Intellectual Property Update - Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643 (11 June 2021)

Intellectual Property Trade Practices
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M Marcus
C Cunliffe 2

Patents – extension of term – which ARTG registration may be relied on

In this case, the applicants, Ono Pharmaceutical Co, Ltd and E.R. Squibb & Sons, LLC (“Ono”) were the proprietors of an Australian patent titled “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 Applicants applied to extend the term of the patent, based on a pharmaceutical product marketed by Bristol-Myers Squibb Australia Pty Ltd, a related entity of the second applicant, under the name OPDIVO.

OPDIVO contains the active pharmaceutical ingredient nivolumab, which is a fully human anti-PD-1 monoclonal antibody of the IgG4 isotype, produced in mammalian Chinese hamster ovary cells by recombinant DNA technology. Nivolumab is a pharmaceutical substance per se which is in substance disclosed in the complete specification of the patent and in substance falls within the scope of at least claim 3. OPDIVO was included on the Australian Register of Therapeutic Goods (ARTG) on 11 January 2016.

A third party competitor of the applicants, Merck Sharp & Dohme (Australia Pty Ltd), had obtained ARTG listing of KEYTRUDA on 16 April 2015. KEYTRUDA contains pembrolizumab, another humanised anti-PD-1 monoclonal antibody of the IgG4 isotype, which is a pharmaceutical substance per se which is in substance disclosed in the complete specification of the patent and in substance falls within the scope of at least claim 3.

The delegate of the Commissioner of Patents held that the OPDIVO application did not comply with the statutory requirements and ought to be refused, because it had not been made on the basis of the good on the ARTG with the first regulatory approval date, which was KEYTRUDA. Ono sought to review the decision under s 5(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth), asserting the delegate made an error of law.

Justice Beach was therefore called upon to resolve a question of construction. Ono contended that the requirements of ss 70(2), (3) and (4) of the Patents Act 1990 (Cth) may be satisfied by any one of the pharmaceutical substances referred to in ss 70(2)(a) and (b) which are disclosed and claimed in the patent, and that any one or more pharmaceutical substance 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 s 71. Ono also contended that the ordinary meaning of s 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 s 70(2).

Justice Beach upheld Ono’s construction. As a consequence, his Honour concluded that the first relevant inclusion of goods in the ARTG containing or consisting of the substance as required by ss 70(3) and (5) was the first inclusion of OPDIVO, the OPDIVO application complied with s 71 because the application was made in time, and that, pursuant to s 77, the term of the patent should be extended from 2 May 2026 to 11 January 2031.

Justice Beach observed that the delegate’s construction (that the application for extension should have been based on KEYTRUDA, because that was the good with the earliest regulatory approval date that contained or consisted of a pharmaceutical substance that fell within the scope of claim 3 of the patent) had little to commend it, except for a literal form of textualism, particularly since it would require the patentee to monitor third party products. His Honour also concluded that the construction was not compelled by the statutory language.

In his reasons, Beach J began by an analysis of the statutory scheme. His Honour observed that:

  • section 70(2) provides that either or both 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; orone or more pharmaceutical substances when produced by a process that involves the use of recombinant DNA technology, must in substance be disclosed in the complete specification and in substance fall within the scope of the claim or claims of that specification;
  • section 70(3) provides that goods containing or consisting of the substance must have been included in the ARTG; and 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 five years;
  • section 70(4)provides that the term of the patent must not have been previously extended;
  • section 70(5)(a)provides that, if no pre-TGA marketing approval was given in relation to the substance, the first regulatory approval date in relation to a pharmaceutical substance is the date of commencement of the first inclusion in the ARTG of goods that contain or consist of the substance;
  • section 71(2)provides that an application for an extension of term must be made during the term of the patent and within six months after the latest of (a) the date the patent was granted; (b) the date of commencement of the first inclusion in the ARTG of goods that contain or consist of any of the pharmaceutical substances referred to in s 70(3); and (c) the date of commencement of s.71 (in this case, s 71(2)(b) is the relevant date);
  • section 74 provides that an application must be accepted if ss 70 and 71 are satisfied; and
  • the effect of section 77 is that if the Commissioner grants an extension of the term, the term of the extension is equal to the period beginning on the date of the patent and ending on the earliest first regulatory approval date (as defined by s 70) in relation to any of the pharmaceutical substances referred to in s 70(2), reduced by five years but not such as to go below zero.

Justice Beach said that in s 71(2)(b), the word “any” in “any of the pharmaceutical substances referred to in subsection 70(3)” just reflects that it is the substance chosen which then becomes “the substance” under s 70(3). The substance chosen is “the substance” under s 70(3) if it meets the condition(s) of s 70(2). And it is “the substance” under s 70(5)(a).

Justice Beach said that, provided the conditions of ss 70(3)(a) and (b) are satisfied, s 70(3) does not impose any additional conditions or restrictions on which of the “at least one of those pharmaceutical substances” may be used to satisfy the requirements of s 70(3). Further, his Honour considered that s 70(3) is not free-standing in the sense that it is to be read with and in the context of s 70(2).

Justice Beach observed that s 71(2)(b) substantially mirrors s 70(5)(a) save that it refers to “any of the pharmaceutical substances referred to in subsection 70(3)” rather than “the substance”. But his Honour considered that this was because the substance specified by the patentee to satisfy s 70(3) can be any pharmaceutical substance that is in substance disclosed and claimed in the patent.

Accordingly, Beach J considered it was for the patentee under s 71(2)(b) to stipulate the pharmaceutical substance, provided the requirements of s 70(3) read in the light of s. 70(2) are satisfied. Justice Beach observed that although the patentee has that freedom to stipulate, there are other broader constraints such as under s 70(4) and s 77(1)(a) concerning the calculation of the term which uses “the earliest first regulatory approval date”. It is not entirely clear what is meant by that comment.

Justice Beach said this construction fits with s 77, which operates once an application for an extension of term meets the conditions for acceptance but is not dealing with the criteria for the grant of any extension.

In reaching this construction, Beach J reasoned that the extension of term regime is beneficial and remedial, and that accordingly, a liberal rather than a literal construction is to be preferred.

Although the Commissioner relied upon Pfizer v Commissioner of Patents (No 2) (2006) 69 IPR 525 (‘Pfizer’) at [34], Beach J considered that the decision did not assist, because in Pfizer, Bennett J was not required to construe the meaning of s 77 in the context of a patent which in substance disclosed and claimed more than one pharmaceutical substance. The issue in Pfizer was whether the first inclusion in the ARTG was the date of listing for export only or the date of registration enabling Pfizer to market the substances in Australia. For that reason, Beach J considered Bennett J was not focused on what he had to consider.

Justice Beach also noted the extrinsic material (the explanatory memorandum, second reading speech and Industry Commission Report No 51, the Pharmaceutical Industry) manifests the recognition that due to the long development time and regulatory requirements involved in commercialising a new pharmaceutical substance, patentees of pharmaceutical products have considerably fewer years of patent protection within which to gain a return on their investment than patentees in other areas of technology and the intention in introducing extension of term provisions directed to pharmaceutical substances was to provide an effective patent life, being the period after marketing approval was obtained, during which patentees were able to exploit their invention and to earn a return on their investment.

Justice Beach accepted (based on comments in Alphapharm Pty Ltd v H Lundbeck A/S (2014) 254 CLR 247) that the extension regime sought to balance a range of competing interests and purposes, and that while the compensation of some time lost due to regulatory hurdles is a purpose of the regime, it is not the sole purpose. But his Honour found that, even with that in mind, and considering the objects clause, the applicants’ construction was to be preferred. It reflects the mischief which the extension of term regime is intended to address. The evident purpose of the extension of term provisions is to provide the patentee with an effective patent life by restoring the time lost by the patentee prior to gaining market approval, thereby compensating the patentee for the additional time, expense and difficulty in commercialising its new product.

Justice Beach also noted that when the sections were introduced (in 1998), s 76A was introduced, which required the patent holder to lodge with the Secretary of the Department a return with financial information as to research and development on the drug the subject of the application. The section was later repealed. Beach J considered the section implicitly supported Ono’s arguments, because the section clearly referred to the activities or investments of the patentee, not a third party.

Justice Beach considered that Ono’s construction fit within the ordinary meaning of the statutory language and is consonant with the legislative purpose, but considered that if he was wrong, and the “earliest first regulatory approval date” included a third party’s ARTG registration, it would be manifestly unreasonable, because a patentee in Ono’s position would be, contrary to the clear legislative intention, denied compensation for the time lost in securing marketing approval for its product. Indeed, the extension term may be reduced to zero. In addition:

  • the patentee would need to review each and every approval granted on the ARTG in order to determine if a particular pharmaceutical substance fell within the scope of one or more claims;
  • the ARTG public summary might not provide details necessary to determine whether the product falls within the scope of a patent, for example the chemical or molecular structure of a competitor product or the therapeutic target of a competitor product, or whether a third party product is protected by patent(s);
  • determining whether a product falls within the claims of the patent is a complex task;
  • determining whether a product falls within the claims of a patent may also require information which can only be provided by the competitor if the Court were to order discovery of relevant documents, which is a non-trivial task;
  • the TGA may remove products from the ARTG in certain circumstances, including upon request by the sponsor, so the ARTG is not necessarily a complete database of all the possible “first regulatory approval dates” in existence;
  • even if the patentee conducts comprehensive searches using reasonable care and skill, there is a risk that third party products will not be picked up by such searches; and
  • if the Commissioner were required to monitor regulatory approvals granted to third party products in order to determine if a pharmaceutical substance is disclosed in a patent specification and in substance falls within the scope of one or more claims of that patent, the Commissioner may face an unduly onerous burden.

For these reasons, Beach J concluded that if the Commissioner’s construction was to be accepted, there would be very serious practical problems which would be unduly onerous and not beneficial to any patentee. His Honour considered the legislature should not be taken to have intended such consequences.

Justice Beach noted that it was not Ono’s position that a patentee should be permitted to wait and elect to apply for an extension based on a good that may be second, third, or last on the ARTG, or that a patentee should be permitted to pick and choose which of its products to nominate as the substance for the purposes of s 70 (although it was unclear precisely how Ono said that outcome could be avoided, based on the language of the relevant provisions). However, it is not clear that Beach J adopted Ono’s construction in this regard: indeed, it appears he may not have (see [174]-[175]).

Justice Beach concluded that the construction applied by the delegate of the Commissioner of Patents in refusing the extension is not the preferable one, because it led to manifest absurdity or unreasonableness, whereas the applicants’ approach has the virtue of avoiding such vices.

Ono’s application therefore succeeded.

Tom Cordiner Headshot

Tom Cordiner QC holds the dual qualification of barrister and registered patents and trade mark attorney

M Marcus

Melissa Marcus practises in defamation law and all aspects of intellectual property

C Cunliffe 2

Clare Cunliffe practises in intellectual property and general commercial litigation

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