Federal Court decision resets expectations for patent term extensions

The Federal Court of Australia (Federal Court) overturned a decision of the Australian Patent Office (APO)[1], in Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643. The Court ruled that an application for an extension of term must be based on the first regulatory approval date of a patentee’s own (and not a third party’s) product falling within the scope of the patent claims.

The decision clarifies that pharmaceutical patent extensions of term must be based on the patentee’s earliest registered product. Importantly, even if a competitor product falls within the scope of the patent, and is registered first, the competitor’s product cannot form the basis for a patent term extension or deprive the patentee of an extension based on their own product. 

The decision, now binding on the APO, is a departure from the established interpretation of the extension of term regime. Astute innovative pharmaceutical companies will be carefully reviewing their patent portfolios and considering whether, applying this decision, an extension of term or longer extension may be available.  

The patent term extension regime

Under the Patents Act 1990 (Cth) (the Act), the 20 year patent term of some standard pharmaceutical patents can be extended by up to five years if the following key criteria are satisfied. 

1. The patent discloses and claims a “pharmaceutical substance per se” or substances prepared by recombinant DNA technology.[2]
   
   
2. Goods containing, or consisting of, at least one of those pharmaceutical substances are included on the Australian Register of Therapeutic Goods (ARTG).[3]
   
   
3. The period from the patent date to the first regulatory approval date for the relevant substance is at least five years.[4]
   
   
4. The patent term has not already been extended.[5]
   
   
5. The application is made before the end of the (unextended) term of the patent and within six months of (i) the first regulatory approval of a relevant good (see criterion (b) above) or (ii) the date the patent is granted, whichever date is later.[6]  

The purpose of the regime is to compensate patentees for patent term “lost” while taking steps to obtain regulatory approval for new medicines. 

Background

Ono Pharmaceutical Co, Ltd (Ono) had applied to extend the term of its patent for anti-PD-1 antibodies (the AU119 Patent) based on the regulatory approval date of its drug Opdivo. There was however an earlier approved PD-1 inhibitor (Merck Sharp & Dohme’s drug Keytruda) that allegedly fell within the scope of the broader AU119 Patent claims. Keytruda was approved approximately nine months before Opdivo. 

In the Patent Office, the Delegate followed the decisions in G D Searle LLC (2008) 80 IPR 210 and Pfizer Corporation v Commissioner of Patents (No 2) (2006) 69 IPR 525, and found that the relevant first regulatory approval was that of Keytruda. This meant that the six month period to apply for a patent term extension commenced on the date of the first inclusion of Keytruda on the ARTG, and Ono was therefore out of time to make this application.  

Following this ruling, Ono sought judicial review of the Delegate’s decision in the Federal Court.

Judicial review by the Federal Court

In the Federal Court, Justice Beach addressed whether the “first regulatory approval date” should be limited to the first regulatory approval date of the patentee’s product.

Only the patentee’s product is relevant

Justice Beach held that the APO erred in finding that the “first regulatory approval date” was the date of approval for a third party product (in this case, Keytruda).   

His Honour instead adopted a more patentee-friendly construction of the extension of term provisions, concluding that an application for an extension of term could only rely on the regulatory approval date of the patentee’s own products and not third party products. This is a significant departure from the previous interpretation of the provisions, which found that earlier approved third party products should be taken into account.[7] In reaching this conclusion, his Honour considered the language of the provisions and drew further support for his construction from the legislative history and extrinsic materials.[8]  

Justice Beach found that Ono’s interpretation was in line with the “beneficial and remedial”[9] purpose of the extension of term regime, namely “… to restore the time lost to patentees prior to gaining marketing approval to compensate the patentee for the additional time, expense and difficulty in developing and commercialising a new pharmaceutical substance.”[10]  

His Honour considered that the alternative construction advocated by the Commissioner had “little to commend it” commercially,[11] and would lead to potentially absurd consequences. Notably, it would require applicants and the APO to first monitor the ARTG for relevant third-party approvals, and secondly, determine from the ARTG records whether or not those third-party products fell within the patent claims (an impossible task in some instances).[12]  Further, as his Honour commented: 

One rhetorically asks how that could be so if “the product on the ARTG” triggering the start of the extension was not that of the patentee, but rather that of a stranger or indeed a competitor? That would not provide an “effective patent life” for the patentee at all.[13]

Justice Beach acknowledged that Ono’s interpretation of the provisions also aligned with practice in the US.[14] However, the US regime is generally distinct from that in Australia and the language of the relevant Code draws no parallels to the Australian statute.[15]

By contrast, in the UK and EU, a third party marketing authorisation may be used to extend the term of a patent (although the position has been controversial).[16] Further, an extension of term application based on the patentee’s approved product will be refused where a third party product with the same “active ingredient” has obtained earlier regulatory approval.[17] Therefore in these jurisdictions, the relevant decision-maker will need to consider third party products on the register and, in some circumstances the earlier listing of such a product could have far worse consequences for the extension application.

Multiple products – can you choose? 

The decision leaves open the question of whether a patentee with multiple products falling within the scope of their patent could elect between the products as the basis for an extension of term application. For example, if a patent claimed substances A and B and the patentee obtained registrations for A and B on different dates, could the patentee choose to base an extension of term application on either product or would they be limited to product A (i.e., the earlier approved product)? It was not necessary to answer this question in the context of this case.

Implications

There are a number of key takeaways that flow from this decision.

1. Patentees should review patent portfolios and consider availability of extensions and longer extensions: This may include circumstances where the patent has already been extended or the deadline for making an application has passed (provided that the original term has not expired). Some patentees may have proceeded on the basis that a third party regulatory approval precluded or limited an extension of term. Following Justice Beach’s decision, more ambitious patentees may seek to advance an argument that, where a patent claims multiple registrations (all products of the patentee), the patent can be extended based on a later registration.  Generic and biosimilar companies will need to remain alive to the availability of such arguments and implications for patent expiry dates.
   
   
2. Divisional patents with narrower patent claims will likely achieve the best extension outcomes:  Although the decision removes the risk of third party products affecting extension of term applications, patent terms can only be extended once and the duration of such a term will be based on the patentee’s product with the earliest regulatory approval date.
   
   Patentees seeking broad claims that encompass multiple pharmaceutical products should therefore consider a divisional filing strategy in which separate patents protect different substances.  
   
   
3. Clarity required regarding when products listed on the ARTG are “goods of the patentee”: While Justice Beach limits the consideration of relevant goods to “goods of the patentee”, the decision does not expressly address what is meant by that term for the purpose of calculating the extension of term, nor does it consider the circumstance where a patentee may want or need to rely on a third party regulatory approval to obtain an extension. It is perhaps implicit in Justice Beach’s decision that at least licensed goods or goods sponsored by a local subsidiary of the patentee could form the basis of an extension of term application.  Nevertheless, this decision gives rise to a question about the circumstances under which goods which are transferred or licensed by the patentee will remain “goods of the patentee” for the purposes of the extension of term regime.

The Commissioner has appealed Justice Beach’s decision, which marks a significant departure from the prevailing construction of the patent term extension regime and the practice of the APO.