FEDERAL COURT OVERTURNS ‘ABSURD’ PATENT OFFICE RULING ON PATENT TERM EXTENSIONS FOR PHARMACEUTICAL SUBSTANCES

The Federal Court has rejected the Australian Patent Office’s historical approach to patent term extension (PTE) applications, upholding a challenge brought by two major pharmaceutical companies against an earlier decision of Australia’s Commissioner of Patents.

KEY TAKEAWAYS

• Justice Beach has confirmed that PTE applications must be filed within six months of the first inclusion on the Australian Register of Therapeutic Goods (ARTG) of the patentee’s own goods, regardless of whether earlier-listed third party goods may also contain a pharmaceutical substance covered by the patent.
• This brings Australia into line with other key jurisdictions, including the US.
• Although the interpretation adopted by the Court represents a more commercial and practical outcome for patentees, reasonable minds may differ as to the correct interpretation of the Patents Act 1990.
• It remains to be seen whether the Commissioner of Patents will seek to appeal the decision to the Full Federal Court.

Update: Following publication of this article, the Commissioner of Patents filed a notice on 9 July 2021 commencing appeal proceedings.

THE DECISION

Earlier this year, we reported that Ono Pharmaceutical Co., Ltd. (Ono) and E. R. Squibb & Sons, LLC (a subsidiary of Bristol-Myers Squibb Company, BMS) sought judicial review of the Commissioner of Patents’ decision to reject their PTE application relating to their anticancer drug, Opdivo.

In the original ruling, the delegate upheld the Australian Patent Office’s (APO) historical view that section 71(2) of the Patents Act 1990 (Cth) (the Act) requires PTE applications to be filed within six months of the first listing on the Australian Register of Therapeutic Goods (ARTG) of any product containing a pharmaceutical substance falling within the claims of the patent, regardless of whether it was the patentee’s product or that of a third party. Ono and BMS argued that the delegate had made an error of law.

On 11 June 2021, Justice Beach of the Federal Court handed down his decision, upholding the challenge and granting the extension sought by Ono and BMS.¹ His Honour rejected the Commissioner’s interpretation, finding that not only was it not compelled by the language of the Act, it was also uncommercial, unduly literal, out of step with the international community, and resulted in “manifest absurdity and unreasonableness”.²

Instead, Justice Beach found that “it is for the patentee under s 71(2)(b) to stipulate the pharmaceutical substance” that starts the clock for their six-month application window.³ His Honour ruled that “the applicants’ construction can fit within the ordinary meaning of the statutory language and is consonant with the legislative purpose”.⁴  In doing so, his Honour placed great emphasis on the purpose of the PTE regime:

to restore the time lost to patentees prior to gaining marketing approval to compensate the patentee for the additional time, expense and difficulty in developing and commercialising a new pharmaceutical substance.⁵

IMPLICATIONS FOR THE PHARMACEUTICAL SECTOR

The key consequence is that the six-month window for filing a PTE application starts running from the first inclusion on the ARTG of the patentee’s goods, not a third party’s.

From a commercial perspective, the position adopted by Justice Beach is plainly more workable—and beneficial—for pharmaceutical patentees. Determining the PTE application timeframe by reference to the applicant’s own product obviates the need to conduct extensive, cumbersome and potentially futile searches for earlier-listed competitor products that may fall within the claims of the patent.⁶

As emphasised by his Honour, this interpretation also now brings Australia into conformity with key markets, including the US.⁷ With patent laws becoming increasingly harmonised, keeping step with our competitors is essential to attracting investment in our pharmaceutical sector.

IS THIS THE END OF THE MATTER?

Despite Justice Beach’s comprehensive dismissal of the Commissioner’s interpretation, there remains some scope for debate regarding the interpretation adopted by the Court.

The interpretation adopted by Justice Beach is plainly more straightforward, for the APO and patentees alike. However, reasonable minds may still differ as to whether it is the correct interpretation of the language of the Act as drafted. It is possible that the Commissioner may appeal the decision to the Full Federal Court.

The Commissioner contended that excluding earlier-listed third party products “raises the frightful spectre of a need to rewrite the statutory provisions”.⁸ Indeed, previous authorities have held that—whether commercially desirable or not—the meaning of the Act is plain. One such case is Pfizer Corporation v Commissioner of Patents (No 2) (2006) 69 IPR 525 (Pfizer), in which Justice Bennett observed that the meaning of “first inclusion in the [ARTG]” was clear and unambiguous, and that the provisions surrounding s 71(2) acknowledge that a patent may comprehend multiple pharmaceutical substances and provide that the first inclusion date refers to the earliest entry that applies to that patent.⁹ Pfizer has been applied in several APO decisions to support the interpretation currently argued for by the Commissioner.¹⁰

However, Justice Beach rejected the Commissioner’s reliance on that case, as that dispute related to choosing between different types of approvals for the same goods, rather than choosing between different goods.¹¹ Consequently, his Honour considered that he need not engage with any of the subsequent APO decisions which had followed Pfizer or indeed, with Pfizer itself.¹²

His Honour also placed significant emphasis on extrinsic materials in reaching his decision, including parliamentary speeches, explanatory memoranda, and government reports. Despite “[accepting] that my brief excursion through the extrinsic materials cannot drive the analysis”,¹³ which must ultimately be founded on the text of the provision itself, Justice Beach appeared to place considerable importance on the implications of those materials in identifying the intent of the relevant provisions.

There is no doubt that the Federal Court’s decision adopts a more practicable and commercial interpretation for pharmaceutical patentees, one which affords them the full benefit of the remedial PTE scheme. However, it remains to be seen whether the Commissioner of Patents will seek to appeal the decision to the Full Federal Court or, if not, whether commercial parties will seek to agitate this issue anew in future cases with the aim of having the Full Court provide a definitive view.