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 brief

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.

Authored by Katrina Crooks

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

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.

Authored by Katrina Crooks

12 min read

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

Summary

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

Key takeaways

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

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

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

The technology

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

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

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

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

The patents

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

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

The proceedings

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

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

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

The construction issue

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

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

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

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

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

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

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

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

Raising the Bar reforms

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

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

The law pre-Raising the Bar

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

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

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

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

The law post-Raising the Bar

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

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

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

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

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

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

Significance of the judgment

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

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

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

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

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

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

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

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

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

3 min read

Gliknik, Inc. v CSL Behring Lengnau AG [2020] APO 46 (“Gliknik”) concerned a patent application for engineered proteins intended for use as replacements for intravenous immunoglobulin.  The application included claims directed to methods of treating autoimmune or inflammatory diseases as well as a Swiss-style claim directed to the same diseases.  Gliknik, Inc. opposed the application on several grounds including that the specification did not sufficiently disclose the invention as claimed.

The standard for “sufficient” disclosure was raised in Australia following the commencement of the Intellectual Property Laws Amendments (Raising the Bar) Act 2012 and its assessment has been approached by the Australian Patent Office with the following two-step enquiry:

  1. Is it plausible that the invention can be worked across the full scope of the claim?
  2. Can the invention be performed across the full scope of the claim without undue burden?

In Gliknik, the Patent Office considered for the first time the plausibility of a Swiss-style claim. Following the principles recently set out by the Full Federal Court in Mylan Health Pty Ltd v Sun Pharma ANZ Pty Ltd [2020] FCAFC 116, the Delegate observed that Swiss-style claims confer a monopoly in respect of a method of making a medicament.  They are not product claims, nor are they method of treatment claims – the monopoly extends to the point where the medicament is made.

Nevertheless, Swiss-style claims are purpose-limited in the sense that the medicament resulting from the method is characterised by the therapeutic purpose for which it is manufactured, as specified in the claim.  Unlike method of treatment claims, however, a Swiss-style claim does not require that the therapeutic effect be achieved. Our analysis of Mylan Health Pty Ltd v Sun Pharma ANZ Pty Ltd [2020] FCAFC 116, including the court’s construction of Swiss-style claims, is available here.

Having construed the claims, the Delegate in Gliknik then considered whether the plausibility standard of therapeutic effectiveness (for method of treatment claims) differed from that of therapeutic purpose (for Swiss-style claims).  In the absence of Australian jurisprudence, the Delegate turned to UK authorities, and in particular, the principles set out by Sumption LJ in Warner-Lambert Company LLC v Generics (UK) Ltd [2018] UKSC 56.  Although that case concerned the plausibility of efficacy rather than purpose, the Delegate reasoned that, if the efficacy of a product is not plausible, then it would follow that an intention to treat would not be plausible.  The Delegate concluded that substituting the word “efficacy” for “purpose” in Sumption LJ’s comments would not provide any substantial difference to the plausibility analysis.

Turning then to the disclosure of the specification, and the evidence of the common general knowledge in the field, the Delegate found it plausible that the engineered proteins of the invention could effectively treat some, but not all, conditions specified in the claims.  For certain conditions, the specification provided no more than a speculative assertion and so the claims were found to be insufficiently enabled.

This decision shows that the Australian Patent Office will apply a similar standard of plausibility to method of treatment claims as it will to Swiss-style claims. For each type of claim, the disclosure of the specification, supplemented by the common general knowledge, must make the efficacy of the treatment plausible.

Authored by Michael Christie, PhD

This webinar is now complete.

We invite you to access our webinar via the button below.

(Passcode: SIP2020-03)


Authored by Michael Christie, PhD and Ean Blackwell

7 min read

Boehringer Ingelheim Animal Health USA Inc. v Intervet International B.V. [2020] FCA 1333

Key takeaways:

  • For novelty purposes, expert evidence does not make up for a lack of sufficiently clear and unambiguous directions in the prior art or for a lack of teaching that would inevitably result in the invention
  • Invention was a “substantial departure” from known formulations, particularly in the face of a long-standing need for combination anthelmintic treatments and was thus not obvious
  • Lack of utility was not established in the circumstances

Background

Merial Inc (now Boehringer Ingelheim Animal Health USA Inc (Boehringer)) appealed from an opposition decision in respect of Australian patent application AU 2011268899 (the application).

The invention described in the application relates to injectable formulations comprising a macrocyclic lactone and levamisole for controlling parasites in animals, and the use of such formulations in the preparation of a medicament for controlling parasites.

The problem addressed by the application was that some parasites develop a resistance to anti-parasitic drugs. Combinations of known drugs had been used in the art to overcome this resistance, but it was desirable to develop an injectable formulation for a combination of a macrocyclic lactone and levamisole, two of the most widely used and effective antiparasitic (anthelmintic) drugs.

However, such combinations have been difficult to formulate, for three main reasons:

First, levamisole and macrocyclic lactones are chemically incompatible and tend to react with each other when combined.  Secondly, levamisole and macrocyclic lactones are stable under different pH conditions (levamisole requires a pH of about 3.0-4.0 to be stable, while macrocyclic lactones require a pH of around 6.0-7.0).  Finally, levamisole salts are soluble in water, whereas macrocyclic lactones are not water soluble but are soluble in organic solvents, and are commonly formulated in oils and organic solvents.

The invention in the application addressed these issues by adopting a non-aqueous solvent system comprising oil and an organic solvent, in which the macrocyclic lactone is in solution, and the levamisole is a salt in particulate form (that is, in suspension).  This type of formulation achieves a separation of the macrocyclic lactone and the levamisole, thus addressing the issue of chemical incompatibility.

Claim 1 of the application is as follows:

  1. An injectable formulation of a macrocyclic lactone and levamisole in a non-aqueous solvent system comprising oil and an organic solvent, wherein the macrocyclic lactone is in solution and the levamisole is a salt in a particulate form, and wherein the levamisole salt is present in the range of between 10-35% w/v.

The Appeal

Boehringer was unsuccessful in its opposition in the Patent Office and appealed on various grounds:

(a)          Lack of novelty.  Boehringer contended that various claims were not novel in light of Chinese patent application CN 1375291A (CN 291).

(b)          Lack of inventive step.  Boehringer contended that the claims did not involve an inventive step because they were obvious in the light of the common general knowledge considered alone, or the common general knowledge combined with CN 291.

(c)           Lack of utility.  Boehringer contended that the invention claimed in each of the claims was not useful, in that the claims of the application include embodiments that do not achieve the promise of a physically and chemically stable suspension formulation of a macrocyclic lactone and levamisole.

Novelty

CN 291 was a patent application published on 23 October 2002 for an invention titled “Veterinary Compound Injection Containing Levamisole or Salts thereof”.

Example 3 of CN291 set out an oil injection containing a combination of ivermectin (a macrocyclic lactone) and levamisole hydrochloride.  However, it was clear that the concentration of levamisole HCl in Example 3 at 5% w/v did not fall within the scope of claim 1 of the application, which specified 10-35% w/v.  Further, Example 3 did not set out any manufacturing steps, or any description of what was intended to be made.  Moreover, it did not describe the levamisole HCl as being in particulate form (or in a suspension).

Boehringer submitted that Example 3 of CN 291 was to be read in conjunction with claim 3 of CN 291, which discloses levamisole HCl in the amount of 10-20% w/v, and with page 3 of the specification, which discloses that preferably the levamisole HCl is present in the amount of 10-20% w/v.  Further, Boehringer submitted that a skilled person reading CN 291 as a whole would understand that CN 291 contained a direction, recommendation or suggestion to make the Example 3 formulation using 10-20% w/v levamisole HCl, because they would consider the 5% w/v concentration of levamisole HCl stated in Example 3 to be far too low for cattle, particularly in light of the other teaching in CN 291.

Based upon expert evidence, Boehringer further argued that the skilled person would expect the levamisole HCl in Example 3 to be suspended in the solvent system and to be present in particulate form, because the skilled person would expect that levamisole HCl will not dissolve in the solvent system of Example 3.  To support this view, Boehringer provided details of two formulations prepared by its expert witnesses following the guidance of CN 291 that fell within the scope of claim 1 of the application.

However, Moshinsky J was not convinced, finding that there was no sufficiently clear and unambiguous direction to modify Example 3 by applying the higher concentration level described elsewhere.  Further, the Court emphasised that Example 3 did not describe the intended formulation as one in which the levamisole HCl is in particulate form.

In addition, the appellant’s expert formulator conceded under cross-examination that the formulation in Example 3 could be a suspension or a solution.

The Court was not swayed by the experiments conducted by the appellant as they involved a number of departures from the teaching of Example 3, and did not establish that any steps used to manufacture a formulation having the composition of Example 3 would inevitably contain levamisole HCl in particulate form.

Inventive Step

Boehringer contended that that it would have been obvious to the notional skilled person or team, based on the common general knowledge alone, or in light of the common general knowledge together with CN 291, to make a suspension formulation using an oil or organic carrier as a base and a co-solvent such as benzyl alcohol (an organic solvent), in which the macrocyclic lactone was in solution and the levamisole salt was in suspension.  It submitted that the skilled person would appreciate that, in such a composition, the levamisole salt would be in particulate form, and that they would know to use a concentration of levamisole salt sufficient to achieve the desired dose in a product for cattle having a dose volume rate of 1 mL/25 kg, which results in a formulation in accordance with claim 1 of the application.

However, the Court found that an oily formulation with levamisole present as a particulate was a substantial departure from known formulations, particularly (and most significantly) in respect of levamisole.  The expert evidence had also shown that, in order to be effective, levamisole needed to reach a high peak concentration in the animal’s gut rapidly, and preferably underwent similarly rapid clearance from the animal to meet regulatory requirements.  As there were no existing formulations of levamisole as a particulate in oil, a carrier often used to slow down absorption of a drug, it was not clear in the common general knowledge whether an effective peak concentration of levamisole could be reached in the animal using such a formulation.  Further, the evidence showed that there is a risk that an active ingredient formulated as a suspension will not be dispersed evenly throughout the formulation, or may result in agglomeration of the particles.

Based upon the evidence, it was held that a solution appeared to be preferable to a suspension for an injectable formulation, and that the above uncertainties as to efficacy, as well as others, would point away from the adoption of such an approach.

Secondary evidence such as the long-standing need for combination treatments of levamisole and a macrocyclic lactone and the desirability of having such a combination in injectable form were also held to support the existence of an inventive step.

Moreover, it was held that CN 291 would not provide any direct assistance to the notional skilled team in addressing the known chemical incompatibility of levamisole and macrocyclic lactones, a finding that was conceded by experts for Boehringer during cross-examination.

Lack of Utility

Boehringer submitted that the stability data in Intervet’s patent application WO 2017/108954 A1 (WO 954) (which Intervet accepted disclosed formulations falling within the scope of claim 1 of the application in suit) demonstrates that not all formulations falling within the scope of the claims of the application achieve the promise of being physically and chemically stable.  In particular, Boehringer relied on data in Table 4 of WO 954 for 2 months, at which point a loss of stability was shown.

However, the figures in Table 4 for 3 months – this being the relevant period for the purposes of the promise – did not show such a loss of stability.  Accordingly, it was held that the data in Table 4 did not establish that the invention failed to meet the promise of stability (that is, stability for 3 months under accelerated conditions).  Moreover, it was found that the data in Table 4 was inherently unreliable, and, even if it had shown a loss of stability as at 3 months, the Court would not have been satisfied that the invention failed the promise of stability.

Costs of amendment applications

In a subsequent judgment (Boehringer Ingelheim Animal Health USA Inc. v Intervet International B.V. (No 2) [2020] FCA 1433, The Court dealt with the costs of two interlocutory amendment applications.

In respect of each interlocutory application to amend, the Court found that “Intervet sought something in the nature of an indulgence.”  Referring to Les Laboratoires Servier v Apotex Pty Ltd (2010) 273 ALR 630 at [59]; cf Eli Lilly and Co v Pfizer Research and Development Co NV/SA (2003) 59 IPR 234, the Court held that in such cases, the patentee may be ordered to pay the costs of the amendment application, regardless of the outcome.

Accordingly, Boehringer’s request that each party bear its own costs was appropriate, particularly in circumstances where there was no adjudication on the merits of either application because Boehringer had ultimately consented to the amendments.

Authored by Ean Blackwell and Katrina Crooks

4 min read

Ono Pharmaceutical Co., Ltd. et al [2020] APO 43 (16 September 2020)

Background

Australia’s Patents Act provides a patent term extension (PTE) to account for the delays that can occur when obtaining regulatory approval for a pharmaceutical substance.   The extension 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); 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 patent term extension is equal to the period between the filing date of the patent and the date of the earliest first regulatory approval, reduced by five years.

The decision

Ono Pharmaceutical Co., Ltd. et al [2020] APO 43 concerned a request to extend the term of a patent covering anti-PD-1 antibodies.  The patent included claims for two blockbuster drugs; Merck Sharp & Dohme’s KEYTRUDA and the patentee’s OPDIVO, both of which received regulatory approval in Australia, but on different dates.  The question at issue, then, was which regulatory approval date was relevant for deciding the patentee’s PTE request.

The patentee hedged its bet, filing two PTE requests; one based on KEYTRUDA, which received regulatory approval on 16 April 2015, and another based on OPDIVO, which received regulatory approval on 11 January 2016.  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).  However, the Patent Office refused that request, 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.

In the hearing, the patentee submitted that the “first regulatory approval date” should be the approval date of their own product, OPDIVO.  This, they argued, was consistent the purpose of the extension of term provisions, that being to restore the time lost by patentees in gaining marketing approval, and to compensate the patentee for the additional time, expense and difficulty in developing and commercialising a new drug.

The patentee argued that the reference to “first” regulatory approval in the Act was only important when multiple regulatory approval dates existed for the same substance, such as for different delivery forms (e.g. capsules, gel capsules, tablets, slow-release, different amounts, etc) that manifested in different ARTG registrations.  According to the patentee, it was only logical, given that the regime is intended to be beneficial and remedial, that it can only be about rewarding patentees for their work and, by implication, not the work of others.  If not, the patentee would not receive the full extension of term for their product.

The Delegate accepted that the PTE regime was designed to encourage the development of new drugs, but rejected the patentee’s broader purposive construction of the Act.  Such a construction, the Delegate noted, would encourage companies to develop a substance that is not new and seek regulatory approval as late as possible, secure in the knowledge that a PTE will be granted for the (not new) substance.  According to the Delegate, this type of scheme would not incentivise new drugs. Rather, it would incentivise new extension applications.

The Delegate acknowledged that there is some ambiguity in the words of the Act insofar as they do not say one way or the other whether the relevant pharmaceutical substance is only that belonging to the patentee, or whether it includes other, equivalent substances owned by third parties.  But the Delegate also noted that this ambiguity had been dealt with previously by the Patent Office in G.D. Searle LLC [2008] APO 31.  In that case, the Patent Office held that an application for PTE must be based on the earliest inclusion on the ARTG of a pharmaceutical substance falling within the scope of the claims, irrespective of the sponsor of the goods.  Moreover, in Pfizer Corp v Commissioner of Patents (No 2) [2006] FCA 1176, the Federal Court of Appeals held that “the term of the extension is based on the earliest inclusion, regardless of the identity of the sponsor. It is not open to the Commissioner to calculate the term of the extension only on the basis of goods sponsored by the Patentee.”

The Delegate therefore found that the substance with the earliest regulatory approval date for the purpose of the PTE request was KEYTRUDA, not OPDIVO.  As such, the patentee’s request for a PTE based on OPDIVO was refused.

Conclusion

In circumstances where a patent claims more than one registered pharmaceutical substance, this decision confirms that the earliest registered substance will be used to determine eligibility for a PTE and to calculate the length of the extension, irrespective of whether the registered substance is owned by the patentee or by a third party.  Patentees should therefore be aware of all pharmaceutical substances covered by their claims, not just those they are seeking to commercialise. If a patent application covers more than one pharmaceutical substance, an applicant may be well-advised to file one or more divisional applications to ensure that each registered substance is quarantined within its own patent, thus enabling maximum extensions to be sought for each patent separately.

Authored by Ean Blackwell and Katrina Crooks

9 min read

Australia’s Full Federal Court recently delivered judgment in an appeal in a significant patent case: Mylan Health Pty Ltd v Sun Pharma ANZ Pty Ltd [2020] FCAFC 116.  The case concerned three patents relevant to Mylan’s oral lipid-lowering agent, Lipidil® (fenofibrate).

An enlarged Full Court bench comprising 5 judges (Middleton, Jagot, Yates, Beach and Moshinsky JJ) was appointed to hear and decide Mylan’s appeal.  This was because Mylan sought to clarify the Full Court’s previous statement in Merck & Co Inc v Arrow Pharmaceuticals Ltd [2006] FCAFC 91; 154 FCR 31 that the characterisation of an alleged anticipation as a “suggestion” in relation to the invention, is “not necessarily fatal to a novelty argument”.  Mylan submitted this statement by the Full Court did not countenance “mere speculation” or “the presentation of no more than a reasoned hypothesis” as an anticipatory disclosure.  On this basis, Mylan submitted to the Full Court (unsuccessfully, as explained below) that the trial judge (Nicholas J) had erred in finding that a hypothesis stated in a prior art document relating to a clinical study deprived methods of treatment claims of novelty.

The Full Court’s decision also provided important guidance in relation to the approach taken by Australian courts in considering obviousness, the construction and infringement of ‘Swiss-style’ claims under Australian patent law and the extent to which consistory clauses alone can provide fair basis for a claim.

Method of treatment and Swiss-Style claims lack novelty in light of clinical trial protocol

The Full Court considered whether method of treatment and Swiss-style claims could be anticipated by prior art comprising a protocol for a clinical trial of the claimed method.

Mylan argued that such a protocol could not be novelty-defeating, because at most it identified a hypothesis that required testing, and could not be understood as teaching or recommending that the claimed method be put to clinical use.  The Full Court rejected that analysis and upheld the trial judge’s finding that Mylan’s method of treatment and Swiss-style claims lacked novelty.

The Full Court held that, in assessing novelty, the key question is whether the information disclosed in the prior art is sufficiently specific and complete to be equal to the invention that is later claimed.  If so, then even a protocol for a trial to test the claimed method could be novelty-defeating.  The Full Court acknowledged that, in this respect, Australia’s law on novelty differs from the law applied by UK courts in cases such as Regeneron Pharmaceuticals Inc v Genentech Inc [2012] EWHC 657 (Pat) and Hospira UK Limited v Genentech Inc [2015] EWHC 1796 (Pat), which hold that the prior art must disclose actual achievement of the relevant therapeutic effect to be novelty-defeating.

This aspect of the Full Court’s decision arguably fails to give due consideration to the proper meaning and importance of words such as “treat” and “prevent” in method of treatment and Swiss-style claims.  As Mylan contended, at the stage of disclosing the protocol for a clinical trial, it is not known whether the product or method under consideration does in fact “treat” or “prevent” the particular condition or illness of interest, and there is a significant prospect that it will later prove ineffective or unsafe.  The approach of the Full Court and the primary judge makes clear that the nature and extent of the prior-published clinical trial protocol or other document will be critical in each case.  Those case-specific factual issues will be especially important in future cases, as it would seem a harsh outcome for patentees for statements of unproven hypotheses, theories, ideas or suggestions to anticipate and invalidate (for lack of novelty, putting aside considerations of obviousness which depend on the common general knowledge and availability of prior art) claims to a method that the patentee has subsequently proven effective and safe in “treating” or “preventing” the particular condition or illness.

Obviousness of formulation and method of treatment claims

Australian Courts generally assess obviousness by asking whether, before the priority date, a skilled person presented with the same problem as the patent owner would have been “directly led to try the claimed subject matter with a reasonable expectation of success” (referred to as the “modified Cripps question”).  Historically, that test has been applied in a strict manner by Australian courts, leading a number of patents to be upheld in Australia that have been invalidated on obviousness grounds in other jurisdictions.

Recently, however, Australian courts have adopted a more flexible interpretation of the Cripps test.  This Mylan case continues that trend.  The trial judge held two of Mylan’s patents (one relating to nanoparticulate formulations of fenofibrate, the other relating to methods of preventing or treating retinal damage associated with diabetes by administering fenofibrate) invalid on obviousness grounds, and the Full Court upheld those findings.

The following aspects of the Court’s obviousness analysis are notable:

  • Mylan’s patent for a nanoparticle formulation of fenofibrate included claims which required the use of specified surface stablizers.  The trial judge did not find that the skilled person would have been directly led to select those specific stabilizers with an expectation that they would be effective. Rather, he found that the claimed stabilizers were logical to try and that routine, trial-and-error testing would have demonstrated their suitability.  The Full Court agreed this was sufficient to support an obviousness finding.
  • In relation to Mylan’s method of treatment patent, an expert gave evidence that, before the priority date, his expectation of success with the claimed method would have been less than 50%.  The trial judge held that evidence was not inconsistent with a finding of obviousness, because the Cripps test does not require a numerical assessment.  Again, the Full Court agreed with that analysis.

The test for obviousness applied by Australian courts remains more demanding upon the party seeking revocation than the approach taken by (for example) the European Patent Office or the UK courts.  However, the Mylan decision continues a trend in Australian patent cases towards a more flexible application of the obviousness test that is somewhat closer to the approach taken by the European Patent Office and UK courts.  This serves to emphasise the importance of careful preparation of the obviousness defence in close collaboration with inventors and key expert witnesses.

Defining the scope of Swiss-style claims

The claims asserted by Mylan included Swiss-style claims.  Swiss-style claims are typically drafted in the form “Use of [active ingredient] in the manufacture of a medicament for the treatment of [disease or disorder]”.  They came about from the need to satisfy particular requirements for patentability which formerly applied under the European Patent Convention.  Although these requirements do not exist in Australia, Swiss-style claims are routinely included in Australian patents as their scope is different from that of method of treatment claims, which are also permitted under Australian law.

The Full Court in this Mylan case examined the interpretation of Mylan’s Swiss-style claims, having regard to the decision of the UK Supreme Court in Generics (UK) v Warner-Lambert [2018] RPC 2, and provided guidance on determining the scope of such claims under Australian law.

One of the Swiss-style claims asserted by Mylan recites:

 “Use of fenofibrate or a derivative thereof for the manufacture of a medicament for the prevention and/or treatment of retinopathy, in particular diabetic retinopathy”.

The Full Court confirmed that the claim, if valid, conferred a monopoly in respect of the method or process of making the medicament, and that the method or process is complete upon manufacture.  The monopoly did not extend to a method of treatment – that being the province of method of treatment claims.  The Full Court also confirmed that Swiss-style claims are purpose-limited in the sense that the medicament resulting from the method or process is characterised by the therapeutic purpose for which it is manufactured, as specified in the claim.  The Full Court rejected the “outward presentation” test that was favoured by Lords Sumption and Reed in the UK Warner-Lambert case.

In the first instance decision, the primary judge said that the the crucial question concerning the infringement of a Swiss-style claim was whether the manufacturer had made or will make the medicament with the intention that it be used in the treatment of the designated condition.  On this basis, to prove infringement of a Swiss-style claim, it would not be enough to show that it was “reasonably foreseeable” that a generic product would be put to the use referred to in those claims (although foreseeability could be relevant in the overall analysis).  The trial judge held that, to prove infringement of Swiss-type claims, it would be necessary to show that the generic intended that its product be put to the use referred to in the Swiss-style claims.

The Full Court disagreed with this approach, instead finding that infringement of a Swiss-style claim is concerned with what the allegedly infringing manufacturer has done, not what it intended to do.  That is, not what a generic manufacturer intended, but what the generic product is for.  According to the Full Court, a single factual question arises when considering infringement:  as the product of the claimed method or process, is the medicament for the specified therapeutic purpose?  The question, the Full Court said, is answered having regard to “all the circumstances of the case”.

The Full Court pointed to several such “circumstances” that will be relevant in determining the therapeutic purpose of the medicament as defined by a Swiss-style claim.  First, the court noted that the physical characteristics of the medicament as it emerges as a product of the manufacturing process, including its formulation and dosage, packaging and labelling, and its patient information, will be an important consideration.  So too will evidence of the manufacturer’s actual intention in making the medicament, where such evidence is available.  Both factors are relevant considerations, but neither is determinative.

On the facts of this case (which included “skinny labelling” confining the approved indications of the generic product to indications outside the conditions within Mylan’s method of treatment claims), the Full Court held that Mylan had not proved that Sun’s fenofibrate products were “for” the second medical use covered by Mylan’s Swiss-type claims.

The Full Court also gave consideration to the reasonably foreseeable use or uses to which the medicament would be put after manufacture.  But while a reasonably foreseeable use may be relevant in deciding the therapeutic purpose of a medicament, it is also not determinative:  it might be reasonably foreseeable that a product might be put to a particular use, but it does not necessarily follow that the product, as manufactured, is for that use.

The Full Court agreed with the primary judge that mere suitability of a medicament for a claimed purpose cannot be determinative of the question of infringement of a Swiss-style claim.  The fact that the patent has been granted on the basis of a second medical use means that there are multiple uses to which the medicament could be put.  Evidence of suitability for use was therefore considered ambiguous and could not alone answer the question whether the medicament, as manufactured, is one for the specified therapeutic purpose.

Ultimately, the Full Court found that the Swiss-style claims, if valid, would not have been infringed by the manufacture of Sun’s competing product.  Of particular relevance to the Full Court’s decision was the fact that the competing product could be used in a large number of diseases other than retinopathy.

The decision validates the importance of including both Swiss-style claims and method of treatment claims when protecting a therapeutic use in Australia.  Both types of claim are permitted in Australia, and although their scope is limited to the specified therapeutic use, each will directly capture a different infringer.  In particular, Swiss-style claims provide a more direct avenue than method of treatment claims for pursuing manufacturers of competitive pharmaceutical products, rather than the medical practitioners who perform the treatment.

Consistory clauses may not provide fair basis if too broad 

Mylan’s third patent, relating to an immediate-release micronized formulation of fenofibrate, was found by both the primary judge and the Full Court to be invalid for lack of fair basis.  The Full Court endorsed the primary judge’s reasoning that the disclosure elsewhere in Mylan’s patent specification made clear that the invention was to the immediate release fenofibrate composition and a method for preparing it, whereas Mylan had advanced a construction of a consistory clause and corresponding claims to the effect that the invention extended to any composition of fenofibrate which satisfies the specified dissolution profile.  The Full Court affirmed that, as Sun Pharma had submitted, this is “a paradigm example of claims which travel beyond the matter disclosed in the specification”, amounting to invalidity for lack of fair basis.

The fair basis test considered in this case still applies to Australian patents for which examination was requested prior to 15 April 2013, when the “Raising the Bar” amendments came into effect.  The ‘fair basis’ requirement is generally considered to be a lower standard for patentees than the ‘support’ requirement that replaced it from 15 April 2013, which Australian Parliament expressly intended to align more closely with requirements under European law.  Therefore, if a consistory clause alone will not necessarily provide fair basis, that risk is likely to be even more significant for more recent patents and pending future patent applications required to meet the higher standard of support (such as an “enabling disclosure”).

Authored by Duncan Longstaff and Michael Christie, PhD