The Australian Federal Court removes a pharmaceutical patent term extension because of the patentee’s own earlier registered goods
Ken Johnstone, Daniel Sieveking, Elizabeth Barrett
In Merck Sharp & Dohme Corp. v Sandoz Pty Ltd  FCA 947, the Federal Court has determined that a pharmaceutical patent term extension (PTE) for a patent disclosing and claiming two of the patentee’s registered goods had been erroneously granted because of the timing of the earlier of the two registrations. This decision means that developers of new pharmaceutical products will need to take care if claiming two goods intended to be registered within the same patent.
Merck Sharp & Dohme Corp. (MSD) is the patentee for Australian Patent No. 2002320303 (the patent), dated 5 July 2002, whose original 20-year term was until 5 July 2022. The Australian Patent Office (APO) had granted an extension of term for the patent based on MSD’s composition comprising sitagliptin and metformin (sitagliptin-metformin), which had been registered on the ARTG on 27 November 2008, thereby extending its patent term to 27 November 2023.
MSD alleged that Sandoz Pty Ltd (Sandoz) had threatened to infringe the patent, since although Sandoz had undertaken not to exploit the invention claimed in the patent before 5 July 2022, they had refused to make such an undertaking for the extended period of the patent (i.e. from 5 July 2022 until 27 November 2023).
Sandoz alleged that the extension of term was invalid in view of MSD’s own goods containing sitagliptin (which were registered on the ARTG on 16 November 2006, and also disclosed and claimed in the patent), and sought rectification of the register to reflect that the patent expires on 5 July 2022 (not 27 November 2023).
The Commissioner of Patents (the Commissioner) was party to the proceedings as an intervener.
At issue was whether the term of the extension should be based on the earliest registration of sitagliptin-metformin (as nominated by the patentee) or sitagliptin (being the earliest registered of the two goods).
Section 70, subsection (2)-(4) of the Patents Act 1990 set out the requirements for an application for a PTE, of which subsections (2) and (3) set out that:
One or more pharmaceutical substances per se (or one or more pharmaceutical substances when produced by a process that involves the use of recombinant DNA technology) must in substance be disclosed in the complete specification of the patent and in substance fall within the scope of one or more claims of that specification;
Both of the following conditions must be satisfied in relation to at least one of those pharmaceutical substances:
- goods containing, or consisting of, the substance must be included in the Australian Register of Therapeutic Goods; and
- the period beginning on the filing date of the patent and ending on the first regulatory approval date for the substance must be at least 5 years.
Section 71(2) of the Patents Act 1990 sets out the deadline for applying for a PTE as the later of:
- six months after the commencement of the first inclusion on the ARTG (of any of the pharmaceutical substances referred to in Section 70(3)), and
- six months after grant of the patent.
Section 77 sets out the calculation for the term of the extension as being equal to the period beginning on the date of the patent and ending on the earliest first regulatory approval date in relation to any of the pharmaceutical substances referred to in subsection 70(2), reduced (but not below zero) by five years, and states that the term of the extension cannot be longer than five years.
The first regulatory approval date is the earlier of the first inclusion on the ARTG, or the date of the first approval if pre-TGA marketing approval has been given to the substance.[i]
MSD cited the recent decision in Ono Pharmaceutical Co. Ltd v Commissioner of Patents  FCA 643  (Ono), which we have discussed previously here and here, as supporting a construction of the calculation for the extension term (i.e. Section 77) being based on the earliest registration of the goods nominated by the patentee in their PTE application. MSD also put forward an alternative construction that the extension of term should be based on the earliest of any goods meeting the criteria set forth in Section 70(3) (being any goods first registered more than 5 years after the date of the patent). In both of MSD’s proposed constructions, the term of the extension would be calculated based on the registration of sitagliptin-metformin, giving them an extension of term until 27 November 2023.
Sandoz contended that the calculation for the extension of term should be based on the earliest of any of the registered goods disclosed in the specification and falling within the scope of the claims of the patent. The Commissioner concurred with Sandoz’s construction of Section 77.
Justice Jagot distinguished the case from Ono, which she considered to be confined to finding that it is the goods of the patentee (rather than the goods of a third party having nothing to do with a patentee) that should be used for determining the deadline for filing the PTE application.[ii]
Her Honour referred to the Explanatory Memorandum[iii] and considered that it was “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”.[iv]
Noting that MSD had registered sitagliptin within five years of the date of the patent and had thus been free to exploit that good from its registration date, she did not consider it in keeping with the intention of the legislation for MSD to “obtain a monopoly over sitagliptin for more than 20 years in circumstances where it never suffered an unacceptable delay in its capacity to exploit sitagliptin”.[v]
Justice Jagot determined that Section 70(2) “establishes the class of relevant pharmaceutical substances”, while Section 70(3) “establishes a smaller subset of that class” for the PTE.[vi] Since Section 71(2) refers to Section 70(3), she determined that the deadline for the application for the PTE should be based on the earliest registration of goods meeting the requirements of Section 70(3) (i.e. goods that are first registered five years or more after the date of the Patent). Further, since Section 77 refers to Section 70(2), that the term of the extension should be calculated based on the earliest of any registered goods that are disclosed and claimed in the patent.
Accordingly, Her Honour determined that sitagliptin-metformin and sitagliptin both met the criteria for Section 70(2), whereas only sitagliptin-metformin met the criteria for Section 70(3). By the operation of Section 77 (in its reference to Section 70(2)), the earlier first ARTG registration of sitagliptin determined that the extension of term was zero. On this basis, Justice Jagot ordered that the Patents Register be rectified to remove the extension of term for the patent, and the term be adjusted back to 5 July 2022. She also dismissed MSD’s originating application claiming threatened infringement of the patent by Sandoz.
While Justice Jagot conceded that there is conceptual complexity associated with the legislation, once text and context are both considered there is no ambiguity about the provisions.[vii] This decision confirms that in cases where two or more pharmaceutical substances (that are disclosed and claimed in a patent) have been registered by or on behalf of the patentee, the calculation of the term of a patent extension is based on the earliest ARTG registration of any of the substances.
In view of this decision, what is not ambiguous is that in cases where a patent application covers two or more potentially registerable goods (e.g. a single active product and combination product as considered in this decision), patent applicants should strongly consider filing divisional applications to have these substances quarantined in separate applications. In that way, an earlier registration in respect of one substance will not preclude an extension of term for later registered goods in respect of a different substance.
We will keep you informed of any future developments in this space, and if you have any questions in relation to PTE applications please contact us.
[i] Patents Act 1990 (Cth) s70(5).
[ii] Merck Sharp & Dohme Corp. v Sandoz Pty Ltd  FCA 947 .
[iii] Explanatory Memorandum, Intellectual Property Laws Amendments Bill 1997 (Cth).
[iv] Merck Sharp & Dohme Corp. v Sandoz Pty Ltd  FCA 947 .
[v] Ibid .
[vi] Ibid .
[vii] Ibid .