Archive for the ‘Patents’ Category

ACCC loses antitrust case against Pfizer

Friday, February 27th, 2015

Flick J has ruled that Pfizer did not breach antitrust rules by trying to maintain sales of Lipitor after it came off patent.

Pfizer’s patent on atorvastatin (Lipitor) was due to expire on 18 May 2012.[1] Its analysis showed it was facing a revenue cliff: from $771 million a year in 2011 to $70 million a years by 2015. Pfizer came up with a 3-part plan:

  1. in the 18 months prior to expiry, it stopped supplying Lipitor through wholesalers and started supplying pharmacies directly (thereby earning the wholesale margin for itself);
  2. it offered a 5% discount to those pharmacies it supplied + a 5% “rebate” credited to an accrual fund. The “rebate” was repayable to the pharmacy if it committed to buy from Pfizer a specified proportion of its anticipated generic atorvastatin needs after the patent expired – the amount of “rebate” repaid would vary according to the proportion of generic needs committed to and the time frame for the commitment. For example, the pharmacy would receive 100% if it committed to taking 75% of its anticipated needs for 12 months. but only 50% if it committed to taking 75% for only 6 months.
  3. Pfizer also made a bundled offer – it could offer to supply both Lipitor and its generic product “atorvastatin Pfizer”.

The ACCC brought action alleging by implementing this plan, Pfizer had contravened:

  • section 46 of the Competition and Consumer Act (CCA), which prohibits a corporation with a substantiall degree of power in a market from taking advantage of that power for proscribed anti-competitive purposes; and
  • section47 of the CCA which prohibits exclusive dealing that has the purpose or effect of substantially lessening competition in a market.

Flick J has dismissed the ACCC’s action.

Relevant market

His Honour found that the relevant market was the market for the supply to community pharmacies in Australia of atorvastatin as the ACCC contended. Pfizer argued the market was the market for the wholesale supply of pharmaceutical products and over the counter products to community pharmacies.

Substantial degree of power in the market

His Honour also found that Pfizer had a substantial degree of power in that market until late 2011 and had taken advantage of that power by implementing its scheme. Pfizer did not have a substantial degree of power in the market from January 2012 on wards.

Before January 2012, Pfizer was the only supplier of atorvastatin and the constraints on the price it could charge imposed by the PBS was “not sufficient to render its market power anything other than “substantial”.” Flick J recognised that there was no precise date which could be identified as the point where Pfizer’s market power ceased to be substantial. By late 2011, however, that power was no longer “enduring” as the expiry date of the patent loomed closer. By February 2012, Ranbaxy was able to enter the market offering its generic atorvastatin for sale[2] and the other intending generic suppliers had registered their products on the Therapeutic Goods Register and were starting sales discussions with potential customers.

Flick J found Pfizer took advantage of its power to impose the direct sales to pharmacies model because the pharmacies were opposed to it, but Pfizer was able to impose it on them as the only possible source of atorvastatin. Similarly, the rebate scheme took advantage of that power because it created an expection of payments in the future on terms that were unclear and yet to be decided. Flick J found that the amount of money accumulated within the rebate scheme by the time the patent expired was very substantial – $35 million – a powerful incentive to buy product from Pfizer. One might wonder, however, why the position would have been any different if the terms on which the rebate could be claimed had been clear.

No anti-competitive purpose

Even in the period before January 2012 when it had a substantial degree of power in the market, however, there was no contravention of 2 46 because it did not take advantage of its market power for a proscribed anti-competitive purpose.

Pfizer also did not contravene s 47 because in implementing the scheme it did not have the purpose of substantially lessening competition.

Rather than having a purpose of deterring competition by the generics, Flick J accepted that Pfizer was motivated by rationale business objectives. For example, selling directly to pharmacies rather than through wholesalers:

But my question, Mr Latham, was directed to Lipitor and generic atorvastatin, not some dream of establishing a generics business? — But once again you’re asking me to make a decision on – on one product, when I have seven products, over $1 billion, coming off patent. And it’s not just Pfizer Australia. It’s around the world. And to try to get the best business organisation that’s going to deliver continuing operations through those generic products, plus, they have these additional benefits of being closer to pharmacy. Going through the licensee doesn’t tick that important box.

The requirement to take 75% of the pharmacies needs to qualify for the “rebate” also did not have an anti-competitive purpose. Rather, Flick J found that the requirement had been reduced from 100% to 75% – sacrificing $30 million in potential revenue – to enable the pharmacy to establish a second source of supply.

s 51(3)

Section 51(3) exempts from s 47 conditions in, amongst other things, licences of patent to the extent they relate to the invention to which the patent relates or articles made according to the invention.

Although its operation did not fall to be determined because there was no contravention of s 47, Flick J would have found it did not apply in this case. His Honour considered that the sale of atorvastatin to the pharmacies would not involve any licence. More importantly, his Honour would have held that the condition was collateral to the patent and so outside the scope of the exemption.

What actually happened

In the event, Pfizer went from selling 100% of the prescribed atorvastatin (as Lipitor) in March 2012, to 32% of prescription in April and settling around 22 – 23% by June 2012. While Pfizer antiticpated marketing advantages in being the only supplier likely to supply generic atorvastatin in pills the same shape, size and colour as Lipitor, the evidence showed it held 100% of the generic market until September 2012, after which its share fell away to 16 – 17% by March/April 2013.

Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd [2015] FCA 113


  1. PBS figures for the year to June 2012 showed Lipitor was the highest cost to the scheme ($593 million) followed by rosuvastatin ($359 million) and ranibizumab ($308 million).  ?
  2. Pfizer and Ranbaxy had settled other litigation on terms which enabled Ranbaxy to enter the market before the patent expired.  ?

IP Australia consults on red tape streamlining and costing

Wednesday, February 25th, 2015

IP Australia has issued to discussion papers:

  • Proposals to streamline IP processes and support small business; and
  • Proposals to streamline IP processes and support small business – Regulatory costs,

apparently following Parliamentary Secretary Karen Andrews’ announcement.

According to IP Australia’s website, the “streamlining” paper:

The … Consultation Paper outlines 22 proposals to align and simplify our IP processes, support small business and make some technical fixes relating to the regulation of IP attorneys.

The first 10 proposals apply across the board (as it were) to patents, trade marks, designs and PBR and relate to matters such as aligning renewals re-examination/revocation, extensions of time, writing and filing requirements.

There are 3 further proposals affecting patents: third party requests for examination, colour drawings and extensions of term – notices to the department of health.

The 14th proposal relates to the acceptance timeframe for trade mark applications.

15 and 16 affect the registration of designs and multiple copies of representations.

There are 6 proposals “supporting small business” including unjustified threats of infringement and trade marks and shelf companies.

And 2 “technical fixes” relating to publishing the personal information of “IP attorneys” and prosecuting “IP attorney” offences.

There are some 84 pages in the paper. So this post is not going to do the paper anything approximating “justice”.

One proposal is to reduce the acceptance period for trade marks from 15 months to 6 months. There are also substantial changes proposed for the regimes relating to extensions of time:

 – Align PBR extensions with those for patents and for a wider range of actions

 – Specify the grounds for the ‘special circumstances’ extension in the trade marks legislation and align circumstances beyond control across the rights

 – Allow extensions of time for renewal grace periods but not renewal dates, for all IP rights

– Make the ‘despite due care’ extension available for all IP rights and have no limit on the period of the extension

– For all rights, limit the ‘error or omission by applicant/owner’ extension to 12 months

 – Streamlined process for short extensions of time

– Simplify and align fees

– Make all extensions of time non-discretionary.

Certificates: you know, things like Certificates of Registration:

The IP legislation would be amended so that certificates would not be required to be issued for examination, registration and grant. Also, the patents and trade marks Acts would be amended to no longer provide that a certificate signed by the Commissioner or Registrar is prima facie evidence of a matter. Instead, the Acts would provide that any document approved by the Commissioner or Registrar (or similar wording) would constitute prima facie evidence of a matter. This would enable IP Australia to continue to provide documents for such purposes, without requiring them to be signed certificates. Signed copies or extracts of the Registers would continue to be admissible in proceedings as if they were the original Register, and therefore prima facie evidence of the particulars on them.

Unjustified threats: this would see removal of the defence under s 129(5) of the Trade Marks Act of bringing infringement proceedings reasonably timely (which is not currently a defence for patent or designs threats), providing the remedy for PBR and introducing a power to award additional damages in respect of blatant and unjustified threats against another party.

Trade marks and shelf companies: this proposal would see amendment of s 27 so that it would not be necessary to incorporate the company that is intended to use the trade mark, but purchase of a shelf company would suffice.

The renewals proposal would see a grace period of 6 months introduced for renewing PBR and provision that all IPR could be infringed during the grace period if subsequently renewed.

In coming up with those proposals, IP Australia has used a costing framework and developed detailed costings which are set out in the “costings” paper. We are being invited to comment on those too.

If you are feeling excited, you should get your submissions in to IP Australia by 7 April 2015.

Proposals to streamline IP processes and support small business (pdf)

Proposals to streamline IP processes and support small business – Regulatory costs (pdf)

High Court to review patenting of isolated genes in Australia

Monday, February 16th, 2015

According to a media release by Maurice Blackburn,[1] the High Court has granted Ms D’Arcy special leave to appeal the decision that Myriad’s BRCA patent for isolated genes is patentable subject matter, as a manner of manufacture, in Australia.

At first instance, Nicholas J upheld the patentable subject matter of the patent. His Honour’s decision was affirmed by a Full Bench of the Federal Court.

The transcript of the special leave application is not yet up.

Lid dips: Phillips Ormonde Fitzpatrick and Dr Summerfield.

D’Arcy v Myriad Genetics Inc.


  1. The law firm representing Ms D’Arcy the appellant. The High Court’s summary (pdf) of Results of Special Leave applications confirms the grant.  ?

Regency still loses its MPEG appeal

Wednesday, December 24th, 2014

Although it rejected the primary judge’s interpretation of s145 of the Patents Act 1990, the Full Court has nonetheless dismissed Regency’s appeal seeking to terminate its licence of MPEG patents.

In 2009, Regency took a licence of a bundle of patents from the MPEG patent pool so that it could make, amongst other things, DVD and Blu-Ray players. All the patents were necessary to make MPEG–2 compliant equipment, but they related to different inventions. By July 2012, some of the patents, but not all, had expired. Regency sought to terminate the licence early, relying on s145.

Section 145 provides:

(1) A contract relating to the lease of, or a licence to exploit, a patented invention may be terminated by either party, on giving 3 months’ notice in writing to the other party, at any time after the patent, or all the patents, by which the invention was protected at the time the contract was made, have ceased to be in force.

(2) Subsection (1) applies despite anything to the contrary in that contract or in any other contract.

The Full Court agreed with Regency that the trial judge`s interpretation of,s145 was wrong but, even so, the right to terminate the licence under s145 did not accrue until all the patents licensed at the time the licence was granted had expired. As there were patents still on foot, therefore, Regency did not have the right under s145 to terminate.

The Full Court considered that the reference to “a patented invention”, an expression not defined in the Patents Act was simply a reference to an invention that was patented, rather than something which was patentable subject matter.

Further, s23(b) of the Acts Interpretation Act 1901 meant that the reference to the singular – a patented invention – could be read as including the plural. While recognising that s145 was intended to protect licensees from being unfairly required to pay licence fees after the patents had expired, Bennett and Pagone JJ pointed out that, as the licensor could also invoke s145, a licensee could be exposed to even greater unfairness if the licence could be terminated after the expiry of one or only some patents:

30 … if MPEG were entitled to terminate the licence when one of the patents or all of the patents for one of the inventions had expired, Regency would be in the position that, having implemented the Standard, it would be required to cease exploitation of the outstanding patents or negotiate a fresh licence.

31 The primary judge recognised the lack of commercial reality and potential unfairness in such circumstances and so do we. It would lead to the absurd result that parties wishing to negotiate for a patent pool would necessarily have to enter into multiple contracts or face the uncertainties and possible damage caused upon the expiry of a single patent of that patent pool. This would be of particular difficulty for a licensee which had “tooled up”, or entered into financial obligations on the faith of the right to exploit the necessary patent, and could also affect third party end users of a product.

Earlier at [25], Bennett and Pagone JJ had emphasised the importance of certainty provided by contracts:

Regency points to commercial and policy reasons why a licensee should not continue to pay royalties where an invention the subject of the licence is no longer the subject of a subsisting patent. However, this possible disadvantage to a licensee can be taken into account during negotiations for a contract. Regency negotiated a licence fee that included patents now expired but must be taken to have been aware of the expiry of patents during the term of the Contract when it negotiated that fee. This is supported by the fact that the October 2009 amendment to the Contract provided for royalty rates, those rates decreasing over specified periods of time in recognition of the ever approaching end to each of the patents (as observed by the primary judge at [11]).

While this case did not explicitly turn on questions of misuse of market power, that analysis does not bode well for the ACCC`s pending antitrust action against Pfizer.

Nicholas J delivered a concurring judgment.

Regency Media Pty Ltd v MPEG LA, L.L.C [2014] FCAFC 183

How long do you have to pay royalties for?

Tuesday, December 2nd, 2014

Vickery J in the Supreme Court of Victoria has had to construe how long an obligation to pay royalties under a sale of patents and technology and associated consultancy agreement lasts: ruling it is as long as the purchaser is using the “invention”.

Roberts came up with the “Roberts Differential Lock”. It enables the driver of a vehicle, such as a 4-wheel drive vehicle, to lock the “dif” from the cabin without having to get out and manually adjust the wheels. The invention could be retrofitted to existing vehicles. Roberts made a provisional patent application for his invention in 1983 and a standard application followed in 1984. Corresponding applications were made in the USA, the UK and Japan in 1985. Roberts and his wife marketed the Roberts Differential Lock though their company, Altair.

In 1987, the Roberts and Altair sold all their rights in the invention to ARB. There was a lump sum payment and royalties to be paid on products made using the invention. Roberts also entered into a Consultancy Agreement for an initial period of 6 months and thereafter until terminated on 30 days’ written notice.

There were two questions before Vickery J:

(1) did ARB have to keep paying roylaties after (presumably) the (1984/1984) patents expired; and

(2) if so, to whom – the Roberts or also Altair?

The terms of the sale agreement

 2. In consideration of the consideration set out in clause 7 of this Sale Agreement and subject to clause 20 hereof, the Vendors hereby jointly and severally sell transfer and assign absolutely to [ARB] all the right title and interest in and to the Roberts Differential Lock including (without limiting the generality of the foregoing) all patent applications, patent rights and proprietary rights relating thereto, and the business name ‘Roberts Diff-Lock’.

11(a). In further consideration of the rights granted hereunder the Company shall pay to the Roberts the following royalties calculated on the net invoice value arising from the sale, lease, hire and use (hereinafter referred collectively as a ‘sale’ or ‘sold’ as the case may be) of the Products by the company and its licensees:-

[a specified dollar amount for each unit sold]. (Those amounts were subject to increase according to increases in the CPI – All Groups Index – Melbourne.)

For this purpose, “Products” were defined to mean:

‘Products’ means the differentials as manufactured pursuant to the patents as specified in the First Schedule

and the First Schedule listed the 1984 Australian patent application and the pending applications in the USA, the UK and Japan – none of which had been granted at that time.

How long?

You will have noticed that clause 11(a) does not say anything about how long the obligation to pay royalties lasted. Vickery J held as a matter of construction the obligation did not end when the “patents”[1] expired. A number of factors led to his Honour’s conclusion.

First, when the sale agreement was executed, the patent terms in the different countries where applications were pending were different. Moreover, as is typical in such agreements, the definition of “patents” extended to divisonals, re-issues, continuations, continuations in part and the like. So, his Honour concluded, the parties contemplated that there would be potentially be different expiry dates in different countries.

Secondly, although the obligation to pay royalties was imposed on sales of Products, what was sold by clause 2 were “all rights in and to the Roberts Differential Lock including … the patents and the proprietary rights relating thereto”. Then “proprietary rights” were defined not just as rights in patents, but also included copyright, confidential information, trade secrets, data, formulae and so on. So ARB was not just buying rights to the patents it was buying all rights to all the technology. Moreover, under the Consultancy Agreement, “all inventions, techniques and improvements developed in the course of the consultancy agreement ‘shall become the sole and exclusive property of ARB …’”

Together, these arrangements indicated the “ambulatory nature” of the proprietary rights ARB obtained.

Thirdly, if ARB was right and its obligations extended only to the “patents”, it had no obligation to pay royalties until at least one of the pending applications was actually registered. However, Vickery J considered it quite clear the obligation to pay was intended to apply to all products ARB sold as soon as the sale took effect whether an application had proceeded to grant or not.

Finally:

109 Further, the object and purpose of the Sale Agreement may be said to be the allocation of the risks and rewards of the patent rights and the proprietary rights to be assigned to ARB by the Vendors. The risk allocation was achieved by means of the mechanism selected for determination of the price to be paid for that assignment.

110 I accept that the Vendors’ construction is commercially sensible in that it provides for an arrangement whereby each party managed its risk as to the proper price to pay (from ARB’s perspective) and to charge (from the Vendors’ perspective) in relation to the bundle of rights sold under the Sale Agreement, which at the time of entry into the contract had a value which was difficult to calculate or even estimate. Accordingly, the Sale Agreement provided for an ambulatory consideration through the royalties regime. If the rights proved to be valuable so that commercialisation of them resulted in a higher number of total sales than anticipated, then ARB would pay a higher total purchase price to the Vendors. On the other hand, if the rights proved to be valuable so that commercialisation of them resulted in a higher number of total sales than initially expected, then ARB would pay a higher total purchase price to the Vendors.

111 I also accept that such a risk-sharing arrangement is not one that had any obvious connection to the life of the patents that might be granted on the assigned patent applications, or to whether any patents became registered at all. In this regard the following is to be noted:

(a) ARB received an immediate and continuing benefit from the sales that it made using the assigned patent rights. In other words, the benefits that ARB received were not contingent upon any patent application listed in the First Schedule of the Sale Agreement proceeding to grant; and

(b) the assigned rights included proprietary rights which did not depend upon a patent proceeding to grant or remaining registered.

Vickery J then rejected ARB’s argument that it would be faced with a perpetual obligation to pay royalties: its obligation was to pay only on products that embodied the invention described in the patents. If it didn’t use that invention, it had no obligation to pay.

Pay the royalty to whom

This is one of those odd arguments where ARB was trying to contend Altair, the Roberts’ company, had no standing to sue. While cl. 11 did say that ARB had to pay “the Roberts”, Vickery J noted that the Roberts and Altair were the “Vendors” as defined and so cl. 11 should be understood as requiring payment to all three.

The conclusions reached by Vickery J, assuming there is no successful appeal, may immediately be contrasted with Maggbury Pty Ltd v Hafele Australia Pty Ltd.[2] One obvious point of difference, is that it appears that patents did actually issue in this case. Moreover, it appears that there was, or may have been, further technology of value apart from the patents – such as copyright, confidential information and further improvements.

The conclusion may also seem at odds with the policy in s 145 of the Patents Act. Even at its strongest, however, that only gives a right to terminate and does not automatically terminate the contract. As we have recently seen, however, the operation of the provision, particularly in a multi-jurisdictional context involving many faceted technologies, is less than clear.[3] In any event, ARB did not invoke the provision and it is not clear from the judgment whether there are other patent, or for that matter other “proprietary”, rights still on foot.

Nonetheless, if ARB could terminate the contract, it is an interesting question how Vickery J’s approach would sit with Maggbury if ARB used only technology now in the public domain.

Finally, as I am sure you have already concluded, if you are acting for the payor in this type of situation this case illustrates the importance of considering very carefully and providing specifically in the agreement for the duration of the obligation to pay royalties and what it is payable on if you are drawing a clause providing for a royalty – especially when the technology comes into the public domain and others may use it royalty free.

ARB Corporation v Roberts & Ors [2014] VSC 495

Lid dip: James McDougall


  1. That is, the patent applications that were pending when the sale agreement was executed.  ?
  2. (2001) 210 CLR 181.  ?
  3. MPEG LA, L.L.C. v Regency Media Pty Ltd [2014] FCA 180  ?

Alphapharm may have a big bill coming

Tuesday, November 18th, 2014

The High Court has dismissed Alphapharm’s appeal from the Full Federal Court’s ruling granting Lundbeck an extension of time to apply to extend the term of the escitalopram patent. It was close though: 3 to 2.

You will recall that Lundbeck applied 10 years late to extend the term of its pharmaceutical patent. So, not only was Lundbeck applying to extend the term of its patent (under s70), it was applying for an extension of time in which to make that application. In granting special leave, the High Court accepted that, if the power were available, the circumstances justified the 10 year extension. The question was a matter of statutory interpretation: was there power to extend.

Section 71(2) specifies when an application to extend the term of a pharmaceutical patent must be made:

(2) An application for an extension of the term of a standard patent must be made during the term of the patent and within 6 months after the latest of the following dates:

(a) the date the patent was granted;

(b) the date of commencement of the first inclusion in the Australian Register of Therapeutic Goods of goods that contain, or consist of, any of the pharmaceutical substances referred to in subsection 70(3);

(c) the date of commencement of this section.

Lundbeck’s application was made within the term of the standard patent (with 1 day to spare), but well outside the dates specified in paragraphs (a) – (c).

Section 223 confers a general power to extend the time for making an application. Under s 223(11), however, the power cannot be used to extend time in relation to “prescribed actions”.[1] One of those prescribed actions related to s 71(2):

(b) filing, during the term of a standard patent under subsection 71(2) of the Act, an application under subsection 70(1) of the Act for an extension of the term of the patent; ….

Crennan, Bell and Gageler JJ, after noting the long history in patents legislation of the power to apply for an extension of time, even after the time had expired, as an important safety valve in the system, ruled that s 71(2) specified 2 requirements. The first time requirement is that the application must be filed within the term of the standard patent. The second time requirement was that the application must also satisfy at least one of the requirements set out in paragraphs (a) – (c).

Crennan, Bell and Gageler JJ held, however, that reg. 22.11 applied only to the first requirement: that the application was made within the term of the standard patent. Their Honours considered this was important otherwise a “gap” could arise between when a patent expired but was then restored. That would be highly undesirable.[2] In contrast, there was no policy reason why reg. 22.11 should apply to the second time requirement. At [71]:

There is nothing in any of the extrinsic materials, or in the long policy debates on simplifying extensions of term, which would suggest any rationale for excluding the second time requirement from the remedial power to extend time under s 223(2)(a). Alphapharm’s senior counsel conceded, correctly, that if Alphapharm’s construction of reg 22.11(4)(b) were correct, the remedial power in s 223(2)(a) could never apply to extend time in relation to the second time requirement, no matter what the quality or provenance of any “error or omission” made in respect of that time. Alphapharm’s construction would introduce an inexplicable asymmetry between a patentee and a competitor opposing a s 70(1) application. An opponent can access the general remedial power to extend times cast upon it in mandatory terms[102]. Had it been the legislature’s intention to exclude the second time requirement in s 71(2) from the general remedial power in s 223(2)(a), that would have been simple to accomplish.

Accordingly, s 223 could be invoked as Lundbeck had satisfied the first time requirement (and so did not need it to be extended) but needed an extension in relation to the second time requirement – which reg.22.11 did not apply to.

In dissent, Kiefel and Keane JJ rather tersely said at [111]:

s 71(2) cannot reasonably be read as referring to two actions. There is but one action referred to in s 71(2) – making an application for extension of the term of a patent. That one action is to be done on a date that satisfies the two requirements as to time set out in s 71(2). It is that action to which s 223(2) would apply, were it not for reg 22.11(4)(b).

Their Honours did explain why they considered policy and historical considerations did not lead to a different conclusion. Of potentially more general interest, however, their Honours took a different stand on the role of statutory interpretation at [121]:

In any event, as was said in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd, legislative history and extrinsic materials cannot displace the meaning of statutory text; nor is their examination an end in itself. (footnote omitted)

While acknowledging the primary role of the text, Crennan, Bell and Gageler JJ invoked the more nuanced role of context espoused in CIC Insurance and Project Blue Sky.

A big bill coming? After the standard term of the patent expired but before the expiry of the extended term, Alphapharm and other generics commenced marketing their own versions of the drug.

Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42


  1. The “prescribed actions” are found in reg. 22.11.  ?
  2. See Crennan, Bell and Gageler JJ at [68].  ?

(Not) patenting business methods

Wednesday, November 12th, 2014

The Full Federal Court has upheld the Commissioner’s refusal to grant Research Affiliates’ patent for a computer implemented method for constructing a portfolio management index.

The central claim reads:

A computer-implemented method for generating an index, the method including steps of:

(a)        accessing data relating to a plurality of assets;

(b)        processing the data thereby to identify a selection of the assets for inclusion in the index based on an objective measure of scale other than share price, market capitalization and any combination thereof;

(c)        accessing a weighting function configured to weight the selected assets;

(d)        applying the weighting function, thereby to assign to each of the selected assets a respective weighting, wherein the weighting:

(i)   is based on an objective measure of scale other than share price, market capitalization and any combination thereof; and

(ii)  is not based on market capitalization weighting, equal weighting, share price weighting and any combination thereof;

thereby to generate the index.

The Court posed the issue before it as being:

whether computer implementation of an otherwise unpatentable business scheme is sufficient to make the claimed method properly the subject of letters patent.

One might think, put that way, there is only one answer. May be. It makes it very important, however, how one determines whether the “scheme” is itself unpatentable.

Another intriguing aspect of the decision is that, before it embarked on analysing whether this was indeed a “manner of manufacture, the Court engaged in a very extensive review of how this issue is approached in other jurisdictions, including the USA and UK.

Time pressures don’t permit extended analysis at this stage. In the meantime:

and no doubt others. It will be interesting to see what happens to the RPL Central appeal.

Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 (Kenny, Bennett and Nicholas JJ)

 

 

Refusing a lapsed patent application and other powers of the Commissioner

Tuesday, September 9th, 2014

The Commissioner of Patents has power to refuse an application even after it has lapsed (but is still capable of revival by payment of “late” fees). The Full Court has also affirmed the Commissioner’s power to set a two month time limit for response (especially where she actually allows six months) and to institute a hearing on her own motion.

In some ways, this is a “silly” case, but it does explain how the application process and restoration of a lapsed application works. The chronology was as follows:

  • In December 2011, Miles requested examination of his patent application.
  • In May 2012, the Commissioner’s delegate raised objections to grant, giving Miles two months in which to overcome the objections or risk the Commissioner making a direction to amend under s 107 or refusing the application.
  • Miles did not respond.
  • In September 2012 (i.e., 4 months later), the Commissioner wrote advising that, as no response had been received, the matter would be set down for hearing and allowing one month for submissions to be filed. The Commissioner’s letter warned that it was possible for the Commissioner to refuse the application or direct amendment and inviting Miles to submit his own amendments.
  • October 2012 was the fifth anniversary of the application and continuation fees were payable. Miles did not pay the continuation fees.
  • On 1 November 2012, the Commissioner refused Miles’ application on the basis that objections to grant had been appropriately raised and not overcome.
  • On 28 March 2013, Miles paid the continuation fee (under s 142) and sought to amend the patent application.

The Commissioner said “bad luck, your application has already been refused” (or words to that effect).

Miles sought judicial review under s 39B of the Judiciary Act unsuccessfully. The Full Court (Bennett, Greenwood and Middleton JJ) dismissed his appeal.

Miles’ first argument was that the Commissioner had no power to refuse his application (in November 2012) because his application had already lapsed in October 2012 when he failed to pay the continuation fees.

The Full Court was having none of that. It was predicated on a misunderstanding of reg. 13.3(1) and 13.3(1A). Section 142(2)(d) provides that a patent application lapses if the applicant does not pay a continuation fee within the “prescribed period”. What constitutes the “prescribed period” is defined by reg. 13.3(1) and (1A):

(1) For paragraph 142(2)(d) of the Act:

>(a) a continuation fee for an application for a standard patent is payable for a relevant anniversary at the last moment of the anniversary; and

>(b) the period in which the fee must be paid is the period ending at the last moment of the anniversary.

(1A) However, if the continuation fee is paid within 6 months after the end of the relevant anniversary (6 month period):

>(a) the period mentioned in paragraph (1)(b) is taken to be extended until the fee is paid; and

>(b) the continuation fee includes the additional fee stated in item 211 of Schedule 7; and

>(c) the additional fee is payable from the first day of the 6 month period.

Reg. 13.3(1) and (1A) were not to be read in some bifurcated manner, but in combination. This meant that, if the continuation fee was paid in the 6 month grace period, the “prescribed period” was extended up until the date the fee was paid, i.e. 28 March 2013. As the continuation fee was paid in this case within the 6 month period, therefore, the application was still on foot when the Commissioner refused it in November 2012.

The Full Court went on to reject Miles’ arguments that the Commissioner had no power to set a two month time limit for response to the Examiner’s report in May 2012[1] or to unilaterally institute a hearing.

One “odd” outcome of this, however, is that Miles’ application would indeed have lapsed in October 2012 if he had not paid the continuation fee in the grace period. In that case, the Commissioner would not have had power to refuse the application. I am not sure how that would help Miles either as, presumably, by that stage it would be too late to file another application.

Miles v Commissioner of Patents [2014] FCAFC 109


  1. The Full Court essentially adopted the primary judge’s reasons at [55] to [93] and pointed out that Miles had been given opportunitites to address the grounds of objection and had failed to take any of them up.  ?

Isolated genes still patentable in Australia

Friday, September 5th, 2014

A Full Bench of the Federal Court of Australia (Allsop CJ, Dowsett, Kenny, Bennett & Middleton JJ) have dismissed the appeal in the Myriad litigation; upholding Nicholas J’s ruling that isolated genes and isolated gene sequences are patentable subject matter in Australia.

Kim Weatherall has pointed out this is a different result to the ruling in the USA but, given the illogicality of the US Supreme Court’s position (e.g. here and here), surely that is no bad thing.

D’Arcy v Myriad Genetics Inc [2014] FCAFC 115

Five Judges speak with one voice on Australian Patent Law Construction and Fair Basis*

Friday, August 22nd, 2014

The Rosuvastatin case is that rare beast – a decision of a 5 member Full Bench of the Federal Court. It canvases many issues and, no doubt, we shall be picking over it for years to come. Susan Gatford, at the Victorian Bar, has kindly provided a guest post on the section 40 issues. Take it way Sue:

The judgment in AstraZeneca AB v Apotex Pty Ltd [2014] FCAFC 99 is an authoritative statement by a Full Court of the Federal Court of current patent law in Australia on novelty, obviousness, fair basis and indirect infringement. Further, neither the parties nor the Full Court at [37] demurred from the primary judge’s summary of the relevant authorities as to what constitutes common general knowledge and the attributes of the hypothetical skilled addressee. Likewise, neither the parties nor the Full Court at [90] disagreed with the primary judge’s exposition of the principles governing the construction of the claims and body of a specification of a patent.

The Full Court was principally constituted with five justices so as to address issues in regard to obviousness[1]. But the decisions at first instance and on appeal, taken together, also provide a “go to” exposition of most of the legal issues that commonly arise in Australian patent cases.

The Court’s views on the different validity grounds and on indirect infringement each warrant separate commentary and analysis. This article considers one of the construction issues, the decision as to fair basis and the interplay between construction and fair basis.

Background

Statins are a group of drugs that reduce the levels of cholesterol in the blood. Rosuvastatin (marketed in Australia as CRESTOR) is a very successful statin. No patent was ever filed in Australia for the rosuvastatin chemical compound. But AstraZeneca (Az) owns a number of secondary Australian patents relating to rosuvastatin. Two such patents are the subject of the appeal decision. One (the low dose patent) is for the administration of a particular dose or dosage range of rosuvastatin for the treatment of excess cholesterol in the blood stream. The other (the cation patent) is for a pharmaceutical composition (combination) of rosuvastatin mixed with certain inorganic salts.

The Full Federal Court’s decision affirms, although with some differences of reasoning and grounds, Apotex’s victory last year before Justice Jagot, in which it obtained orders revoking both patents.

The outcome of the appeal

The low dose patent was held:

  • to have named the wrong inventor (with a discussion of the current and former entitlement provisions of the Patents Act);
  • to be obvious (with a discussion of the starting point at which obviousness is to be considered and the impact of section 7 of the Patents Act); and
  • not to have been infringed (with a discussion of section 117 of the Patents Act)
  • 

However, reversing the decision of the primary judge, the Full Court held that the low dose patent was novel despite the existence of prior publications disclosing both rosuvastatin and a dosage range that covered the dosage range the subject of the claims.

The cation patent was held:

  • to have impermissibly claimed too early a priority date;
  • to have been anticipated (not novel);
  • to be obvious; and
  • not to be fairly based on the specification (despite the presence of claim 1 as a consistory clause within the body of the specification).

The five judges agreed with each other on all issues. Justices Besanko, Foster, Nicholas and Yates wrote a joint judgment which dealt with all issues except obviousness. Justice Jessup wrote a separate judgment on obviousness with which the rest of the Court agreed.

Patent construction and section 40 issues in relation to the cation patent.

The cation patent was for rosuvastatin mixed with certain multivalent cation inorganic salts. The salts were not therapeutic – their role was said to be simply to stabilize the rosuvastatin and prevent it from degrading. The patent specification described rosuvastatin and various salts being mixed together into a tablet which was then coated.
There was a disagreement between the parties as to the meaning of the words “pharmaceutical composition” in claim 1 of the cation patent. Apotex submitted that in the context of the cation patent “pharmaceutical composition” referred only to the rosuvastatin-salt mixture, and did not include the tablet coating. This was because the proposed Apotex product did not have a rosuvastatin-salt mixture – in its tablet the salt was placed into the coating, not mixed with the rosuvastatin.

Az, in order to maintain its infringement case, argued that the words “pharmaceutical composition” in claim 1 meant the whole tablet i.e. the means by which rosuvastatin is administered or delivered to the patient, whatever form that takes. The primary judge agreed with Az, as did the Full Court.

But, Apotex said, if this is what claim 1 means then it is not fairly based on the specification, as there is no real and reasonably clear disclosure in the specification of a pharmaceutical composition in which the relevant inorganic salt is contained solely within the coating of the pharmaceutical composition and not mixed with the active ingredient, being rosuvastatin. They noted that every disclosure in the cation patent of the use of a relevant salt, including in each of the examples, involved the salt being mixed or blended with rosuvastatin. They also noted that the only theory advanced in the specification to explain how the multivalent cation salt improved the stability of rosuvastatin was that it stabilised its chemical structure, which the experts’ evidence confirmed required “intimate mixing”.

Az did not dispute this evidence but submitted that the fact that claim 1 was repeated in the body of the specification as a consistory clause was itself sufficient for fair basis, relying on statements in Lockwood Security Products Pty Limited v Doric Products Pty Limited (2004) 217 CLR 274 (Doric No 1) at [38] and [91] to [93]. The primary judge had agreed with that submission.

The Full Court, however, disagreed. It said at [421]

“The question that must be addressed is whether there is a real and reasonably clear disclosure in the specification of an invention in which there might be no mixture of the active ingredient and inorganic salt. In our opinion, the specification, when read as a whole, does not make any such disclosure even in the most general sense.”

In other words, the claim was for a composition which contained three things – rosuvastatin, salt and a coating. The claim did not require the salt and the rosuvastatin to be mixed, so the salt could either be with the rosuvastatin or in the coating. In the invention disclosed in the specification, though, the salt and the rosuvastatin were always mixed. The possibility of the salt not being mixed with the rosuvastatin was not contemplated and not disclosed.

Section 40(3) of the Patents Act as applied to this patent (i.e. as it stood before the 2013 amendments to the Patents Act) requires that “the claim or claims must be … fairly based on the matter disclosed in the specification”.

The Court’s finding of lack of fair basis refocuses attention on the construction of claim 1 contended for by Apotex. But the Court was not prepared, in light of the authorities, to read claim 1 as requiring the salt and the rosuvastatin to be mixed, as it considered that to do so would be to draw an impermissible gloss from the specification.

The Court was, however, prepared to use section 40 to strike down what it evidently regarded as a claim that was too widely drawn. Whether the judgment will result in an increase in the number of successful challenges based on section 40 grounds remains to be seen.

AstraZeneca AB v Apotex Pty Ltd [2014] FCAFC 99

 

Thanks, Sue.


  1. As to which see Mark Summerfeild’s recent blog post  ?