An odd but not absurd result - the Full Federal Court clarifies the scope of patent term extensions

What you need to know

• The Full Court has clarified that patent term extensions must be based on the first goods included in the Australian Register of Therapeutic Goods (ARTG).
• If a good which falls within the scope of a patent claim is first registered by a competitor, any extension of term for the patent must be based on that competitor registration.
• If a patent discloses and claims multiple pharmaceutical substances with different ARTG start dates, the relevant date for the patent term extension is the first regulatory approval date.

What you need to do

• These two decisions are likely to be highly relevant to innovator's commercialisation and prosecution strategies.
• Pharmaceutical patentees must actively monitor the ARTG for competitor products that may fall within the scope of their patents. Pharmaceutical patentees may also consider divisional filing strategies in relation to different substances to obtain maximum protection.
• On the other hand, the decisions will be welcomed by generic pharmaceutical companies. The outcome in these cases may leave existing patent term extensions vulnerable and provide opportunities for patent term extension challenges and early entry for generic products.

Patent Term Extension Regime

Pharmaceutical patents may be eligible for an extension to their term of up to five years. This extends the standard 20 year term up to 25 years. The extension is in recognition of the significant length of time required to develop and obtain regulatory approval for a new drug.

To be eligible for a term extension, certain requirements must be met. These include:

• one or more pharmaceutical substances or pharmaceutical substances involving recombinant DNA technology, must be 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 ARTG;
• there must be at least five years between the date of the patent and the date of the first regulatory approval for the substance; and
• the term of the patent must not have been previously extended.
• If this criteria is satisfied, the extension is calculated as the time period between the date of the patent and the date of first regulatory approval minus five years.

Background to the decisions

Ono

In Ono, Ono's patent covered two products: Ono's own product, OPDIVO, and a competitor's product, KEYTRUDA. Both products were registered on the ARTG, but the competitor product was listed 8 months earlier. The question was which regulatory approval date was relevant for determining Ono's extension request, the patentee's or the competitor's. Ono preferred the regulatory approval date of its own product as this resulted in a longer term extension.

The Commissioner refused Ono's extension application based on Ono's OPDIVO product, finding that the competitor's KEYTRUDA product was registered first and therefore should form the basis of the extension request.

On appeal, Justice Beach overturned the Commissioner's decision. Contrary to longstanding Patent Office practice, Justice Beach found that only a patentee's product registrations are relevant to extension of term requests. In reaching this conclusion, his Honour took a liberal construction of the relevant provisions of the Patents Act.

MSD

In MSD, MSD's patent disclosed and claimed two pharmaceutical substances: sitagliptin alone and a combination of sitagliptin and metformin. MSD's sitagliptin products were registered on the ARTG two years earlier than its sitagliptin and metformin combination products. However, MSD had obtained an extension to the term of its patent on the basis of the later registration of the combination products. The validity of the term extension was challenged by Sandoz in infringement proceedings brought by MSD.

At first instance, Justice Jagot found that the term extension should be calculated from the regulatory approval date of the sitagliptin products, and not the later registered combination products. Using the regulatory approval date of the sitagliptin products resulted in a zero term extension.

Appeal

The first instance decisions in Ono and MSD were appealed. The appeals were heard on consecutive days in November 2021 by the same Full Court bench, consisting of Chief Justice Allsop and Justices Yates and Burley.

Full Court decisions: First means first

Competitor products are relevant

In Ono, the Full Federal Court overturned the decision of Justice Beach. The Full Federal Court agreed with the Commissioner that the earlier registered competitor product should form the basis of the request.

The Full Court concluded that, while the object of the extension regime is to compensate a patentee for lost time in obtaining regulatory approval of its product, the legislative regime should not be construed to achieve a commercial outcome for a patentee. The Full Court acknowledged that the extension regime balances a range of competing interests and that to construe the statutory provisions with reference to only the patentee's goods impermissibly reduces the scope of the actual words of the legislation.

Multiple substances in one patent

In MSD, the Full Federal Court affirmed Justice Jagot's decision. The Full Court agreed that, for patents disclosing and claiming multiple pharmaceutical substances, the length of the extension is to be calculated from the earliest first regulatory approval of any of those substances.

Similar to its reasoning in Ono, the Full Court acknowledged that this outcome is in accordance with a policy objective of achieving a balance between the competing interests of the patentee and the public interest in unrestricted use of the pharmaceutical invention.

The Full Court rejected MSD's submission that the primary judge's construction led to the "absurd" result of a large number of extension applications resulting in a zero term of extension. While their Honours acknowledged the apparent oddity with the statutory scheme, they observed that the statute expressly contemplates not only that the extension of term may be zero, but also provides that the extension of term may not be below zero. In this context, the Full Court agreed with the primary judge's conclusion that the legislature inferred that a patentee would not make an application for extension of term if the term of the extension would be zero.

Conclusion

The two decisions in Ono and MSD have brought much needed clarity to the particular products to be used in patent term extensions. Any patent term extension which has been granted should be considered critically in light of these decisions to check that it satisfies the extension criteria.

Authors: Nina Fitzgerald, Partner; Stevie Gough, Senior Associate; and Lauren Howe, Graduate.