4 min read

Crowdsourcing can currently be defined as “the practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people and especially from the online community rather than from traditional employees or suppliers” (Merriam Webster Dictionary).  However, the idea of crowdsourcing itself is not new and existed well before the age of the internet.  Here, we consider crowdsourcing and its merits and risks in the context of intellectual property. 

Why use crowdsourcing?

Crowdsourcing has the potential to open up new ideas and possibilities by harnessing ideas which would not otherwise have been realised.  In principle, crowdsourcing can facilitate results via outside-of-the box thinking and by increasing the number of minds applying themselves to a particular problem or challenge. 

What are some examples of crowdsourcing?

Crowdsourcing strategies are used in a variety of technical and non-technical fields. 

One example of crowdsourcing that pre-dates the internet era is the design of the Sydney Opera House.  The winning design for this iconic landmark, by Danish architect Jørn Utzon, was chosen from an international competition in the mid-1950s.  

An example of an internet-based crowdsourcing site is the Lego Ideas Platform, which is used as a community for fans to share their own Lego creations.  The most popular ideas are assessed for potential production into new Lego sets to be sold to the public. 

Various online crowdsourcing platforms exist for logos, brand names, images, product redesign, software solutions, as well as problem-solving challenges.  Global companies are using crowdsourcing platforms seeking new innovations in technical fields including pharmaceuticals, clean tech and engineering to mention but a few.

How is intellectual property relevant?

Intellectual property rights present an opportunity to protect valuable innovations and creations and in turn realise value through exclusive rights with a defined scope and period of time.  In the hands of third parties, intellectual property rights pose a barrier and risk to new market entrants.  Therefore, it is important to consider:

  • Patent law – when solutions to technical problems are sought via crowdsourcing
  • Trade mark law – when crowdsourcing is used to come up with new product names, logos or brands
  • Design law – with respect to the visual appearance of new and distinctive products
  • Copyright law – with respect to artistic works such as drawings and literary works (any original text)

Managing intellectual property when crowdsourcing ideas

Crowdsourcing might raise issues regarding ownership of the resultant intellectual property.  Ownership of rights to crowdsourced intellectual property will generally not be governed by the usual laws which relate to contracts of employment – except, perhaps, if a company runs an internal crowdsourcing exercise in which only its own employees participate.  

Express and clear contractual terms (such as in terms and conditions which contributors are required to actively acknowledge) dealing with intellectual property ownership and licensing/use are therefore critical, just as they would be when engaging any third party contractor/consultant.  Payment for a winning response can be arranged as consideration for an assignment by agreement of all of the associated intellectual property rights.  An alternative mechanism for the formal legal transfer of the relevant intellectual property rights is by way of a deed, which does not require any consideration but does have other requirements. 

Novelty and inventive step are requirements for securing patent protection in Australia and virtually all other jurisdictions.  So, until a patent application is filed, it is prudent to avoid publishing too many (or, ideally, any) details of an invention (e.g. on a website).  If too much information is disclosed, this could later cause an invention to be ineligible for patent protection.  This is incredibly important, especially because some key jurisdictions have no grace period (Australia does have provisions protecting against self-disclosure within a specified period before a patent application’s filing date).  In this regard, we would recommend getting professional advice before making any disclosure.  

Also, it is important to be mindful of possible secret use issues associated with making commercial gain from an invention before the patent application is filed.  If the invention has been exploited commercially before the first patent application is filed, this could render the subsequently-filed patent invalid.  

In addition, it is worthwhile remembering that any information disclosed in a crowdsourcing context is available to competitors. 

A crowdsourced solution still needs the usual due diligence checks.  For instance, a granted patent confers an exclusive right to exploit the claimed invention (including but not limited to importing, using, making, selling or offering to sell a patented product or using a patented method), and to prevent others from doing so (via court proceedings).  However, the patent does not give the owner the right to exploit the invention without infringing other parties’ intellectual property rights or without obtaining any necessary regulatory approvals, so it is recommended to carry out relevant investigations to find out if exploiting the invention would infringe a patent belonging to somebody else (“Freedom to Operate”).  

Similarly, trade marks, registered designs and copyright also confer exclusive rights, so due diligence checks are needed to establish whether the proposed name or brand, design or appearance, or associated literature or artistic work might infringe the existing intellectual property rights of others.

Conclusion

Crowdsourcing has the ability to unlock ideas not previously considered, but it is not guaranteed to provide solutions. 

We recommend evaluating the potential benefits of crowdsourcing against the associated risks before proceeding.  Intellectual property can be the cornerstone of a business so it is critically important to take into account when developing a business strategy.  For advice, please contact Shelston IP. 

Authored by Serena White, DPhil and Duncan Longstaff

1 min read

Shelston IP has once again been named as a finalist in the Australian Law Awards for Intellectual Property Team of the Year.  

The Australian Law Awards, run in partnership with Principal Partner UNSW Law & Justice. The awards program identifies the finest lawyers and firms across Australia, recognising the depth of talent and outstanding achievements.

The annual event presents an invaluable opportunity to highlight the notable achievements of lawyers at the height of their career who demonstrate leadership, technical expertise, mentorship and business development skills – the only national awards program to do so.

The awards program bestows some of the industry’s most respected and sought-after accolades showcasing outstanding performance by partners, or partners equivalent, across individual practice areas within the Australian legal profession.

Once again this recognition reinforces the strength of our formidable team. They consistently build strong relationships with their clients, who then in turn have confidence in service we provide.

Authored by Duncan Longstaff

3 min read

The Therapeutic Goods Administration (TGA) has commenced a timely public consultation into the repurposing of prescription medicines, which seeks to better understand the incentives and potential hurdles influencing sponsors’ decision-making on whether to extend the approved indication for an existing medicine. Of particular interest to the TGA is the viability of repurposing medicines for rare diseases or less commercially profitable indications, or in circumstances where the new indication is already accepted clinical practice, albeit ‘off-label’ in Australia or elsewhere.

As part of its consultation paper the TGA has proposed far-reaching changes that have the potential to significantly reduce the regulatory burden on sponsors when applying for the inclusion of a new indication, improve information sharing and access to related international regulatory and reimbursement approvals, and implement open access to Australian medicine usage data.

Repurposing and ‘off label’ use

Repurposing, also referred to as second medical use, is the use of a known drug for a new therapeutic purpose. Repurposing is a promising avenue in drug discovery and has been an active area of growth in the last decade for a variety of drug classes, particularly chemotherapeutic agents.

Among the most visible recent examples of potential repurposing have been the investigation of known medicines such as chloroquine and hydroxychloroquine (both anti-malarials), remdesivir (an antiviral developed to treat Ebola) and tocilizumab (a monoclonal antibody developed to treat rheumatic conditions) and numerous other existing medicines as potential COVID-19 treatments.

Repurposing has the important benefit of decreasing the overall cost of bringing a new treatment to market and broadening access to it by Australian prescribers and patients, as the safety and pharmacokinetic profiles of the repurposed candidate have already been tested and established in connection with its original indication(s). 

In recent years, the TGA has worked with innovator sponsors to enable them to make submissions based on peer-reviewed literature, rather than clinical data, for registration of new indications for existing medicines on the Australian Register of Therapeutic Goods (ARTG). This in turn has enabled reimbursement for the indication through listing on Australia’s Pharmaceutical Benefits Scheme (PBS). 

In one such example, the TGA worked with the sponsor of Tamoxifen, a well-known breast cancer hormonal treatment in clinical use since the 1970s, to submit a literature-based application for a new indication (the prevention of breast cancer in high-risk women), which is an off-label use supported by recommendations in both Australian and international clinical care guidelines.

However, the TGA cannot compel sponsors to seek ARTG registration for a new indication that does not meet the sponsor’s business objectives, even where widespread and clinically-supported off-label use exists. Commercial imperatives are therefore one of the main barriers to less profitable second medical use indications becoming registered and subsidised.

Proposed approaches to facilitating and encouraging repurposing of medicines

The TGA has outlined three broad approaches to encouraging ARTG regulatory and PBS reimbursement applications for repurposed medicines, summarised below.

Proposal 1 – Reduce regulatory burden

  • Develop and provide specific regulatory support and guidance for repurposing medicines, including clinical trial design and scientific advice.
  • Assist with the development of literature reviews to simplify literature based submissions.
  • Facilitate access to comparable overseas evaluation reports, where they exist.
  • Improve the coordination of multi-jurisdictional submissions with other regulators.
  • Provide fee relief (currently a TGA application and evaluation for an extension of indication is approximately $148,000), for submissions for medicines that have low commercial returns but high public health gains.
  • Streamline simultaneous submissions for regulatory and reimbursement evaluation.
  • Provide exclusivity periods for the first sponsor of new indications of repurposed off-patent medicines.

Proposal 2 – Enhanced information sharing and access

  • Facilitate open access to Australian medicine usage data.
  • Provide a simple mechanism to find related international regulatory and reimbursement approval assessment reports or decision summaries.

Proposal 3 – Actively pursue registration and review

  • Seek public expressions of interest for sponsorship of new indications of a medicine, potentially limited to non-commercial organisations.
  • Compelling sponsors to make an application for an additional indication.
  • Pharmaceutical Benefits Advisory Committee (PBAC) to have the ability to approve the inclusion of an additional indication without the need for an application by the sponsor.

The issues raised by this consultation paper have important and far-reaching implications for both innovator and generic sponsors, and it will be of interest to see the outcome of this first round of pubic consultation, which concludes on 30 March 2021.

Authored by Duncan Longstaff

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Abstract

Australia has long been regarded as a favourable jurisdiction for those seeking to enforce patent rights. However, there are important differences between patent law and litigation practice in Australia, compared to jurisdictions such as the US, Europe and Japan.  Those differences present both risks and opportunities for parties litigating patents in Australia. In this webinar, Principal Duncan Longstaff and Special Counsel Andrew Rankine, both specialist patent litigators, will identify aspects of Australian patent law and litigation practice that present potential traps for the unwary, and provide practical guidance on steps which can be taken before commencing litigation, or in its early stages, to maximise prospects of success. Topics addressed will include patent ownership and licensing, standing, pre-action discovery and preliminary injunctions, as well as post-grant patent amendments. Principal and ICT/EE patent attorney Tam Huynh will facilitate the discussion.

Authored by Duncan Longstaff and Andrew Rankine

Welcome to Shelston IP’s wrap-up of the most notable patent law decisions in Australia and New Zealand delivered during 2020 – a remarkable year indeed. The High Court delivered its first decision in a patent case since 2015, and there was an interesting spread of Full Federal Court, Federal Court, Australian Patent Office and Intellectual Property Office of New Zealand decisions relating to issues of patent validity, infringement and amendment as well as procedural issues.

Read our full report

  • The High Court of Australia has endorsed the doctrine of exhaustion in favour of the longstanding doctrine of implied licence with respect to patented products in Australia, but made clear the critical question remains whether the modifications made to a product in each case are properly characterised as permissible repair or impermissible re-making (Calidad v Seiko Epson).
  • An enlarged Full Federal Court has confirmed that a protocol for a clinical trial that is publicly available can be novelty-defeating, provided the information disclosed is sufficiently specific and complete to disclose the invention that is later claimed. The Full Court has also provided important guidance on the nature and scope of Swiss-style claims, and the circumstances under which such claims may be infringed (Mylan v Sun).
  • The Full Court of the Federal Court has found that a computer-implemented method that linked website users to online advertising was not a manner of manufacture and therefore not patentable subject matter (Commissioner of Patents v Rokt). In separate decisions, a computer-implemented method relating to “sandboxing” (Facebook) and an invention relating to the hardware and software components of an electronic gaming machine (Aristocrat v Commissioner of Patents) were held to be patent-eligible subject matter, while a modified roulette table was found not to be patent-eligible (Crown).
  • The Full Court of the Federal Court has confirmed that section 105(1A) of the Patents Act 1990 (Cth), introduced by the Raising the Bar reforms, confers on the Federal Court the power to direct amendments to patent applications during the course of an appeal hearing (Meat and Livestock Australia v Branhaven).
  • In the long-running patent dispute relating to Lundbeck’s antidepressant, Lexapro (escitalopram), the Full Court of the Federal Court overturned a decision that had found Sandoz liable for patent infringement during the extended term of a patent after it was restored, and awarded damages. Lundbeck has recently been granted special leave to appeal to the High Court of Australia, which for the third time will hear an appeal regarding an aspect of this long-running litigation (Sandoz v Lundbeck).
  • The Federal Court provided its first detailed analysis of the Raising the Bar reforms to Australian patent law concerning sufficiency and support. A subsequent judgment on final relief, delivered in November 2020, highlights the challenges facing a defendant who seeks to resist final injunctive relief on public interest grounds (Merck Sharp & Dohme v Wyeth). Those sufficiency and support requirements, as well as best method, were also considered in detail by the Australian Patent Office (University of British Columbia, Gliknik v CSL).
  • 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 v Sanofi).
  • A party which gave undertakings not to launch an allegedly infringing biosimilar without first giving notice successfully resisted an application for preliminary discovery (Pfizer v Sandoz). Conversely preliminary discovery was granted against a former employee, but limited in scope due to the prevailing financial circumstances (Sovereign v Steynberg).
  • Extension of term applications were refused for pharmaceutical patents (Pharma Mar, Ono).
  • An opposition to an Australian patent application based solely on a challenge to entitlement was successful (Liquid Time v Smartpak).
  • The Federal Court considered the applicability of the Crown use defence to infringement, and the effect of prior disclosures by the Crown on validity (Axent v Compusign).
  • The nature and detail of disclosures in prior art and the common general knowledge proved determinative of the validity in decisions concerning a combination pharmaceutical product (Boehringer v Intervet) and a parking management system (Vehicle Monitoring Systems v SARB).
  • The construction of claims in the context of the entire specification proved determinative of issues of infringement and validity in several decisions (Caffitaly v One Collective, Nufarm v Dow, CQMS v ESCO).
  • The Intellectual Property Office of New Zealand has delivered decisions demonstrating the difficulty of opposing an application under the “old” 1953 Act (Lonza v Koppers), the high burden for computer-implemented methods (Thomson Reuters) and the more onerous support requirements under the “new” 2013 Act (Taiho Pharmaceutical).

As we continue into 2021 (and away from 2020), we hope this review provides a practical and comprehensive resource. Please do not hesitate to take the opportunity to contact our authors, all subject-matter experts in their respective fields, for advice on the issues raised by these important decisions.

Authored by Duncan Longstaff

7 min read

Sandoz Pty Ltd v H Lundbeck A/S [2020] FCAFC 133 (4 August 2020)

In the long-running patent dispute relating to Lundbeck’s blockbuster antidepressant, Lexapro® (escitalopram), the Full Court of Australia’s Federal Court overturned a decision of Jagot J, who had found Sandoz liable for infringement of the Lexapro patent and awarded Lundbeck more than AU$16 million in damages. Lundbeck has recently been granted special leave to appeal to the High Court of Australia, which for the third time will hear an appeal regarding an aspect of this litigation.

Background

The original 20-year term of the Lexapro patent (AU 623144) was due to expire in June 2009. In April 2004, the Commissioner of Patents granted a 5-year extension of the patent term, calculated by reference to the first regulatory approval date for Lexapro. The active ingredient of Lexapro is escitalopram, the S-enantiomer of citalopram. A racemic form of citalopram (a mixture of the S- and R-enantiomers) was earlier marketed in Australia by Lundbeck under the trade name Cipramil.

In subsequent Federal Court proceedings, that extension of term was held invalid (Alphapharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618; upheld on appeal: H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151). The Court found that any extension of term application needed to be made by reference to Cipramil, being the first approved therapeutic goods that “contain” the S-enantiomer of citalopram within the meaning of the Patents Act 1990 (Cth) (the Act). It followed that such application was required to be made within six months of the first regulatory approval date for Cipramil. Lundbeck’s application was therefore submitted out of time.

In consequence, the Lexapro patent expired on 13 June 2009, at the end of its original term. Three days later, Sandoz and other generics launched generic escitalopram products. In doing so, they appeared to be taking a risk. On 12 June 2009, Lundbeck had sought an extension of time to submit a new extension of term application, based on the first regulatory approval date for Cipramil.

Given that the time limit for submitting such an application expired in mid-1998, Lundbeck required a 10-year extension of time. Nevertheless, that extension was granted, on the basis that the applicable time limit had been unclear until determined by the Federal Court in June 2009 (Alphapharm Pty Ltd v H Lundbeck A/S (2011) 92 IPR 628; upheld on appeal: Aspen Pharma Pty Ltd v Commissioner of Patents (2012) 132 ALD 648; Aspen Pharma Pty Ltd v H Lundbeck A/S (2013) 216 FCR 508; Alphapharm Pty Ltd v H Lundbeck A/S (2014) 254 CLR 247).

Armed with this extension of time, Lundbeck submitted a new application to extend the term of its Lexapro patent. In June 2014, some 5 years after the patent had expired, that extension was granted (Alphapharm Pty Ltd v H Lundbeck A/S (2014) 109 IPR 323; upheld on appeal: Alphapharm Pty Ltd v H Lundbeck A/S (2014) 110 IPR 59; Alphapharm Pty Ltd v H Lundbeck A/S (2015) 234 FCR 306; Alphapharm Pty Ltd v H Lundbeck A/S [2016] HCATrans 52).

The newly extended term of the Lexapro patent expired in December 2012. By that time, Sandoz and other generics had been marketing escitalopram products in Australia for over three years. Lundbeck sought damages for infringement of the Lexapro patent during that period.

In defence of such damages claim, Sandoz relied on a settlement agreement it had reached with Lundbeck in February 2007 (Settlement Agreement). In return for Sandoz discontinuing its revocation case against the Lexapro patent, Lundbeck agreed to grant Sandoz an irrevocable licence to the patent, effective from a date two-weeks prior to its expiry (the Early-entry licence).   

At the time that agreement was reached, the expiry date of the Lexapro patent remained uncertain – litigation concerning the validity of the original extension of term was ongoing. The agreement recorded several alternative dates on which the Early-entry licence might commence. However, it did not address the possibility that the term of the Lexapro patent might expire and, sometime later, be extended. That is, of course, what transpired.

In defence of Lundbeck’s damages claim, Sandoz submitted that, on a correct construction of the Settlement Agreement, the Early-entry licence commenced in May 2009, two-weeks before expiry of the Lexapro patent, and remained in force thereafter. By contrast, Lundbeck submitted that, because the term of the patent was extended to December 2012, the early-entry licence did not commence until November 2012, leaving Sandoz liable for infringement in the intervening period.

First instance decision

Lundbeck was successful before the primary judge (H Lundbeck A/S v Sandoz [2018] FCA 1797). However, Jagot J did not accept either party’s construction of the Settlement Agreement.

Her Honour found that, under the terms of the Settlement Agreement, the Early-entry licence commenced in May 2009, two weeks before the Lexapro patent expired. In reaching that conclusion, Jagot J held that the operation of the agreement ought not be tested by reference to the fact that, 5 years later, a new extension of term was granted, because this could not have been predicted by the parties in February 2007, when they entered into the Settlement Agreement.

However, in Jagot J’s view, this was not the end of the matter. Noting that Sandoz would not require a licence after the Lexapro patent had expired, her Honour found that the effect of the Settlement Agreement was to confer on Sandoz a licence which commenced in May 2009 and ceased to operate two weeks later, upon the expiry of the patent’s original term.

It followed, in Jagot J’s view, that Sandoz did not have the benefit of a licence when the term of the Lexapro patent was subsequently extended. Based on these findings, Jagot J held Sandoz liable for infringing the patent between June 2009 and December 2012, awarding Lundbeck in excess of AU$16 million in damages.

Decision

An appeal by Sandoz to the Full Court was successful. The critical issue on appeal concerned the construction of the Settlement Agreement, in particular, whether the Early-entry licence ceased to operate on expiry of the original term of the Lexapro patent in June 2009, or continued thereafter.

In approaching that question, the Full Federal Court reiterated well-established principles of contract construction. The terms of a contract are to be construed objectively. The question is what the language used would convey to a reasonable business person, in light of the surrounding circumstances known to both parties at the date of their agreement, including the objects of the contract, and assuming that the parties intended to achieve a commercial result. A court will be slow to adopt a construction that would give a contract an effect that is commercially nonsensical.

On the other hand, the Full Court emphasised that commercial common sense and surrounding circumstances may not be invoked to discount the language in which a contract is expressed. The fact that a contractual provision may operate to disadvantage one party to an agreement is not a reason to depart from the ordinary meaning of the language in which that provision is expressed.

In the view of the Full Court, the language of the Settlement Agreement was sufficiently clear. It granted Sandoz an irrevocable licence that commenced in May 2009, two weeks before expiry of the Lexapro patent, and remained in force thereafter. The Full Court held that, objectively ascertained, it was the parties’ intention to stipulate a start date for the licence, but not an end-date.

Notably, the Full Court agreed with Jagot J that it appeared neither party had, at the time of concluding the Settlement Agreement in February 2007, turned their mind to the possibility that the Lexapro patent might expire and only subsequently have its term extended. That is unsurprising, given unprecedented course of the Lexapro proceedings. As the Full Court observed, had the parties been able to foresee the course those proceedings would take, it is likely that express provision would have been made for such eventualities in the Settlement Agreement.

Significance

The Full Federal Court’s decision highlights the complexity of the extension of time and extension of term provisions under Australia’s patent legislation which, together or separately, can significantly affect the course of the litigation and the negotiation of commercial settlement terms.

The decision of the Full Federal Court does not yet bring to a close one of the most complex patent disputes in Australian legal history, as Lundbeck was recently granted special leave to appeal to the High Court of Australia (H. Lundbeck A-S & Anor v Sandoz Pty Ltd; CNS Pharma Pty Ltd v Sandoz Pty Ltd [2021] HCATrans 13 (11 February 2021). That will be the third time this litigation has reached the High Court for a substantive appeal, with Lundbeck previously succeeding in obtaining both its application for an extension of time to apply for an extension of term and then the extension of term application itself. Over its long course, the Lexapro litigation has made a number of significant contributions to Australian patent law, including in relation to the validity of enantiomer claims and the operation of the provisions of the Act which govern extensions of term and extensions of time, and now it appears set to contribute to Australia’s contract law as well.

Authored by Andrew Rankine and Duncan Longstaff

4 min read

In this Federal Court case, Pfizer’s attempt to obtain documentation from Sandoz regarding its ERELZI etanercept product failed, Justice Burley finding that undertakings provided by Sandoz to give notice prior to exploiting ERELZI products in Australia removed any reasonable belief that Pfizer might have the right to obtain relief as at the time of the application. The circumstances illustrate the significance of the form of undertakings given by potential generic/biosimilar entrants when patent disputes erupt.

Background

The background to this case is set out in more detail here. In short, Pfizer markets the highly successful etanercept therapy under the name BRENZYS in Australia, for conditions including rheumatoid and psoriatic arthritis. In October 2017 Sandoz obtained registration on the Australian Register of Therapeutic Goods (ARTG) for its biosimilar, ERELZI. The Department of Health’s Pharmaceutical Board Advisory Committee recommended that the products be listed in March 2018, subject to certain further information being provided. In April 2018 Sandoz informed the Department of Health that it had decided not to proceed to the next step “at this point in time”. Sandoz has taken no further steps with respect to launch of ERELZI in Australia since that time. In December 2019, Pfizer sought preliminary discovery from Sandoz for documents relating to the manufacture of ERELZI, on the basis that it may have a right to relief for infringement of three of its patents.  

The decision

The test for obtaining preliminary discovery has recently been clarified by the Full Court of the Federal Court in a case brought by Pfizer against Samsung Bioepsis in respect of its biosimilar etanercept product. The Full Court confirmed that as long as there are reasonable grounds for a belief that there may be a right to relief, it is not necessary to show, for example via expert evidence, that such a claim would succeed. Indeed the purpose of obtaining preliminary discovery is to determine whether a right to relief in fact exists.

In light of the Samsung decision, it would likely have been difficult for Sandoz to show in this case that Pfizer did not have the requisite level of belief that ERELZI may fall within the scope of the claims of its patents, and indeed Sandoz accepted that Pfizer had such belief for the purposes of the application. 

However, Sandoz relied on undertakings offered to Pfizer, pursuant to which it undertook not to exploit any ERELZI products in Australia or take steps to proceed with PBS listing, for the duration of the patent, without first giving Pfizer certain notice. The length of the notice offered is not recorded in the judgment for confidentiality reasons, however the judgment notes that in earlier correspondence Sandoz had offered to give Pfizer 150 days’ prior written notice. It is assumed therefore that the notice period offered is relatively substantial. Sandoz also agreed to provide certain discovery with a period of time after giving any such notice (the details of this undertaking were also confidential).

In these circumstances, Pfizer contended that the notice period offered was insufficient to allow it to obtain relief in time if Sandoz did in fact give notice of an intention to launch. It sought an order that Sandoz give preliminary discovery of specified schedules of documents within 7 days of giving the relevant notice and a ‘Sabre order’ requiring it to seek production of any such documents held by related companies. The issues were therefore quite confined.

Burley J refused the orders sought by Pfizer. Based on the language of the relevant Federal Court Rules governing preliminary discovery, his Honour concluded that Pfizer needed to show a reasonable belief that its rights may be infringed as at the date when the application is being assessed. Calling in aid notions of quia timet relief, Pfizer argued that the relevant question was whether it held a reasonable belief that the notice offered by Sandoz was likely to affordPfizer sufficient time to protect itself from material harm.  However Burley J held that the circumstances of the case did not warrant a reading of the Rules which would in effect provide an exception to the reluctance of the Court to answer questions based on hypothetical facts, as was the case here where Sandoz had not yet made a decision to launch. He gave examples of difficulties which could arise, in particular, the appropriate scope of any preliminary discovery could be affected by admissions which Sandoz might make with respect to infringement.

Significance

While the outcome in this case is highly dependent on the specific facts, it does highlight the effectiveness of appropriately crafted undertakings in resisting legal action, where a product has been listed on the ARTG and steps have been taken to list on the PBS, circumstances which would generally amount to a threat of patent infringement, in the absence of any undertakings.  

Preliminary discovery applications are set to become a more common weapon in patent litigation arsenal in years to come, particularly given the increasing significance in Australia (as elsewhere) of biosimilar patent litigation, where patents covering manufacturing processes are likely to assume greater importance given the additional complexities at play in claiming active biological molecules per se, and the significance of specific manufacturing processes in the production of biologics. Given the likely lack of available information as to a competitor’s manufacturing processes, preliminary discovery may be an essential prelude to patent infringement claims in such cases, assisted by the planned Therapeutic Goods Administration “transparency measures” which will introduce an earlier notification scheme for generic and biosimilar medicines. Equally we expect to see the strategies to resist such applications develop providing more case law in this area.

7 min read

Merck Sharp & Dohme Corp v Wyeth LLC (No 4) [2020] FCA 1719

In a previous article, we discussed Justice Stephen Burley’s finding that a Wyeth patent covering certain vaccines against Streptococcus pneumoniae was valid and would be infringed by a 15-valent vaccine that Merck Sharp & Dohme (MSD) planned to launch in Australia.  By a subsequent judgment, Burley J has now granted final relief consequential on those findings, including an injunction restraining launch of MSD’s 15-valent vaccine.  The judgment is notable for his Honour’s rejection of a request, made by MSD, for a separate hearing on the question of whether injunctive relief ought to be refused on public interest grounds, given the significant medical benefits offered by MSD’s 15-valent vaccine. 

Key takeaways

  • Under existing Australian law, the starting position is that a patent owner successful in infringement proceedings will ordinarily be entitled to a final injunction restraining supply of an infringing product.  Nevertheless, in deciding whether to grant an injunction in each case, the court will have regard to all relevant considerations, including the public interest.
  • A defendant seeking to avoid final injunctive relief on public interest grounds faces both substantive and procedural hurdles.  The defendant may need to apply, at an early stage of the proceeding, to have the public interest question heard and determined separately, after the main trial on patent infringement and validity.

Background

The technology at issue in these proceedings was reviewed in our previous article.  Very briefly, more than 90 different serotypes of the bacterium Streptococcus pneumoniae (or “pneumococcus”) have been identified.  A limited number of especially virulent serotypes cause around 1 to 2 million childhood deaths globally, each year.  Wyeth’s Prevnar 13® vaccine, which is currently listed on Australia’s National Immunisation Program, targets 13 of those serotypes.  The 15-valent vaccine developed by MSD targets two additional serotypes, offering broader protection against pneumococcal disease.

In his previous judgment,  Burley J found that marketing of MSD’s 15-valent vaccine in Australia would involve infringement of one of three patents asserted by Wyeth in this proceeding (his Honour found the asserted claims of the other two asserted patents to be invalid).

Under Australia’s existing law on remedies for patent infringement, the starting position for analysis is that a patent owner successful in infringement proceedings will ordinarily be entitled to a final injunction, assuming there is a threat of ongoing infringement.  On the other hand, an injunction is an equitable, and therefore discretionary, remedy and a court will have regard to all relevant considerations in assessing whether injunctive relief is appropriate in each particular case, including considerations of proportionality.

A relatively recent decision of Australia’s Full Federal Court has confirmed that a final injunction for patent infringement will ordinarily be granted in terms which, in addition to restraining the specific conduct that was held to infringe at trial, restrains generally any further infringing conduct by the defendant (Calidad Pty Ltd v Seiko Epson Corporation (No 2) [2019] FCAFC 168, as we reported in our Best Patent Cases 2019 publication available here).  An injunction granted in that form places on the defendant the risk of being held in contempt of court if it chooses to “sail close to the wind” by engaging in further conduct that, although modified from the conduct that was found to infringe at trial, could nevertheless still be found to fall within the scope of the patentee’s claims.

In the Prevnar vaccine case, MSD did not challenge the particular form of injunctive relief sought by Wyeth.  Rather, MSD argued that no final injunction should be granted at all, or alternatively that the question of injunctive relief should be deferred until after the determination of any appeal.  MSD based those arguments on the public interest in accessing its 15-valent vaccine, given the health advantages that vaccine would confer over the currently-available Prevnar 13® product.

Public interest

The need to take account of public interest considerations in assessing injunctive relief for patent infringement has been recognised in recent case law across a number of jurisdictions. 

Recent US case law has built upon the foundation laid by the landmark decision of the US Supreme Court in eBay Inc v MercExchange LLC, 547 US 388 (2006).  The eBay case established that a patent owner seeking final injunctive relief for infringement must establish that (1) it has suffered irreparable injury; (2) damages would not be an adequate remedy; (3) the balance of hardships between patent owner and defendant favours equitable relief; and (4) the public interest would not be disserved by a final injunction – the so-called “eBay factors”.

The role of public interest considerations in the grant or refusal of final injunctive relief for patent infringement was also considered in the recent UK case of Evalve Inc v Edwards Lifesciences Limited [2020] EWHC 513.  The defendant in that case opposed the grant of a final injunction, based on evidence that some medical practitioners believe, on reasonable grounds, that the infringing medical device (used to repair leaky heart valves) performs better in certain patients than the patent owner’s device.  As a fallback position, the defendant argued that use of the infringing device in those patients should be carved out of the scope of any final injunction.

In a detailed review of the issue, UK High Court Justice Colin Birss identified the following matters as relevant to the role of public interest considerations in the grant or refusal of injunctive relief for patent infringement.

First, the UK Patents Act 1977 (in common with patents legislation in Australia and several other jurisdictions) includes a number of provisions that reflect the legislature’s assessment on public interest issues.  These include, for example, statutory exclusions from patent infringement (e.g., for experimental use), compulsory licensing provisions and the Crown use scheme.  By the latter provisions, a government may authorise use of a patented invention without the patent owner’s consent where this is deemed to be in the public interest. 

Secondly, a patent infringer who invokes the public interest as a reason to withhold a final injunction is, in effect, seeking a compulsory licence without having established the statutory grounds on which such licences are ordinarily made available.

Thirdly, to assess whether it would be just in all of the circumstances to withhold a final injunction on public interest grounds, a court must be provided with evidence concerning the adequacy of damages to compensate the patent owner in lieu of an injunction.  Speaking hypothetically, Birss J observed that, if the level of compensation required to adequately compensate the patent owner would strip the infringer of their entire profits, then refusing an injunction may be to no avail, since the infringing product is unlikely to be made available in such circumstances.

In light of these considerations, Birss J concluded that, in patent infringement proceedings, the bar for refusing a final injunction on public interest grounds is high.  His Honour expressed the view that, generally speaking, it will be necessary to establish by objective evidence that the defendant’s product is needed to protect the lives of patients for whom it is the only suitable treatment (at [87]).

MSD submitted that those conditions would be satisfied in the Australian Prevnar vaccine case.  It invited Burley J to convene a separate hearing on whether it was against the public interest to grant a final injunction, at which hearing MSD proposed to adduce additional evidence, including evidence concerning the prevalence of pneumococcal serotypes covered by its 15-valent vaccine that are not covered by Wyeth’s Prevnar 13® product.

Justice Burley refused MSD’s request for a separate hearing and determined that it was appropriate that Wyeth be granted a final injunction restraining supply of MSD’s 15-valent vaccine.  His Honour’s reasons for that decision highlight the challenges facing a defendant seeking to resist final injunctive relief on public interest grounds in a patent infringement case.

On the one hand, Burley J pointed to a number of factors suggesting it was premature to determine the public interest question.  MSD has not yet obtained regulatory approval to market its 15-valent vaccine in Australia and its intended launch date remains unclear.  Wyeth’s counsel indicated that Pfizer (the parent company of Wyeth) intends launching a 20-valent pneumococcal vaccine in Australia, which may come to market before the MSD product is approved.  Justice Burley observed that the timeline of these events would be expected to have a significant bearing on the assessment of the public interest arguments raised by MSD.

On the other hand, Burley J found that the question of whether a final injunction should be refused on public interest grounds had been raised on the pleadings for the infringement case and his Honour was not persuaded that MSD should be permitted to, in effect, re-open its case on this issue, after judgment.

It is possible that MSD may seek to test those conclusions before the Full Federal Court.  A notice of appeal against Burley J’s judgment on issues of validity and infringement was filed by MSD in late January.

Significance

Justice Burley’s decision highlights the substantive and procedural challenges faced by a defendant in patent infringement proceedings seeking to argue that final injunctive relief should be refused on public interest grounds. 

In light of this decision, defendants who wish to preserve the ability to oppose final injunctive relief on public interest grounds may need to apply, at an early stage in the proceeding, to have that question deferred for separate determination, after the main trial on infringement and validity, with the parties granted leave to file fresh evidence on the public interest considerations which apply at that time.

Authored by Andrew Rankine and Duncan Longstaff

5 min read

A recent YouTube spat over an AI created cover of Britney Spears’ 2004 song “Toxic” demonstrates that AI has now made it possible for one artist to sing a cover of another artist, no human required! In this case, a group called DADABOTS, which describes itself as “a cross between a band, a hackathon team and an ephemeral research lab”, created the rendition using software enabling generation of audio content in the voice of a particular artist, in a particular genre or as a novel fusion. The end result was a Frank Sinatra cover of the Britney Spears song.

Whilst this is a prospect that is bound to be exciting to some, from the perspective of conventional copyright law (and perhaps defamation law), the path to creating such a custom cover track using AI is fraught with complexity and uncertainty.

Yet that didn’t stop DADABOTS rendition being met with something a little more conventional, a copyright takedown notice and subsequent removal from YouTube, as Futurism’s Dan Robitzski recently reported. Futurism noted that GreyZone Inc., a company which offers copyright infringement identification and reporting services, was responsible for the complaint but wasn’t able to identify on whose behalf.

Appeal of YouTube take down

The basis for the original takedown notice is unclear – presumably representatives of either Frank Sinatra or Britney Spears’ respective record labels took the view that their copyright was infringed in some form. In Australia, their songs are likely to be covered by a suite of copyright and related rights, potentially including copyright in the lyrics, the musical work, performance rights and recording rights.

In this case, DADABOTS appealed YouTube’s decision to remove the rendition, calling in aid the US copyright doctrine of fair use. This doctrine is codified in the US Copyright Act and allows “fair use” of copyright works without infringing copyright. Unlike in Australia where the equivalent “fair dealing” is limited to quite specific circumstances, the US Courts have a broad discretion to determine what use is “fair”, depending on factors such as the nature of the copyright work, the purpose of the use and the effect of the use on the potential market for the copyright work. YouTube accepted the appeal and DADABOTS upload was reinstated, albeit with YouTube flagging it as a cover of “Toxic”. YouTube offers a service which allows eligible copyright holders to set up rules dealing with any third party copies of their exclusive copyright content uploaded on YouTube. This might include blocking the uploaded media, taking ad revenue from it or tracking the viewership information. YouTube’s flag of the DADABOTS version presumably makes it subject to any such controls in place in respect of “Toxic”.

Use of copyright works during development of AI powered applications

To make the rendition, DADABOTS used an AI software tool developed by California based OpenAI. Known as “Jukebox”, the software utilises neural networks, a form of machine learning. To become competent, Jukebox was trained by processing various datasets, which in turn allowed it to create the rendition on the basis of what it learnt from that data processing. In this case Jukebox then performed lyrics (of “Toxic”) in the voice and/or genre of the artist on which the software had been trained (Frank Sinatra). According to Open AI’s website, Jukebox was trained on 1.2 million songs, corresponding lyrics and metadata, including artist, genre, year and associated keywords.

Interestingly, Futurism’s article suggests the YouTube appeal arguments were crafted without reference to the use of AI to create the DADABOTS rendition. The fair use arguments were focussed on the end result (i.e. the new rendition) as a fair use in itself, rather than by reference to the method used to create it. Separate to issues around copyright ownership of works created wholly or substantially by AI technologies, the use of copyright works for AI related functions, such as machine learning and datamining is very much a live issue globally. The extent to which such uses are thought to be “fair uses”, is likely to influence the development of the fair use doctrine in copyright, the bounds of which already vary considerably from country to country, if not lead to specific copyright provisions. One notable mover in this space is Japan, which from 1 January 2019 enacted various provisions in its Copyright Act aimed at exempting computer data processing and analysis of copyright works from infringement in certain circumstances. The way in which the law on this topic develops globally may well be a factor which influences where companies with a focus on developing AI powered applications choose to base themselves (if it is not already). Differences in the law on this topic around the globe may also lead to potentially complicated questions of jurisdiction where AI generated material is exported from one country to another.

In Australia, the current law is likely to be less friendly to machine learning and AI powered applications, as a result of the stricter confines on fair dealing, and other limited exceptions to copyright infringement. Certainly where AI applications are used for development which is commercial in nature, it is unlikely that Australian copyright exemptions would apply. While section 40 of the Copyright Act 1968 (Cth) does provide an exemption for fair dealing for research purposes, it has generally been given a narrow reach.

Indeed, extension of the fair dealing provisions in Australia was a topic considered extensively by the Productivity Commission in its review of intellectual property laws in Australia and consequent report issued in 2016. Submissions made on this issue included those from tech companies supporting a broader fair use exception and specifically referring to machine learning in this context. The Productivity Commission ultimately recommended significant reforms in this area paving the way for a US-style fair use exception. However following two years of further consultation, the Government announced in August 2020 only a limited extension of the fair dealing exceptions for non-commercial quotation.

As a consequence, use of datasets to train AI systems in Australia appears likely to carry with it a significant risk of copyright infringement for the foreseeable future, in the absence of an appropriate licence. As the law in this area continues to develop worldwide, this is clearly a space to watch for both copyright owners and anyone using databases of copyright material to power or utilise AI technologies.

Authored by Onur Saygin and Duncan Longstaff

4 min read

Pfizer suffered a setback last week in its Australian battle to protect ENBREL (etanercept), when its preliminary discovery application against Sandoz was dismissed by Justice Burley in the Federal Court. The reasons for the dismissal are not yet public, subject to the parties seeking suppression orders over any confidential information contained in them, but are likely to be released in coming days.

ENBREL is Pfizer’s blockbuster autoimmune disorder therapy, used to treat various chronic diseases including rheumatoid arthritis. Commercially available in Australia since 2003, ENBREL was the only etanercept product registered on the Australian Register of Therapeutic Goods until 2016 when Samsung Bioepis registered BRENZYS, followed by Sandoz’s registration of ERELZI in 2017.

Given ENBREL’s success it is not surprising that patents covering the product are also being litigated elsewhere. In the United States, where Amgen holds the patent rights, ENBREL is its top selling product. The US Federal Appeal Court recently issued its judgment upholding the validity of the ENBREL patents and restraining Sandoz from entering the market there.  Amgen has also filed proceedings against Samsung Bioepis in the US, where Samsung’s ETICOVO is not yet on the market pending the outcome of that litigation.

In Australia, Pfizer launched its preliminary discovery application against Sandoz in November 2019, after winning a similar application against Samsung Bioepis in late 2017. In the Samsung case, Pfizer sought discovery of documents submitted to the Therapeutic Goods Administration in order to ascertain whether BRENZYS infringed three patents covering methods of producing polypeptides and/or proteins in the upstream bioprocessing phase.

The relevant Australian rules provide that preliminary discovery can be sought before a substantive proceeding is commenced, for discovery of documents directly relevant to the question of whether the applicant has a right to obtain relief from the Court. It is necessary to show that the applicant reasonably believes that they may have a right to such relief and that, after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding to obtain that relief. The Court has a discretion as to whether it makes a preliminary discovery order.

The key issue in the Samsung case was whether Pfizer had the requisite belief that it may have a right to obtain substantive relief; that is, in this case, a belief that Samsung was infringing its patents. The parties filed extensive affidavit evidence, including from experts on this topic. Pfizer advanced six contentions which it argued supported its reasonable belief, including the fact that BRENZYS had been registered on the basis of its biosimilarity with ENBREL, that specific characteristics of BRENZYS were similar to ENBREL, in particular it had similar glycosylation profiles, and that since ENBREL fell within the scope of the relevant patent claims, so must BRENZYS. Considering these arguments in detail, and noting that he had not had the benefit of cross examination of the witnesses, Justice Burley ultimately found that he was not convinced that there was a “reasonable basis” for Pfizer’s belief of patent infringement, as opposed to a mere suspicion (see Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCA 285). However, an appeal by Pfizer to the Full Federal Court was upheld (see Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCFCA 193). The Full Court emphasized that the inquiry was not to determine the dispute between the experts, or who was more persuasive, but rather whether Pfizer had a reasonable basis for a belief that it may have a right to obtain relief. Noting the very substantial evidence filed on the application, Allsop CJ emphasised that “these are summary applications not mini-trials”. The High Court subsequently refused special leave for a further appeal. After the matter was remitted to the primary judge to determine the final form of orders, those orders were made in May 2019 and the proceeding still continues after orders were made earlier this year for any application for further discovery to be filed.

In light of the more generous approach to preliminary discovery applied by the Full Court in the Samsung case, it will be interesting to see the reasons for Justice Burley’s decision in the Sandoz case. It certainly seems plausible that another appeal to the Full Court is on the horizon. More generally, we expect to see more preliminary discovery applications in patent disputes in years to come, given the increasing significance in Australia (as elsewhere) of biosimilar patent litigation. In that sphere, patents covering manufacturing processes are likely to assume greater importance in light of the additional complexities at play in claiming active biological molecules per se, and the significance of specific manufacturing processes in the production of biologics. Given the likely lack of available information as to a competitor’s manufacturing processes, preliminary discovery may be an essential weapon in many such cases. It also remains to be seen whether we will see more applications to be released from the general undertaking only to use information obtained in an Australian proceeding for the purpose of that proceeding, in order to allow, for example, preliminary discovery obtained in Australia at an early stage to be used for the purpose of corresponding US proceedings.

We look forward to providing a further update when the judgment is released in this case.