In a significant pair of appeals handed down on the same day, with each cross referring to the other, the Full Federal Court has clarified extensions of term for patents covering more than one pharmaceutical substance with regulatory approval.

In Commissioner of Patents v Ono Pharmaceutical Co. Ltd  [2022] FCAFC 39 (Ono),sup>1 the first approved substance covered by the patent was a third party's. The Court overturned the trial judge and confirmed that the regulatory approval date of the third party's product, not the later approval date of the patentee's product, was to be used for the purpose of calculating regulatory delay - resulting in a shorter extension.

In Merck Sharp & Dohme Corp. v Sandoz Pty Ltd  [2022] FCAFC 40 (MSD v Sandoz),2 both approved substances were the patentee's. MSD sought an extension based on the product with later regulatory approval, as that would have resulted in an enforceable extension of almost 18 months. The Court upheld the trial judge and confirmed that the earlier regulatory approval date applied for the purpose of calculating regulatory delay. As a result, the Full Court reduced the extension of term to zero. This would be the case even if the patentee had not marketed the relevant approved substance in Australia.

Key takeaways

When considering extensions of term for patents covering more than one pharmaceutical substance with regulatory approval, it is important to note:

  • a patent term extension is to be calculated by reference to the product containing the pharmaceutical substance covered by the patent which first obtains regulatory approval;

  • this product may be a third party product;

  • the patentee does not have a choice as to which product it might rely on in seeking an extension of term;

  • if a product covered by a patent obtains approval less than five years after the filing date of the patent, there will be no effective extension of term;

  • divisional filings claiming different and specific subsequently approved commercialised products may provide scope for patentees to benefit from different term extensions.

Ono - additional regulatory approval for third party product

This case concerned an extension of term application for Ono Pharmaceutical Co. Ltd (Ono) and E.R. Squibb & Sons LLC's patent (AU2011203119) for anti-PD-1 antibodies.  Ono applied for an extension of term based on the regulatory approval date for its drug Opdivo® (nivolumab), but MSD's drug Keytruda® (pembrolizumab) had an earlier regulatory approval date and also fell within the scope of the claims.3  

In the Patent Office, Ono's application was unsuccessful. The delegate of the Commissioner found that the application should have been based on the regulatory approval date of Keytruda as "[t]he good with the earliest first regulatory approval date containing, or consisting of, the substance that falls within the scope of claim 3 of the patent".4

Ono applied for judicial review of the Patent Office's decision in the Federal Court where the primary judge set aside the delegate's decision and ordered that the application based on Opdivo be granted. Given the language of the provisions, their legislative history, extrinsic materials and a finding that the Commissioner of Patents' construction of the relevant sections would lead to what His Honour considered to be potentially absurd consequences, the primary judge found that an application for an extension of term must be based on the first regulatory approval date of a patentee's own (and not a third party's) product falling within the scope of the claims.  

The Full Court reversed the primary judge's decision and found (as had the Commissioner) that Ono's application should have been based on the earliest first regulatory approval date of any substance falling within the scope of the patent (i.e. Keytruda). The Full Court rejected the primary judge's "liberal rather than a literal" approach to interpreting the legislative provisions in favour of the language chosen by the legislature.5  

Specifically, the Court found that limiting the relevant goods in the extension of term application to those of the patentee "reduce[d] the scope of section 70(3) to a more limited subset of goods than is provided for by the actual words of the provision."6 Further the Full Court clarified that, where a patent claimed multiple pharmaceutical substances, it was not open to the patentee to choose which substance would form the basis of the extended term calculation under section 77(1)(a).7 The calculation will always be based on the earliest first regulatory approval date of a product containing, or consisting of, a pharmaceutical substance falling within the scope of the patent.

More generally, the Full Court found that:

in balancing the range of competing interests-not just providing for the patentee's interests-it can be taken that the legislature saw the correct balance as being achieved by the very words it chose in order to implement the extension of term regime. If, in its operation, that regime has not achieved, and is not achieving, its intended policy objectives, or is providing difficulty for patentees in its application, then it is for the legislature to drive the outcomes it seeks by undertaking the necessary legislative changes.8 

As a result of the Full Court's decision, the only extension of term open to Ono will be based on Keytruda. Such an extension will be eight months and 26 days shorter than if the term was extended by reference to Opdivo.  

MSD v Sandoz - regulatory approvals for more than one product of the patentee

In this case, patentee Merck Sharp & Dohme Corp. (MSD) sued generic pharmaceutical company Sandoz for threatening to infringe MSD's compound patent which claimed both sitagliptin (Januvia®) and sitagliptin/metformin (Janumet®). The trial judge dismissed the infringement claim at trial and further allowed Sandoz's cross-claim, ordering revocation of MSD's patent term extension which her Honour found had been wrongly granted by the Patents Office.9

In dismissing the appeal and upholding Her Honour's decision, the Full Court approved the trial judge's reasoning which - in a situation which the Full Court described as an "oddity" - resulted in an extension of term of zero.10 That is, MSD's patent met all the eligibility criteria for the grant of an extension, but the duration of the extension had to be reduced to nothing.

The Full Court confirmed that section 77 of the Act, which sets out the calculation of duration of an extension "means what it says".11 That is, an extension of term is equal to the amount of time between the date on which the patent was filed and the date on which any pharmaceutical substance which is disclosed and claimed by the patent first obtains regulatory approval,12 minus five years. However, the extension cannot be longer than five years or less than zero.13 This means that in any case where a product disclosed in a patent obtains regulatory approval within five years of the patent date, the patent term is not able to be effectively extended. This is true even if  the patentee seeks to base its application for the extension on a second product disclosed in the patent which obtains regulatory approval more than five years after the patent date.  

This was the situation in the present case. MSD's products for sitagliptin and sitagliptin/metformin both  fell within the scope of the patent in issue.14 The duration between the patent date and the first regulatory approval date for goods containing or consisting of each of those two pharmaceutical substances was (approximately):

  • four and a half years for sitagliptin; and

  • six and a half years for sitagliptin/metformin.15]

MSD's application for the extension of term was based on the sitagliptin/metformin product. However, because the patent also disclosed and claimed sitagliptin, the calculation of the extension had to be based on that substance, as it was approved first. Accordingly, the patent was entitled to an extension of term equal to four and half years "reduced (but not below zero) by 5 years".16 In practice, the end result is no extension.

The Full Court agreed with the trial judge that MSD's arguments to the effect that this interpretation produced a "senseless paradox" and other absurd outcomes should be rejected. MSD submitted that this reasoning would, in practice, lead to:

  1. situations where a patentee would seek extension and the Commissioner would be forced to assess that application then grant an extension of term equal to zero; and

  2. situations where a patentee would be unable to obtain an extension for a subsequent product disclosed, claimed and later commercialised in the same patent.17  

In the view of their Honours, as to the argument in (a), the legislature has inferred that patentees will not make an application in circumstances where they would not obtain any enforceable extension.18 Regarding the argument in (b), a patentee could solve this problem by amending the patent to remove the claims to the subsequent product, filing a divisional application claiming the subsequent product and then applying for an extension of that divisional.19  

The Full Court also dismissed MSD's challenge to a previous decision of the Full Court in Pfizer Corp v Commissioner of Patents [2006] FCAFC 190, confirming that relevant inclusion in the Australian Register of Therapeutic Goods (ARTG) for the purpose of calculating the extension includes a listing for "export only" substances. It could not be said that the legislature sought only to compensate for delay in marketing in Australia.20

Concluding remarks

Subject to further appeal, these judgments restore the perceived orthodoxy as to term extension based on regulatory delay. The extension is to be calculated from the earliest approval of a product covered by the patent (if more than one), whether the additional approved product was that of a third party, or another product of the patentee.

Further, any suggestion that the patentee has choice in the product or approval by reference to which extension is determined has been scotched, and matters of the 'earliest first' approved pharmaceutical substance are objectively determined based on the facts, including the state of the ARTG.  

Somewhat relatedly, in a recent interlocutory decision, the Federal Court has expressed a preliminary view, consistent with the perceived orthodox view, that extensions of term are only available for claims to new pharmaceutical substances (rather than processes).21

If the results in the three decisions stand, this will reinforce the conventional understanding that the Australian patent extension of term provisions are reasonably restrictive.

Footnotes

1Commissioner of Patents v Ono Pharmaceutical Co. Ltd [2022] FCAFC 39.

2 Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40.

3To account for this, Ono separately applied for an extension of term based on Keytruda's regulatory approval to be considered by the Commissioner in the event the application based on Opdivo was unsuccessful.

4 Ono Pharmaceutical Co., Ltd. et al [2020] APO 43, [45].

5 Commissioner of Patents v Ono Pharmaceuticals Co. Ltd  [2022] FCAFC 39, [116].

6 Commissioner of Patents v Ono Pharmaceuticals Co. Ltd  [2022] FCAFC 39, [135].

7 Commissioner of Patents v Ono Pharmaceuticals Co. Ltd  [2022] FCAFC 39, [136].

8 Commissioner of Patents v Ono Pharmaceuticals Co. Ltd  [2022] FCAFC 39, [139].

9 Merck Sharp & Dohme Corp. v Sandoz Pty Ltd  [2021] FCA 947; 162 IPR 409

10 Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40, at [40], [80].

11 Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40, at [63].

12 The "first regulatory approval date" is defined in s 70(2). In this case (and most others) this date is in effect the date on which goods that contain or consist of the relevant pharmaceutical substance are included on the Australian Register of Therapeutic Goods.

13 Patents Act 1995  (Cth), ss 77(2) and 77(1)(a).

14 Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40, at [6].

15 Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40, at [6].

16 Patents Act 1995  (Cth), s 77(1).

17 Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40, at [49]-[53].

18Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40, at [80].

19In this case, such a process would not have benefited MSD as it was suing Sandoz for infringement of the claims to the earlier product (sitagliptin).

20 Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40, at [108].

21 Biogen International GmbH v Pharmacor Pty Ltd [2021] FCA 1591, at [137]-[138].

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.

    Lawyers Weekly Law firm of the year 2021                  
 		Employer of Choice for Gender Equality (WGEA)

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.