.

Justice Burley’s decision provides the first detailed analysis by the Federal Court of Australia concerning amendments made in 2012 to Australian patent law on the topics of sufficiency of description and support for claims.  The decision highlights the significant implications of those amendments for patent validity and claim scope.

The technology

Streptococcus pneumoniae (also referred to as “pneumococcus”) has an outer capsule that incorporates complex sugars known as polysaccharides.  Differences in capsular polysaccharides distinguish variants of pneumococcus, called “serotypes”.  More than 90 distinct serotypes have been described.  A more limited group of virulent serotypes are responsible for most serious pneumococcal infections.

The antibody response to capsular polysaccharides is generally poor in young children.  As a result, they are particularly susceptible to pneumococcal infections, which globally account for around 1 to 2 million childhood deaths each year.

To address this problem, “polysaccharide-protein conjugate vaccines” were developed with the aim of stimulating immunity against serotypes of pneumococcus known to be responsible for a high proportion of human infections.  In such vaccines, capsular polysaccharides are joined (“conjugated”) to a carrier protein, leading to a stronger antibody response than is achievable with vaccines based on capsular polysaccharides alone.

A polysaccharide-protein conjugate vaccine against pneumococcus developed by Wyeth, known as Prevnar 7®, was in clinical use before the priority date of the Composition Patents.  That product is a “7-valent” vaccine.  It comprises capsular polysaccharides from 7 different pneumococcus serotypes, in each case conjugated to a single protein (known as “CRM197”).  Evidence led in the case indicated that, before the priority date, steps had been taken to develop 9-valent and 11-valent polysaccharide-protein conjugate vaccines against pneumococcus, but no such products had yet been licensed or launched.

The patents

Three patents were at issue in this proceeding.  Two of them, referred to by Burley J as the “Composition Patents”, were related members of the same patent family.  The more senior family member (referred to here as the “Parent Composition Patent”) was subject to the provisions of Australia’s Patents Act as they stood prior to the Raising the Bar amendments.  The more junior family member (referred to here as the “Child Composition Patent”) was subject to the post-Raising the Bar Patents Act.  The body of the specification was substantially the same in the parent and child patents.  It described multivalent immunogenic compositions (that is, vaccines) comprising 13 distinct polysaccharide-protein conjugates, thereby providing increased coverage of pneumococcal serotypes compared to the existing Prevnar 7® vaccine.

A third patent asserted by Wyeth in the proceeding, referred to by Burley J as the “Container Patent”, disclosed siliconized container means for the stabilization of polysaccharide conjugates.  The issues raised in the proceeding in relation to the Container Patent are not discussed here.

The proceedings

Merck Sharp & Dohme (MSD) sought revocation of Wyeth’s Composition Patents on a variety of grounds, including lack of novelty, lack of inventive step (i.e., obviousness), false suggestion, lack of clarity, lack of fair basis (in relation to the pre-Raising the Bar Parent patent) and lack of support (in relation to the post-Raising the Bar Child patent).

By a cross-claim, Wyeth alleged that a 15-valent pneumococcal vaccine which MSD proposed to launch and market in Australia would infringe selected claims of all three of the asserted patents.

Wyeth’s allegation that the Composition Patents would be infringed by marketing of MSD’s 15-valent vaccine in Australia gave rise to a critical issue of claim construction in the proceeding, namely, whether the claims of those patents were limited to 13-valent vaccines (as MSD contended) or extended to vaccines covering 13 or more serotypes (as Wyeth submitted).

The construction issue

Claim 1 of the Parent Composition Patent was in the following terms:

A multivalent immunogenic composition, comprising: 13 distinct polysaccharide-protein conjugates, together with a physiologically acceptable vehicle, wherein each of the conjugates comprises a capsular polysaccharide from a different serotype of Streptococcus pneumoniae conjugated to a carrier protein, and the capsular polysaccharides are prepared from serotypes 1, 3, 4, 5, 6A, 6B, 7F, 9V, 14, 18C, 19A, 19F and 23F and wherein said carrier protein is CRM197.

Insofar as is presently relevant, claim 1 of the Child Composition Patent was in similar (although not identical) terms.

The specification of each of the Composition Patents included text (standard in Australian patents) indicating that “comprising” is used in an inclusive sense (“including”) rather than an exhaustive sense (“consisting of”).  That text provided the basis for Wyeth’s submission that, because MSD’s 15-valent vaccine included the 13 serotypes identified in the claims of the Composition Patents, it fell within those claims.  On Wyeth’s construction, the presence of two additional serotypes in MSD’s 15-valent vaccine was irrelevant to infringement.

Arguing to the contrary, MSD submitted that its construction (limiting the claims to 13-valent vaccines) was the only construction consistent with the description of Wyeth’s invention in the specification taken as a whole.  A corresponding submission, based on similar (but not identical) claim language, had been accepted in related UK proceedings between MSD and Wyeth (see Merck Sharp & Dohme Limited v Wyeth LLC [2020] EWHC 2636 (Pat) at [251]-[270]).

However, on this key issue, Burley J preferred Wyeth’s construction.  In his Honour’s analysis, the inclusive definition of “comprising” was decisive.  Provided that a vaccine included each integer of Wyeth’s claims (including, relevantly, the 13 specified serotypes), it would infringe – a conclusion not altered by the presence in the infringing product of additional serotypes.

What is notable for present purposes is the very substantial breadth given to Wyeth’s claims on the construction adopted by Burley J.  On that construction, the range of valences covered by Wyeth’s claim would appear to have no upper bound.

Unsurprisingly, in view of this broad construction, a question arose as to whether the claims were fairly based on, or supported by, the disclosure contained in the body of the Composition Patent specification.  On that legal issue, the Raising the Bar amendments have brought about a profound shift in Australian law, as Burley J’s judgment demonstrates.

Raising the Bar reforms

The Raising the Bar reforms were introduced to address concerns that Australia’s patent standards were lower than those of its major trading partners, causing Australia’s innovation landscape to become cluttered with unduly broad patents.  The amendments were expressly directed at aligning key aspects of Australian patent law, including on sufficiency of disclosure and support for claims, with the standards applied by UK courts and the European Patent Office (EPO) Boards of Appeal.

Although the Raising the Bar amendments were enacted in April 2012, lengthy transitional provisions mean that many of the key reforms, including those concerning sufficiency and support, are only now coming before the courts for interpretation and application.

The law pre-Raising the Bar

Prior to the Raising the Bar reforms, the relationship between the disclosure in the body of a patent specification and the breadth of the claims was governed by the legal requirement for “fair basis”.  The leading authority on that requirement (Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274) established that fair basis does not turn on any inquiry into the patentee’s “technical contribution to the art”, but rather on whether each claim corresponds textually with what the patentee has described as their invention in the body of the patent specification.

The practical effect of Lockwood’s permissive interpretation of the fair basis requirement was amplified by the equally permissive interpretation of the sufficiency requirement given in the leading authority pre-Raising the Bar (Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1).  That case stands as authority for the proposition that a patent specification will have adequately described the invention if it would enable a person skilled in the relevant art to produce “something” falling within each claim (referred to colloquially as the “one way rule”).

That body of law is of continuing relevance for Australian standard and innovation patents for which examination was requested before 15 April 2013.  In the present case, that “old” body of law applied to the Parent Composition Patent.

Applying those authorities, Burley J found little difficulty in concluding that, notwithstanding his Honour’s broad interpretation of the claims of the Parent Composition Patent, those claims were fairly based.  Reflecting the essentially textual nature of the pre-Raising the Bar test for fair basis, that conclusion followed from the fact that the description of the invention in the body of the Parent Composition Patent employed the same inclusive language (“comprising”) as appeared in the claims.

The law post-Raising the Bar

Following the Raising the Bar amendments, the provisions of Australia’s Patents Act dealing with sufficiency and support are in substantially the same terms as the corresponding provisions of the European Patent Convention and the United Kingdom’s Patents Act 1977.  Parliamentary records make clear that those provisions were intended to have substantially the same effect as their European and UK counterparts, and that Australia courts are expected to have regard to decisions of the EPO Boards of Appeal and of UK courts in interpreting those provisions.

Burley J reviewed a number of EPO and UK authorities, including the recent decision of the UK Supreme Court in Regeneron Pharmaceuticals Inc v Kymab Ltd [2020] UKSC 27, to interpret the post-Raising the Bar requirement that the claims be “supported by matter disclosed in the specification”.

Referring to the landmark decision of the House of Lords in Biogen Inc v Medeva Plc [1997] RPC 1, Burley J observed that the claim support obligation has come to be understood as falling “under the umbrella of the requirement that the patent specification contain an enabling disclosure”.  His Honour noted that, although the requirement for sufficient description is directed to the specification as a whole, while the requirement for support is directed specifically to the claims, both requirements serve to ensure that a person skilled in the relevant art, armed with the patentee’s specification, is enabled to perform the invention over the whole area claimed without undue burden.

Referring to the decision of the EPO Board of Appeal in Exxon/Fuel Oils (T 409/91) [1994] EPOR 149, Burley J noted that the requirement for enablement across the full claim scope has been recognised as reflecting the general legal principle that the scope of a patent monopoly, as defined by the claims, should correspond to the patentee’s technical contribution to the art, as disclosed in their specification.

Applying those authorities, Burley J concluded that the claims of the Child Composition Patent were not supported by the matter disclosed in the specification.  On the construction advanced by Wyeth and accepted by His Honour, those claims encompassed any polysaccharide-protein conjugate pneumococcal vaccine comprising 13 or more serotypes (provided the other claim integers were satisfied).  While there was no dispute that the specification of the Composition Patents would enable a skilled person to make and use a 13-valent vaccine, uncontested evidence established that the disclosure of the specification could not be extrapolated to vaccines containing other, additional serotypes.  Manufacture of polysaccharide-protein conjugate vaccines comprising more than 13 serotypes was not enabled.

In the result, the asserted claims of the Parent Composition Patent were held to be valid and infringed, while the asserted claims of the Child Composition Patent were held invalid for lack of support.

Significance of the judgment

The disparate conclusions reached in this case concerning the Parent and Child Composition Patents serve to illustrate the profound changes to Australian law brought about by the Raising the Bar reforms.

Observers in other jurisdictions may find it curious that such starkly different findings could be made on the basis of very closely similar patent specifications.  The principle upon which the Child Composition Patent was held invalid (i.e., the requirement that claim breadth correspond to the patentee’s technical contribution to the art) is said to reflect the “essential patent bargain” whereby the patent holder is granted a time-limited monopoly in return for disclosing their invention in terms sufficiently clear and complete for it to be performed by those skilled in the art.  The fact that this requirement did not apply to the Parent Composition Patent serves to illustrate the extent to which, in the pre-Raising the Bar era, Australian patent law had diverged from the law applied by its major trading partners.

Such disparate outcomes are likely to remain a feature of Australian patent disputes for some years to come.  Australian patents subject to the pre-Raising the Bar law are expected to remain in force until at least 2033.

This decision also demonstrates that the post-Raising the Bar incarnations of Australia’s written disclosure requirements in s 40 of the Patents Act 1990 (Cth) can be a much more powerful weapon in the arsenal of a party seeking to revoke an Australian patent.  Historically, the low thresholds for fair basis and sufficiency have provided relatively wide scope for Australian patentees in advancing positions on claim construction to capture alleged infringements.  This main constraint for patentees in advancing claim construction under the pre-Raising the Bar body of law has been (and will remain) potential novelty and inventive step consequences arising from constructions being so broad as to capture prior art or common general knowledge.  The onerous post-Raising the Bar support and sufficiency requirements will add an extra dimension to these construction “squeezes” and another powerful validity ground which must be fended off.

Furthermore, notwithstanding parliament’s intention that the post-Raising the Bar provisions concerning sufficiency of description and claim support be interpreted so as to have substantially the same effect as the corresponding provisions of European and UK law, lingering disparities between the law of those jurisdictions and the terms of Australia’s Patents Act mean that some independent development of Australian law on sufficiency and support appears inevitable.  Two examples may be noted.

First, under the UK’s Patents Act 1977, although both sufficiency and support are requirements for a valid patent application, only lack of sufficiency is available as a ground of revocation for granted patents.  UK courts have remedied that “logical gap” by recognising both requirements as aspects of a single unifying requirement for an enabling disclosure.  No such logical gap exists in Australia’s Patents Act, where both lack of sufficiency and lack of support are available as grounds for revocation.  Whether this difference will lead Australian courts to seek to disentangle the threads of sufficiency and support in the UK authorities remains to be seen.

Secondly, by contrast to the requirements of European and UK law, Australia’s post-Raising the Bar Patents Act continues to impose a requirement to disclose the “best method”.  European and UK authorities provide no guidance on how that requirement is to be accommodated with the law regarding sufficiency and support.  For such guidance, it may be necessary for Australian courts to look to United States authorities.  Whether they will choose to do so remains to be seen.

Given the significant commercial interests at stake, and the complexity of the legal and factual issues raised by the Prevnar® case, the likelihood of an appeal appears reasonably high.  Whether any appeal judgment casts further light on Australian patent law post-Raising the Bar is likely to depend upon whether the appeal court upholds the broad construction of Wyeth’s Composition Patent claims that was accepted by Burley J.

Authored by Andrew Rankine, Charles Tansey, PhD, Duncan Longstaff

In Part 1 of this series (available here), we examined the impact of the proposal by Australia’s Therapeutic Goods Administration (TGA) to provide early confidential notification to innovators of applications under evaluation for generic and biosimilar product registration. In this Part 2, we focus on the TGA’s other proposed reform, the earlier publication of applications for marketing approval relating to major innovator prescription medicines. The TGA is currently seeking feedback on its Prescription Medicines Transparency Measures by 9 June 2020. The proposed reforms relating to publication of major innovator applications are aimed at providing better access to information on new prescription medicines for healthcare professionals and the general public, but will also have important implications for both innovators and the sponsors of generic and biosimilar medicines, including from a patent perspective.

In February 2019, the TGA released its initial consultation paper entitled Whether the TGA should publish that a prescription medicine is under evaluation, seeking feedback from industry and other interested parties on whether, and if so how, the TGA should disclose that an application for marketing approval for a prescription medicine has been accepted for evaluation. The submissions received showed a consensus of support for early publication of all prescription medicines being evaluated for marketing approval in Australia, with many submissions noting that Australia’s current approach is out of step with the practices of overseas regulators including Medsafe New Zealand, Health Canada and the European Medicines Agency (EMA), all of whom publish information on all prescription medicine applications accepted for evaluation.

Current practice

The longstanding practice of the TGA has been to treat the submission of an application for marketing approval for a prescription medicine as confidential unless and until the product has been approved and entered on the Australian Register of Therapeutic Goods (ARTG). In practice, this has meant that the TGA will only state that it can “neither confirm nor deny” receipt of an application for registration of a new prescription medicine, including for reasons of commercial confidentiality. Efforts to obtain access to information or documents from the TGA under the Freedom of Information Act 1982 (Cth) proved futile for a patent owner in Secretary Department of Health and Ageing v iNova Pharmaceuticals (Australia) Pty Limited [2010] FCA 1442 (21 December 2010). However, some exceptions to this general rule may apply in specific circumstances. For example:

  • The meeting agenda for Australia’s Pharmaceutical Benefits Advisory Committee (PBAC) is published 2-3 months ahead of each meeting. The meeting agenda may identify applications for marketing approval that are under evaluation by the TGA.
  • The TGA publishes the outcome of the process to designate orphan drug status or to determine a drug’s priority or provisional status, which occurs prior to the acceptance of the drug for evaluation.
  • Where the TGA and an overseas regulator are jointly conducting the review of a prescription medicine, the overseas regulator may publish that the drug is under active review.

Additionally, the sponsor of the innovator medicine retains the discretion to make public, at any time, that its application for marketing approval is being considered by the TGA.

The TGA’s proposal

Under the reforms proposed, commencing as early as June 2020, the TGA will publish information on the following application types:

  • Type A – new medicines (i.e., new active pharmaceutical ingredient (API));
  • Type B – new combinations of medicines (contains at least one new API); and
  • Type C – new indications for an existing approved medicine.

It is proposed that, within one month of the date that an application for marketing approval falling within one of the categories above has passed preliminary assessment, the TGA will publish the:

  • Sponsor name;
  • Product name;
  • API(s);
  • Proposed indication; and
  • Application type.

Implications for the pharmaceutical industry

Advance notice of applications for registration of a new drug or new indication for an approved drug will be valuable to generic and biosimilar sponsors, and competitor innovators, in some circumstances. Earlier notification of these products and indications may inform decision-making and planning by competitors with respect to their own products and timelines to market. This could impact competitors’ research and product development priorities, product identities and dosage forms, and strategies for potentially challenging an innovator’s patents (either proactively or defensively).

Innovators should also be mindful of the potential consequences of earlier publication for their patent portfolios. In particular, it will be increasingly important for innovators to ensure that relevant patent applications for specific indications, second medical uses or specific formulations, dosage forms or production processes are filed prior to the TGA publishing key details early in the process for obtaining regulatory approval. The early publication of key details such as the compound, dosage regimen and indications by foreign regulatory authorities, including the US Food and Drug Administration (FDA), have created novelty and inventive step issues for Australian patents relating to specific indications or second medical uses in several cases in recent years, which could not benefit from Australia’s “grace period” provisions.

If you are a sponsor of therapeutic goods in Australia and have questions on how these reforms may impact your business, please do not hesitate to contact us.

Authored by Dr Roshan Evans, Duncan Longstaff and Andrew Rankine

In an unprecedented decision, the Federal Court of Australia has considered and dismissed a claim by the Commonwealth Government for compensation from sponsors of innovator pharmaceutical products, pursuant to undertakings as to damages given in exchange for an interlocutory (preliminary) injunction restraining the launch of the first generic product: Commonwealth of Australia v Sanofi (No 5) [2020] FCA 543.

Notwithstanding this first-instance decision against the Commonwealth, given some of the findings in the case, the potential for Commonwealth damages claims would appear to remain a relevant factor to be taken into account by innovators in their risk assessment, prior to commencing any application for an interlocutory injunction to restrain the launch of a first generic or biosimilar competitor product.

The judgment also provides a number of other “takeaways” for both innovators facing generic launch during the term of a patent, and generics defending their position in such circumstances, which are discussed further below.

Key Findings

  • In principle, the Commonwealth is not precluded from claiming compensation under a patentee’s usual undertaking as to damages, where it can be established that the Commonwealth’s loss would not have occurred but for the grant of the interlocutory injunction, the loss was a direct legal consequence of the grant of the injunction, and the loss was reasonably foreseeable.
  • However, the Court found that the Commonwealth’s losses were not a direct consequence of the interlocutory injunction granted in this case which, although restraining infringement of Sanofi’s patent generally, did not explicitly restrain listing on the Commonwealth’s Pharmaceutical Benefits Scheme (PBS) (instead, Apotex gave a separate undertaking, not supported by any undertaking as to damages, to refrain from listing its products on the PBS pending the outcome of the patent case). This finding calls into question future Commonwealth damages claims based on interlocutory injunctions that do not explicitly restrain PBS listing.
  • Compelling evidence (supported by contemporaneous documents) from the ultimate decision-makers at the generic party and the Commonwealth is likely to be required to convince the Court that, but for the grant of the interlocutory injunction, the generic product would have been launched and listed on the PBS in the face of the significant damages risk if the patent owner ultimately succeeded in establishing infringement of a valid patent claim. In the present case, the Commonwealth failed to lead evidence from those key decision-makers and, in those circumstances, the Court was not prepared to draw inferences favourable to the Commonwealth, or accept the evidence given by subordinates without the relevant decision-making authority.
  • The Court found that it was more likely than not that the Commonwealth would have been prepared to reverse statutory reductions in the reimbursed price for Sanofi’s products triggered by the generic listing on the PBS, if sale of the generic product was subsequently restrained by a permanent injunction.

Background to the litigation

The case concerned the blockbuster blood-thinning (platelet-inhibiting) medication clopidogrel, sold in Australia by Sanofi as PLAVIX and by Bristol-Myers Squibb (BMS) as ISCOVER, under a global co-marketing arrangement. Apotex proactively commenced proceedings in August 2007 against Sanofi seeking revocation of Sanofi’s Australian Patent No. 597784 (the Patent), relating to clopidogrel and various of its salts. The litigation progressed relatively quickly, compared to more recent cases in the Federal Court. An interlocutory injunction was granted in late September 2007, the trial on validity was conducted in April 2008 and a first-instance decision upholding the validity of some claims of the Patent was delivered in August 2008. A Full Court appeal decision, revoking all claims of the Patent, was delivered in late September 2009 and an application by Sanofi for special leave to appeal to the High Court was refused in March 2010. Apotex’s clopidogrel products were listed on the PBS from 1 May 2010. In 2010, Apotex and other generic companies commenced damages proceedings, seeking compensation from Sanofi and BMS pursuant to the undertaking as to damages. Those claims were settled in 2014. The Commonwealth brought its claim for damages in 2013.

The interlocutory injunction obtained by Sanofi in September 2007 restrained Apotex from infringing the Patent, including by importation and sale of pharmaceutical products which had clopidogrel as their active ingredient. Sanofi gave the usual undertaking as to damages in connection with the interlocutory injunction. Importantly, the interlocutory injunction did not expressly prevent Apotex from applying for inclusion of its products on the PBS. However, on the same date (and noted in the same set of orders as gave effect to the interlocutory injunction) Apotex gave the Court a voluntary undertaking (the Apotex Undertaking) that it would not apply to list its clopidogrel products on the PBS until the determination of the patent proceeding. Sanofi did not provide any cross-undertaking as to damages for the Apotex Undertaking.

The Commonwealth’s claim

The Commonwealth claimed losses in respect of the supply of clopidogrel products under the PBS, said to result from the delay in the Commonwealth’s ability to reduce the subsidised price for those products via statutory price reductions triggered by first generic entry and subsequent price disclosure-related reductions. The various components that made up the claimed price difference amounted to a sum of approximately AU$325 million, excluding interest:

AU$51 m

Mandatory statutory price reductions that would have occurred if generic clopidogrel products had been listed on the PBS on 1 April 2008 (then a 12.5% reduction), with a further 2% reduction on 1 August 2009.

AU$216 m

Price disclosure-related price reductions that would have occurred between 1 April 2010 and 31 December 2014.

AU$58m

Payments made by the Commonwealth to subsidise supply of clopidogrel plus aspirin combination products in the period 1 December 2009 to 31 March 2016.

This is the first case in which judgment has been given on a Commonwealth claim for damages pursuant to a pharmaceutical patentee’s undertaking as to damages given in connection with grant of an interlocutory injunction. The Commonwealth has previously settled claims for compensation against Wyeth,[1] relating to extended release formulations of the antidepressant venlafaxine (EFFEXOR-XR) (a decision in that case concerning damages claims by generic suppliers issued in late 2018), and against AstraZeneca relating to the “super statin” rosuvastatin (CRESTOR) (in that case, both the Commonwealth and the generic parties reached a settlement with AstraZeneca).[2] A Commonwealth claim for damages pursuant to undertakings given by Otsuka and BMS in relation to the antipsychotic aripiprazole (ABILIFY) is continuing.[3]

The guidance provided to the Australian pharmaceutical industry by this clopidogrel decision complements the recent (late 2018) Federal Court decision relating to venlafaxine, in which generic party claims arising from an undertaking as to damages were upheld: Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2018] FCA 1556. In the venlafaxine case, the Court found that the unsuccessful innovator patentee should pay compensation to both the generic companies party to the litigation, and third party generic companies who were affected by the interlocutory injunction. The Commonwealth settled its claim with the patentee Wyeth before trial, but its evidence and submissions were referred to in the decision on the generic party claims, with an intimation that the Commonwealth could, in the right circumstances, have a sound claim to compensation. However, Nicholas J’s decision in the present clopidogrel case highlights the need to satisfy the threshold requirement for the Commonwealth’s loss to flow directly from the interlocutory injunction itself, and the significant circumstantial and evidentiary hurdles the Commonwealth will often face in proving what would have happened if there had been no interlocutory injunction.

The Court’s reasoning

The Court’s findings regarding the complex issues, arguments and evidence led by the parties can be distilled as follows:

  • Did the interlocutory injunction restrain Apotex from PBS-listing? – Nicholas J found that the Apotex Undertaking, which had been given voluntarily, was not a necessary or natural consequence of the making of the interlocutory injunction. His Honour did however accept the Commonwealth’s position that the Apotex Undertaking would not have been proffered but for the interlocutory injunction, and that the interlocutory injunction had the practical (indirect) effect of preventing Apotex from applying for PBS listing of its generic clopidogrel products.
  • Would Apotex have PBS-listed “but for” the interlocutory injunction? – Despite Apotex’s Australian Managing Director giving evidence that Apotex would “almost certainly” have launched “at risk”, Nicholas J was not satisfied that Apotex’s CEO and ultimate decision-maker would, in September 2007, have authorised such a launch in the circumstances where:
    • hypothetically, no interlocutory injunction had been granted;
    • a judgment in the validity trial was expected within 1 year, given that the presiding judge was due to retire; and
    • significant financial consequences would result if the challenge to the validity of the Patent failed, because Apotex “…could find itself having to cease any further sales following the grant of a final injunction shortly after obtaining a PBS listing that triggered a price reduction that might not be reversed or, at least, might not be reversed for some significant period of time”.
  • Was the Commonwealth’s loss a direct consequence of the interlocutory injunction, or too remote? – Nicholas J found that the interlocutory injunction did not directly affect the legal rights, obligations or interests of the Commonwealth as it did not prevent the Commonwealth receiving applications for PBS listing from Apotex or any other generic supplier. His Honour also considered that the fact that Sanofi’s undertaking as to damages did not extend to the Apotex Undertaking gave strong contextual support to the view that the undertaking as to damages should not be interpreted as extending to loss suffered by the Commonwealth due to Apotex being prevented from applying for PBS listing as a result of its voluntary undertaking.
  • Could the Commonwealth’s loss have been foreseen at the time the interlocutory injunction was granted? – Nicholas J found that all losses claimed by the Commonwealth, including the operation of the price disclosure price reduction regime and the pricing of the clopidogrel plus aspirin combination products, were reasonably foreseeable. His Honour rejected Sanofi’s contention that it could not have reasonably foreseen that the Commonwealth would be affected, as no legal right or liability of the Commonwealth was affected by the interlocutory injunction.
  • Was the loss claimed by the Commonwealth compensable (in principle)? – Nicholas J found that the Commonwealth was in principle entitled to seek compensation under Sanofi’s undertaking because its circumstances were not different from those of a natural person, notwithstanding that it had control over the PBS regime.
  • Would the statutory PBS price reductions have been reversed? – Nicholas J considered it more likely than not that the Commonwealth would have de-listed Apotex’s clopidogrel products from the PBS, and reversed the 12.5% statutory price reduction for PLAVIX and ISCOVER, if (in the counterfactual) Apotex’s products had been PBS-listed but their supply was later restrained by a final injunction. His Honour was strongly influenced by evidence of two previous examples of (discretionary) PBS price reductions for other products having been reversed and lamented the lack of evidence from the senior Commonwealth decision-maker to support its contentions that it would not have reversed the 12.5% price reduction.

Implications for the conduct of pharmaceutical patent litigation in Australia

The implications for the conduct of pharmaceutical patent litigation flowing from this long-awaited decision are multi-faceted and can be summarised as follows:

  • Commonwealth damages claims are possible in principle – This decision is consistent with the view that loss incurred by the Commonwealth as a result of delayed PBS-listing of generic products due to patent litigation is compensable, in principle, where the necessary elements are established, and reinforces comments to that effect made in the recent venlafaxine case. Patentees seeking interlocutory injunctions must therefore continue to take into account a possible Commonwealth claim as an incident of obtaining an interlocutory injunction.
  • Remoteness of loss may be an impediment to claims for compensation under the usual undertakings as to damages – The Court’s findings on the question of whether the connection between the interlocutory injunction and the alleged loss is sufficiently direct may present an impediment to future Commonwealth claims for compensation based on interlocutory injunctions that do not expressly restrain PBS-listing of generic products. It will be of interest to see how the Full Court views this question of remoteness of loss, should an appeal take place. It will also be interesting to observe whether the Commonwealth becomes more actively involved in the hearing of interlocutory injunction applications and specifically presses for the issue of PBS listing to be addressed in the terms of any interlocutory injunction granted and the associated cross-undertaking as to damages.
  • Evidentiary hurdles for the Commonwealth and other third-party compensation claims exist – On this occasion, the Commonwealth failed to establish on the evidence that Apotex would have launched “at risk” if no interlocutory injunction was granted, demonstrating the difficulties faced by the Commonwealth and other third parties in making good this proposition, particularly in circumstances where the generic involved has settled its claim. The Commonwealth’s failure to call key decision-makers from the restrained generic party and its own PBS-pricing authority were significant factors. The Commonwealth’s case was further hampered by the need to obtain documents from Apotex by subpoena, many of which were produced in heavily redacted form, to preserve privilege. Such evidentiary difficulties could potentially be lessened where both the Commonwealth and the generics are parties to the claim for compensation from the innovator. However, even where the generic parties pursue their own damages claims under a patentee’s undertaking at the same time as the Commonwealth, the Commonwealth and other third parties will be dependent on the generic parties’ evidence and therefore potentially vulnerable.
  • Contemporaneous records or communications must establish the generic decision maker’s intent to PBS list in the counterfactual – For generic parties, the Commonwealth or any third parties to claim compensation under the “usual undertakings” given by an innovator, they must be able to establish by contemporaneous business records, and if necessary by calling evidence from the ultimate decision makers, that they would, in all the circumstances, have made the decision to launch and supply their generic product to the Australian market, if not restrained by grant of an interlocutory injunction. It will be important for parties planning to launch “at risk” in circumstances where they may be the subject of an interlocutory injunction to consider what contemporaneous records will be available to establish the course they would have pursued had no injunction been granted.
  • Innovators and generics should consider carefully the terms of an interlocutory (preliminary) injunction and any voluntary undertakings sought – Where an innovator is able to obtain voluntary undertakings from a generic party, to the effect that it will not take steps to PBS-list pending the resolution of patent enforcement proceedings, this may reduce the likelihood of a successful Commonwealth damages claim. In light of this decision, innovators can be expected to seek interlocutory injunctions that restrain infringement of their patent(s) generally, without any express refence to the generic party’s ability to list their products on the PBS (while noting the possibility that a court could nevertheless find that the injunction had the practical effect of preventing PBS-listing because the generic will not be able to give the required “guarantee of supply”). The decision also sounds a warning to generic parties to carefully consider any voluntary undertakings they may provide to the Court, where such undertakings are not supported by any cross-undertaking as to damages given by the innovator. In the latter circumstances, the generic party is unlikely to be compensated for losses flowing from its undertakings, even if ultimately successful in the patent proceedings.
  • Statutory price reduction(s) may be reversed – The Court’s finding that, on the balance of probabilities, it was likely that any statutory reduction in the PBS-price for Sanofi’s products would have been reversed had an interlocutory injunction been refused and final judgment subsequently delivered in Sanofi’s favour, may have implications for future interlocutory injunction applications in pharmaceutical patent cases. It has previously been suggested that such price reductions would be effectively irreversible, even if the innovator was ultimately successful in obtaining a final injunction. The finding of Nicholas J in this case has the potential to contribute to the trend away from the routine granting of interlocutory injunctions in pharmaceutical patent disputes, observable in a number of recent judicial decisions.[4]

Given the size of the Commonwealth’s claim and the novel legal issues raised in the case, it appears likely the Commonwealth will consider an appeal.


[1] Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (2018) 136 IPR 8.

[2] AstraZeneca AB v Apotex Pty Ltd; AstraZeneca AB v Watson Pharma Pty Ltd; AstraZeneca AB v Ascent Pharma Pty Ltd (2015) 323 ALR 605.

[3] Otsuka Pharmaceutical Co Ltd v Generic Health Pty Ltd [2015] FCA 848

[4] See the reasons of the Full Court  comprising Jagot, Yates and Moshinsky JJ in Sanofi-Aventis Deutchsland GmbH v Alphapharm Pty Ltd (2019) 139 IPR 409; Jagot J in Sigma Pharmaceuticals (Australia) Pty Ltd (ACN 004 118 594) v Wyeth (2009) 81 IPR 339 and H. Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408; Yates J in Mylan Health Pty Ltd v Sun Pharma ANZ Pty Ltd (No 2) (2019) 141 IPR 26.

Authored by Dr Roshan Evans, Duncan Longstaff, Katrina Crooks and Andrew Rankine

Regulatory changes recently approved by the Australian Government are likely to impact the way in which pharmaceutical patent litigation is conducted in Australia. The Therapeutic Goods Administration (TGA) is currently seeking feedback on options for implementing the proposed Prescription Medicines Transparency Measures by 9 June 2020. The reforms are directed at:

1. Early publication of major innovator prescription medicine applications.

2. Early confidential notification of generic or biosimilar medicine applications to innovators.

In Part 1 of this series we examine the reforms pertaining to generic and biosimilar medicine applications and their expected impact on the conduct of pharmaceutical patent litigation in Australia. In Part 2 (to follow), we will address the reforms relating to major innovator prescription medicine applications in further detail.

The reforms were the subject of a consultation paper released in February 2019. A total of 39 submissions were received from industry, government and interest groups, with a clear majority supporting early publication of all prescription medicines being evaluated for marketing approval in Australia. The consensus position was that TGA should be consistent in the way in which it manages all applications for registration, including generic and biosimilar applications.

Existing notification scheme

Under the current regime, the TGA does not release information about the lodgement or acceptance of an application for evaluation of a prescription medicine, in contrast to the practices of many overseas regulatory authorities including Medsafe New Zealand, Health Canada and the European Medicines Agency (EMA). Under Australia’s current practices, it is only after a prescription medicine has been evaluated, granted marketing approval and entered on the Australian Register of Therapeutic Goods (ARTG) that information about that product becomes publicly available. It is usually at this stage that an innovator will first become aware of the impending launch of a generic or biosimilar competitor.

At present, where an applicant for registration of a prescription medicine under s 23 of the Therapeutic Goods Act 1989 (the TG Act) intends to rely in whole or in part on safety or efficacy data for a reference (innovator) medicine, and the applicant has identified one or more potentially relevant patents that have not expired, the applicant must certify under s 26B of the TG Act either:

  • that the applicant believes on reasonable grounds that the marketing of its product will not infringe a valid claim of the relevant patent(s); or
  • where the applicant proposes to market its product before the expiry of the term of the patent(s), that it has notified the patentee of its application for registration.

However, an applicant seeking marketing approval for a generic or biosimilar product is currently able to avoid notification where:

  • the applicant forms a view that no relevant patent(s) exist; or
  • the applicant believes on reasonable grounds that it will not infringe any valid claim of otherwise relevant patent(s).

This has meant, in practice, that sponsors seeking marketing approval for a generic or biosimilar medicine in Australia generally do not notify the innovator of their application, and the innovator only becomes aware of the generic or biosimilar product when it is approved. This leaves very limited time after publication of the approved generic or biosimilar product on the ARTG (often less than 2 months) for the innovator to obtain information about it (eg, in relation to its manufacturing process or formulation), including through a contested preliminary discovery application if necessary. During that short period after publication of ARTG approval, the innovator must consider whether to commence patent enforcement proceedings (including whether to seek an interlocutory injunction) before the generic or biosimilar product is listed on Australia’s Pharmaceutical Benefits Scheme (PBS) (triggering reductions in the subsidised price of the innovator’s product) and launched on the Australia market.

Australia’s current regime for belatedly and somewhat passively notifying innovators of generic and biosimilar product approvals contrasts with the rigid and transparent processes of the US Food and Drug Administration (FDA). The FDA’s Paragraph IV Drug Product Application process (under the Hatch-Waxman Act) provides that a generic company submits an Abbreviated New Drug Application (ANDA) and the innovator is given 45 days to file an infringement suit. The generic company is automatically restrained until the entire process (including any litigation, which has set timeframes) is resolved, with the first ANDA applicant receiving 180 days exclusivity for the generic drug if successful. This regime encourages generic companies to seek to launch new products and challenge innovators’ patents, while protecting the innovators’ position until the patent issues are resolved without the urgency, cost and uncertainty associated with seeking a preliminary injunction in a small window between generic products obtaining regulatory approval and pricing subsidies. It is also worth noting that it is open to debate as to whether Australia’s current arrangements are consistent with its obligations under the Australia-United States Free Trade Agreement (AUSFTA).[1]

TGA’S proposed reforms for notification of generic and biosimilar applications to innovators

The proposed changes are aimed at providing earlier notification to innovators that an application has been made for registration of a generic or biosimilar product, and to reduce or remove the discretion currently afforded to sponsors of generic or biosimilar products in determining whether or not a relevant patent exists (option 2), and if so, whether marketing of the generic or biosimilar product would infringe a valid claim of that patent (options 1 and 2). Whichever option is chosen, implementation of these measures is anticipated to commence in early 2021.

Option 1

The first option being considered by the TGA provides early notification to the innovator of a generic or biosimilar application, regardless of whether or not the applicant believes that marketing of its generic product would infringe one or more relevant patents. Specifically:

  • Applicants would be required to provide notification on a confidential basis to the innovator, when the application passes preliminary examination, and before acceptance for evaluation under section 25 of the TG Act, where the applicant has a reasonable belief that the term of any relevant patent has not expired.
  • Where the applicant has formed a reasonable belief that no relevant patent exists, it may instead provide the TGA with a declaration to that effect.

While this option would remove the discretion currently afforded to a generic applicant to form its own view as to whether it will infringe a valid claim of any relevant patent(s), it would remain within the applicant’s discretion to decide for itself whether any relevant patent(s) exist, which in practice could significantly dampen the impact of these reforms.

Option 2

The second option mandates early notification for all generic and biosimilar applications:

  • regardless of the applicant’s belief as to the existence of any relevant patent(s); and
  • even if the applicant considers that no valid patent claim would be infringed by the marketing of its product.

All applicants would be required to notify the relevant innovator, and provide a copy of that notification to TGA upon passing preliminary assessment. For innovators, this option is likely to be preferred.

Impact on pharmaceutical patent disputes

Information about the status of an application for registration of a generic or biosimilar medicine is of commercial value to innovators, where a relevant pharmaceutical patent exists and may be infringed by marketing of the generic or biosimilar product.

Early notification of generic applications for registration will provide innovators with more time to consider and, if appropriate, commence patent enforcement proceedings before the generic or biosimilar product is launched. As noted above, under Australia’s current arrangements, innovators typically obtain notice of impending generic or biosimilar competition at a late stage, shortly before the generic or biosimilar product is due to be listed on the PBS and launched on the Australian market. In these circumstances, it has been very common for innovators to seek an interlocutory injunction (also referred to as a preliminary injunction) to restrain PBS-listing and launch of the generic or biosimilar product pending the outcome of patent enforcement proceedings.

To secure an interlocutory injunction, the innovator is required to undertake to compensate the sponsor of the generic or biosimilar product, and any third party adversely affected by the grant of the injunction, if the patent is ultimately held to be invalid or not infringed. There are currently a number of cases pending (or recently settled or decided) in which generics and the Australian Government have made claims on such undertakings, with the Government seeking compensation for additional costs to Australia’s PBS where generic or biosimilar market-entry has been delayed by ultimately unsuccessful patent enforcement proceedings. The first decision in such a case found that the unsuccessful innovator patentee should pay compensation to generic companies who were party to the litigation as well as generic companies who were not party to the litigation but were still affected by the interlocutory injunction (the Commonwealth settled its claim with the patentee in that case): Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2018] FCA 1556. Yesterday (28 April 2020), the Federal Court of Australia handed down the first major decision in relation to a claim by the Commonwealth under a patentee’s undertaking, dismissing the Commonwealth’s claim for AU$325,000,000 plus interests and costs and awarding costs to the innovator: Commonwealth of Australia v Sanofi (formerly Sanofi-Aventis) (No 5) [2020] FCA 543. An appeal from the latter judgment is possible.

Earlier notice of applications for registration of generic or biosimilar products may enable any patent enforcement proceedings to be resolved before marketing approval is granted for the generic or biosimilar product, thereby removing the need for an interlocutory injunction and associated undertaking. Innovators who do apply for an interlocutory injunction will be able to do so much earlier in advance of the potential PBS listing and launch of generic or biosimilar products, making injunction hearings less urgent and potentially impacting upon the prospects of obtaining an injunction given the balance of convenience as between the parties’ respective interests and potentially irreparable harm may be different. In some cases, the sponsor of a generic or biosimilar product may choose to delay launch of their product for the time period necessary to complete patent proceedings commenced prior to the grant of marketing approval, and thereby avoid the potential for damages arising from an ‘at risk’ launch.

Even if patent enforcement proceedings are not completed by the time marketing approval is granted and a generic or biosimilar product is launched,[2] the proposed reforms would be expected to reduce the period of time for which any interlocutory injunction, and associated undertakings, would remain in place, thereby reducing the potential liability of innovators in the event of any damages claim ultimately made on their undertakings.

The impact of these changes for sponsors of generic and biosimilar medicines is more difficult to predict and would depend upon the circumstances of each individual case.

Overall, the proposed reforms have a number of possible implications for the conduct of pharmaceutical patent disputes in Australia:

  • Amending claims – Innovators may have more time and a greater opportunity to amend their patent claims and/or initiate divisional filings in the Patent Office, prior to the commencement of any enforcement proceedings, where this will improve the innovator’s overall prospects of success.
  • Preliminary discovery – Under the proposed reforms, innovators will have more time to initiate and obtain preliminary (i.e., pre-action) discovery, for example in relation to the manufacturing processes for a generic or biosimilar product, or in relation to its formulation, to assess whether patent enforcement proceedings should be commenced.
  • Interlocutory injunctions – Innovators will have more time to consider and prepare for any application for an interlocutory injunction. In addition, it is likely that such applications could be heard and determined on a less urgent basis, which would be of assistance to the courts called upon to decide such applications. Earlier notice may also enable patent enforcement proceedings in some cases to be resolved before marketing approval is granted for the generic or biosimilar product, avoiding the need for an interlocutory injunction and associated undertaking.
  • Quantum of damages – Early notice may enable patent enforcement proceedings to be resolved earlier, reducing the period of time for which any interlocutory injunction and associated undertakings remain in place. This would be expected to reduce the quantum of any claim for damages made pursuant to those undertakings, if the innovator (patentee) is held to be ultimately unsuccessful.
  • Non-adversarial options – Innovators will also have additional time to seek information from generic or biosimilar sponsors that will assist innovators in assessing whether their patent(s) would be infringed by marketing of the generic or biosimilar product. Innovators and the sponsors or generic or biosimilar products will also have increased time to seek to reach a negotiated outcome which may avoid the need for patent enforcement proceedings.
  • Licensing agreements – As an example of such non-adversarial options, it is possible that innovators and the sponsors of generic or biosimilar products may choose to enter into licensing arrangement to avoid lengthy and expensive litigation. It will be essential for the parties to ensure that any such arrangements are not considered anti-competitive.

It remains to be seen whether early mandatory notification will ultimately lead to any significant reduction in patent litigation between innovators and the sponsors of generic and biosimilar products in Australia. On the other hand, for the reasons noted above, early notification would be expected to reduce the likelihood, or at least the quantum, of damages claims made on undertakings given by innovators to secure interlocutory injunctive relief pending the outcome of patent enforcement proceedings.

The main beneficiaries of early mandatory notification of applications for generic or biosimilar marketing approval will be the sponsors of innovative medicines, who will be afforded more time to prepare for and commence any patent enforcement proceedings prior to generic or biosimilar launch. Generic parties may be less enthused by the early notification proposals, not only because innovators will have more time to consider and commence patent infringement proceedings, but also because, if they are sued, their generic competitors may through the court process receive advance notice of the products they are seeking to bring to market.

More generally, when implemented, these reforms will achieve closer regulatory harmonisation between Australia and comparable overseas jurisdictions, which is a desirable outcome.

If you are a sponsor of therapeutic goods in Australia and have questions on how these reforms may impact your business, please do not hesitate to contact us. We would be happy to assist you with your enquiries.


[1] Australia – United States Free Trade Agreement (2004), Article 17.10.5(b).

[2] The time period between acceptance for evaluation and entry onto the ARTG (where the generic or biosimilar is approved) will vary between applications. For generic products, the TGA advises that the process is designed to take approximately 8.5 months. See TGA, Prescription medicines registration process, Appendix 1, Version 2.3, March 2018.

Authored by Dr Roshan Evans, Andrew Rankine and Duncan Longstaff