Intellectual Property Law Update Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40 - Commissioner of Patents v Ono Pharmaceutical Co. Ltd [2022] FCAFC 39

Intellectual Property
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M Marcus

Patents – extensions of term of patent relating to pharmaceutical substances



Chief Justice Allsop and Justices Yates and Burley heard these appeals one after the other in November 2021 and handed down their decisions in both on 18 March 2022. They concerned different approaches to statutory construction, relating to extension of patent terms, taken by Beach J and Jagot J as primary judges. Justice Beach had given Ono a longer extension of term than the Full Court considered was available, and Jagot J had rejected Merck’s of term in a manner the Full Court agreed with. All in all, disappointing news for patentees and good news for generic pharmaceutical companies.


The Patents Act 1990 (Cth) provides for the extension of term of up to five years beyond the usual twenty year term for patents that disclose and claim a pharmaceutical substance per se where good containing the substance are included in the Australian Register of Therapeutic Goods and it has taken at least give years from the date of the patent to achieve first regulatory approval on the ARTG. The length of the extension is equal to the period beginning on the date of the patent and ending on the “earliest first regulatory approval date” reduced by five years.

In the Ono matter, Ono sought an extension of term of its patent based on the date that it had obtained listing on the ARTG of its OPDIVO product (which contained the pharmaceutical substance nivolumab), which was the subject of the claims of the patent. As it happened, Ono had previously commenced an infringement proceeding against Merck Sharpe & Dohme (Australia) Pty Ltd in respect of Merck’s KEYTRUDA product (which contained a different pharmaceutical substance, pembrolizumab) which Ono asserted infringed that patent. While that dispute was settled, the key fact for the present dispute was that KEYTRUDA had been listed on the ARTG some eight or so months before OPDIVO had been. Accordingly, Ono’s position was that the calculation of the extension of term of its patent should be based on the listing of its OPDIVO product, not Merck’s KEYTRUDA product.

Justice Beach at trial agreed with Ono, observing that the Commissioner of Patents was “seeking to sell … a literal form of textualism” of the extension of term regime which was not reasonable and commercial. In short, Beach J observed that the purpose of the regime was to ensure that patentees did not lose the benefit of their patent monopoly for a drug by reason of the time it takes to obtain marketing approval (listing on the ARTG) for the drug, and if the calculation of the extension of term was made by reference to a competitor’s marketing approval, the result would be unreasonable and uncommercial. Accordingly, his Honour interpreted the extension of term regime to allow the patentee to choose or nominate the drug that was first listed on the ARTG and upon which the extension of term was to be calculated.

The Full Court disagreed with Beach J. While their Honours accepted that one of the objects of the extension of term regime is to compensate a patentee of a drug for time lost in obtaining regulatory approval before it can exploit its claimed invention, they did not accept that this required that the regime be construed so as to achieve a “commercial outcome for the patentee”. Their Honours stressed that the regime seeks to “balance a range of competing interests, not just the interests of the patentee”. Accordingly, their Honours rejected a liberal rather than literal construction. That necessarily led to a conclusion that the text of the extension of term regime requires identification of the “first regulatory approval date” for a pharmaceutical substance disclosed and claimed in the patent, which is objectively ascertained by reference to the ARTG, not what the patentee identifies in its application for an extension of time, or only by reference to the drugs sponsored by the patentee.

Then in the Merck v Sandoz matter, Merck had obtained an extension of term on its patent based on an application for an extension relying on the listing on the ARTG for export only of a composition of sitagliptin/metformin, which was claimed in the patent. However, Merck had previously (and within five years of the date of the patent) obtained listing on the ARTG for export only of sitagliptin alone, which was also claimed in the patent. If it had identified that drug in its application for an extension, it would not have obtained any extension.

Merck sued Sandoz for infringement of the patent, which infringement action would fail if there was no extension of term of the patent. Justice Jagot at first instance rejected Merck’s contention that the patentee could choose which substance it wished the extension of term to be based on. As may be appreciated by the Full Court’s decision in the Ono matter, the Full Court agreed with Jagot J.

As it happens, Merck only obtained registration on the ARTG of its sitagliptin/metformin composition for marketing in Australia much later than its export only listing on the ARTG. Merck therefore later applied to extend the term of its patent based on that later ARTG registration. It argued that the extension of term regime only concerned registrations on the ARTG which were not “export only” listings. This required it to overcome an earlier decision of the Full Court in Pfizer Corp v Commissioner of Patents (2006) 155 FCR 578 which held otherwise and observed that manufacturing a product for export involves exploitation of the invention of the patent and so an export only listing on the ARTG gives the patentee the benefit of its patent in line with the object of the regime. The Full Court in Merck v Sandoz declined to depart from the previous Full Court’s “reasoned decision”, noting that the regime is concerned with “first inclusion” on the ARTG, not first “registration” as opposed to “listing” on the ARTG.

Tom Cordiner Headshot

Tom Cordiner KC 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

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