Australia: Case Note: H Lundbeck A/S v Sandoz Pty Ltd [2019] APO 18 - patent licence

Last Updated: 1 August 2019
Article by Bernadette Hawkins

In the recent Australian Patent Office decision of H Lundbeck A/S v Sandoz Pty Ltd [2019] APO 18 (11 April 2019), Sandoz was successful in its application for a compulsory licence to protect its exploitation of Lundbeck's Australian Patent No. 623144 ("the Escitalopram Patent").

Background to the Case

Lundbeck's blockbuster antidepressant, escitalopram, marketed as Lexapro®, has been the subject of extensive patent litigation in Australia over the past decade. The Escitalopram Patent claims the (+)-enantiomer of citalopram per se and its methods of preparation. Citalopram is a racemic mixture of the (+) and (-)-enantiomers, marketed by Lundbeck as Cipramil®, and is the subject of an earlier Lundbeck patent.

In 2003, Lundbeck successfully applied for an extension of patent term of the Escitalopram Patent based on the inclusion of Lexapro® in the Australia Register of Therapeutic Goods (ARTG). However, it was subsequently found in a Full Federal Court decision ( Alphapharm Pty Ltd v H Lundbeck A/S [2008] FCA 559, 76 IPR 618) that the extension was incorrectly based on the inclusion of Lexapro® in the Australian Register of Therapeutic Goods (ARTG) and should have in fact been based on the earlier inclusion of Cipramil® in the ARTG.

As a result, Lundbeck filed for a 10-year extension of time to apply for an extension of term correctly based on the inclusion of Cipramil® in the ARTG. The extension of time was advertised on 23 July 2009 and the extension of term was granted on 25 June 2014, extending the protection of the Escitalopram Patent to 9 December 2012. However, given that the extension of term was not granted until after the Escitalopram Patent ceased on 13 June 2009, during this period of uncertainty a number of generic manufacturers, including Sandoz, launched their generic equivalents.

Late last year, we reported on the Federal Court decision in H Lundbeck A/S & Anor v Sandoz Pty Ltd, in which Sandoz was found to infringe on the Escitalopram Patent due to the retroactive nature of the extension of term. The current proceedings arose from Sandoz's application for a licence to exploit the Escitalopram Patent under regulation 22.21.

Should a Licence Be Granted?

The main consideration of the APO decision was whether or not to grant Sandoz a licence that would protect their exploitation of the Escitalopram Patent, in view of the patent ceasing before the extension of term could be granted.

Regulation 22.21 of the Patents Regulations 1991 provides protection or compensation for certain persons who "exploited, or took definite steps by contract or otherwise to avail themselves of or exploit, inventions" within a period of time extended under section 223(9) of the Patents Act 1990.

Section 223(9) of the Patents Act 1990 empowers the Commissioner to protect a third party who exploited or took definite steps to exploit the invention "because of" a failure to do a relevant act. In the present case, the relevant act was Lundbeck's failure to apply for an extension of term in time and the subsequent ceasing of the patent.

When deciding if a licence should be granted, the Deputy Commissioner considered the following matters arising from section 223(9):

a) Did Sandoz exploit, or take definite steps to exploit, the invention before 23 July 2009?

b) Was the exploitation "because of" the failure of Lundbeck to file the application for extension of term of the patent in time, or the ceasing of the patent?

The Deputy Commissioner determined that Sandoz's importation and sale of its generic equivalent, Esitalo®, before the extension of time was advertised, was exploitation of the invention. Furthermore, the Deputy Commissioner found that Sandoz's belief that the patent term was ceasing would have been a main contributing factor when scheduling the launch of their generic equivalent and as such their exploitation was "because of" the Escitalopram Patent ceasing.

The Deputy Commissioner also considered the following circumstances arising from regulation 22.21:

c) Did Sandoz exploit the invention during the period of time extended?

d) If all the criteria from section 223(9) are satisfied, is there discretion whether to grant a licence?

e) On what terms should a licence be granted?

The Deputy Commissioner found that Sandoz exploited the invention by importation, but not sale, during the period of time extended. As such, the criteria of section 223(9) were met and pursuant to regulation 22.21(5) a licence must be granted by the Commissioner "if reasonably satisfied that the application [for a licence] should be granted". The Deputy Commissioner agreed with a previous decision (HRC Project Design Pty Ltd v Orford Pty Ltd [1997] APO 12, 38 IPR 121) that there was a broad discretion on whether to grant a licence.

Further the Deputy Commissioner considered the following matters relevant to the discretion of whether to grant a licence:

  • The nature of the act Lundbeck failed to do and why
  • How Sandoz came to exploit the invention
  • The interests of both Lundbeck and Sandoz

Lundbeck failed to file an extension of term based on Cipramil® within the time set out in the Patents Act 1990. The Administrative Appeals Tribunal (AAT) found that Lundbeck delayed the application for strategic commercial reasons and that Lundbeck did not apprise Sandoz of their intentions to seek the extension. In a previous decision (H Lundbeck A/S v Sandoz Pty Ltd [2018] FCA 1797), Justice Jagot, did not find such behaviour "unreasonable ... in the circumstances".

Sandoz was found to have exploited the Escitalopram Patent by the launch of its Esitalo® product and while importation of the product was covered by a licence, the sale of the product was not. The Deputy Commissioner was of the opinion that, despite the importation not being considered exploitation, it would be artificial to separate the two aspects. Furthermore, any uncertainty as to whether Sandoz required protection was mitigated by the successful infringement action brought by Lundbeck against Sandoz.

A licence would be of considerable commercial value to Sandoz in providing relief from Lundbeck's infringement action. Therefore, the Deputy Commissioner found that there was no reason that a licence should not be granted and was satisfied that the application for a licence should be granted under the following terms:

  • The licence would not entail any royalties
  • The licence would run from the date that the normal term of the patent ended and run until the date that the patent expired at its extended term
  • The licence would be personal to Sandoz, meaning it could not be assigned or transferred

Takeaways

While Australia's patent system is generous in the allowance of lengthy extensions of time to rectify errors that may lead to a loss of patent rights, patentees need to be aware that a third party can apply for protection against exploitation by grant of a compulsory licence by the Commissioner.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions