Summary

In a significant victory for pharmaceutical patentees, the Federal Court in Ono Pharmaceutical Co. Ltd v Commissioner of Patents [2021] FCA 643 held that a patentee can obtain a patent term extension (PTE) based on the first inclusion in the Australian Register of Therapeutic Goods (ARTG) of the patentee’s goods containing or consisting of a pharmaceutical substance falling within the claims of the patent even if a third party’s goods containing or consisting of a pharmaceutical substance falling within the claims of the patent had been included in the ARTG at an earlier date.  This decision overturned the Australian Patent Office’s (APO) decision in Ono Pharmaceutical Co. Ltd et al [2020] APO 43 to the contrary, and is contrary to other earlier APO decisions, and has thus fundamentally altered the law on this issue, to the benefit of pharmaceutical patentees. 

Background

Ono Pharmaceutical Co Ltd and E.R. Squibb & Sons, LLC (the Patentees), are the proprietors of Australian Patent No. 2011203119, entitled “Human monoclonal antibodies to programmed death 1(PD-1) and methods for treating cancer using anti-PD-1 antibodies alone or in combination with other immunotherapeutics” (the Patent).  The Patent covers the Patentees’ product OPDIVO (nivolumab), a blockbuster anti-cancer drug.

The Patent has an effective date of 2 May 2006 and would, in the normal course, have been set to expire 20 years later on 2 May 2026.  On 11 July 2016, the Patentees applied to extend the term of the Patent pursuant to section 70 of the Patents Act 1990 (Cth) (the Act).

The Patentees’ made two applications for a PTE.  The Patentees’ first, and preferred, application was made on the basis of their own product’s (OPDIVO) inclusion on the ARTG, which has an ARTG start date of 11 January 2016.  If this was accepted, the Patent would be extended to 11 January 2031.  The Patentees’ second application was based on the inclusion of KEYTRUDA (a competitor’s product that contains a pharmaceutical substance falling within the scope of the claims of the Patent) on the ARTG.  KEYTRUDA has an earlier ARTG start date of 16 April 2015 and therefore the extension of term would be shorter (approximately 4 years instead of 5).

Relevant legislation

Subsection 70(2)(a) of the Act provides that in order to obtain a PTE, “one or more pharmaceutical substances per se must in substance be disclosed in the complete specification and in substance fall within the scope of the claim or claims of that specification”.

Subsection 70(3) of the Act provides that the following conditions must be satisfied in relation to at least one of those pharmaceutical substances:

(a)    goods containing or consisting of the substance must have been included in the ARTG; and

(b)    the period beginning on the date of the patent (s 65) and ending on the first regulatory approval date for the substance must be at least 5 years.

Subsection 71(2) of the Act sets out when a PTE application should be made and relevantly states:

(2)  An application for an extension of the term of a standard patent must be made during the term of the patent and within 6 months after the latest of the following dates:

(a)        the date the patent was granted;

(b)        the date of commencement of the first inclusion in the Australian Register of Therapeutic Goods of goods that contain, or consist of, any of the pharmaceutical substances referred to in subsection 70(3), as worked out under subsection 70(5A) (if applicable);

(c)        the date of commencement of this section.

Section 77 of the Act sets out how the length of the PTE should be calculated:

(1)    If the Commissioner grants an extension of the term of a standard patent, the term of the extension is equal to:

(a)    the period beginning on the date of the patent and ending on the earliest first regulatory approval date (as defined by section 70) in relation to any of the pharmaceutical substances referred to in subsection 70(2);

reduced (but not below zero) by:

(b)    5 years.

The decision of the Commissioner of Patents

The Patentees argued that the requirements of section 70 may be satisfied by any one of the pharmaceutical substances which are disclosed and claimed in the patent.  They also submitted that any one of the pharmaceutical substances disclosed and claimed in the patent may be used for the purposes of calculating the time by which an application for an extension of term must be filed under section 71.  They also contended that the ordinary meaning of section 77(1) is that the term of the extension is calculated by reference to the earliest first regulatory approval date of any pharmaceutical substance that is disclosed and claimed in the patent, being the substance that the patentee nominates in its application for an extension of term for the purposes of section 70(2).  Consequently, they argued that the first relevant inclusion of goods in the ARTG containing or consisting of the substance disclosed and claimed in the Patent was the first inclusion of OPDIVO, which contained the pharmaceutical substance nivolumab.  Further, the OPDIVO PTE application complied with section 71 because the application was made within 6 months of the date of commencement of the first inclusion in the ARTG of OPDIVO.

These arguments were rejected by the delegate of the Commissioner of Patents.  The delegate held that the OPDIVO PTE application did not comply with the statutory requirements.  The delegate applied the decision of G.D. Searle LLC [2008] APO 31 in which it was held that “an application for extension of term must be made on the basis of the earliest first inclusion in the ARTG of goods containing, or consisting of, a pharmaceutical substance which in substance falls within the scope of the claims, irrespective of the sponsor of the goods”.  The delegate further relied on Pfizer Corp v Commissioner of Patents (No 2) [2006] FCA 1176 (Pfizer No. 2), stating that in that case the Federal Court was clear 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 found that the good with the earliest regulatory approval date that contained or consisted of a pharmaceutical substance that fell within the scope of the patent, namely, pembrolizumab, was KEYTRUDA.  As a result, the delegate refused the PTE application made on the basis of OPDIVO.

The decision of the Federal Court

The Patentees sought a review of the decision of the Commissioner.  Beach J in the Federal Court heard that appeal and held that the Patentees’ construction of sections 70, 71 and 77 was the correct one.  Indeed Beach J went so far as to say:

The construction applied by the delegate and persisted with by the Commissioner is not the preferable one.  If it was dictated by the ordinary meaning conveyed by the text, and I do not say that it was, it leads to manifest absurdity or unreasonableness.  Contrastingly, the applicants’ approach has the virtue of avoiding such vices.

Beach J stated that the PTE regime is designed to compensate a patentee of a pharmaceutical substance for the loss in time before which it can exploit its invention because of the regulatory time involved in bringing a new pharmaceutical product to market, and therefore “a liberal rather than a literal construction is to be preferred.”  He held that the substance specified by the patentee to satisfy section 70(3) can be any pharmaceutical substance that is in substance disclosed and claimed in the patent and it is for the patentee under section 71(2)(b) to stipulate that substance.

Beach J disagreed with the Commissioner’s assertion that there was no requirement that there be any relationship between the patentee seeking the extension and the entity that holds the ARTG approval for the “good” included on the ARTG.  His Honour distinguished the earlier Federal Court decision of Pfizer No. 2, stating that it did not assist the Commissioner as the Court in that case “was not asked to construe the meaning of the relevant provisions in the context of a patent that discloses more than one substance.”.  Beach J also indicated that he did not need to discuss the earlier APO decisions, such as G.D. Searle LLC [2008] APO 31, Pfizer Italia S.r.l [2007] APO 2, and Re iCeutica Pty Ltd (2018) 146 IPR 342, that had applied the APO’s understanding of Pfizer No. 2, as that case was “not a secure foundation” for those decisions.

Beach J stated that it was clear from the Explanatory Memorandum to the Bill that introduced the PTE regime, and the second reading speech to the Bill, that the purpose of the PTE regime was to provide an effective patent life and 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.

Beach J also referred to the fact that section 76A of the Act (which has now been repealed) stated that in respect of each PTE application, the patentee must lodge a return setting out the total amount spent on each type of research and development.  He stated that this supports the patentee’s arguments as it clearly refers to the activities or investments of the patentee or under its authority, not a third party let alone a competitor.

Finally, Beach J noted that if the Commissioner’s position was to be accepted and the “earliest first regulatory approval date” included a third party’s ARTG registration, there would be very serious practical problems which would be unduly onerous and not beneficial to any patentee.  Chief among those problems was that the patentee would have to review every approval granted on the ARTG and determine whether the product falls within the claims of the patent, which can be a complex task and likely to require information not disclosed on the ARTG.

The Federal Court therefore ordered that the decision of the delegate be set aside and the application for the PTE on the basis of OPDIVO be granted.

Implications of the decision

The decision of the Federal Court in Ono Pharmaceutical Co. Ltd v Commissioner of Patents [2021] FCA 643 represents a significant victory for pharmaceutical patentees.  In future PTE applications, the APO will (pending any further appeal) adopt the position of the Federal Court.  Based on this decision, pharmaceutical patentees will be able to obtain a PTE based on the first inclusion in the ARTG of the patentee’s goods containing or consisting of a pharmaceutical substance falling within the claims of the patent even if a third party’s goods containing or consisting of a pharmaceutical substance falling within the claims of the patent had been included in the ARTG at an earlier date. 

However, given the significant implications of this judgment, there is a good chance that it will be appealed.