Australia: Buyer Beware: Swiss-Style Patent Claims And The Australian Life Sciences Industry

Last Updated: 17 December 2018
Article by Joy Atacador, Scott Sloan and Andrew Baker

A recent Federal Court decision has confirmed the Australian approach to the infringement of Swiss-style patent claims. The decision serves as a useful reminder of:

  • The legal framework surrounding second medical use inventions in Australia; and 
  • The issues associated with the importation of medicaments that are manufactured using patented methods overseas. 

Discoveries related to the second medical use of a known substance can be protected by claims directed towards a method of treatment and Swiss-style use claims. Both of these types of claims can provide some form of patent protection where the discovery relating to the substance itself may not otherwise be patentable. 

In particular, Swiss claims are directed to the use of a substance in the manufacture of a compound for the treatment of a particular condition. However, the question of the scope of Swiss claims has not been considered extensively by Australian courts. 

The decision in Apotex v ICOS Corporation (No 3) [2018] FCA 1204 (Apotex v ICOS) has confirmed the Federal Court's approach to the construction of Swiss claims and the potential issues for Australian importers of pharmaceutical compounds. 

Second medical use claims

In a method of treatment claim the patentee's monopoly is limited to a process used to treat a condition by administering a particular compound. For example, the 'use of substance X for the treatment of condition Y'. 

In order to establish infringement of this type of claim it is necessary to show that a person has used the method or that they have played a role in another person's use of the method. This means that medical professionals who use the patented method may be liable for infringement. 

In contrast, a Swiss claim can take the form of 'the use of substance X in the manufacture of a medicament for the treatment of condition Y'. An invention defined by a Swiss claim has been characterised by Australian courts as a method or process. 

In contrast to a method of treatment claim, the method defined by a Swiss claim is likely to result in a physical product. The availability of such a product may provide inventors with a broader scope of protection when compared with method of treatment claims because it allows patentees to target persons who import or sell these products, rather than the medical professionals that use a patented method.  

Apotex v ICOS 

Apotex commenced revocation proceedings in respect of two patents owned by ICOS. The ICOS patents relate to the use of a particular dose of a compound to inhibit an enzyme in order to treat male sexual dysfunction. In particular, the ICOS patents included Swiss claims related to the manufacture of this compound. ICOS filed a cross-claim seeking a declaration that Apotex had threatened to infringe the above claims by proposing to import substances that would be manufactured by multiple third parties outside of Australia.  

Apotex admitted that its compound would infringe all of the asserted claims, except for the Swiss claims. Apotex submitted that the importation or sale of a compound made overseas by third parties couldn't be an infringement of the claims. Apotex also relied on evidence which showed that various entities located in different countries were used to manufacture the active ingredient and the finished dosage form.  

Territoriality and the Patents Act

Section 13 of the Patents Act gives patentees the exclusive rights to exploit their invention and to authorise another person to do so.  Where the relevant invention is a method or process, the right to exploit the invention is defined as including the right to use the method or process and to import a product resulting from such use. However, the application of the Act is effectively limited to the area within Australia's continental shelf. 

In Apotex v ICOS, the issue in dispute between the parties was whether the use of a patented method to manufacture a product is required to have taken place in Australia, if the product is also subsequently imported into Australia. Apotex submitted that only products resulting from the use of the relevant method in Australia were relevant to infringement and that a finding contrary to this submission would be a significant extension of the territorial restriction of rights contained in the Patents Act. 

The court noted the uncertainty around this issue and first considered the approach adopted by Lindgren J in Alphapharm v H Lundbeck (2008) 76 IPR 618. In that case his Honour found that it was necessary to read a limitation into the meaning of 'exploit' which had the effect of capturing a product that is imported into Australia but manufactured overseas using a patented process or method.

Nicholas J came to the same conclusion in Apotex v Warner-Lambert (2016) 122 IPR 17 but focused on the relevant act of infringement, as opposed to the interpretation of 'exploit'. His Honour noted that in cases where the use of a patented method occurs outside of Australia, the relevant act of infringement becomes the sale or importation of the product made using the patented method as opposed to the use of the patented method overseas.

Besanko J agreed with the approach adopted in Apotex v Warner-Lambert (2016) 122 IPR 17 and found that the definition of 'exploit' and section 13 operate together to determine the limits of a patentee's exclusive rights. On this basis his Honour found that the importation of products into Australia that had been manufactured overseas using the patented method would infringe the Swiss claims of the ICOS patents.

Consequences for importers of pharmaceutical compounds

The approach adopted by Australian courts to Swiss claims could have significant implications for an industry reliant on global supply chains and overseas manufacturing facilities. 

In particular, the key lessons to be taken from the decision are that: 

  • It is important to consider the method used to manufacture medicaments in overseas production facilities prior to the importation of finished drugs into Australia; and
  • As a result of the relatively large volume of finished drugs that are imported into Australia, most cases that consider Swiss claims will turn on the identification of a product that has been manufactured using a patented method and subsequently imported, as opposed to the use of the method itself.

Ultimately, the decision in Apotex v ICOS provides additional guidance as to the construction of Swiss claims and serves as a useful reminder of the legal issues that may arise where compounds manufactured overseas using patented methods are subsequently imported for sale into Australia. 

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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