In two appeal judgements handed down concurrently on 18 March 2022, the Full Federal Court has clarified that a pharmaceutical patent term extension (PTE) for a patent should be based on the earliest Australian regulatory approval date of a pharmaceutical substance which is disclosed and claimed in the patent, irrespective of whether the substance was developed by the patentee or a competitor.
- A patentee’s own earlier ARTG (Australian Register of Therapeutic Goods) listed pharmaceutical substance, or an earlier ARTG listed substance of a competitor (if disclosed and claimed in the patent) can affect the deadline for filing an application for a PTE and the term of the extension.
- Pharmaceutical patent applicants should consider monitoring the ARTG for any competitor’s listings that fall within the scope of their patent claims which could affect the deadline for filing a PTE application and/or the term of the extension, particularly prior to their own ARTG registrations.
The two cases in question, Commissioner of Patents v Ono Pharmaceutical Co. Ltd  FCAFC 39 (Ono) and Merck Sharp & Dohme Corp. v Sandoz Pty Ltd  FCAFC 40 (MSD), were appeals from the first instance decisions of Ono Pharmaceutical Co, Ltd v Commissioner of Patents  FCA 643 and Merck Sharp & Dohme Corp. v Sandoz Pty Ltd  FCA 947, respectfully.
Briefly, both cases involved an earlier ARTG registered pharmaceutical substance and a later ARTG registered pharmaceutical substance (on which the respective PTE application had been based) that were disclosed and claimed in the patent in question. In Ono, the earlier registered substance was from a third party unrelated to the patentee, whereas in MSD the earlier registered substance had been developed by the patentee. Despite the legislation not distinguishing between goods developed by a patentee and those developed by a third party, in the first instance decision in Ono, the earlier registered third party goods were disregarded, whereas in MSD the patentees own earlier registered goods were not.
At issue in both cases before the Full Federal Court (both before Allsop CJ, Yates and Burley JJ) was the construction of the relevant PTE legislation, particularly with respect to which of the ARTG registered goods for each case should be used to determine the deadline for filing the PTE application and the term of the extension.
The Australian PTE legislation is set out in Chapter 6, Part 3 (Sections 70-77) of the Patents Act 1990.
The main legislative points of construction at issue in the cases were:
- subsections 70(2) and (3), which set out two of the three requirements for a PTE (the pharmaceutical substance is disclosed and claimed in the patent; and goods containing the substance are on the ARTG and at least 5 years from the effective filing date and first regulatory approval must have elapsed;
- subsection 71(2), which sets out the deadline for requesting a PTE; and
- section 77, which sets out the calculation for the extension term in the case where the Commissioner grants the extension.
First Instance Decision
In the Ono first instance decision, Beach J had overturned a Patent Office decision (Ono Pharmaceutical Co., Ltd. et al  APO 43) where a PTE on the basis of the patentee’s ARTG registered pharmaceutical substance, OPDIVO (containing the anti-cancer active nivolumab), had been refused in view of an earlier ARTG registered third-party pharmaceutical substance, KETRUDA (containing the anti-cancer active pembrolizumab).
Beach J had considered a literal interpretation of the PTE provisions put forward by the Commissioner (where the “first regulatory approval” for the purpose of determining the extension would be the earliest ARTG registered goods disclosed and claimed in the patent) against an alternative interpretation put forward by the patentee (where the earliest ARTG registration of the goods nominated by the patentee in their PTE application would be used to determine the extension).
Based on an understanding that the legislation was designed“to compensate a patentee of a pharmaceutical substance for the loss in time before which it can exploit its invention” and “to remedy the mischief of a shortened period for an effective monopoly that has been caused by delays in obtaining regulatory approval”,[i] Beach J had preferred the construction put forward by the patentee, rather than the Commissioner’s construction (which would have resulted in goods of a third party affecting the patentee’s extension).
Full Federal Court Appeal
The Commissioner appealed the first instance decision to the Full Federal Court on grounds, inter alia, that the primary judge had erred in their construction of the PTE provisions.
In a unanimous decision, the Full Federal Court allowed the appeal. Their honours noted that “the extension of term regime seeks to balance a range of competing interests, not just the interests of the patentee. It can be taken that the legislature saw the correct balance as being achieved by the very words it chose to implement that regime”,[ii] and in view of this rejected the primary judge’s construction of the PTE legislation in Ono in favour of the literal construction put forward by the Commissioner, which was also consistent with the decision in MSD handed down at the same time (discussed below).
Further, their honours noted that the primary judge in Ono had erred in limiting the legislation by implying “the notion of choice and the notion that s 70(3) is concerned only with “the patentee’s goods”, instead considering that no such limitation should be read into the legislation.[iii] Their honours stated that if the PTE 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”.[iv]
Accordingly, unless leave to appeal to the High Court is sought and allowed, the outcome of the case is that the OPDIVO PTE application will be refused. It will be for the Patent Office to consider an extension of time application for a late-filed alternative PTE request on the basis of KETRUDA by the patentee.
First Instance Decision
In the MSD first instance decision, Jagot J had determined that a PTE, which had initially been granted by the Patent Office on the basis of the patentee’s ARTG registered pharmaceutical substance, JANUMET (being a combination of sitagliptin and metformin for treating diabetes), should be revoked in view of the patentee’s earlier ARTG registered pharmaceutical substance, sitagliptin (also for treating diabetes).
Jagot J had considered a literal interpretation (as also put forward by the Commissioner in Ono) of the PTE provisions put forward by the respondent and the Commissioner (who was an intervener), against a number of alternative interpretations put forward by the applicants (including the “goods nominated by the patentee” construction which had been successful in the Ono first instance decision, and an alternative construction where the timing of the extension under section 77 would be based on the earliest goods meeting the subsection 70(3) criteria (i.e. that had been first registered on the ARTG at least 5 years after the date of the patent)).
Jagot J had distinguished the case from Ono in that the earlier registered goods belonged to the patentee, rather than to an unrelated third party, and preferred the literal construction of the respondent and Commissioner over the constructions put forward by the applicants.
Full Federal Court Appeal
The appellants appealed the first instance decision to the Full Federal Court on grounds, inter alia, that the primary judge had erred in their construction of the PTE provisions, in particular with respect to the timing provisions of section 77.
In another unanimous decision, the Full Federal Court dismissed the appeal in MSD, upholding the primary judge’s construction of the PTE legislation and rejecting the alternative constructions put forward by the appellants. This decision was consistent with the decision in Ono handed down at the same time (discussed above).
Their honours agreed with the primary judge that if the Commissioner determines that the section 70 and 71 requirements are met, and intends to grant the extension, the calculation set out in section 77 to determine the term of the extension should be based on the date of the earliest ARTG registration of any substance meeting the subsection 70(2) criteria (being any pharmaceutical substance that is disclosed and claimed in the patent).
Accordingly, their honours held that although the section 70 and 71 requirements were met by the PTE application in question, the earliest ARTG registered goods were, however, registered within 5 years of the date of the patent, and as such the section 77 calculation resulted in an extension term of zero.
In view of this, the outcome of the case (again pending leave to appeal to the High Court being sought and allowed) is that the Register will be adjusted so that the term of the extension for the patent in question will be adjusted to zero.
Concluding Remarks and Recommendations
The decisions of Ono and MSD provide some much-needed clarity regarding how the PTE provisions are to be construed. We expect that the changes in practice that the Patent Office had introduced after the first instance Ono decision, discussed in our previous article, will be walked back. As such, we consider that the Office may no longer require PTE applicants to indicate that regulatory approval was sought by or with the consent of the patentee.
The decisions also confirm previous Patent Office practice whereby a PTE based on an un-related third-party’s ARTG registration could be sought and allowed. An unfortunate corollary for patentees is that a third-party ARTG registration (or indeed a patentee’s own earlier ARTG registered good) could preclude a PTE.
In view of Ono, we recommend that pharmaceutical applicants/patentees regularly monitor competitor activities and search the ARTG for goods that could fall within the scope of their claims.
Additionally, we strongly recommend pharmaceutical applicants consider i) the scope of claims being prosecuted in view of earlier regulatory approvals, and ii) filing one or more divisional applications to have substances (that are intended to be ARTG registered) quarantined in separate applications. Thereby, an earlier registration in respect of one substance will not preclude an extension of term for later registered goods in respect of a different substance (whether being the patent applicant’s goods or that of a third party).
In certain circumstances, particularly where it is not possible to file a divisional application, patentees may consider pre-emptively filing amendments to exclude earlier ARTG registered goods if appropriate, in order to facilitate eligibility and allowance of a PTE.
The team at Spruson & Ferguson has extensive experience at dealing with pharmaceutical patents, including patent term extensions and performing searches of the ARTG, and would be happy to assist with any queries.
[i] Ono Pharmaceutical Co, Ltd v Commissioner of Patents  FCA 643 .
[ii] Commissioner of Patents v Ono Pharmaceutical Co. Ltd  FCAFC 39 .
[iii] Ibid .
[iv] Ibid .