Australia

What do you get when you are granted an exclusive territory

Leave a Comment / Franchising, IP generally / / / , , , , , ,

This case is a franchising case, but it explores the legal consequences of granting an exclusive territory and so should be of interest to IP practitioners too.

Some facts

Spanline carries on a business of providing home additions and extensions such as awnings and patios. It operates nationally through a network of franchisees and sub-franchisees.

In 2001, Spanline appointed RPR as its exclusive franchisee for the South Coast of NSW. RPR was based in Nowra, but its territory also included the Illawarra region and the Southern Highlands. The Southern Highlands were about an hour’s drive from Nowra, but much closer to the Illawarra region.

In 2004, RPR granted Marmax a sub-franchise for the Illawarra region. That was in anticipation of events which finally took place in 2005. In 2005, RPR sold its business in the Illawarra region to Marmax and Spanline granted a new, exclusive franchise over the Illawarra region to Marmax.

In 2007, Marmax began selling to customers in the Southern Highlands. The first time RPR complained to Spanline, Spanline did nothing. It said it could find nothing amiss although, if it had conducted even a cursory search of its database, it would have found that Marmax was indeed selling in RPR’s territory.

Spanline met with Marmax in July 2009 and orally approved Marmax continuing to service customers from the Southern Highlands. Spanline considered this was in its commercial interests as RPR refused to open an office in the Southern Highlands and Spanline was concerned business from potential customers in the Southern Highlands would be lost because they would not travel to Nowra.

After yet further complaints from RPR, Spanline sent Marmax a letter in September 2009 telling it not to sell in RPR’s territory. But Marmax’ subsequent telephone call left Marmax with the understanding that it could continue in line with the July 2009 oral permission.

An attempt to negotiate a co-existence arrangement over the Southern Highlands failed as RPR would not agree to the proposed reduction in its exclusivity and Spanline authorised Marmax to continue.

The result

The trial judge had awarded RPR damages from both Spanline and Marmax: Spanline for breach of the exclusivity arrangements in the franchise agreement; Marmax for breach of the terms of the sale of business agreement.

The Full Court allowed Marmax’s appeal. The Full Court also partially allowed Spanline’s appeal, finding it liable to pay damages only for sales by Marmax in RPR’s territory after Spanline gave Marmax oral permission to continue selling in the Southern Highlands.

What kind of exclusivity was the exclusive territory

Spanline first argued that the grant of the exclusive right “to conduct the Franchised Business in the [Franchised] Territory” was just a promise to be the only franchisee located in the territory and not directed to the location of customers. The Full Court agreed with the trial judge that the exclusivity extended to the customers. The definition of Franchised Business extended to installation of the products. Also, the nature of the business was supplying and installing products in retail customers’ homes.

What did the promise of exclusivity mean

The trial judge had found Spanline in breach of its obligations to RPR implied by the grant of exclusivity both by failing to undertake even the most rudimentary investigation of RPR’s initial complaints as well as by failing to stop Marmax from selling into RPR’s territory, both before and after Spanline gave Marmax oral permission to sell to customers in the Southern Highlands and authorising Marmax to sell in RPR’s exclusive territory.

The promise of exclusivity imported with it implied terms of good faith and fair dealing and an implied term to co-operate: to do all things necessary to ensue each party got the benefit of its bargain. In doing so, the trial judge had relied on Far Horizons Pty Ltd v McDonald’s Australia Ltd [2000] VSC 310 and similar cases.

The Full Court did not disagree that those terms should be implied. Instead, it disagreed about their content. In essence, the Full Court held that the grant of an exclusive territory required Spanline only to refrain from taking positive steps to derogate from the grant of exclusivity or to authorise someone else to invade the territory. The Full Court said:

[139] …. In our view, the content of the obligation to do all things necessary to give the other party the benefit of the contract required Spanline to refrain from taking positive steps that would infringe upon or cause a third party to infringe upon the exclusive franchise granted to RPR. To require Spanline to do more, such as to take positive steps to investigate possible incursions by Marmax upon the rights of RPR, would exceed the requirement of necessity. It could not be said that the absence of a requirement to investigate such conduct would render the RPR Franchise agreement nugatory, worthless or seriously undermined.

[140] For the same reasons, we also do not accept RPR’s contention that Spanline was under an obligation to take steps to enforce its contractual rights against Marmax for the benefit of RPR.

At [150], the Full Court held that the implied duty to act in good faith did not require anything more than the implied duty to co-operate.

What did this mean? First, Spanline had no obligation to do anything to protect RPR or to try to stop Marmax invading RPR’s territory. (Any of us who might have thought that setting up a network of exclusive territories might have implied such an obligation would apparently be wrong.)

As already noted, therefore, Spanline was only liable to RPR for damages on sales[1] made by Marmax in RPR’s territory after Spanline gave Marmax permission to carry on. Spanline was not liable for sales while it was just “sitting on its hands”.

If you were acting for a franchisee, or an exclusive licensee, of a territory which did not extend to the whole of Australia, you would want to consider bargaining for a term requiring the franchisor (or licensor) to do “something”.

In this connection, the Full Court expressed an additional concern about implying a term that Spanline take reasonable steps to ensure RPR’s territory remained exclusive. It was likely to be uncertain in scope:

[141] …. The mere fact that the term operates by reference to a criterion of reasonableness is not the problem: it is that the contract does not supply any means for determining what is reasonable in the circumstances. It was argued that Spanline’s obligation to RPR could extend to termination of the contractual relationship between Spanline and Marmax. How the interests of Spanline and Marmax would be taken into account in determining whether such a step would be “reasonable” was not explored.

Something rather explicit would seem to be required

Why didn’t Marmax have to pay damages

RPR argued that Marmax was also in breach of both the original sub-franchise agreement and the sale of business agreement.

The Full Court held that the initial sub-franchise agreement between RPR and Marmax had been terminated once RPR and Marmax entered into the sale of business agreement and Spanline granted exclusivity over the Illawarra region to Marmax (with RPR’s knowledge and consent).

The Full Court accepted that a restraint on Marmax selling in RPR’s (retained) territory would not have been an unreasonable restraint of trade. However, the restraints imposed in the sale of business agreement did not extend to Marmax’ activities.

The sale of business agreement did include a restraint clause which seems fairly typical:

Except as permitted by clause 3.10, Marmax must not, and must ensure that each of its affiliates does not, during each restraint period in the South Coast Franchise Area:

(a) promote, participate in, finance, operate or engage in (whether on its own account or in partnership or by joint-venture); or

(b) be concerned or interested (directly or indirectly, or through any interposed body corporate, trust, principal, agent, shareholder, beneficiary, or as an independent contract, consultant or in any other capacity) in,

any of the Restrained Businesses.

For this purpose, “Restrained Business” was defined to mean:

a business, or operation:

(i) similar to the Spanline franchise businesses such as the Business; or

(ii) competitive with the Spanline franchise businesses such as the Business; or

(iii) supplying similar products and services to the Spanline franchise businesses such as the Business.

As best I can make out, this clause did not provide any protection to RPR because Marmax was conducting a Spanline franchise business, not a competing or similar business. There was also a “non-interference” clause:

On and from the Completion Date, [RPR] must not, and must ensure that each of its affiliates does not, during each restraint period:

a) Solicit, canvas or secure the custom of a person who is at the Completion Date, or was within 1 year before the Adjustment Date, a customer of the Business or [RPR] in connection with the Business;

b) Represent itself as being in any way connected with, interested in or associated with the Business (except as its proprietor before the Completion Date) or any business conduct by Marmax; or

c) Solicit, employ or engage the services of any transferring employee or any other person who becomes an employee of Marmax in connection with the Business.

The remarkable feature about the non-interference clause is that it was one way. There was no reciprocal obligation on Marmax not to interfere with RPR’s continuing business.

As a result, Marmax was not in breach of any contractual obligations it owed to RPR and the award of damages for making sales in RPR’s territories could not be sustained.

Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd [2015] FCAFC 127 (Middleton, Foster and Gleeson JJ)

  1. Strictly speaking, damages for the loss of the opportunity to make those sales.  ?

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When can an authorised user sue

Leave a Comment / Trade marks / / / , , , , , , , ,

Following on from my earlier post about the Trade Marks Act 1995 and repackaged goods, it is worth noting that there was also a dispute about the power of an authorised user to bring proceedings under s 26(1)(b) of the Act.

Amongst other things, section s 26(1)(b) provides:

Powers of authorised user of registered trade mark

(1) Subject to any agreement between the registered owner of a registered trade mark and an authorised user of the trade mark, the authorised user may do any of the following:

….

(b) the authorised user may (subject to subsection (2)) bring an action for infringement of the trade mark:

   (i) at any time, with the consent of the registered owner; or

  (ii) during the prescribed period, if the registered owner refuses to bring such an action on a particular occasion during the prescribed period; or

  (iii) after the end of the prescribed period, if the registered owner has failed to bring such an action during the prescribed period;

Scandinavian Tobacco Group Eersel, as the owner of the registered trade marks, had brought the proceeding, but it was joined as an applicant by its local distributor as an authorised user. Trojan argued that the authorised user had no standing to sue in this case. This was not an argument about whether the local distributor was an authorised user. Rather, it was whether or not the formal requirements of s 26(1)(b) had been met.

Allsop CJ confirmed that s 26(1)(b) allowed an authorised user to bring proceedings for trade mark infringement concurrently with the trade mark owner. It was not necessary for the authorised user to call on the registered owner to bring proceedings and then wait 60 days for the owner to fail to take any action.

The power of an authorised user under the Act to bring proceedings is subject to any agreement with the registered owner to the contrary. In that connection Cl 8 of the relevant distribution agreement is in fairly typical terms:

Nothing in this Agreement shall be interpreted or otherwise construed as giving the Distributor any rights to any of the Supplier Trade Marks. The Distributor shall inform the Supplier of any Infringements of the Supplier Trade Marks of which the Distributor becomes aware. Prosecutions for infringements shall be at the Supplier’s discretion and cost, but the Distributor shall offer all reasonable assistance. Any damages received shall be credited to the Supplier.

Allsop CJ considered this did not exclude the authorised user’s powers under s 26(1)(b) but, if it did, his Honour would have inferred the registered owner had given consent in the circumstances of this case: both the registered owner and the authorised user had issued the proceedings as joint applicants.

The question of the local distributor’s standing as an authorised user to bring proceedings is not necessarily an arid debate in cases where the right owner is also an applicant. It might have affected how much damages could be recovered for any infringement by Trojan.

There are of course a number of ways damages could be calculated (assuming damages and not an account of profits were pursued). One way of calculating such damages is the amount of profits that would have been made on sales lost as a result of the infringing activity. If s 123 had not provided Trojan with a defence and the applicants had pursued damages for lost sales, the quantum as measured by any profits lost by reason of the (hypothetical) infringement would probably include the local distributor’s “lost” profits only if it was an authorised user and entitled to join in the proceeding. If STG, as the owner of the registered trade marks, was the only applicant, its damages would probably have been limited only to the profits it lost on sales to its distributor and probably would not include profits on sales “lost” by the distributor.[1]

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086[2]

  1. The qualification “probably” is necessary in light of the Full Court’s decision in a copyright case: Insight SRC IP Holdings Pty Ltd v Australian Council for Educational Research Ltd [2013] FCAFC 62  ?
  2. STG’s appeal from the principal decision was heard by the Full Court on 25 November.  ?

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Parallel imports – repackaging Down Under

1 Comment / Trade marks / / / , , , , , ,

Scandinavian Tobacco Group Eersel (STG) is the world’s largest manufacturer of cigars and pipe tobacco. Three of its brands include CAFE CREME, LA PAZ and HENRY WINTERMANS; each of which is registered in Australia as a trade mark for tobacco products.

Trojan bought up stocks of genuine STG cigars in Europe in their original packaging. STG had placed the relevant trade marks on the cigars or their packaging.

The Tobacco Plain Packaging Act, however, precludes the sale of such cigars in Australia in their packaging. Trojan took the cigars out of the packaging which STG sold them in and put them in the drab, khaki packaging with gruesome pictures and health warnings as required under the TPPA. It also placed on the new packaging the relevant trade mark in the plain font and type size in the limited places that the TPPA allows.

STG sued for infringement unsuccessfully. Trojan did use the trade marks as trade marks within the meaning of s 120, but the defence provided by s 123(1) applied.

Allsop CJ held that use of the trade mark by an importer on genuine goods was use of the trade mark “as a trade mark” and so would infringe if done without consent or other defence. While appearing to express some doubts, his Honour considered that 4 Full Courts[1] required him to find that the 1995 Act changed the law so that Champagne Heidsieck[2] was no longer good law. Accordingly, subject to the s 123 defence, Trojan would have infringed.

Section 123(1) provides:

In spite of [section 120][s120], a person who uses a registered trade mark in relation to goods that are similar to goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark.

This seems like a pretty straightforward application of s 123(1). STG argued, however, that the application of the trade mark which Trojan had to show STG’s consent was the application to the plain packaging by Trojan, not the application of the trade mark to the original packaging by STG.

Allsop CJ short circuited that argument. His Honour got STG to agree that a retailer could rely on s 123(1) to avoid infringement if it printed the trade mark on a purchase receipt. One would hope that proposition was not controversial. At [82], his Honour developed the ramifications:

During argument, I posited to Mr Heerey, counsel for STG, an example: a tie with
trade mark Z woven into the tie, in a pink box with trade mark Z embossed on the box. Both trade marks have been applied by the registered owner. The shop owner advertises his stock of Z ties with a sign outside bearing trade mark Z and invoices customers with a document bearing the same mark. Mr Heerey accepted that there would be no infringement in the use of the advertising and invoices even though such use would be use as a trade mark because of the operation of s 123: Facton Ltd v Toast Sales Group Pty Ltd [2012] FCA 612; 205 FCR 378 at 398–404 [112]-[145]. (It is to be noted, and Trojan emphasised this point in its submissions, that Middleton J in Facton said at [132] that “a natural reading of the words used in s 123 suggest that the only time at which the issue of consent is to be assessed is the time of the application of the trade mark to goods.”) I then posited a change to the facts. The
shop owner preferred selling the tie in a blue box (fitting in with a blue theme to his shop) upon which he faithfully and accurately placed the trade mark Z. The tie was taken out of the pink box (which was discarded) and put in the blue box for display and sale. STG submitted that the step of placing the Z trade mark on the blue box would not be protected by s 123, but accepted that the sign and invoices remained protected. That was so, it was submitted, because of an implied consent by the registered owner of the trade mark to the advertising and invoices in the light of the trade mark on the tie. Yet, should the difference be governed by the existence of weaving on the tie? Has not the trade mark already been applied in relation to the good (the tie) by embossing on the pink box?

Allsop CJ considered that the plain, natural meaning of the statutory language led to the answer “Yes” and was to be preferred.

In this case, there was no question about the quality of the goods once Trojan had repackaged them. Section 123(1) arguably does not concern itself with such matters. Nonetheless, the approach under the Australian Act contrasts starkly with the convoluted regime applicable in the EU which even requires the parallel importing repackager to give the trade mark owner advance notice of its nefarious plans.[3]

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086

  1. The famous four: Transport Tyre Sales Pty Ltd v Montana Tyres Rims & Tubes Pty Ltd [1999] FCA 329; 93 FCR 421 at 440 [94]; [Paul’s Retail Pty Ltd v Sporte Leisure Pty Ltd [2012] FCAFC 51; 202 FCR 286 at 295 [66]; Paul’s Retail Pty Ltd v Lonsdale Australia Limited [2012] FCAFC 130; 294 ALR 72 at 82 [65] and E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2009] FCAFC 27; 175 FCR 386 at 403–404 [57]- [58]. The two Paul’s Retail cases, of course, did not involve genuine goods and the High Court in Gallo refrained from deciding this point while overtuning the Full Federal Court’s decision.  ?
  2. Champagne Heidsieck et cie Monopole Society Anonyme v Buxton [1930] 1 Ch 330.  ?
  3. See for example Case C–143/00 Boehringer Ingelheim KG v Swingward Ltd and Dowelhurst Ltd [2002] ECR–1 at [61] – [68].  ?

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Section 155 notices

Leave a Comment / Enforcement / / / , , , , , , ,

Under s 155 of the Competition and Consumer Act 2010, the ACCC can issue a notice to a person requiring them to provide information and answer questions. Failure to comply, or knowingly furnishing false or misleading information in response, is a criminal offence.

Natural Food Vending Pty Ltd was served with one such notice and failed to comply. Davies was its sole director and was convicted of aiding, abetting, counselling or procuring that failure.

The Act provides for a maximum fine of 20 penalty units ($2200) or up to 12 months imprisonment. Reeves J considered that the particular offending in this case did not warrant a sentence of imprisonment. His Honour further considered that a fine, given Davies’ impecuniosity, would effectively lead to his imprisonment on his default. Accordingly, Reeves J has now sentenced Davies to 200 hours community service provided he does not commit another offence during the service period.

Australian Competition and Consumer Commission v Davies (No 2) [2015] FCA 1290

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The word yellow is descriptive of online directories

Leave a Comment / Trade marks / / / , , , , , , , , , , , , , , ,

Telstra has lost its appeal in the “Yellow” case.

The Full Court upheld the trial judge’s conclusion that the word “yellow” lacked any capacity to distinguish print or online directories under (the old version of) s 41. However, the Full Court accepted that the word “yellow” had become sufficiently distinctive of Telstra by reason of use and promotion after the date of the application that it would have been registrable if it had had some inherent capacity to distinguish.

Following the High Court’s ruling in “Oro/Cinque Stelle“, the Full Court agreed with the trial judge that the word “yellow” signifies the colour yellow and the evidence showed that the colour yellow signified print and online directories. Consequently, the word itself was descriptive. At [117], in considering the ordinary signification of the word, the Full Court said:

We would say at the outset that it was appropriate for Telstra to proceed on the basis that capacity to distinguish could not be decided by reference to inherent adaption alone even if the Court accepted all of its arguments. The word yellow describes a colour and, even without evidence, it would be appropriate to infer that at least some other traders might wish to use that colour. Furthermore, there was at the very least evidence in this case of not infrequent use of the colour yellow in connection with print and online directories.

The Full Court then considered that the evidence of use by other traders in print and online directories confirmed that consumers did in fact consider the word “yellow” descriptive of such directories. Like the trial judge, the Full Court took into account the usage of traders overseas as well as within Australia, although it may have been to support the good faith of the local traders’ use.

Survey and acquired distinctiveness – s 41(5)

If the word “yellow” had had some capacity to distinguish print and online directories, the Full Court would have allowed Telstra’s appeal that it had become sufficiently distinctive under s 41(5) by use after application. A 2008 survey (not the 2007 survey relied on by the primary judge) showed that after several years of use including millions of dollars of expenditure on advertising, at least 12% of the survey respondents identified (associated?) the word “yellow” with Telstra’s directory unprompted. A further 4%, making 16% in total, had similar unprompted association.

The Full Court distinguished British Sugar and held that would be sufficient. (The report does not disclose the terms of the question that elicited those responses.) Arguably, makes a nice contrast to the Oro/Cinque Stelle case.

What about .com.au

In dismissing a second, cross-appeal in which yellowbook.com.au was found to be deceptively similar to Telstra’s Yellow Pages trade mark, the Full Court treated the domain name “accoutrement” .com.au as largely insignificant for the purposes of the deceptive similarity analysis.

The interesting point here is that the Full Court considered this may not always be the case. It was appropriate to disregard the element here in the context where the services were online directories and consumers were shown largely to disregard such elements.

The question of onus

The Full Court also seems to have resolved the ongoing disputes about the onus of proof. The Full Court held that the opponent has the onus of proving that a proposed trade mark has no inherent capacity to distinguish. It further held that that onus was on the balance of probabilities, not the practically certain standard which some courts at first instance have applied.

Telstra Corporation Limited v Phone Directories Company Australia Pty Ltd [2015] FCAFC 156 (Besanko, Jagot and Edelman JJ)

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IP Australia consults on patenting genetic material post Myriad

Leave a Comment / Patents / / / , , , , , ,

Following the High Court’s ruling that Myriad’s claims for isolated DNA relating to BRCA1 were not patentable subject matter, IP Australia has released a “consultation” on how it proposes to treat patent applications claiming genetic material.

The Commissioner considers that the High Court’s ruling excludes from ‘manner of manufacture’ a claim “to an isolated nucleic acid that merely represents information coding for a polypeptide is not patent eligible.”

Accordingly, at this stage, IP Australia contemplates rejecting as not manners of manufactures claims to:

  • Naturally occurring (human) nucleic acid sequences encoding polypeptides or functional fragments thereof -either isolated or synthesised
  • Naturally occurring (non-human) nucleic acid sequences encoding polypeptides or functional fragments thereof – either isolated or synthesised
  • cDNA
  • Naturally occurring human and non-human coding RNA – either isolated or synthesised

On the other hand, IP Australia considers the following could be patent subject matter:

  • Naturally occurring isolated regulatory DNA (e.g. promoters, enhancers, inhibitors, intergenic DNA)
  • Isolated non-coding (e.g. “Junk”) DNA
  • Isolated non-coding RNA (e.g. miRNA)
  • Naturally occurring isolated bacteria
  • Naturally occurring isolated virus Isolated polypeptides
  • Synthesised/modified polypeptides
  • Isolated polyclonal antibodies
  • Chemical molecules purified from natural sources (e.g. new chemical entities, antibiotics, small molecules) Isolated cells Isolated stem cells
  • Probes
  • Primers Isolated interfering/inhibitory nucleic acids (e.g. antisense, ribozymes)
  • Monoclonal antibodies Fusion/chimeric nucleic acids
  • Transgene comprising naturally occurring gene sequences
  • Vectors/microorganisms/animals/plants comprising a transgene

The Commissioner is interested in receiving comments on her proposed practice by 30 October 2015.

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Google Books = fair use in USA

Leave a Comment / Copyright / / / , , , , , ,

Just in time for the 2015 Copyright Symposium, the Second Circuit Court of Appeals has ruled that the Google Books Project is “fair use” of copyright and so not infringing.

Judgment here (pdf). Opinion authored by Circuit Judge Leval.

Eleanora of the IPkats first look here; Rebecca Tushnet focuses on the fourth factor discussion here. The “four factors” from §107 are:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

Before responsibility for copyright was transferred to the Department of Communications and the Arts, the Commonwealth Attorney-General had commissioned a study of the economic effects of the ALRC’s recommendation to introduce “fair use” into Australian copyright law.

The Authors Guild v Google Inc. (CA2 Oct 16. 2015 13-4829-cv)

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Myriad’s BRCA1 claims – take 2

Leave a Comment / Patents / / / , , , , , , , , , , , ,

As previously noted, the High Court has unanimously ruled that Myriad’s 3 claims for isolated nucleic acids for the BRCA1 gene that codes for specific mutations and polymorphisms are invalid.[1]

Claim 1 was:

An isolated nucleic acid coding for a mutant or polymorphic BRCA1 polypeptide, said nucleic acid containing in comparison to the BRCA1 polypeptide encoding sequence set forth in SEQ.ID No:1 one or more mutations or polymorphisms selected from the mutations set forth in Tables 12, 12A and 14 and the polymorphisms set forth in Tables 18 and 19.

Claims 2 and 3 were subsidiary claims for narrower formulations.

The sole issue in the case was whether claims 1 to 3 of Myriad’s patent were a “manner of manufacture” within the meaning of s 18(1)(a) of the Patents Act – what the American’s refer to as subject matter or patentable subject matter. There was no challenge to the novelty or inventive step of the claim – the basis on which the corresponding patent was rejected in Europe.

There was also no challenge to claims 4 – 30, which Gordon J at [191] and [257] characterised as applications of the isolated gene sequences to various purposes such as a probe (claim 4), vectors (claims 5 – 7), methods of producing mutant or polymorphic BRCA1 polypeptides (claims 8 – 9), preparations and uses of polypeptides (claims 10 – 16) and methods of diagnosis (claims 17 – 30).

Previously, this question fell to be determined according to the principles declared in the “watershed” NRDC case. All 3 sets of reasons acknowledged the continued relevance of that decision, but appear to have qualified its teaching in potentially far-reaching ways.

French CJ, Kiefel, Bell and Keane JJ

The majority judgment was delivered by French CJ, Kiefel, Bell and Keane JJ.

A narrow approach

At one level (one might hope the right level), their Honours’ judgment can be seen as focusing very specifically on the singular nature of Myriad’s claim. Thus, at [6], their Honours said:

Despite the formulation of the claimed invention as a class of product, its substance is information embodied in arrangements of nucleotides. The information is not “made” by human action. It is discerned. That feature of the claims raises a question about how they fit within the concept of a “manner of manufacture”. As appears from s 6 of the Statute of Monopolies, an invention is something which involves “making”. It must reside in something. It may be a product. It may be a process. It may be an outcome which can be characterised, in the language of NRDC, as an “artificially created state of affairs”. Whatever it is, it must be something brought about by human action. ….

In their Honours’ conception, that was not the case here. The judgment continues at [6]:

The requirement, in each claim, that the sequence in the isolate bear specified mutations or polymorphisms raises the same problem in a particular way. Satisfaction of that integer depends upon a characteristic of the human being from whom the nucleic acid is isolated, a characteristic which is not shared by all human beings. It has nothing to do with the person who isolates the nucleic acid bearing the mutant sequence.

That is, nothing was “made”. Rather, the gene sequence with the relevant mutation(s) and/or polymorphism(s) was made in the individual from whom the genetic material had been extracted. “All” that Myriad did was whittle that genetic material down to identify whether or not the relevant mutation or polymorphism was present.[2]

Further, at [8]:

…. The size of the class of the products as defined is large. No upper limit was suggested in argument. The boundaries of the class are not defined by a limiting range of chemical formulae. There is a real risk that the chilling effect of the claims, on the use of any isolation process in relation to the BRCA1 gene, would lead to the creation of an exorbitant and unwarranted de facto monopoly on all methods of isolating nucleic acids containing the sequences coding for the BRCA1 protein. The infringement of the formal monopoly would not be ascertainable until the mutations and polymorphisms were detected. Such a result would be at odds with the purposes of the patent system.[3]

One might wonder how one works out whether or not the “monopoly” that would arise would be “exorbitant and unwarranted”. The size of the class claimed seems problematic, the “chilling effect” also might be thought something that flows from the grant of any patent. Why for example would that be any more of a problem than for the patents granted originally over compounds such as omeprazole or rosuvastating or any number of other drugs?

Moreover, the problem of infringement loomed very large. No-one could know in advance whether or not what they were doing would infringe. It would depend on whether a relevant mutation or polymorphism was present in the individual from whom the genetic material was extracted. One might say, of course, that one would not be at risk of infringing unless one was looking for the BRCA1 sequence. One might also say, at least up until today, that there was no bar to patenting omeprazole or rosuvastatin or any other chemical substance just because one had found a specific use for it such as treating disease A when, after the compound had been discovered, someone else might be precluded from investigating its use, surprisingly, to treat disease B.[4]

The problem seems particularly to come back to the nature of the claim as being tosomething generated in an individual naturally and independently of any action by the patentee.

Wider ramifications

French CJ, Kiefel, Bell and Keane JJ did not just declare that claims 1 to 3 were not patentable subject matter. Their Honours went on to explain the principles that should be applied in future.

First, their Honours accepted at [18] that the NRDC test was still the appropriate question:

“Is this a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?”

As I tell my patents class students, that provides us with an awful lot of guidance! Their Honours continued:

That question is to be answered according to a common law methodology under the rubric of “manner of manufacture” as developed through the cases, but consistently with “a widening conception of the notion [which] has been a characteristic of the growth of patent law.” That widening conception is a necessary feature of the development of patent law in the 20th and 21st centuries as scientific discoveries inspire new technologies which may fall on or outside the boundaries of patentability set by the case law which predated their emergence.

So far, still so good; particularly the recognition of the need for the concept to continue developing.

The “common law methodology” is further explained in [5] – [7] and troubled French CJ in Apotex v Sanofi. The first point appears to be, if the claim falls within an existing recognised class of patentable subject matter, it is a manner of manufacture. If it is a new class, however, “policy factors informed by the purpose of the Act and considerations of coherence in the law” need to be considered. Moreover, there are limits in judicial law-making “inherent in common law methodology”:

Where an affirmative application of the concept is likely to result in the creation of important rights as against the world, to involve far-reaching questions of public policy and to affect the balance of important conflicting interests, the question must be asked whether that application is best left for legislative determination. The patentability of nucleotide sequences derived from human DNA is in that category. The inherent patentability of the invention as claimed would powerfully imply patentability of any claim for an isolated nucleic acid coding for a specified polypeptide.

Notwithstanding 50+ years of the Courts successfully applying the NRDC formula, this High Court is plainly very uncomfortable with that role.

For those 50+ years since NRDC, we had been thinking there were 2 (or 3) requirements for patentable subject matter:

  1. Whether the invention as claimed is for a product made, or a process producing an outcome as a result of human action; and
  2. Whether the invention as claimed has economic utility.[5]

French CJ, Kiefel, Bell and Keane JJ confirmed that requirements 1 and 2 are still necessary. As foreshadowed in paragraph [6], however, their Honours said that requirements 1 and 2, while necessary, are not in themselves sufficient.[6] Other factors must be taken into account. At [28], their Honours laid out four further considerations:

  1. Whether patentability would be consistent with the purposes of the Act and, in particular:
    1. whether the invention as claimed, if patentable under s 18(1)(a), could give rise to a large new field of monopoly protection with potentially negative effects on innovation;
    2. whether the invention as claimed, if patentable under s 18(1)(a), could, because of the content of the claims, have a chilling effect on activities beyond those formally the subject of the exclusive rights granted to the patentee;
    3. whether to accord patentability to the invention as claimed would involve the court in assessing important and conflicting public and private interests and purposes.
  2. Whether to accord patentability to the invention as claimed would enhance or detract from the coherence of the law relating to inherent patentability.
  3. Relevantly to Australia’s place in the international community of nations:
    1. Australia’s obligations under international law;
    2. the patent laws of other countries.
  4. Whether to accord patentability to the class of invention as claimed would involve law-making of a kind which should be done by the legislature.

The new, additional factors 1, 2 and 4 above were described as the most important in the balancing process the inquiry envisaged by their Honours.[7]

Having regard to these considerations, French CJ, Kiefel, Bell and Keane JJ declared at [94]:

Although it may be said in a formal sense that the invention as claimed, referring to isolated nucleic acids, embodies a product created by human action, that is not sufficient to support its characterisation as a manner of manufacture. The substance of the invention as claimed and the considerations flowing from its substance militate against that characterisation. To include it within the scope of a “manner of manufacture” involves an extension of that concept, which is not appropriate for judicial determination. Further, to include this class of claim within that concept would not contribute to coherence in the law as was the case in Apotex. Nor do Australia’s international obligations and the differently framed patent laws of other jurisdictions, which were referred to earlier in these reasons, support the conclusion that this class of claim should fall within the concept.

The “substance of the invention” and the considerations flowing

In the decision of the Full Federal Court under appeal, it had been pointed out that isolated DNA was in fact man made – it didn’t occur in nature. French CJ, Kiefel, Bell and Keane JJ, however, considered that was to elevate form over substance. So at [90], their Honours accepted a submission from the appellant:

“Myriad’s claims are simply not expressed in terms of chemical composition, nor do they rely in any way on the chemical changes that result from the isolation of a particular section of DNA. Instead, the claims understandably focus on the genetic information encoded in the BRCA1 and BRCA2 genes.”

That characterisation, so far as it emphasises the focus of the claims on genetic information, is applicable to the claims in this case and, contrary to the view of the Full Court, should be accepted.

At [93], their Honours then emphasised:

When proper regard is paid to their emphasis on genetic information, the subject matter of the claims lies at the boundaries of the concept of “manner of manufacture”. That it does lie at the boundaries is further evidenced by the odd consequence that if the claims are properly the subject of a patent, the patent could be infringed without the infringer being aware of that fact. That consequence coupled with the very large, indeed unquantified size of the relevant class of isolated nucleic acids, all of which bear the requisite information, raises the risk of a chilling effect upon legitimate innovative activity outside the formal boundaries of the monopoly and risks creating a penumbral de facto monopoly impeding the activities of legitimate improvers and inventors.

The characterisation of the claims as “information”[8] has some affinity for Gordon J’s approach, discussed briefly below, ruling that the claims were to a mere discovery rather than invention. As discussed above under A narrow approach, this seems to flow from the singular nature of the claims in suit with the consequent uncertainties, particularly for infringement.

An extension of the concept

How do you tell that Myriad’s claim involved an extension of the concept of manufacture?

It is true that no court in Australia had ruled on the patentability of isolated gene sequences until the Myriad litigation. However, the Patent Office has been granting patents for ‘man made’ microbes since 1976 and for isolated genetic material since 1995. The legislative history showed that Parliament rejected an attempt to exclude genetic material from patentable subject matter when passing the 1990 Act. A further attempt to exclude human genetic material was rejected in the Senate in 2011. Two inquiries by Government agencies in the 2000s had also endorsed the status quo and recommended against exclusion. Indeed, the Government of the day had publicly announced its acceptance of the ALRC’s recommendation not to exclude isolated genetic materials from patentability. French CJ, Kiefel, Bell and Keane JJ said at [37]:[9]

This Court is not concerned in this appeal with “gene patenting” generally, but with whether the invention as claimed in Claims 1 to 3 falls within established applications of the concept of manner of manufacture. If it does not, then the question is one of inclusion not exclusion. The legislative history cannot be read as impliedly mandating the patentability of claims for inventions relating to isolated nucleic acids coding for particular polypeptides. The legislative history does not assist the Court in answering the question posed in this appeal.

Contribute to coherence

[Apotex][apotex] had (more or less) upheld the status of methods of medical treatment as patentable subject matter. That contributed to coherence because there was no rational basis to distinguish between patenting medical products and patenting methods of treatment.

Here, arguable, the nature of the claim as already discussed means it is impossible to assess the risks of infringement in advance. That presumably does not promote coherence. Their Honours also focused on the broad range of what was claimed and the potential impacts on future researchers. As already discussed, it may be difficult to distinguish those aspects from claims to other chemical compounds.

Gageler and Nettle JJ

Given the length of this post already, I shall only comment briefly on the remaining judgments.

Like French CJ, Kiefel, Bell and Keane JJ, Gageler and Nettle JJ considered at [125] that “an artificial state of affairs” and “economic utility” were necessary requirements for patentable subject matter, but not sufficient.

Also like French CJ, Kiefel, Bell and Keane JJ, Gageler and Nettle JJ stated at [144] that the question of patentable subject matter must be looked at as a matter of substance rather than form.

Invoking Microcell and Philips v Mirabella, their Honours considered at [133] that patentable subject matter involved a threshold inquiry of “inventiveness”.

Products of nature therefore did not qualify as at [136] they lacked the necessary quality of inventiveness. Gageler and Nettle JJ considered that Myriad’s claims were properly characterised as merely claims to products of nature.

Earlier at [128], Gageler and Nettle JJ had said:

Regardless, however, of the amount of labour involved or the differences between the product and the raw natural material from which it is derived, it is necessary that the inventive concept be seen to make a contribution to the essential difference between the product and nature.

Then, at [134], their Honours said:

Here, the essence of claim 1 is the correlation between the incidence of cancer and the presence of the specified mutations and polymorphisms in the mutated BRCA1 gene. Such ingenuity as that entails consists in the idea of examining an isolated fragment of a patient’s naturally occurring DNA constituted of the BRCA1 gene for the presence or absence of the specified mutations and polymorphisms. The subject matter of the claim does not make any contribution to the inclusion of the specified mutations and polymorphisms in the mutated BRCA1 gene. Their presence or absence in or from it is the result of the isolated BRCA1 gene being part of the naturally occurring DNA from which the sequence is isolated. To adopt and adapt the reasoning in NV Philips’ Gloeilampenfabrieken Application, it is “the inevitable result of that which is inherent in the [DNA]”.[10]

Like the reasons of French CJ, Kiefel, Bell and Keane JJ, this passage emphasises that Myriad did not itself make, or cause to be made, the relevant material. Rather, it was generated in the human body independently of any action by Myriad.

Thus, Gageler and Nettle JJ said at [139]:

…. the BRCA1 gene is not patentable as such because it is a naturally occurring phenomenon which lacks the quality of inventiveness necessary to qualify as a manner of new manufacture.

Gordon J

Gordon J at [222] – [225] specifically rejected D’Arcy’s argument that “naturally occurring things, or products or phenomena or principles of nature are excluded as a proper subject matter of a patent.” These were too vague, malleable and imprecise to be useful tools.

Instead, her Honour focused on the role isolation of the nucleic acid played: it simply allowed identification of the presence, or absence, of naturally occurring mutations or polymorphisms. Gordon J then advanced five reasons why the claims did not qualify as patentable subject matter:

  1. The claim is to multiple products, not a single product: [231]-[239];
  2. Although Myriad claims a class of chemical compounds as a product, it cannot delineate the bounds of its claim by reference to chemical composition: [240]-[243];
  3. Myriad did not create, make or alter the characteristic, the code: [244]-[249];
  4. There is no idea, concept or principle embodied in a manner of new manufacture: [250]-[258]; and
  5. The claim is too broad: [259]-[264].

Points 1, 2 and 5 focus on the sheer number and variety of compounds or sequences which were embraced. So at [241] and [242], her Honour recorded that Myriad could not identify the boundaries of the claims:

…. it is not possible for Myriad to record all of the various chemical compounds (or products) that might be produced by isolating an individual’s nucleic acid. For example, as Myriad accepted during argument, the claim is to an “extremely wide number” of chemical compounds where the compound formulae would vary according to the number of sequences extracted but the compound would nevertheless contain one or more of the specific mutations or polymorphisms.

As has been seen, changes in chemical composition are not limited to variation in the number of nucleotides. So, although the claimed product is a chemical compound, Myriad did not and cannot delineate the bounds of the class of compounds by reference to the chemical composition of the class of the claimed product. Instead, Myriad sought to delineate the boundaries of the claim by reference to what it described as the “characteristics identified within the claim” – the specific mutations and polymorphisms, represented by the code.

I am not sure why delineation by class of compound would be any more precise than the method chosen by Myriad – if you know, please leave a comment.

Under point 5, her Honour also pointed out the concern that no-one could know in advance whether they infringed or not and, if the role of the claim, is to identify the boundaries of the monopoly, that does rather cause a problem.

Under point 4, Gordon J referred to the nature of invention as discussed in the Hickton Patent Syndicate case:

In my opinion, invention may lie in the idea, and it may lie in the way in which it is carried out, and it may lie in the combination of the two; but if there is invention in the idea plus the way of carrying it out, then it is good subject-matter for Letters Patent. (Gordon J’s emphasis)

Her Honour considered that claims 1 to 3 failed to qualify because they did not carry out Myriad’s discovery that certain mutations or polymorphisms indicated increased risk of breast cancer. Gordon J said:

[254] Here, having located the BRCA1 gene and identified its nucleic acid sequence, Myriad’s idea, concept or principle is that specific mutations or polymorphisms in that sequence suggest a predisposition to breast cancer and ovarian cancer.

[255] How then is that idea carried out in claim 1? It is not. It is not and could not be carried out – as claim 1 suggests – by creating a product comprising isolated nucleic acid from a patient which contains the identified characteristic in any one of its many forms. As has been seen, Myriad does not claim the methods by which it isolates the nucleic acid or the methods by which it identifies the sequence of the patient’s nucleic acid. Myriad does not claim the characteristic. Claim 1 is not a claim to the idea, concept or principle.

Gordon J contrasted these claims to claim 4 which used the discovery to create a probe to test for the presence or absence of mutations. That was an invention. So analysed, claims 1 to 3 might be seen to be ‘mere’ discoveries’ rather than an application or now to offend against the enablement and sufficiency requirements.

Some other scary thoughts

First, it is not entirely clear from the decision whether cDNA is patentable subject matter as the US Supreme Court accepted. French CJ, Kiefel, Bell and Keane JJ said at [73]:

Nor, as previously noted, are the claims subject to any process?based limitation involving the breaking up and physical stitching together of the sequences comprising the isolated nucleic acids which are the products the subject of the claims. The “conceptual” stitching together, which may be regarded as the ordered compilation of information defining the relevant sequence, falls outside the claims entirely. The claims encompass molecules comprising isolated nucleic acids containing coding nucleotides arranged in the same sequence as appears in the DNA from which they were derived, whether or not introns and other non-coding sections have been removed from the relevant stretch of that DNA.

That might leave room for debate that cDNA could qualify. Also, the exclusion of introns or other “non-conding regions” might ameliorate the “chilling effects”. Gageler and Nettle JJ, however, at [116] characterised the claims as claiming “the uninterrupted sequence of nucleotides without introns”, i.e., cDNA. According to Gordon J at [283], the parties agreed that, if the claims were not patentable subject matter, they would not be saved where they extended to cDNA.

Philips v Mirabella!

Dr Patentology has called Philips the second worst ever patent judgment by the High Court. No argument from me. Turns out, we’re both wrong. At least 6 judges of the current High Court consider it good law[11] and appear to use it as their touchstone of patent principles.

I would say we need legislative reform but, as the Angel of Lake said, “Before you choose your wish son You better think first ….”

D’Arcy v Myriad Genetics Inc [2015] HCA 35

  1. According to Gordon J at [205] a “mutation” is a variation in a gene sequence “private to an individual or that indiviual’s immediate family.” In contrast, at [207] a “polymorphism is a genetic variant which has arisen in a distant common ancestor and is therefore not unique to an individual or that individual’s immediate family. Forty per cent of women in the general female population have one or more polymorphisms in the BRCA1 gene that are not found in the remaining 60 per cent of the population.”  ?
  2. Gageler and Nettle JJ also focused on this point at e.g. [162]. See also Gordon J at [248].  ?
  3. Citing Cornish, Llewellyn and Aplin for the final conclusion.  ?
  4. Of course, these days, s 119C would probably provide one with a defence to infringement, at least for the research into the possible use.  ?
  5. In fact, the Full Federal Court in Grant has told us there is a the third requirement: a physical transformation of something. Arguably, that was not in issue in Myriad as the isolated gene sequence was physically different to the unisolated genetic material in the human body to an extent.  ?
  6. Insofar as the claim falls within existing concepts of “manner of maufacture” as it has been developed through the cases, their Honours said at [28] requirements 1 and 2 “will also ordinarily be sufficient.” (emphasis supplied)  ?
  7. The survey of foreign laws didn’t really help as it was only the USA following the US Supreme Court’s Myriad decision that appears to have ruled out patent protection for isolated genetic material.  ?
  8. Optimistically hoping it was the claim to “information” rather than just genetic information which was important.  ?
  9. Gageler and Nettle JJ took a similar position at [171]. Nicholas J reviewed the legislative history at [113] – [123] in Cancer Voices.  ?
  10. A different Philips case, which their Honours read as endorsed by NRDC: (1954) 71 RPC 192 at 194, quoted in NRDC (1959) 102 CLR 252 at 279.  ?
  11. In addition to Gageler and Nettle JJ, see French CJ, Kiefel, Bell and Keane JJ at [12].  ?

Myriad’s BRCA1 claims – take 2 Read More »

Little Brown Balls Bounced Again

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Jessup J has ruled that MALTITOS may be registered for confectionary in the face of MALTESERS.

Mars had successfully opposed Delfi’s application before the Office on the grounds of its prior registration for MALTESERS and its reputation in Australia.

On the s 44 point, both marks consisted of three syllables and had the word “malt” in common as the first syllable, but the different appearance and sound of the remaining two syllables were sufficiently strong that ordinary purchasers would not be caused to wonder if there was a common trade source. Both parties accepted (apparently on the basis of Delfi’s overseas use) that MALTITOS would be pronounced “toes”. Jessup J was favoured with the expert evidence of a linguist, Ass Prof Cox, including that:

the consonant between the final two syllables is ‘t’, phonetically described as a voiceless alveolar stop sound /t/, whereas for ‘Maltesers’ it is ‘s’ pronounced as /z/, a voiced alveolar fricative sound. The difference between the two sounds /t/ and /z/ is a difference of manner of articulation (stop vs fricative) and also of voicing (voiceless vs voiced). /t/ is a voiceless speech sound whereas /z/ is voiced. These differences are highly functional in English and separate words like ‘seat’ vs ‘seize’, ‘shoot’ vs ‘shoes’.

Jessup J conceded he was not in a position “to engage with her in her field of technical expertise”, but her evidence confirmed his impression as a layperson. In his Honour’s view:

if the notional consumer under contemplation was someone whose eye fell upon the applicant’s mark, in isolation, displayed on a package sitting on a rack or shelf, I am quite unpersuaded that it would, because of the limited similarities between that mark and the respondent’s mark, enter his or her mind that the product in question derived, or might have derived, from the same source as products sold under the latter.

The Bali Bra case [1] notwithstanding, Jessup J did not consider that he was concerned with the potential for sales assistants to mishear the product request across a noisy counter.

Delfi tried to argue that s 60 could be invoked only by unregistered marks, but Jessup J, after some consideration, was not prepared to buy that. Rather, the reputation (if proved) provided the basis for the comparison:

the only respect in which s 60 requires an exercise different from that arising under so much of s 44 as relates to deceptive similarity is that the reputation in Australia of the “other” mark must be the reason why the use of the mark proposed to be registered is likely to deceive or cause confusion. What this means in practice is that the notional consumer of average intelligence thinking of making a purchase by reference to goods in association with which the latter mark is used, or intended to be used, is no longer someone who has had no more than some exposure to the “other” mark: he or she is someone who is assumed to have that level of awareness of that mark as is consistent with the content and extent of the reputation of it.

His Honour accepted that MALTESERS had a widespread, solid reputation. As in the Malt Balls case, however, that in the end told against deception:

with a stronger awareness of the respondent’s mark, I consider that such a consumer would be immediately struck by the differences between the two marks, as discussed above. He or she may observe the limited similarities between the marks and, because the subject of the presumptive interest would be confectionery, may assume that the products were of the same nature as those sold under the respondent’s mark, but, giving the matter a moment’s reflection, would readily conclude that those products were not Maltesers. As I say, the strong reputation of the respondent’s mark would, if anything, make that conclusion a more likely one.

Delfi Chocolate Manufacturing S.A. v Mars Australia Pty Ltd [2015] FCA 1065

  1. The Bali Bra case is not referred to in the judgment but, consistently with Jessup J’s view, Mason J did appear to be concerned with the prospect that the consumer would have misheard what the sales person said over the phone: “No doubt orders are sometimes placed by telephone. And in considering the likely reaction of a customer it is important to take into account, not the person whose knowledge of the two marks and the goods sold under them enables her to distinguish between them, but the person who lacks that knowledge.”  ?

Little Brown Balls Bounced Again Read More »

Alphapharm v Lundbeck per se

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The Full Federal Court has dismissed yet another appeal in the Alphapharm v Lundbeck (escitalopram) saga:

You will recall that Lundbeck had applied (10 years late)[1] for an extension of the term of its escitalopram patent under s 70 of the Patents Act, escitalopram being the (+) enantiomer of citalopram.[2]

The issue in this appeal was whether escitalopram satisfied the requirement in s 70(2)(a) that:

one or more pharmaceutical substances per se must in substance be disclosed in the complete specification of the patent and in substance fall within the scope of the claim or claims of that specification

Alphapharm’s argument was that Lundbeck’s patent was a claim to a pharmaceutical substance – the isolated or pure enantiomer – but it was not a claim to a pharmaceutical substance per se. Rather, Alphapharm characterised the claim as a claim to the substance limited by a requirement of purity of manufacture.

Bennett, Nicholas and Yates JJ rejected Alphapharm’s characterisation.

Claim 1 of the escitalopram patent is to:

(+)–1-(3-dimethylaminopropyl)–1-(4’-fluorophenyl)–1,3-dihydroisobenzofuran–5-carbonitrile and non-toxic acid addition salts thereof.

Their Honours pointed out that the claim did not itself use the word “isolated” or “pure”. Nonetheless, the skilled addressee would understand the claim to be referring to the substance constituted by the isolated enantiomer, not as existing in the racemate. That substance was a new chemical entity with different characteristics and properties to the racemate.

92 …. the claim is to the (+)-enantiomer and nothing else. The term “pharmaceutical substance per se” simply means the pharmaceutical substance “in itself”. In Boehringer, Heerey J observed that per se meant ‘by or in itself’ ‘intrinsically’ or ‘essentially’ (at [7]). The Full Court approved that approach on appeal (at [37]).

93 Semantics aside, it is clear that the claim describes a pharmaceutical substance per se. The substance was, as explained by Lindgren J at [536], a new chemical entity. The racemate and the (+)-enantiomer had different physico-chemical interactions manifested in different pharmacodynamics and pharmacokinetics (the Decision at [234]). The claim is to (+)-citalopram, irrespective of how it is produced. The isolated (+)-enantiomer plainly qualifies as a pharmaceutical substance per se and the primary Judge was correct in concluding that it satisfies s 70(2)(a) of the Act.

It looks like things are now getting down to the sharp pointy question of how much will have to be paid in terms of pecuniary remedies. As this was an appeal from a single judge who, in turn, was hearing an appeal from the Commissioner, Alphapharm needed leave to appeal.[3] While cases granting “leave” are not quite as rare as hen’s teeth, the Full Court noted leave should be granted because:

35 This application also represents Alphapharm’s only course in challenging the extension of term of the Patent, which has significant consequences to Alphapharm. If Lundbeck is successful, the term of the Patent will be extended and Lundbeck’s infringement proceedings against Alphapharm can proceed.

Alphapharm Pty Ltd v H Lundbeck A/S [2015] FCAFC 138 (Bennett, Nicholas and Yates JJ)

  1. The High Court held that Lundbeck was not “out of time” in making its application last year.  ?
  2. Lundbeck patented the racemate citalopram in 1980 and marketed it in Australia as Cipramil. The racemate being a mixture of both the (+) and (-) enantiomers. Lundbeck marketed escitalopram as Lexapro.  ?
  3. Patents Act s 158(2).  ?

Alphapharm v Lundbeck per se Read More »

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