7 min read

Australia’s Federal Court Decision, Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2021] FCA 947, concerns a patent claiming two pharmaceutical substances having different first regulatory approval dates; one less than 5 years after the patent filing date and one more than 5 years after the patent filing date.  The decision considers whether the first regulatory approval more than 5 years after the filing date can be considered the first approval for PTE-eligibility purposes. 

Patent Term Extensions (PTEs) in Australia

Australia’s Patents Act provides patent term extensions (PTEs) to account for the delays that can occur when obtaining regulatory approval for pharmaceuticals (see s70-79A of Patents Act 1990).  A PTE can last for up to five years and is available when the following requirements are met:

  • the patent, in substance, discloses and claims a pharmaceutical substance per se, or a pharmaceutical substance when produced by recombinant DNA technology;
  • goods containing or consisting of the pharmaceutical substance are included in the Australian Register of Therapeutic Goods (ARTG);
  • the PTE application is made within six months after the later of (a) the date the patent was granted and (b) date of the first inclusion in the ARTG; and
  • the first regulatory approval for the pharmaceutical substance occurred more than five years after the filing date of the patent.

The length of a PTE is equal to the period between the filing date of the patent and the date of the first regulatory approval, reduced by five years.  A patent cannot be extended more than once.

Background

Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2021] FCA 947 concerns the patent term extension granted in connection with Australian patent 2002320303, which covers two pharmaceutical substances for the treatment of diabetes: sitagliptin and a composition containing sitagliptin and metformin.  The patent was filed on 5 July 2002 and its ordinary term was therefore set to expire on 5 July 2022

Sitagliptin was first included in the ARTG on 16 November 2006, i.e. less than five years after the filing date. 

The composition containing sitagliptin and metformin, however, was first included in the ARTG on 27 November 2008, six years, four months and 22 days after the filing date of the patent.  The patentee, Merck Sharp Dohme (MSD), applied for a PTE based on the regulatory approval of the sitagliptin/metformin composition and the term of the patent was extended until 27 November 2023

Sandoz contended that the extension of term was invalid and sought rectification of the register to reflect a patent expiry date of 5 July 2022

Reliance on the Ono decision

This decision relies heavily on the recent decision, Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643.

As recently reported here. Ono addressed the issue of “earliest first regulatory approval” in the context of a patent covering two blockbuster cancer drugs; the patentee’s drug and a competitor’s drug.  The competitor’s drug received regulatory approval before the patentee’s drug and the issue was therefore which regulatory approval date was relevant for deciding the patentee’s PTE request.

In Ono, Justice Beach noted that PTEs are intended to provide an effective patent life for pharmaceutical products.  His Honour reasoned that the drug which is the subject of the PTE application is intended to be the drug of the patentee, not that of a third party.  His Honour also commented that it is for the patentee to nominate the pharmaceutical substance for the purposes of requesting a PTE (which can be any pharmaceutical substance that is in substance disclosed and claimed in the patent). 

Justice Beach concluded that the patentee’s own first regulatory approval (rather than the competitor’s earlier first regulatory approval) could form the basis of the request. 

The “earliest first regulatory approval date”

In the present case, MSD argued that “the earliest first regulatory approval date” means either:

(a) the earliest first regulatory approval date of any substance claimed by the patent which is included on the ARTG and which received regulatory approval at least 5 years after the patent’s filing date (MSD’s primary construction), as nominated by the patentee (based on Ono), or

(b) the earliest first regulatory approval date of all substances claimed by the patent which are included on the ARTG and which received regulatory approval at least 5 years after the patent’s filing date (MSD’s alternative construction).

That is, MSD’s construction required any regulatory approvals for pharmaceutical substances less than 5 years after the patent filing date to be disregarded for the purpose of assessing PTE eligibility. 

If MSD’s construction were to be followed, the ARTG approval of sitagliptin could be ignored (being less than 5 years after the patent’s filing date) and PTE eligibility could be determined based on the date of inclusion in the ARTG of the combination of sitagliptin and metformin (i.e. the first regulatory approval which is at least 5 years after the patent’s filing date). 

Sandoz contended that “the earliest first regulatory approval date” means the earliest regulatory approval date of any pharmaceutical substance in the patent – this corresponds to the date of inclusion in the ARTG of sitagliptin.  Following this line of argument, if regulatory approval is secured for any pharmaceutical product claimed by the patent less than 5 years after the patent filing date, no patent term extension can be obtained. 

Reasoning and discussion

MSD submitted that all of the factors which Beach J considered relevant in Ono are equally relevant to the present case. Justice Jagot disagreed. 

Her Honour took the view that the absurdity identified in Ono was the fact that a patentee could be granted an extension of term of zero merely because the earliest first regulatory approval date would be that of an unrelated company relating to the same substance.  In the present case, however, it was the patentee who had obtained regulatory approval for both substances covered by the patent.

Her Honour noted:

It is one thing to conclude that it is absurd for a patentee to be denied any term of an extension due to an earlier regulatory approval by another unrelated party of which the patentee may not have known and over which the patentee would have had no control. … It is another to conclude that it would be absurd for a patentee to be denied any term of an extension due to an earlier regulatory approval by the patentee or its agent of which the patentee must have known and over which the patentee had control. In such a case, the patentee, by definition, will not have been delayed in obtaining regulatory approval for a substance or the substance in its patent for at least five years.” 

Justice Jagot also commented on the crucial presence of the word “earliest” in s77(1) of Patents Act 1990, which sets out how to calculate of an extension of term. 

Her Honour was of the opinion that it is clear that the legislature considered a delay of less than five years after a patent filing date for obtaining regulatory approval for a pharmaceutical substance covered by the patent was acceptable and did not require a capacity for an extension of term of the patent, commenting:

There is no reason to infer that the legislature intended that a patentee with a patent disclosing and claiming more than one pharmaceutical substance intended that there could be an extension of term if the patentee obtained inclusion of one or more pharmaceutical substances in the ARTG within five years of the date of the patent but then also obtained inclusion of one or more pharmaceutical substances in the ARTG five years or more after the date of the patent. Provided one pharmaceutical substance has been included in the ARTG within five years of the date of the patent, the patentee has had the benefit of the monopoly afforded by s 13 of the Patents Act within the period of delay the legislature considered acceptable.”

Conclusion

Justice Jagot agreed with Sandoz, taking the view that the regulatory approval date of sitagliptin (less than 5 years after the patent filing date) was to be used in calculating the length of the PTE.  Her Honour thus concluded that the extension of term of MSD’s patent is zero and ordered that the Register be rectified as sought by Sandoz.

Implications

This decision confirms that, if a patent covers more than one pharmaceutical substance for which the patentee has obtained regulatory approval, the calculation of the extension of term must be based on the substance that was approved first.  If the approval date of that substance is within five years of the filing date of the patent, no extension of term will be granted.

Patent Applicants should therefore consider separating substances that have received (or are expected to receive) regulatory approval into multiple patents, for example by pursuing each substance in its own divisional patent application.  This will ensure that each patent is able to enjoy the maximum extension of term that is available to it based on the substance that it covers.

Authored by Serena White, DPhil and Michael Christie, PhD

6 min read

Ariosa Diagnostics, Inc v Sequenom, Inc [2021] FCAFC 101

The Full Court of the Federal Court of Australia has confirmed that Sequenom’s diagnostic method of detecting fetal DNA in maternal blood is eligible for patent protection in Australia.  The decision highlights the different approaches taken by Australian, European and US authorities when it comes to assessing the patentability of diagnostic methods.

However, the Full Court also found that Sequenom’s patent was not infringed by the importation of results from tests conducted overseas on the basis that the results were information and not a product that could be exploited.

The technology

Sequenom’s patent stemmed from the discovery of cell-free fetal DNA (cffDNA) in maternal blood serum and blood plasma by two researchers from Oxford University. The discovery enabled the development of a non-invasive prenatal test using maternal blood samples. 

The test could be used to determine the gender of an unborn baby, and its susceptibility to certain genetic conditions. Prior to the inventors’ discovery, obtaining a prenatal sample for testing typically involved inserting a needle through the mother’s abdomen or cervix. 

The patent

Claim 1 of Sequenom’s patent defines:

A detection method performed on a maternal serum or plasma sample from a pregnant female, which method comprises detecting the presence of a nucleic acid of foetal origin in the sample.

In the first instance decision, the Federal Court of Australia found that the use of the “Harmony” prenatal diagnostic test by Ariosa Diagnostics Inc, and by its licensees, Sonic Healthcare Limited and Clinical Laboratories Pty Ltd, infringed certain claims of Sequenom’s patent. On appeal, Ariosa challenged the validity of the claims and the finding of infringement.

Validity

Ariosa argued that the primary judge erred in finding that the claimed method is a “manner of manufacture” as required under the Patents Act because what is claimed is a mere discovery of a naturally occurring phenomenon. In a related submission, Ariosa contended that, properly understood, the end result of each claim is mere information.  The human-mediated “detection”, Ariosa argued, is no different from the discovery that cffDNA is detectable. Ariosa submitted that in substance there is no application of the discovery by simply claiming the detection of what has been discovered to exist. 

In support of their arguments, Ariosa cited D’Arcy v Myriad Genetics Inc [2015] HCA 35, in which the High Court found that claims defining isolated nucleic acids encoding mutant or polymorphic BRCA1 polypeptides were in substance directed to naturally occurring genetic information, which is not patentable subject matter.

The Full Court rejected Ariosa’s approach, finding that it disaggregated the discovery of cffDNA in maternal plasma or serum from the method used to harness that discovery. Although fetal nucleic acid occurs in nature, the Full Court found that the substance of the invention is not cffDNA itself, but the identification of that particular nucleic acid as a part of a method:

Unlike the position in Myriad, claim 1 is not, as a matter of substance, directed to genetic information, but to a method involving the practical application of a means for identifying and discriminating between maternal and foetal nucleic acid. Although foetal nucleic acid occurs in nature, the substance of the invention is not cffDNA itself, but the identification of that particular nucleic acid as a part of a method. It is impermissible to disaggregate the integers of the method to point only to the cffDNA as the “invention”. Identification of the substance of the invention does not involve disregarding material aspects of the claim language. The invention as claimed is not merely output, but the detection process which yields an output. This is the very type of subject matter considered to fall on the correct side of the line between discovery of a scientific fact or law of nature and invention (at [155]).

Their Honours observed that an invention may reside in an abstract idea that is put to a useful end, even though the way of putting it to that end can be carried out in many useful ways, all of which are otherwise known. While the mere discovery of a natural phenomenon is not eligible for a patent, the practical application of that discovery may very well be patentable subject matter.

The Full Court concluded that the invention defined by claim 1 of Sequenom’s patent ”falls firmly within the concept of a manner of manufacture as that term is to be understood having regard to the authorities, being an artificially created state of affairs of economic utility” (at [166]).

Ariosa’s other grounds of attack, namely, that the claims were invalid for lack of sufficiency and lack of fair basis, were also unsuccessful.

Infringement

Before conducting the Harmony Test in Australia, Ariosa’s Australian licensees, Sonic Healthcare and Clinical Laboratories, collected blood samples from pregnant women in Australia and sent those samples to Ariosa in the US. Ariosa then conducted the Harmony Test in the US and provided the results, in the form of a report made available by a file sharing platform, to Sonic Healthcare and Clinical Laboratories in Australia. 

The exclusive rights of a patentee to exploit an invention will ordinarily be infringed by importing the product of a patented process, even when that process is carried out overseas. This is because Australia’s Patents Act defines the term “exploit” as including:

where the invention is a method or process – use the method or process or do [acts including importing] in respect of a product resulting from such use.

The primary judge found that the method was infringed when it was performed in Australia, which was not in dispute in the present case. However, the primary judge also found that Sonic Healthcare’s and Clinical Laboratories’ “send out” model amounted to an infringement of Sequenom’s claims because it used a method that would have infringed the claims if conducted in Australia.

The Full Court disagreed, noting that the Patents Act does not provide a definition of the term “product”. Their Honours preferred a construction of the word “product” in the context of the definition of “exploit” which recognises that not all patented methods or processes will lead to a product. The Full Court observed that the broad definition applied by the primary judge could have consequences that are not sensible – a person who has heard the outcome of the Harmony Test, which may be as simple as “it’s a girl!”, and who then flies to Australia with that information may infringe the patent by importing that outcome.

The Full Court also noted the incongruity that would result from extending the patentee’s monopoly to encompass test results that are not them themselves patentable:

A claim to mere information is not patentable …. The fact that such information is derived from a patentable process or method cannot render the information itself patentable. In those circumstances, we do not consider that the word “product” in para (b) of the definition of “exploit” should be interpreted as extending the patentee’s monopoly to information which could not itself constitute patentable subject matter since it would have the unintended and odd consequence of permitting the patentee to obtain patent protection in respect of subject matter that has long been held to be unpatentable (at [269]).

Accordingly, because the imported test results are themselves information, and not a “product” as such, Sonic Healthcare’s and Clinical Laboratories’ send out model did not infringe Sequenom’s patent.  

Final comments

The Full Court’s decision highlights the different approaches taken by Australian, European and US authorities when it comes to assessing the patentability of diagnostic methods.  The corresponding patent application was found to be valid in the UK (Illumina, Inc v Premaitha Health Plc [2017] EWHC 2930), albeit under a different eligibility test, but was deemed invalid by the US Court of Appeals for the Federal Circuit (Ariosa Diagnostics, Inc. v Sequenom, Inc. 788 F.3d 1371 (Fed. Cir. 2015)).

In Australia, courts will construe a claim in its entirety, rather than considering each feature individually. While the mere discovery of a natural phenomenon may not be eligible for a patent in Australia, the practical application of that discovery may very well be, even where the application uses known methods.

The decision also confirms that not all patented methods will give rise to a “product” that can be exploited in an infringing act.

Ariosa and Sequenom have the option of applying for special leave to appeal the decision to the High Court. 

Authored by Karen Heilbronn Lee, PhD and Michael Christie, PhD

1 min read

Shelston IP is very pleased to announce their promotions from 1 July 2021.

Ean Blackwell is our newly appointed Principal.

Ean works within our Biotechnology and Chemistry team. Ean is an AU/NZ Patent Attorney, a Chartered UK and a European Qualified Patent Attorney with industry experience as a research scientist. Ean’s IP career has spanned three continents, having practiced in Asia, Europe and Australia. He has particular experience in the plant molecular biology, biotechnology and Big Pharma industry sectors.

Kathy Mytton has also been elevated to Senior Associate.

Kathy is a solicitor and registered trade mark attorney with over 20 years’ experience across a broad range of industries for protection of trade mark rights in Australia, New Zealand and other foreign jurisdictions. She has extensive proven experience in providing strategic and commercially focused advice to clients.

Congratulations on this important milestone in your career.

Authored by Ean Blackwell and Kathy Mytton

5 min read

Australia’s Federal Court Decision, Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643, overturns the Patent Office Decision, Ono Pharmaceutical Co., Ltd. et al [2020] APO 43, in which the Patent Office had found that the substance with the first regulatory approval date for the purpose of the patent term extension request was a competitor product.  In a Judicial Review of the Patent Office decision, the Federal Court found instead that the substance with the first approval date was the patentee’s own, later-approved product.

Patent Term Extensions (PTEs) in Australia

Australia’s Patents Act provides patent term extensions (PTEs) to account for the delays that can occur when obtaining regulatory approval for pharmaceuticals.  A PTE can last for up to five years and is available when the following requirements are met:

  • the patent, in substance, discloses and claims a pharmaceutical substance per se, or a pharmaceutical substance when produced by recombinant DNA technology;
  • goods containing or consisting of the pharmaceutical substance are included in the Australian Register of Therapeutic Goods (ARTG);
  • the PTE application is made within six months after the later of (a) the date the patent was granted and (b) date of the first inclusion in the ARTG; and
  • the first regulatory approval for the pharmaceutical substance occurred more than five years after the filing date of the patent.

The length of a PTE is equal to the period between the filing date of the patent and the date of the first regulatory approval, reduced by five years.  A patent cannot be extended more than once.

Background

Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643 concerned a request to extend the term of Australian patent 2011203119.  The patent claims encompassed two blockbuster cancer drugs: Merck Sharp & Dohme’s KEYTRUDA and the patentee’s OPDIVO, both of which received regulatory approval in Australia, but on different dates.  Thus, the question at issue was which regulatory approval date was relevant for deciding the patentee’s PTE request.

To cover all of its bases, the patentee simultaneously filed two PTE requests: one based on the competitor product, KEYTRUDA, which had received regulatory approval on 16 April 2015, and another based on its own product, OPDIVO, which had a regulatory approval date of 11 January 2016.  The PTE request based on KEYTRUDA was accompanied by a request for an extension of time. 

From the patentee’s perspective, the request based on OPDIVO was preferred as it would result in a longer extended term (an additional 8 months, 26 days). 

The Overturned Patent Office Decision

Initially, the Patent Office refused the PTE request based on OPDIVO, finding that KEYTRUDA was included on the ARTG first and therefore should form the basis of the request.  The patentee disagreed and requested to be heard.

At the Patent Office hearing, and as previously reported, the patentee’s request for a PTE based on OPDIVO was again refused (Ono Pharmaceutical Co., Ltd. et al [2020] APO 43).

The Federal Court Decision: Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643 (11 June 2021)

Justice Beach of the Federal Court observed that PTEs are “designed to remedy the mischief of a shortened period for an effective monopoly that has been caused by delays in obtaining regulatory approval”. 

Justice Beach framed the question at issue as follows:

“… it is whether an application for an extension must be filed within 6 months of the first inclusion in the ARTG of goods containing or consisting of any pharmaceutical substance falling with the claims of the patent:

(a)          where the goods were those of the patentee (the applicants’ position); or

(b)          irrespective of whether the goods were those of the patentee, that is, they could be the goods of a third party that had nothing to do with the patentee and, moreover, might be a competitor [the position taken by the Patent Office]”

Answering this question involved consideration of the intended meaning of the relevant provisions and the history of the legislation, including the 1997 Explanatory Memorandum (EM), the second reading speech to the Bill that became the 1998 Amendment Act (the speech) and the now-repealed s 76A of the Patents Act 1990. 

Justice Beach noted that PTEs are intended to provide an effective patent life for pharmaceutical products and the reference to “product” was “clearly not that of a stranger let alone a competitor”.  His Honour rhetorically asked how the legislation would provide an effective patent life if the product on the ARTG triggering the start of the extension was not that of the patentee, but rather that of a stranger or indeed a competitor, concluding, “[t]hat would not provide an “effective life” for the patentee at all”.

Justice Beach also determined that it is for the patentee to specify the pharmaceutical substance for the purposes of requesting a PTE (which can be any pharmaceutical substance that is in substance disclosed and claimed in the patent). 

His Honour reasoned that the drug which is the subject of the PTE application is intended to be the drug of the patentee, not that of a third party.  His Honour considered that the Patent Office’s interpretation of the law would place an unreasonably onerous burden on the patentee who would need to review each and every ARTG listing to identify those that contain a pharmaceutical substance falling within the scope of the claims (to the extent possible, noting also the dearth of information provided in ARTG public summaries), and to determine whether another relevant substance was previously listed on the ARTG but later removed, as can occur in certain circumstances. 

Justice Beach acknowledged, however, that the Patent Office’s approach was understandable in light of the text being construed and that a Delegate of the Patent Office is not as free as a Judge to reject any perceived ordinary meaning of the legislation by reason of manifest absurdity or unreasonableness. 

Conclusion

Justice Beach agreed with the patentee and favoured a liberal rather than a literal construction of the legislation, commenting in summary that a liberal construction can fit within the ordinary meaning of the statutory language and is consonant with the legislative purpose.

It was therefore concluded that the term of the patent should be extended based on the regulatory approval date of the patentee’s own pharmaceutical substance, OPDIVO, even though KEYTRUDA was approved earlier. 

Implications

This decision lifts the burden for patentees of the need to monitor the ARTG for approval of third party drugs.  In circumstances where a patent covers more than one approved pharmaceutical substance, the decision implies that a PTE request does not have to be based on the substance that was approved earliest. 

Authored by Serena White, DPhil and Michael Christie, PhD

3 min read

Following a cacophony of dire warnings and lobbying over the past decade from the Australian biotechnology and medical sectors, and the sudden sharp focus of middle Australia on the critical importance of onshore manufacturing facilities such as those capable of mRNA vaccine production, the Federal Government has announced the introduction of a $206.4m patent box for Australian medical and biotechnology industries as part of the 2021-2022 Federal Budget handed down on 11 May 2021.

Named quite literally after a tick box historically present on income tax forms, a patent box provides tax incentives designed to encourage companies to commercialise and manufacture patented technology locally. From 1 July 2022, Australia’s proposed patent box is slated to tax income derived from eligible patents at a concessional corporate tax rate of 17%, rather than the standard corporate tax rate of 30%, or 25% for small and medium enterprises (SMEs).

While the specifics are yet to be established, the patent box is proposed to apply to income derived from granted Australian patents in the medical and biotechnology sectors filed after the budget announcement (ie, after 11 May 2021), providing that at least a portion of the research and development (R&D) of the technology occurred in Australia. The following example was provided with the Federal budget papers: A company selling a patented product makes $175 million in net income directly attributable to the patent. If 80% of the R&D associated with the patented product occurred in Australia, then 80% of the income (ie, $140 million) would enjoy the concessional 17% tax rate. 

The measure is intended to incentivise Australian companies to invest in and perform their R&D, commercialisation and manufacturing of patented technologies onshore. It has been warmly received by the Australian biotechnology sector with Lorraine Chiroiu, CEO of AusBiotech, stating that the organization whole-heartedly commends the initiative: “This tax incentive will address the gap that leaves our IP vulnerable, retain home-grown IP, and support Australian innovators and manufacturers. It will make the commercialisation of IP and manufacturing in Australia more genuinely viable for businesses.”

Cochlear’s CEO, Dig Howitt, has similarly commented: “Incentivising companies of all sizes to keep their intellectual property and manufacturing in Australia will generate substantial economic benefits through royalties, licence fees, tax revenues, supply chains, jobs, and capital investment.”

CSL CEO Dr Andrew Nash concurs, stating, “CSL welcomes the introduction of a patent box which will help decrease the flow of intellectual property from local medical research going overseas. It will drive the growth of advanced manufacturing jobs, capital intensive investment and sovereign capacity in medical technology and biotechnology manufacturing.”

A number of countries already have patent box regimes, including the UK, Belgium, Spain, France, the Netherlands, Luxembourg, Switzerland, and China. Australia’s patent box is set to follow the Organisation for Economic Co-operation and Development (OECD)’s guidance on patent boxes to meet internationally accepted standards.

The Government has indicated that it will consult with industry on the design of the patent box and explore whether the regime should be extended to include clean energy patents. Lobbying from that sector is already well underway.

On a technical note, several years typically elapse between patent filing and patent grant. Accordingly, it could be some three or four years before the patent box regime begins to provide significant benefit. Patent grant can, however, be brought forward by various means including requesting early national phase entry in Australia followed by expedited examination. If you require advice on this issue, Shelston IP would be happy to help.     

Authored by Karen Heilbronn Lee, PhD and Allira Hudson-Gofers

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

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