Patent term extensions are to be calculated using the patentees first in time ARTG listing | Federal Court narrows patentees’ use of Australian patent term extension regime

On 12 August, Jagot J handed down her decision in MSD v Sandoz¹. It is a very important decision for both patentees seeking to navigate the extension of term provisions, and for generic companies trying to navigate complex patent landscapes as it clarifies the operation of the patent term extension regime in Australia.

While the term of a standard patent in Australia is 20 years, for “pharmaceutical substances per se” (new and inventive substances), the Patents Act 1990 (Cth) (the Act) provides a scheme whereby, in certain circumstances, the 20 year term can be extended once for further period of up to 5 years.

“Tethered to the statutory text and context”, Her Honour held that the calculation of any extension of term (under s 77(1)) of the Act) is to be by reference to the first inclusion in the Australian Register of Therapeutic Goods (ARTG) of goods containing or consisting of any of the pharmaceutical substances disclosed and claimed in the patent obtained by the patentee. So, where a patentee has a subsequent ARTG listing which goods include a pharmaceutical substance that is also disclosed and claimed by the patent, that ARTG listing cannot be the basis for the calculation of the extension.

For MSD, this meant that the extension of term of one in its suite of patents directed at the treatment and prevention of diabetes was wrongly calculated, and in fact, under the regime, no extension should have been granted.

Her Honour distinguished the case from the situation where an unrelated third party ARTG listing had been relied on to refuse an extension of time, as was the case in Ono (which we reported on here). In that case, Beach J held that the scheme operates only by reference to the patentee’s ARTG listings, and not those belonging to a third party.

The facts

The relevant patent was filed on filed on 5 July 2002, and would have normally expired on 5 July 2022.

A related body corporate to the patentee obtained ARTG listing for sitagliptin on 16 November 2006, and subsequently obtained, on 27 November 2008, an ARTG listing for a sitagliptin/metformin combination.

Both sitagliptin and the sitagliptin/metformin combination were disclosed and fell within the claims of the patent.

The patentee sought and obtained an extension of term based on the sitagliptin/metformin combination ARTG listing, and the patent term was extended until 27 November 2023.

The patentee sued the respondent for threatened infringement of the patent because it would not provide an undertaking that it would not launch before 27 November 2023. The respondent cross-claimed seeking rectification of the register to reflect a 5 July 2022 expiry date .

The respondent contended that the extension should have been calculated by reference to the 16 November 2006 listing, which would mean the extension of term was zero.

The extension regime

Section 77(1) provides that an extension of time is equal to:

(a) the period beginning on the date of the patent and ending on the earliest first regulatory approval date (as defined in section 70) in relation to any of the pharmaceutical substances referred to in subsection 70(2);

reduced (but not below zero) by

(b) 5 years.

“The addition of the word ‘earliest’ is crucial” her Honour said. “It recognises that there may be more than one pharmaceutical substance disclosed and claimed in a patent which satisfies ss 70(2) and (3) and s 71(2) (whatever the patentee may nominate in its application for an extension of term) and requires that the extension of term be calculated by reference to the first regulatory approval date of that substance.”

The patentee tried to argue that the reference to s70(2) in s 77(1) should be a reference to s 70(3), which provide that:

(a) one or more pharmaceutical substances per se (or one or pharmaceutical substances when produced by a process that involves the use of recombinant DNA technology) are disclosed in the complete specification, and in substance fall within the scope of a claim of the patent (section 70(2)); and

(b) goods containing or consisting of the substance are included in the Australian Register of Therapeutic Goods (ARTG) (section 70(3)(a)); and

(c) the period beginning on the date of the patent (usually the filing date), and ending on the first regulatory approval date for the substance, must be at least 5 years (section 70(3)(b)).

Quite plainly, s70(3) refers to a subset of the substances referred to in s70(2).

The patentee’s approach “does not involve either the “reading down” or the “reading up” of the section. It involves replacing the reference to s 70(2) with a reference to s 70(3) as if the reference to s 70(2) were a drafting error”, she said.

“It is strongly arguable that reading the reference to s 70(2) as if were a reference to s 70(3) would result in something the legislature never intended….“It is clear that the legislature considered a delay of less than five years in the capacity to exploit a patent disclosing and claiming a pharmaceutical substance was acceptable and did not require a capacity for an extension of term of the patent. There is no reason to infer that the legislature intended that a patentee with a patent disclosing and claiming more than one pharmaceutical substance intended that there could be an extension of term if the patentee obtained inclusion of one or more pharmaceutical substances in the ARTG within five years of the date of the patent but then also obtained inclusion of one or more pharmaceutical substances in the ARTG five years or more after the date of the patent. Provided one pharmaceutical substance has been included in the ARTG within five years of the date of the patent, the patentee has had the benefit of the monopoly afforded by s 13 of the Patents Act within the period of delay the legislature considered acceptable”.

Takeaways

The decision suggests that current patent term extensions granted in Australia may required closer scrutiny. Given the patentee elects the reference product for the extension request, and therefore the ARTG approval date, there is scope for error in the grant of such extensions in the face of this decision.

An extension of term will be zero if a patentee has had the benefit of inclusion of a pharmaceutical substance in the ARTG within five years of the date of the patent and then obtains inclusion of another pharmaceutical substance in the ARTG five years or more after the date of the patent.

The Commissioner of Patents has appealed the Ono decision. It remains to be seen if the patentee in this case will likewise appeal this decision.

¹Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2021] FCA 947