Patent term extensions (PTEs) in Australia have been a hot topic over the past year.  On Friday, things got a lot hotter for patentees whose patent covers more than one pharmaceutical substance per se thanks to two decisions of the Full Federal Court, which collectively operate to narrow the circumstances in which pharmaceutical patentees can obtain a PTE. 

Two appeals; two different outcomes; more challenges for pharmaceutical patentees 

In 2021, we wrote about Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2021] FCA 947 (MSD v Sandoz), and Ono Pharmaceutical Co. Ltd v Commissioner of Patents [2021] FCA 643 (Ono), which each discussed the Federal Court’s decisions clarifying the circumstances in which a pharmaceutical patentee could obtain a PTE.  In summary, those decisions at first instance meant that:

• Per Ono, a patentee could obtain a 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 on the ARTG at an earlier date.
• However, per MSD v Sandoz, where two or more goods containing pharmaceutical substances (that are disclosed and claimed in a patent) have been included on the ARTG by the patentee (or its agent), the calculation of the length of a PTE must be based on the earliest of those inclusions on the ARTG.  This can result in a PTE of zero years.

Both of the decisions in MSD v Sandoz and Ono were subsequently appealed to the Full Court of the Federal Court and were heard on consecutive days by the same panel of three judges; both decisions on appeal were handed down on Friday, 18 March 2022.

The appeal in MSD v Sandoz was dismissed by the Full Court, meaning the findings of the primary judge (outlined at (b) above) were upheld.  

The Full Court allowed the appeal by the Commissioner of Patents in Ono.  The Full Court found that the primary judge had erred because:

• his reasoning implied a notion of choice into section 70(3) of the Patents Act 1990 (Cth) (the Act), which was not there; and
• the primary judge had stated that section 70(3) of the Act is concerned only with “the patentee’s goods”, which incorrectly reduced the scope of the section to a more limited subset of goods than is provided for by the actual words of the provision and the context of the PTE regime as a whole (i.e. when taking into account other statutory provisions).  

While the primary judge had considered there to be a “nice fit” when sections 70 and 71 of the Act are read together in that more limited way, the Full Court found that this “fit” is only achieved by conveniently imposing limitations on the statutory language that lead to the patentee’s desired outcome – essentially, the “fit” was reverse engineered rather than arising directly from the statute itself.

As a result, the Full Court overturned the first instance decision in Ono, instead holding that a PTE must be based on the first inclusion on the ARTG of any substance disclosed and claimed in the patent, irrespective of whether the first inclusion on the ARTG is by a third party or by the patentee.

A more limited PTE regime in practice

Notably, just prior to these two Full Court decisions, the Australian Patent Office (APO) published its decision in Bayer Pharma Aktiengesellschaft [2022] APO (Bayer), which applied and followed the primary judge’s decision in MSD v Sandoz.  The APO found that Bayer’s patent was not entitled to a PTE extending the patent term expiry date from 31 August 2020 to 8 February 2023.  Given the Full Court upheld the first instance decision in MSD v Sandoz, this APO decision provides a good example of how the Full Court’s decisions will practically affect patentees going forward.

Background

Bayer’s request for a PTE was based on the marketing approval of “YAZ”, a Bayer product that was approved on 8 February 2008 and fell within the scope of a claim of Bayer’s patent.  The PTE was granted, but was then challenged by a third party who argued the PTE should have been based on the earliest first regulatory approval date of a pharmaceutical substance falling within the claims.  The third party noted that an earlier Bayer product, “YASMIN”, had been registered on the ARTG on 6 July 2001 and also fell within the scope of the claims of Bayer’s patent.  If the PTE was based on the inclusion of “YASMIN” on the ARTG then the patent term would not be extended.

Bayer argued that “YASMIN” contained a different pharmaceutical substance per se to “YAZ” and that, as such, “YASMIN” should not be considered the substance referred to in the relevant sections of the Act (subsections 70(3) and (5)(a) - we have previously outlined the relevant statutory provisions of the PTE regime in the Act here).

Bayer contended that “substance” meant, by construction of the Act, the pharmaceutical substance specified in the application for the extension of term (i.e. the substance in “YAZ”, not that in “YASMIN”, which was a different pharmaceutical substance per se to that in “YAZ”, though both were disclosed and claimed in the patent).  Further, in calculating the term of the PTE, Bayer submitted that the legislation allowed for the nomination of ‘any’ substance claimed in the patent, and thus that the appropriate regulatory approval date is that of the nominated substance (i.e. that in “YAZ”).

Decision by the Commissioner of Patents

The Commissioner of Patents did not accept Bayer’s submissions and found that, although the Act allows for a patent to disclose multiple pharmaceutical substances, and although there may be multiple ARTG approval dates for goods containing those substances, the PTE must be based on the date that the first product containing any of the pharmaceutical substances claimed in the patent was included on the ARTG.  This is consistent with Jagot J’s decision (and the Full Court’s decision) in MSD v Sandoz that ‘the Act does not operate by reference to a nomination or selection of a pharmaceutical substance by the patentee, and that the extension is based on what is, in fact, the “earliest” inclusion on the ARTG’.

Therefore, the Commissioner rejected Bayer’s argument that ‘the substance’ be construed as a reference to the substance the subject of the PTE because that would be akin to making a nomination or selection of a pharmaceutical substance.

Implications for pharmaceutical patentees

The Full Court decisions in MSD v Sandoz and Ono, and the APO’s decision in Bayer, demonstrate the challenges pharmaceutical patentees face in obtaining PTEs: where two or more goods containing pharmaceutical substances (that are disclosed and claimed in a patent) have been included on the ARTG by the patentee or any other person, the calculation of the length of a PTE will be based on the earliest of those inclusions on the ARTG.  The impact of the Full Court decisions is that the circumstances in which a pharmaceutical patentee will be able to obtain a PTE to compensate for loss of patent term as a result of the regulatory approval process are narrower than those identified by the Court at first instance in Ono.  

In light of these decisions, and as discussed previously, pharmaceutical companies should consider strategies that allow them to maximise the time one or more products will be protected by a patent, including separating different pharmaceutical substances into divisional patent applications and delaying applications for regulatory approval of certain products in view of the company’s development pipeline.  Without taking such measures, pharmaceutical companies risk losing the benefit of a regime designed to protect them by ensuring that the steps necessary to bring a new pharmaceutical product to market do not negatively impact the term of the associated patents.