‘A reasonable and commercial construction?’ Patent time extensions after Ono Pharmaceuticals

The Federal Court of Australia has ordered the Commissioner of Patents to grant Bristol Myer Squibb (BMS) a patent term extension (PTE) for cancer drug Opdivo until 2031, providing certainty to industry around Australia’s intellectual property regime.

Background

BMS and Ono Pharmaceutical sought judicial review by the Federal Court of Australia after the Australian Patents Office (APO) rejected their PTE application for cancer drug Opdivo under Section 70 of the Patents Act 1990 (Cth).

The APO ruling rejected the PTE application because it had formed a view that an application must be filed within six months of the first inclusion on the Australian Register of Therapeutic Goods (ARTG) any pharmaceutical substance falling within the claims of the patent. The APO (erroneously) believed this extended to pharmaceutical substances of third parties and not just the patentee’s goods. In this case, Merck Sharp & Dohme, competitors to BMS and Ono Pharmaceuticals, had registered Keytruda with the ARTG more than six months prior to the application for extension, and the APO determined that the registration of Keytruda was the relevant date.

BMS and Ono Pharmaceuticals appealed to the Federal Court, arguing that the six months’ time restriction ran from the date that the patentee, not a third party, registers their goods on the ARTG.

Decision of the Federal Court of Australia

Justice Beach found in favour of BMS and Ono Pharmaceuticals, and determined that the  Commissioner’s position would lead to ‘absurdity or unreasonableness’ if accepted. While the Commissioner favoured ‘literal form of textualism’, Justice Beach considered the policy considerations underlying patent law and the broader commercial context, including:

1. 1. the purpose of a PTE is to provide patentees with an effective patent life by restoring the time lost by the patentee prior to gaining market approval, thereby compensating the patentee for the additional time, expense and difficulty in commercialising its new product;
   2. despite the enormous time and resources used to develop a drug, the protection provided under the patent system for a pharmaceutical product is less than what is provided for other technologies, because of time lost in developing and gaining marketing approval for new drugs. The industry thus gains a more restricted return on its investment compared to other industries and is restricted in the development of new products;
   3. the laws of comparable jurisdictions, such as the US, Japan, and the EU are consistent with the BMS and Ono Pharmaceuticals’ position; and
   4. the Commissioner’s position would lead to commercial absurdities. For example, if a patentee’s product was approved by the TGA at year nine and a competitor’s product was approved by the TGA at year six, the patentee who applied for a PTE would only receive a one year patent extension, instead of the legislated five years. This would also fail to achieve the intended policy outcome, which is to compensate the patentee for time lost due to delays in obtaining marketing approval.

This is an important decision for industry as it confirms the long understood policy underpinnings of the patent term extension regime. As Australia and the United Kingdom announce the finalisation of the terms of their Free Trade Agreement, this decision provides important certainty for a global industry of the Australian Government’s position on intellectual property protection. If the decision of the APO were to stand, it would undermine negotiations on issues of trade and access to medicines by effectively reducing the effective patent term extension period in Australia and putting Australia at a competitive disadvantage to other countries such as the US, UK and European Union.

This article was first published by MedNews.

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Authored by:

Kelly Griffiths, Partner
Eric Chen, Lawyer