Alphapharm

Alphapharm may have a big bill coming

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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].  ?

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A patents case goes to the High Court

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The High Court has granted special leave to Alphapharm to appeal from the Full Federal Court’s decision to allow Lundbeck to apply to extend the term of its Lexapro patent 10 years late. The High Court was not interested at all in the exercise of the discretion to allow a 10 year extension. the question is whether a power to extend time exists at all.

The extension of term provisions for pharmaceutical patents are found in s 70 and s 71(2). Section 71(2) provides that:

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.

It was common ground that Lundbeck’s application was outside the latest of the possible dates.

However, the Patents Act also provides a power to grant extensions of time in s 223.

Lundbeck’s problem – if it turns out to be a problem – is that s 223(11) says that s 223 cannot be used to extend the time for doing “prescribed actions” and reg. 22.11 specifies as one of the prescribed actions:

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;

In the Federal Court,[1] Yates J at [50] found that Lundbeck’s “application” for an extension of time fell outside this because it really involved 2 requirements:

The making of an application under s 70(1) of the Act is governed by two time limits: the application must be made “during the term of the patent” and within six months of the applicable date in s 71(2)(a) to (c). Both time limits must be observed in order to make an application.

While the requirement that the application be made “during the term of the patent” was caught and so excluded by s 223(11), the second requirement – within 6 months of the applicable date – was not.

The High Court (Kiefel J and Keane J) have granted Alphapharm special leave to argue that, as a matter of construction, there was really only one application.

Lundbeck boldly tried to argue that special leave should not be granted because the issue raised no question of general importance: there not that many applications for an extension of time to apply for an extension of the term of a pharmaceutical patent. Kiefel J retorted sharply:

KIEFEL J: But the extension of a patent is itself an important matter, is it not?

MR NIALL: It is.

KIEFEL J: Very important.

It does raise an interesting question. The extended term expired back in December 2012. Alphapharm and others, however, had entered the market when the original term of the patent expired on 13 June 2009 and before Lundbeck’s application for an extension of time in which to file its application to extend the term had been finalised. Therefore, it would appear that the potential exposure of the generics companies to damages awards (or an account of profits) is up for grabs; i.e., another 3 years.

Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCATrans 79

Lid dip: Opinions on High

Some other commentaries: here, here and here.

  1. Aspen Pharma Pty Ltd v H Lundbeck A/S [2013] FCAFC 129 (Jessup and Jagot JJ agreeing).  ?

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Oh won’t you stay …

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The patent war over escitalopram in Australia is still going!

One aspect of the Alphapharm / Lundbeck case I had forgotten (if I appreciated it at the time) was that Lindgren J quashed the extension of the patent’s term under s 70ff.

In June 2009, after the Full Court upheld Lindgren J’s decision, Lundbeck made a new application for an extension of term and also applied under s 223 for an extension of time to make that application – an extension of some 10 years or so.

In June 2011, the Commissioner granted Lundbeck’s application for an extension of time over oppositions by Alphapharm, Aspen and others. The AAT dismissed an appeal Aspen et al. and Aspen et al. have appealed from the AAT’s decision to the Full Court. That appeal is still pending.

Pending the outcome of the appeal, Yates J has now refused Aspen et al. a stay on the Commissioner’s decision to extend the term of the patent.[1]

Accepting that it was not ordinarily desirable that there be parallel proceedings before both the Commissioner and the Court, Yates J considered it was not appropriate to exercise his discretion to stay the proceedings before the Commissioner in this case.

While a number of considerations were advanced by both sides, the central consideration was that Lundbeck could well lose the ability to sue for some infringements if it was successful in extending the term of its patent. The issue here is that under s 120(4) proceedings for infringement must be brought within 6 years of the infringing conduct. Aspen et al. were not able to point to any real prejudice outweighing that.[2]

It may be of interest to note that the point in common between the 2 sets of proceedings is Aspen _et al._’s contention that the Commissioner has no power to grant the extension of term now under s 70(4) as she has already exercised the power (albeit invalidly) in granting the extension quashed by Lindgren J.[3]

Aspen Pharma Pty Ltd v H Lundbeck A/S [2013] FCA 324

ps [4]

  1. The Commissioner must now decide whether an extension of term is in order and, if so, the extension of term will be advertised and Aspen _et al. have foreshadowed they intend opposing.  ?
  2. While the costs and disruption of unnecessary opposition proceedings were invoked, Yates J considered at [53] that such costs should not be substantial and, at [55], that they could “exert a real measure of restraint over the costs they will incur in the anticipated oppositions.”  ?
  3. See [40] – [43] of Yates J’s reasons.  ?
  4. I thought apologies were due to Jackson Browne, the soaring soprano and David Linley, but it seems Maurice Williams should also be in the picture.  ?

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Obvious to try (typos corrected)

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IP Australia (for present purposes, the Commissioner of Patents) has been exploring ways to improve the quality of patents by, amongst other things, raising the threshold of inventiveness. (Consultation Paper, November 2009 (pdf) see section 1.2ff).

One might have thought that this would require legislative reform given the extremely strict approach to common general knowledge and, for that matter, s 7(3) taken in Australia.

Perhaps because the election so indecisively intervened, however, and professedly because the submissions agreed, IP Australia now appears to believe it can resolve our problems by simply adopting a new approach at the examination stage, so that legislation is no longer required. As from 1 August 2010, therefore, IP Australia has amended its approach to examining applications:

The Patent Manual of Practice and Procedure was amended on 1 August to indicate that where the application relates to the solving of a problem, being either a problem that is recognised in the art or a problem that is reasonably inferred from the specification, it is appropriate for examiners to consider the question:
Would the person skilled in the art (in all the circumstances) directly be led as a matter of course to try the claimed invention in the expectation that it might well produce a solution to the problem?

Patentology points out the way the Courts have been approaching this may not sit too well with the Commissioner’s idea.

Now, it is true that the majority in Alphapharm did say:

[52]  …. Thirdly, in a case such as the present, the relevant question was that posed in the first part of the passage. Were the experiments “part of” that inventive step claimed in the Patent or were they “of a routine character” to be tried “as a matter of course”? If the latter be attributable to the hypothetical addressee of the Patent, such a finding would support a holding of obviousness.

[53]  That way of approaching the matter has an affinity with the reformulation of the “Cripps question” by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd[57]. This Court had been referred to Olin in the argument in Wellcome Foundation[58]. Graham J had posed the question[59]:

“Would the notional research group at the relevant date, in all the circumstances, which include a knowledge of all the relevant prior art and of the facts of the nature and success of chlorpromazine, directly be led as a matter of course to try the -CF3 substitution in the ‘2’ position in place of the -C1 atom in chlorpromazine or in any other body which, apart from the -CF3 substitution, has the other characteristics of the formula of claim 1, in the expectation that it might well produce a useful alternative to or better drug than chlorpromazine or a body useful for any other purpose?” (emphasis added)

That approach should be accepted.

The first thing to note about this proposition is that it is introduced by “thirdly”. There are a few hurdles to get over before one gets to the reformulated Cripps question.

One of the hurdles, recognised in the Commissioner’s Official Notice, is that one first has to be able to posit that the patent is attempting to propose a solution to some identified or identifiable problem. In the Lockwood (No. 2), however, the High Court made it very plain at [63] – [65] that may not always be appropriate.

Another hurdle expressed by the majority in Alphapharm were repeated doubts that “obvious to try” could be applied, if at all, to anything other than a simple step from the prior art to the claimed invention rather than, as in that case, a combination patent. In such cases, the majority rejected the approach of more recent English cases in favour of US cases such as In re O’Farrell

The admonition that ‘obvious to try’ is not the standard under §103 has been directed mainly at two kinds of error. In some cases, what would have been ‘obvious to try’ would have been to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result, where the prior art gave either no indication of which parameters were critical or no direction as to which of many possible choices is likely to be successful. … In others, what was ‘obvious to try’ was to explore a new technology or general approach that seemed to be a promising field of experimentation, where the prior art gave only general guidance as to the particular form of the claimed invention or how to achieve it.

More generally, one may wonder how well the Commissioner’s attempt to use administrative procedural reform to obviate perceived deficiencies in the High Court’s interpretation of the legal meaning of the terms used in the Act will work. Given what the High Court has repeatedly said “common general knowledge” means and the limitations written into s 7(3), how would a Court on appeal deal with the Commissioner’s rejection of a patent application on the Commissioner’s new approach?

As the High Court itself made plain in Alphapharm, the divergence between Australian law and UK and for that matter US law lies in the prior art that may be used to found an attack on obvousiousness. Thus

in [43]:

…. The holding for which Minnesota Mining is celebrated is the rejection, as inapplicable to the terms of the 1952 Act, of the reasoning in certain English decisions. This might have permitted the basing of an argument of obviousness upon prior publicly available publications, without evidence that they had become part of the common general knowledge at the priority date. ….

and in [44]:

…. obviousness was not determined by asking whether a diligent searcher might have selected the elements of the claimed invention by taking pieces from those prior publications and putting them together…

and in [49]:

The result in Britain of the shift in grundnorm is exemplified in the observation by Laddie J[53] that the skilled worker (identified in s 3 of the 1977 UK Act):

“is assumed to have read and understood all the available prior art”. (High Court’s emphasis)

The treatment of the point by Aickin J in Minnesota Mining, as indicated above, expressly rejected any assumption as to what in such a way may be expected of and attributed to the hypothetical addressee. ….

If that is the foundation of the problem, it seems very hard to see how anything but a legislative solution will suffice for, as the High Court also made very plain, it is the function of the legislature to set (and if thought appropriate) change the parameters.

Official Notice (with link to Manual)

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The patent was valid, but not infringed

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Foster J has ruled that Bitech’s patent for an apparatus that simulates log flames or coal fire in electric or gas fired domestic room heaters is valid, but not infringed.

An essential feature of the patent was that the simulated flames resulted from reflected light, however, the alleged infringements used directly projected light, not reflected light and consequently did not infringe.

The novelty attack failed because the relevant prior art did not possess all the features claimed. The attack on obviousness failed because s 7(3) was not available – the complete specification was filed before the 1990 Act came into force and so the Alphapharm rules were all that was relevant.

Of potentially greater interest, if there had been infringement, Foster J would have found the importer and retailer (Bunnings) were engaged in a common design.

Somewhat bizarrely, on of the respondents denied it had imported the allegedly infringing products, but led no evidence on the point. As a result, Foster J has foreshadowed some consequences in costs for putting the applicant to proof on this point.

Bitech Engineering v Garth Living Pty Ltd [2009] FCA 1393

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