Federal Court rejects the Patent Offices absurd and unreasonable

What you need to know

• An application to extend the term of a pharmaceutical product patent must be based on the regulatory approval date of the patentee's own product.
• The pharmaceutical substance relied upon must fall within the scope of the relevant patent's claims.
• If more than one approved pharmaceutical substance falls within the scope of the relevant patent claims, the patent term extension request must be based on the patentee's first approved substance.
• The decision is currently on appeal.

What you need to do

• A patent term extension request must be filed within six months of the first inclusion on the Australian Register of Therapeutic Goods of a pharmaceutical product which falls within the scope of the relevant patent's claims.
• Patentees must clearly stipulate the pharmaceutical substance on which the patent term extension is based.
• There is no need for patentees to consider whether any pharmaceutical products belonging to third parties that were included on the Australian Register of Therapeutic Goods before the patentee's products might fall within the scope of the patent's claims.

It takes a very long time to develop and obtain regulatory approval of a pharmaceutical product. However, to avoid invalidating a patent throughout this process (for example, during the publications about, and conduct of, clinical trials) it is necessary to apply for a patent before a pharmaceutical product has completed the development process, satisfied the necessary testing and obtained regulatory approval.

In recognition of the delay between when a patent is filed and when regulatory approval is obtained, enabling commercialisation, the Patents Act provides a limited right to apply for a patent term extension. Where an extension of term is granted, patentees can obtain up to five additional years to exploit their invention and earn a return on their investment.

Criteria for a Patent Term Extension

In order for a patent to be eligible for a term extension, the following criteria must be satisfied:

• a pharmaceutical substance per se, or a pharmaceutical substance when produced by recombinant DNA technology, must be in substance disclosed in the patent and must fall within the scope of a claim;
• goods containing or consisting of that pharmaceutical substance must be included in the Australian Register of Therapeutic Goods (ARTG); and
• there must be at least five years between the date of the patent and the date of the first regulatory approval for the substance.

In applying this criteria, the Commissioner of Patents determined that the first substance included in the ARTG which falls within the scope of the patent claims is the relevant substance for calculating any patent extension. In the Commissioner's view it was irrelevant whether that substance was registered by the patentee or a third party.

Ono's approach

Ono did not agree with the Commissioner that a third party's pharmaceutical product that falls within the scope of Ono's patent should affect the calculation of Ono's patent term extension. To challenge this practice, Ono filed two extension of term applications.

The first term application was based on Ono's own product, OPDIVO. OPDIVO received regulatory approval on 11 January 2016.

The second term extension application was based on KEYTRUDA. KEYTRUDA was a product registered and commercialised by a competitor of Ono and Ono accepted that the product fell within the scope of the patent's claims. KEYTRUDA received regulatory approval on 16 April 2015 before any Ono product that fell within the scope of the claims was registered.

Ono's preferred position was to obtain the patent term extension based on OPDIVO's regulatory approval date because it would result in a longer extended term. However, the Patent Office granted the patent term extension on the basis of KEYTRUDA. Based on the Commissioner's interpretation of the provisions, KEYTRUDA was the first pharmaceutical product falling within the scope of the claims to obtain regulatory approval and therefore, the appropriate product for calculating the patent term.

Federal Court prefers purposive construction

Justice Beach rejected the Commissioner's interpretation of the extension of time provisions as being a strict textual approach that was inconsistent with the purpose for which patent term extensions were created. Justice Beach noted that extensions of term are a benefit conveyed by the Patents Act on a patentee to ensure that they are able to commercialise their pharmaceutical products despite the delays of regulatory approval. On this basis, Justice Beach concluded a liberal approach to the provisions was to be preferred.

Adopting this liberal construction Justice Beach determined that the relevant pharmaceutical product(s) for ascertaining the first regulatory approval date must be the patentee's own product. Justice Beach concluded that it was impractical for a patentee to be expected to review all products approved on the ARTG and assess whether they fall within the scope of the patent claims which is a challenging task and may not be possible based on public information. These practical difficulties evidenced that the Commissioner's interpretation was not what was intended by the legislature.

Accordingly, the Commissioner's decision was overturned and Ono's patent was extended on the basis of the date that its OPDIVO product was registered.

Where to from here?

This decision will be welcomed by patentees who can now apply for a patent term extension based on their own products only and without reference to when competitor products which fall within the scope of the claim may have been registered. This approach simplifies the extension regime and enables patentee's to maximise their term extension.

However, Justice Beach's approach is contrary to longstanding practice of the Commissioner. Further, the legislation requires a purposive construction to limit the regime in the manner reflected in this decision. As a result, the Commissioner of Patents has appealed the judgment and we will be sure to update you when an appeal court considers this issue.

Authors: Ferdous Bahar, Lawyer; and Nina Fitzgerald, Partner