Alphapharm Pty Ltd v H Lundbeck A/S
[2011] APO 36
•1 June 2011
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Aphapharm Pty Limted & Ors v H.Lundbeck A/S [2011] APO 36
Patent:623144
Title:(+)-enantiomer of citalopram and process for the preparation thereof
Patentee: H.Lundbeck A/S
Opponents:Alphapharm Pty Ltd, Sigma Pharmaceuticals (Australia) Pty Limited, Apotex Pty Ltd and Sandoz Pty Ltd
Delegate: Karen Ayers
Decision Date: 1 June 2011
Hearing Date: 2 March 2011
Catchwords: PATENTS – request under section 223 – request for extension of time to file section 70 (extension of term for a pharmaceutical substance) – misunderstanding and uncertainty in the law meant that original extension was for wrong substance – original extension was revoked by court order because of failure to meet timing requirements of section 71 – second extension of term application based on correct substance filed together with a request under section 223 for an extension of time under 223 – Regulation 22.11(4)(b) does not exclude section 70 applications from section 223 provided these are filed within the term of the patent as required by section 71(2) – causative error established to enliven section 223 – opponents would be disadvantaged by the extension but they took the risk of entering the market early despite knowing the patentee’s intention to extend the patent – balance of public interest favours the extension– while there will be a short term increase in the cost of the patented drugs, this is more than offset by the broader public interest of encouraging research and development in the pharmaceutical field– extension therefore granted –costs awarded
Representation: Representatives for H.Lundbeck A/S: Corrs Chambers Westgarth, Melbourne
Representatives for Alphapharm Pty Ltd: Mallesons Stephen Jaques, Sydney
Representatives for Sigma Pharmaceuticals (Australia) Pty Ltd: Blake Dawson, Sydney
Representatives for Apotex Pty Ltd: Freehills, Melbourne
Representatives for Sandoz Pty Ltd: Griffith Hack, Melbourne
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent:623144
Title:(+)-enantiomer of citalopram and process for the preparation thereof
Patentee: H.Lundbeck A/S
Date of Decision: 1 June 2011
DECISION
I grant an extension of time under section 223 to 12 June 2009 for the patentee to file an application under section 70 for an extension of term for a pharmaceutical substance based on the marketing approval of CIPRAMIL.
Subject to any appeal or review, the Commissioner will proceed to process the section 70 extension of term. If the Commissioner is advised of an appeal or review within 30 days, she will defer consideration of the extension of term until after that action is finally disposed of.
I award costs against the opponents.
REASONS FOR DECISION
Background
Patent number 623144 was filed 13 June 1989 by H. Lundbeck A/S (‘Lundbeck’) as a convention application based on UK application 8814057 filed on 14 June 1988. The Australian application was accepted on 24 February 1992 and sealed on 31 August 1992 without opposition. The original 20 year term of the patent expired on 13 June 2009.
The patent discloses and claims the (+)-enantiomer of citalopram. Citalopram is a compound belonging to the therapeutic category of selective serotonin re-uptake inhibitors (SSRIs) which are used to treat depression and in particular, Major Depressive Disorder (MDD). Citalopram is a racemate which means that it exists as a mixture of two different (mirror-image) forms of the same chemical compound. The individual forms of the racemate are called enantiomers. They are classified according to two separate (and independent) criteria, based on:
a) the physical property of rotating plane-polarised light. Enantiomers are designated (+) (dextrorotatory) or (-) levorotatory based on the direction they rotate plane-polarised light in solution; and
b) the spatial (absolute) configuration of the molecules in a 3-D model. Enantiomers are designated R (clockwise) or S (anti-clockwise) depending on the direction from highest to lowest molecular weight substituents at the chiral centre.
The racemate Citalopram was the subject of an earlier and separate patent (509445) also owned by Lundbeck. The citalopram patent was filed on 5 January 1977 and advertised accepted on 15 May 1980. It was sealed on 13 October 1980 without having been opposed and ceased on 5 January 1993 after its 16 year patent term (as it then was).
The racemate salt (Citalopram hydrobromide) is marketed by Lundbeck under the brand name CIPRAMIL. CIPRAMIL was first registered on the Australian Register of Therapeutic Goods (ARTG) on 9 December 1997.
The current patent (the ‘LEXAPRO’ or ‘escitalopram’ patent) concerns the S-(+)-enantiomer of citalopram. Claim 1 of the patent reads:
(+)-1-(3-dimethylaminopropyl)-1-(4’-fluorophenyl)-1,3-dihydroisobenzofuran-5-carbonitrile and non-toxic acid addition salts thereof
The LEXAPRO Patent discloses processes for obtaining the (+)-enantiomer (also known as escitalopram) and data showing that it is therapeutically more active than citalopram itself, and more than 100 fold more active than (-)-citalopram.
The S-(+)-enantiomer salt (Escitalopram oxalate) is marketed under the brand name LEXAPRO and was first registered on the ARTG on 16 September 2003. On 10 December 2003, the patentee filed an extension of term on 623144 based on the ARTG approval of LEXAPRO. The Commissioner advertised acceptance of this application under section 74(2) on 22 January 2004 and granted the section 70 application on 27 May 2004. The term of the patent was then recorded on the Register of Patents (the ‘Register’) as having been extended until 13 June 2014 under section 76 of the Patents Act 1990 (Cth).
Some time later, revocation/infringement proceedings in relation to the LEXAPRO patent were commenced in the Federal Court. One of the third parties involved in these proceedings was Alphapharm Pty Ltd (‘Alphapharm’). On 7 July 2005, the Commissioner received information from Alphapharm suggesting that the section 70 extension was not valid because of the existence of the earlier ARTG registration of the drug CIPRAMIL.
Alphapharm’s argument was based on the decision in Merck & Co v Arrow Pharmaceuticals Ltd [2003] FCA 1344; 59 IPR 226. In the Merck patent, the claims as granted related to a compound known as lovastatin beta-hydoxy acid (“LHA”) which had cholesterol lowering properties. Merck based their section 70 application on the drug MEVACOR which was included on the ARTG. The primary ingredient of MEVACOR was Lovastatin (a pro-drug of LHA) but there were trace amounts (between 0.1-0.6%) of LHA in MEVACOR as an impurity. The Federal Court found that this was sufficient for the purposes of section 70(3)(a) and hence Merck was granted an extension of term for their patent based on MEVACOR.
Applying the reasoning in Merck v Arrow [supra] to the circumstances of the current case, Alphapharm argued that LEXAPRO was not the first product included on the ARTG which contained the S-enantiomer of Citalopram. According to Alphapharm, CIPRAMIL (as a racemate) was a mixture of both the S-(+) and R-(-) enantiomers of citalopram and therefore necessarily contained S-(+) enantiomer. This meant that the timing provisions of section 71(2) and the calculation of the extension of term under section 77(1) should have been based on CIPRAMIL rather than LEXAPRO and the patentee was only entitled to an extension of term to 9 December 2012 (not 13 June 2014 as recorded on the Register)[1].
[1] For a full explanation of the calculations under section 77, see paragraphs [15]-[17] in Lundbeck v Commissioner [2005] FCA 1718.
Having already granted an extension of the term of the patent under section 76, the Commissioner considered herself functus officio with regard to reconsidering that decision. However, there was an explicit remedy in regulation 10.7(7) which allowed the Commissioner to correct the Register where she becomes aware of an earlier inclusion date on the ARTG after a section 70 application has been granted. In the current case, the Commissioner’s prima facie view was that she was obliged to invoke this regulation to correct the extension details on the Register.
Neither Alphapharm nor the patentee agreed with the Commissioner’s prima facie view. Alphapharm considered that the LEXAPRO extension of term application was clearly invalid by reason of section 71(2) (the application was out of time). In such circumstances, they considered that the Commissioner had the power to remove the extension. In contrast, the patentee believed that the Commissioner could not reconsider the extension at all once granted. They argued that regulation 10.7(7) was invalid because it was ultra vires with respect to section 228 of the Patents Act (Cth).
This preliminary disagreement was referred to the Federal Court for resolution. In his first decision issued on 28 November 2005 (Lundbeck v Commissioner of Patents [2005] FCA 1718), Lindgren J found that Alphapharm’s request to remove the extension from the Register should be an issue for the Court under section 192 rather than the Commissioner and set this aside for later consideration. In a second decision issued shortly after[2], he confirmed that regulation 10.7(7) was intra vires and that the Commissioner had the power to correct the Register under this provision if the details of the extension of term were incorrect.
[2] Lundbeck v Commissioner of Patents [2006] FCA163 (1 March 2006) at [47] et seq
The regulation 10.7(7) matter was therefore remitted back to the Commissioner for hearing [as per regulation 10.7(8)]. The Commissioner’s decision [see Lundbeck v Alphapharm [2006] APO 18 (19 May 2006)] invoked regulation 10.7(7) to correct the extended patent term back to 9 December 2012. This decision was then appealed to the Federal Court where it was co-joined with a number of other related court actions before Justice Lindgren.
A summary of the interrelated Court proceedings relevant to the current hearing are provided in the table below:
Action Description NSD 1120 of 2005
(Alphapharm v Lundbeck)The Revocation Proceeding by Alphapharm against the LEXAPRO patent. Concurrent request to rectify the Register under section 192 to remove the extension details .
Counterclaim from Lundbeck regarding infringement with respect to Alphapharm’s action in obtaining regulatory approval
NSD 954 of 2006
(Arrow v Lundbeck)The Revocation Proceeding by Arrow against the LEXAPRO patent. Concurrent request to rectify the Register under section 192 to remove extension details.
Counterclaim from Lundbeck regarding infringement with respect to Arrow’s action in obtaining regulatory approval
NSD 1078 of 2006
(Lundbeck v Commissioner of Patents and Alphapharm)The Lundbeck Appeal (Extension of Term) Proceeding. Appeal from the Commissioner’s decision to invoke reg 10.7(7) to amend the Register by bringing forward the expiry date of the Patent.
These matters were heard together by Lindgren J and a single decision issued Alphapharm Pty Ltd v H Lundbeck A/S [2008] FCA 559 (24 April 2008). The key findings of his decision were as follows:
a)The judge accepted that the separation of Escitalopram from its racemic mixture was a difficult process and required inventive effort to achieve. All the claims of the LEXAPRO patent were therefore found to be valid apart from claim 5 which failed for want of utility.
b)However, as CIPRAMIL necessarily contains S-(+) enantiomer (escitalopram) as part of the racemic mixture, the registration of CIPRAMIL on (9 December 1997) was the first inclusion on the ARTG for the purposes of section 70 and 71 of the Patents Act 1990 (Cth) [see para 533-543].
c)Justice Lindgren therefore dismissed Lundbeck’s appeal in relation to NSD 1078 of 2006 and ordered that the Register should be rectified by omission from it of any reference to an extension of term of the patent [as per para 544].
Lindgren J’s decision was appealed to the Full Federal Court. On 11 June 2009 (2 days before the original 20 year term of the patent was due to expire), the Full Court (Justice’s Emmett, Bennett and Middleton) handed down their decision (Alphapharm Pty Ltd v H Lundbeck A/S [2009] FCFCA 70). In a majority decision, they upheld Lindgren J’s decision and most relevantly for the current case, confirmed that the first goods included on the ARTG for the purposes of sections 70 and 71 of the Patents Act 1990 were those where the claimed pharmaceutical substance had been present (regardless of whether the substance was in a form which would have infringed the claim).
That meant that the term of any extension of the LEXAPRO patent is limited by the date of registration of CIPRAMIL. However as the time for such an application had expired, the Full Court concluded that the Register should be rectified (under section 192) by the removal of the original application for extension of term based on LEXAPRO.[3]
[3] See Bennett J’s reasoning in Alphapharm Pty Ltd v H Lundbeck A/S [2009] FCFCA 70 at [247]
The patentee sought special leave to the High Court to appeal the Full Court’s decision. In the meantime, the Court Order to remove the original extension of term was stayed pending the appeal (but noted on the Register). The patentee filed a new (contingent) section 70 application based on CIPRAMIL on 12 June 2009 so that this would be able to meet one of the critical requirements of section 71(2) (that an application for an extension of term must be made within the term of the patent). The patentee also filed a section 223 application to extend the time provided by section 71(2) to file a section 70 application based on CIPRAMIL.
The High Court refused the special leave application on 11 December 2009 (see Alphapharm Pty Ltd v H Lundbeck A/S & Anor [2009] HCATrans 324) and the patentee then proceeded to further progress their new section 70 and section 223 applications before the Patent Office. The fate of Lundbeck’s section 70 application is dependent on the section 223 application because unless the extension of time is granted, the section 70 application will not meet the timing requirements of section 71(2). As the section 223 application was for more than 3 months, this was advertised for opposition purposes [section 223(4) and (6)] on 23 July 2009.
There were four separate oppositions filed in relation to the Lundbeck section 223 application.
a) Alphapharm Pty Ltd (‘Alphapharm’ - opponent 1) filed on 3 August 2009;
b) Sigma Pharmaceuticals (Australia) Pty Limited (‘Sigma’ - opponent 2) filed on 20 August 2009;
c) Apotex Pty Ltd (‘Apotex’ - opponent 3) filed on 20 August 2009; and
d) Sandoz Pty Ltd (‘Sandoz’ - opponent 4) filed on 21 August 2009.
Evidence in the matters was finalised on 23 November 2010 and a combined hearing for all four oppositions was held in Canberra on 2 March 2011. The patentee, Lundbeck, was represented by Katrina Howard (SC) instructed by Matthew Swinn of Corrs Chambers Westgarth, Sydney. Alphapharm was represented by David Catterns (QC) assisted by Kim O’Connell and Christina Taylor of Mallesons Stephen Jaques, Sydney and Rob Silberstein of Alphapharm. Sigma was represented by Christian Dimitriadis of Counsel assisted by Ben Miller of Blake Dawson, Sydney. Apotex was represented by Neil Murray of Counsel assisted by Paul Jones of Freehills, Melbourne and Sandoz was represented by Craig Smith of Counsel assisted by Phoebe Connell of Griffith Hack, Melbourne.
Glossary of Terms
There are a number of technical terms and abbreviations used in this decision. These are summarised in the table below:
term definition Citalopram A racemic mixture containing both the S-(+)- and R-(-)-enantiomers of the compound 1-(3-dimethylaminopropyl)-1-(4’-fluorophenyl)-1,3-dihydroisobenzofuran-5-carbonitrile which is used to treat depression. CIPRAMIL Lundbeck’s Trade name for their citalopram product Escitalopram (+)-citalopram, S- enantiomer LEXAPRO Lundbeck’s Trade name for their Escitalopram Product APO Australian Patent Office ARTG Australian Register of Therapeutic Goods PBS Pharmaceutical Benefits Scheme Register Patent Register TGA Therapeutic Goods Administration Chronology
A chronology of events has been generally described in the background to this decision. The table below provides a summary of the key dates and events prior to the current hearing.
Event Date LEXAPRO patent filed 13 June 1989 LEXAPRO patent sealed 31 August 1992 CIPRAMIL included on the ARTG 9 December 1997 Commencement of the extension of term provisions in the Patents Act (1990) (Cth) 27 January 1999 Last date that Lundbeck could file its extension of term based on CIPRAMIL registration [under section 72(2)(c)] 26 July 1999 LEXAPRO included on the ARTG 16 September 2003 Merck v Arrow [2003] FCA 1344 considered the word “containing” in section 70 25 November 2003 Lundbeck files first section 70 extension of term application for LEXAPRO patent (based on LEXAPRO ARTG registation) 22 December 2003 First section 70 Extension of term application granted to 13 June 2014 (no opposition filed) 27 May 2004 Alphapharm’s letter advising the Commissioner of an earlier ARTG registration based on CIPRAMIL 7 July 2005 Court decision issued concerning Patentee’s challenge to Commissioner’s power under regulation 10.7(7)
Lundbeck v Commissioner of Patents [2006] FCA1631 March 2006 Commissioner’s decision to use reg 10.7(7) to correct the extension of term date
Lundbeck v Alphapharm [2006] APO 1819 May 2006
Lundbeck’s appeal to Commissioner’s decision dismissed by Lindgren J. Lindgren J orders that Register be rectified according to section 192 of the Patents Act 1990 (Cth) to remove the extension of term from the Register (stayed pending outcome of the appeal)
Alphapharm Pty Ltd v H Lundbeck A/S [2008] FCA 55924 April 2008 Full Federal Court confirms order of Lindren J
Alphapharm Pty Ltd v H Lundbeck A/S [2009] FCFCA 7011 June 2009 Lundbeck files a second Extension of Term application on LEXAPRO patent based on CIPRAMIL together with an extension of time under section 223 12 June 2009 Expiry of original term of the LEXAPRO patent 13 June 2009 Extension of time application under s223 to file the second section 70 application advertised for opposition purposes 23 July 2009 Period in which 4 notices of opposition were filed to the section 223 request 3-21 August 2009 High Court refuses Lundbeck’s application for special leave to appeal
Alphapharm Pty Ltd v H Lundbeck A/S & Anor [2009] HCATrans 32411 December 2009 Evidence finalised in section 223 oppositions 22 November 2010 Matter set for hearing on second extension of term application 2 March 2011 Legislative Framework
Section 70
Sections 70-79 were introduced into Part 3, Chapter 6 of the Patents Act by the IP Laws Amendment Act 1998 and came into force on 27 January 1999. The primary purpose of this IP Laws Amendment Act was to give effect to the Government’s decision to provide for an extension of term scheme for pharmaceutical patents. An extension of up to five years was to be available for a standard patent relating to a pharmaceutical substance that is the subject of first inclusion on the ARTG. This was similar to provisions available for pharmaceutical patents in the US, Europe and Japan and recognised the exceptionally long development time and regulatory requirements involved in developing and commercialising a new drug. The aim was said to provide an effective “patent life” or period after marketing approval is obtained during which companies are earning a return on investment, more in line with that available to inventions in other fields of technology.
Section 70 outlines the requirements for an application for an extension of term for a pharmaceutical substance as follows:
(1)The patentee of a standard patent may apply to the Commissioner for an extension of the term of the patent if the requirements set out in subsections (2), (3) and (4) are satisfied.
(2)Either or both of the following conditions must be satisfied:
(a)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;
(b)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 the claim or claims of that specification.
(3)Both of the following conditions must be satisfied in relation to at least one of those pharmaceutical substances:
(a)goods containing, or consisting of, the substance must be included in the Australian Register of Therapeutic Goods;
(b)the period beginning on the date of the patent and ending on the first regulatory approval date for the substance must be at least 5 years.
Note:Section 65 sets out the date of a patent.
(4)The term of the patent must not have been previously extended under this Part.
(5)For the purposes of this section, the first regulatory approval date, in relation to a pharmaceutical substance, is:
(a)if no pre‑TGA marketing approval was given in relation to the substance—the date of commencement of the first inclusion in the Australian Register of Therapeutic Goods of goods that contain, or consist of, the substance; or
(b)if pre‑TGA marketing approval was given in relation to the substance—the date of the first approval.
The timing requirements for filing an application under section 70 are then provided in section 71(2):
71(2)An application for an extension of term of a standard patent must be made during the term of the patent and within 6 months after the latest of the following dates:
(a) the date the patent was granted;
(b) the date of commencement of the first inclusion in the Australian Register of Therapeutic Goods of goods that contain, or consist of, any of the pharmaceutical substances referred to in subsection 70(3);
(c) the date of commencement of this section.
The current section 70 application is filed outside the latest of periods mentioned in section 71(2)(a)-(c) and in order to have their section 70 application considered, the patentee needs to obtain an extension of time under section 223.
Section 223
Section 223 allows an extension of time to do a “relevant act”. Section 223(2) reads as follows:
Where, because of:
(a) an error or omission by the person concerned or by his or her agent or attorney; or
(b) circumstances beyond the control of the person concerned;
a relevant act that is required to be done within a certain time is not, or cannot be, done within that time, the Commissioner may, on application made by the person concerned in accordance with the regulations, extend the time for doing the act.
A "relevant act" for the purposes of section 223 is defined in section 223(11):
an action (other than a prescribed action) in relation to a patent or patent application, or any proceedings under this Act (other than court proceedings), and includes the making of a Convention application within the time allowed for making such applications.
This provides the Commissioner with a discretionary power to extend the time to do any “action” in relation to a patent other than a “prescribed action”.
Regulation 22.11(4) then prescribes the following actions as being excluded for the purposes of section 223(11):
(4)For the definition of relevant act in subsection 223 (11) of the Act, each of the following actions is prescribed:
(a)an action or step prescribed in Chapter 5, other than an action or step taken under regulation 5.3 or 5.3AA, paragraph 5.4 (a), subparagraph 5.8 (1) (a) (i) or regulation 5.9A;
(b)filing, during the term of a standard patent as required by subsection 71 (2) of the Act, an application under subsection 70 (1) of the Act for an extension of the term of the patent;
(c)an action or step prescribed in Chapter 20.
In the current case, the relevant part of this regulation is 22.11(4)(b). The opponents argued that the combined effect of section 223(11) and regulation 22.11(4)(b) is that section 223 is not available to remedy the failure to file any application under section 70.
I note that the Commissioner has previously granted section 223 extension of time applications for section 70 applications. The APO decision in Pre Jay Holdings Limited and Woco Investments Ltd [2001] APO 18 (issued 24 April 2001) concerning patent No. 582540 is one example. In that case, the patentee needed to make a second section 70 application when they found their first extension was based on the wrong product. In order to comply with the timing requirements set out in section 71(2), the patentee applied for, and was granted, an extension of time under section 223 for making the section 70 application.
That decision was appealed to the Full Federal Court (see Prejay Holdings Ltd v Commissioner of Patents [2003] FCAFC 77) but the decision was not challenged on the Commissioner’s power to grant the section 223 extension and so the Full Court did not consider this issue.
The only in depth consideration of regulation 22.11(4)(b) has been the Patent Office decision of Re Application by Boerhinger Ingelheim International GmbH (1999) 48 IPR 17; [1999] APO 60 (24 September 1999) [hereafter Boerhinger] which the parties all referred to in their submissions. In that case, when Boehringer filed their extension of term application, they had not realised that their patent (548186) was a divisional application. This meant that the patent had an earlier expiry date and the extension of time was filed outside the term of the patent contrary to section 71(2).
Boehringer filed a request under section 223 to allow them to file outside the term of the patent. They argued that the phrase “during the term of a standard patent” in regulation 22.11(4)(b) had a clear meaning by itself and that the phrase “as required by subsection 71(2)” of the Act must be construed to avoid redundancy. Their view was that it imported the other elements required by s.71(2) and based on this construction, the exclusion under regulation 22.11(3)(c) (as it then was) would only apply when BOTH the requirement of filing during the term of the patent AND the time specified by the relevant one of subparagraphs (a) to (c) are not met.
The Deputy Commissioner disagreed with their construction. He found that the phrase “during the term of a standard patent as required by subsection 71(2)” merely imports the context of that section to identify which “term of a standard patent is being referred to” which is the term of the patent prior to any section 70 extension being granted. On his construction, the only “prescribed acts” in regulation 22.11(3)(c) (as it then was) were extensions of time filed after the standard patent term had expired.
The current opponents agreed with the outcome of the Boerhinger case but they argued that the Deputy Commissioner’s reasoning was incorrect. On their reading of the provision, the exclusion of regulation 22.11(4) applies to all extension of time applications for an extension of term. In that regard, they referred to the text book “Patent Law in Australia” by Colin Bodkin, 2008, where the author had noted[4] that were it not for the guidance provided by the Explanatory Memorandum, it would be at least arguable that the plain meaning of regulation 22.22(4)(b) is to exclude all extensions of time for the extension of term.
[4] See “Patent Law in Australia” by Colin Bodkin, 2008 chapter 16, paragraph 16049)
According to the opponents, this means that rather than refusing the application for an extension of time because it was filed after the term of the patent had ended, the Deputy Commissioner should have refused the application simply on the basis that it was related to an extension of term application under section 70.
The patentee argued that if Parliament had intended to exclude all section 70(1) applications from the provisions of section 223, then the legislation could simply be drafted to this effect. Having the additional phrase “during the term of a standard patent as required by subsection 71 (2) of the Act” must therefore provide some further limitation to the types of section 70 applications excluded from the provision. Otherwise the phrase would be completely redundant over the remaining parts of the sub-regulation.
I note that the additional phrase “during the term of a standard patent as required by subsection 71(2) of the Act” functions as an adverb in regulation 22.11(4) (b). An adverb’s function is to modify the action of the verb (in this case, filing”).[5] Reading the regulation literally, only those section 70 filings which are filed “during the term of the standard patent” are excluded from the provisions of section 223.
[5] >
This interpretation however would lead to a manifestly absurd result because the corollary would also be true. Section 223 would then be available to section 70 applications made outside of the term of the patent. This would allow patents to be extended outside their 20 year term and lead to uncertainty in the Register regarding whether a pharmaceutical patent had actually expired.
Where the ordinary grammatical meaning of a provision leads to an absurd result, a court will generally need to interpret the provision such that it reflects Parliament’s intent. This is known as the “Purpose rule” in statutory interpretation and is one of three general common law “rules” used by the Courts in construing legislation[6]:
·the literal rule—the court will give effect to the ordinary and natural meaning of the text;
·the purpose rule—the court will adopt a meaning consistent with the purpose of the legislation;
·the golden rule—the court will adopt a meaning that avoids absurdity or inconsistency arising from the ordinary and natural meaning of the text.
[6] See Pearce & Geddes “Statutory Interpretation in Australia” (5th ed. 2001)
The High Court in Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation [1981] HCA 26; 147 CLR 297 (5 June 1981) in discussing these rules noted that if the language of a statute is not ambiguous or uncertain, a court will apply its ordinary and grammatical meaning (ie the literal rule) unless to do so will give the statute an operation which obviously was not intended. At page 320 Mason and Wilson JJ explained the approach in more detail:-
"... Generally speaking, mere inconvenience of result in itself is not a ground for departing from the natural and ordinary sense of the language read in its context. But there are cases in which inconvenience of result or improbability of result assists the court in concluding that an alternative construction which is reasonably open is to be preferred to the literal meaning because the alternative interpretation more closely conforms to the legislative intent discernible from other provisions in the statute.
There is a similar problem with the related so-called "golden rule" of construction. There are statements of the rule which would confine the courts to the ordinary grammatical sense of the words used unless that produces an absurdity or inconsistency. It is to be noted that Dixon J. in Broken Hill South Ltd. v. Commissioner of Taxation (N.S.W.) [1937] HCA 4; (1937) 56 CLR 337, at p.371 observed that departure from the ordinary grammatical sense is not legitimate unless there is "some obscurity or some inconsistency", though it may be that "obscurity" was intended to be a reference to " absurdity". For the reason already given in the discussion of the literal rule, departure from the ordinary grammatical sense cannot be restricted to cases of absurdity and inconsistency.
In some cases in the past these rules of construction have been applied too rigidly. The fundamental object of statutory construction in every case is to ascertain the legislative intention by reference to the language of the instrument viewed as a whole. But in performing that task the courts look to the operation of the statute according to its terms and to legitimate aids to construction."
The High Court approach is reflected in Section 15AA of the Acts and Interpretation Act 1901 (as enacted in 1981) which mandates a purposive approach to statutory interpretation:
15AA Regard to be had to purpose or object of Act
In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.Section 15AB of the Acts Interpretation Act 1901 (as enacted in 1984) explicitly allowed certain extrinsic material to be used in interpreting the purpose of the Act as follows:
15AB Use of extrinsic material in the interpretation of an Act
(1) Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:
(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b) to determine the meaning of the provision when:
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable.
Section 15AB(2) provides a non-exhaustive list of extrinsic materials which may be considered including the Explanatory Memorandum [15AB(2)(e)]. In the current case, the Explanatory Memorandum (EM) for the Intellectual Property Laws Amendment Bill 1998 (which introduced the pharmaceutical extension of term scheme) explicitly outlines Parliament’s intent to allow the timing provisions of section 71 to be extended under section 223 provided the relevant criteria were satisfied[7]:
"Section 71 sets out the requirements of the form and timing of the application. The extension of time provision under s.223 of the Patents Act 1990 will apply to all acts required to be done under the extension of patent term scheme provided the relevant criteria are satisfied."
[7] See Explanatory Memorandum to the Intellectual Property Laws Amendment Bill 1997 (Cth) Notes on Clauses p. 18 at [14]
The opponents’ argument that all section 70 applications are excluded from the provisions of section 223 is clearly inconsistent with the EM’s explicit intention. Parliament qualifies this intention by noting that only “acts required to be done under the extension of patent term scheme” which met the “relevant criteria” would be extendible under the section 223. Although it is not clear from the EM itself whether the “relevant criteria” refers to section 223 and/or section 71, the very existence of an exclusion provision such as regulation 22.11(4)(b) suggests that there is a “relevant criterion” requirement in section 71 that needed to be satisfied to enliven the provisions of section 223.
Section 71 relates to the form and timing of an application under section 70. There are two specific requirements in section 71 which are referred to in regulation 22.11(4)(b). The first is that an application is filed under section 70(1) and the second is that the application is filed “during the term of a standard patent as required by section 71(2)”. Given that I have ruled out above that it could be any section 70 application, the relevant requirement in section 71 must relate to filing “during the term of the patent”.
In this regard, the key to construing the regulation may lie in the additional words “as required by section 71(2)” which seem to emphasise that filing during the term of the patent is a key requirement of section 71(2). This phrase provides a link to the “relevant criteria” mentioned in the EM and suggests that the purpose of regulation 22.11(4)(b) is to prescribe a specific time constraint within section 71(2) (ie: that the section 70 application must be filed during the term of the patent) which could not be circumvented by section 223.
This purposive construction would still allow a second time limit in section 71(2) (the 6 month time limit) to be extended (provided the application was filed during the term of the patent). Such extensions would be consistent with Parliament’s general intention to apply section 223 to section 70 applications. They would also properly balance private and public interest considerations by allowing patentees access to the beneficial provisions of section 223 to correct errors while still providing third parties with adequate notice about any extension to make informed decisions about when they can enter the market.
The opponents argued that it is not possible to read “down” regulation 22.11(4)(b) to import a temporal restriction to the type of actions being excluded by the provision (ie: excluding an action based on when it was done). According to the opponents, the reference in section 223(11) to an “action” emphasises that what was being prescribed is a physical act and suggested that introducing a temporal element into the regulation would exceed its legislative power.
However, all actions for the purpose of section 223 must necessarily have a temporal element (or there would be no time limits to extend). Limiting an action based on when it has been done is simply a means of defining a sub-set of actions within a broader class of actions and does not inappropriately introduce a temporal element into the provision. In that sense, an action done at a particular time is still an action.
In my view, the exclusion of only certain types of section 70 applications (those filed after the term of the patent has expired) from section 223 is consistent with the intent of the provision and a purposive construction of the legislation. As a consequence, regulation 22.11(4)(b) does not exclude section 70 applications from the provisions of section 223 provided these are filed within the term of the patent as required by section 71(2).
In the current case, the section 70 application was filed one day before the original term of the patent had expired and therefore section 223 is potentially available as a remedy to extend the time set out in section 71(2)(c) provided the requirements of section 223 are fulfilled.
Section 223 Request
The patentee filed their application for an extension of term under section 70 together with an extension of time application section 223 application on 12 June 2009. In support of their section 223 application, the patentee provided a statutory declaration by Carolyn Welsh of Corrs Chambers Westgarth outlining the circumstances of Lundbeck’s misunderstanding of which ARTG goods provided the basis of the section 70 extension of term.
In its current form, the section 223 request refers to a 132 month extension. This is based on the assumption that the correct date for filing an extension of term application would have been 8 June 1998 which was 6 months after CIPRAMIL was first included on the ARTG register [as per section 71(2)(b)]. However (as the parties all agreed), the correct date for filing an extension of term application based on CIPRAMIL was that prescribed under section 71(2)(c) [6 months from the commencement of the extension of term provisions (ie 27 January 1999)]. The statutory deadline for filing a section 70 extension of term was therefore 26 July 1999 which means that only a 121 month extension of time under section 223 was required.
The parties all agreed that this error in dates was not critical to the consideration of the section 223 request. The shorter period required is wholly within the original period of time requested and the facts surrounding the extension are identical. The hearing therefore proceeded on the basis that the section 223 extension of time request was for the correct time period (ie 26 July 1999 until 12 June 2009).
Is there a causative error to enliven section 223?
As discussed above, the deadline for filing a section 70 request for the racemic product CIPRAMIL under section 71(2)(c) was 26 July 1999. The patentee failed to file a section 70 request at that time because they had mistakenly thought that CIPRAMIL was not a relevant good in relation to the enantiomer patent.
Karen Sinclair was the Australian patent attorney responsible for the first extension of term application based on LEXAPRO. When the extension of term based on CIPRAMIL was due, she did not consider that this product was the first inclusion on the ARTG for the purposes of section 70. In her evidence,[8] she notes that:
“In preparing the application, given my understanding of the chemical difference between Cipramil and Lexapro, it did not occur to me, or any of my team, that the date of regulatory approval could, let alone should, have been used to extend the patent.”
[8] See Karen Joy Sinclair statutory declaration dated 20 August 2010 at [19]
Then in 2003, when the original extension of term application based on LEXAPRO was filed, her evidence indicates that she understood the “pharmaceutical substance” disclosed and claimed in the Patent was (+) citalopram and that the term “the substance” in section 70(3)(a) was a reference to one of “those pharmaceutical substances” described in section 70(2) of the Act. Based on this reasoning, she believed that it was the registration of LEXAPRO was the first inclusion on the ARTG for the purposes of section 70[9].
[9]See Karen Joy Sinclair statutory declaration dated 20 August 2010 at [20]-[21]
A statutory declaration by John Petersen confirms that Lundbeck genuinely believed that the extension on the LEXAPRO patent should have been based on LEXAPRO rather than CIPRAMIL[10]. Mr Petersen is the Divisional Director of Corporate Patents and Trade Marks employed by the patentee company and provided the patentee’s instructions to file an extension of term application based on LEXAPRO in 2003. He notes at [12]:
“On the basis that CIPRAMIL does not fall within the scope of the claims of the LEXAPRO patent and my view (again shared by Lundbeck) that an extension of term of a patent is granted to allow the patentee the full term to sell (amongst other things) the product protected by the patent, prior to 2005, I and Lundbeck did not contemplate applying to extend the term of the LEXAPRO patent on the basis of the marketing approval of CIPRAMIL.”
[10] See statutory declaration by John Meidahl Petersen dated 22 August 2010
Based on this evidence, I accept that the patentee genuinely believed on 26 July 1999 that a section 70 extension of term application could not be based on the racemate, CIPRAMIL. Further, the patentee’s involvement in the long and complex court proceedings is clear evidence that they continued to hold this belief until at least 11 June 2009 when the Full Federal Court handed down their decision[11].
[11] Alphapharm Pty Ltd v H Lundbeck A/S [2009] FCFCA 70
The patentee’s misunderstanding of the law clearly caused them to decide not to file an extension of term application based on CIPRAMIL. I am satisfied that this is a causative error which would enliven the provisions of section 223.
Discretionary factors
The opponents argued that there were a number of discretionary issues which the opponents submitted weighed heavily against an extension of time being granted under section 223. These are considered in full below.
Unreasonable Delay
The opponents argued that the current extension (for 121 months) is for an extraordinary long period and that it is not in the interest of the public to have patents exist in a state of uncertainty due to the delay taken by the patentee to rectify errors in the Register (as per re Sanyo Electric Co Ltd v Commissioner of Patents (1996) 36 IPR 470 at 480.
However, in determining whether a delay is undue, the most relevant consideration is not the length of the delay itself but whether it was unreasonable or unnecessary in the circumstances of the case (see Board of Control of Michigan Technological University v Deputy Commissioner of Patents [1981] FCA 39; (1981) 34 ALR 529 at 535).
When the extension of term application based on CIPRAMIL was due (ie 26 July 1999), the general understanding at that time had been that an extension of term should be based on the enantiomeric product (LEXAPRO) rather than CIPRAMIL. As Michael Caine (an independent patent attorney) from Davies Collison Cave, Melbourne explained in Evidence in Answer[12]:
“If H Lundbeck A/S (Lundbeck) had sought my advice in 1999 as to whether it could have extended its Australian patent number 623144 (the Lexapro patent) on the basis of it marketing approval for racemic citalopram or Cipramil, I would have advised that it could not because Cipramil, being a racemate, does not contain or consist of a pharmaceutical substance which “falls within the scope of the claims” of the patent to be extended. This is because Cipramil does not contain any of the (+) enantiomer of citalopram substantially free of the (-) enantiomer as necessitated by the language of the claims to be extended. In 1999, I would have advised Lundbeck that an extension of term of the Lexapro patent would need to be based upon marketing approval in Australia or the single enantiomer, Lexapro.”
[12] See Michael James Caine statutory declaration dated 20 August 2010 at [13]
It was the Federal Court decision of Merck v Arrow[13] issued on 25 November 2003 which first interpreted the extension of term provisions differently. In overturning an earlier Patent Office decision[14], Wilcox J found that an ARTG registered product which “contained” the claimed product (even as an impurity) was sufficient for the purposes of section 70(3).
[13] Merck & Co v Arrow Pharmaceuticals Ltd [2003] FCA 1344; 59 IPR 226.
[14] Merck v Arrow [2002] APO 13 (17 April 2002)
Even after the Merck v Arrow decision[15], there was still uncertainty in the field as to whether the decision represented definitive law (especially as the decision had been undefended). Mr Caine, for example, believed that the Court’s approach in Merck v Arrow was inconsistent with the intention of Parliament[16]. He would still have advised his clients, in and before 2003, to apply for an extension based on the enantiomer and he was aware from discussions with colleagues that other practitioners would have given the same advice[17].
[15] Merck & Co v Arrow Pharmaceuticals Ltd [2003] FCA 1344; 59 IPR 226.
[16] See Michael James Caine statutory declaration dated 20 August 2010 at [24]
[17] See Michael James Caine statutory declaration dated 20 August 2010 at [23]
Mr Caine acknowledged that it was not until after the appeal to the High Court was refused, that he accepted that the law was not as he, and his colleagues, had understood it[18]. The evidence provided by the patentee confirms that they held a similar view and the involvement of the patentee in the long and complex court proceedings is strong evidence of this. I therefore accept that it was only when the special leave application to the High Court had been refused that the patentee accepted that the first inclusion on the ARTG for the purpose of section 70 was the racemate CIPRAMIL.
[18] See Michael James Caine statutory declaration dated 20 August 2010 at [25]
The opponents argued that the patentee should still have applied for an alternate extension of term once the lower decisions of the Commissioner or Lindgren J were handed down rather than waiting for the higher court appeals to be resolved. However, the alternative section 70 applications would only have been necessary if all the patentee’s appeals were unsuccessful (including the appeal on the Commissioner’s decision to invoke regulation 10.7(7) to correct the Register). Given that the patentee strongly believed that they would win their case on appeal, it was reasonable for them to wait for the appeal process to be finalised before proceeding with an alternate section 70 application.
There was also no purpose in filing an alternative extension of term application until the appeal process was finalised because the Commissioner was unable to process it while the court proceedings were pending. Under section 70(4), the term of the patent must not have previously been extended under part 3, chapter 6 (pharmaceutical extension of term provisions). The Commissioner would therefore not have been able to make a decision on an alternate section 70 application until the fate of the first extension was known.
As a consequence, while there is a lengthy extension being requested, the evidence shows that much of the delay was due to the court proceedings in which the original extension was challenged. The patentee first became aware of a potential problem around 7 July 2005 when Alphapharm advised the Commissioner of the existence of an earlier ARTG registration for the racemate, CIPRAMIL. From then until 12 June 2009 (when the patentee filed the current section 70 application), the question of whether the extension or term should have been based on the enantiomer or the racemate was still being considered by either the Commissioner or the Court (as the background and chronology above clearly indicated).
I am therefore satisfied that the patentee did not cause any unreasonable delays in filing their alternative section 70 application.
Patentee interests
The patent discloses and claims a pharmaceutical substance as defined in Schedule 1 of the Patents Act. As a consequence, the patent is eligible for an extension of term provided each of the requirements of section 70 and 71 are fulfilled.
The Full Court found that the first inclusion on the ARTG for the purposes of section 70 was CIPRAMIL. This product was first included on the ARTG on 9 December 1997. This was 4 years after the original (‘citalopram’) patent had expired and as a consequence the earlier (‘citalopram’) patent (also owned by Lundbeck) was never exploited in Australia.
If the current patent were to be extended based on the ARTG registration of CIPRAMIL, the expiry date would become 9 December 2012. This would add 3.5 years to the current patent term providing an effective patent term of 9.5 years.
This extended term would be closer to a 15 year effective patent term intended with the pharmaceutical extension of term scheme and would better compensate the patentee for their research in developing a useful drug. This is clearly in the patentee’s interests.
Third party interests
Third parties have commenced selling their generic escitalopram products since the expiry of the original term of the patent on 13 June 2009. The evidence indicates that there are now a number of different brands in the market (the PBS web-site lists 8 different brands - see exhibit KAO-4). I accept that the generic companies selling these different products (including all the current opponents) would all be significantly impacted if the current patent were to be extended.
The opponents argued that it is possible that the current risk to third parties would not have arisen if Lundbeck had acted sooner because they would have been able to delay their product launches until the extension of term application was determined. Alphapharm also suggested (in their letter of 19 May 2011), that until Lundbeck made its application for an extension of time, they had no certainty as to whether Lundbeck would in fact apply for an extension of time.
However while there was no formal application for an extension of term based on CIPRAMIL, the opponents were all aware that there was an ARTG registration for this product which could form the basis of an extended term. They could also have been in no doubt that the patentee intended to extend their patent as the current section 70 (CIPRAMIL) application falls wholly within the period originally sought by the patentee with their first (LEXAPRO) application.
The patentee had applied for their first section 70 extension of term application as early as 22 December 2003 and had actively defended their right to this extension through lengthy court proceedings. The substantive issue before the Court was what product the extension should be based on (and hence how long the extension should be). There was no suggestion that the patentee was not entitled to any extension (provided the timing requirements of section 71 could be met).
The opponents entered the market as soon as the original term had expired to obtain a “market advance”. This entry was within the statutory extension periods available to both CIPRAMIL and LEXAPRO and also prior to the patentee exhausting all avenues of appeal with regard to the LEXAPRO extension of term application.
My view is that this was a deliberate strategy by the opponents with a known commercial risk. Thus while I accept that the opponents would be disadvantaged by granting an extension of time under section 223, I think these problems have been caused by their own commercial decisions rather than any delays by the patentee. I do not believe this should be a discretionary factor which counts against granting the extension.
Public Interest
The opponents argued that there is a significant public interest against extending the term of the patent which had now expired. This would force competitors from the market which would significantly increase the cost of drug. It could also lead to public confusion because certain products were no longer available and this might lead to a decrease in patient compliance.
With a large number of competing products already on the market, I am not convinced that any extra confusion would be caused by removal of one or more of these drugs from the market. In contrast, I accept that that the cost of drugs is likely to increase if the generic drugs are removed from the market and the opponents have provided ample evidence to demonstrate this.
However, while some members of the public might have to pay a higher costs in drugs, this would only be for a short term (3.5 years) and would always have been the case if the correct extension had been granted in the first place. The patentee is prima facie entitled to an extension of term based on CIPRAMIL because of delays in obtaining marketing approval. Granting them a section 223 application to enable them to progress an alternate section 70 application enables them to correct a deficiency in the original application.
The increase in cost is also more than offset by the broader public interest in encouraging research into new and useful drugs. The pharmaceutical extension of term scheme legislation was introduced by Parliament to allow a 15 year effective patent term for pharmaceutical substances. This was in recognition of the long delays in obtaining regulatory approval of those substances. It ensures that research and development is encouraged by a scheme which adequately recompenses the cost of medical research. This enables companies such as Lundbeck to re-invest in pharmaceutical research to develop new drugs for the benefit of the Australian public.
I therefore find on balance that the public interest weighs in granting the extension.
CONCLUSION
Regulation 22.11(4)(b) does not exclude section 70 applications from the provisions of section 223 provided these are filed within the term of the patent as required by section 71(2). In the current case, the section 70 application was filed one day before the original term of the patent had expired and therefore section 223 is generally available as a remedy to extend the time set out in section 71(2)(c) provided the requirements of section 223 are fulfilled.
The patentee’s misunderstanding of the law led to their failure to apply for an extension of time based on the correct ARTG registration. While 121 months is an undoubtedly a long time, it is still reasonable in the circumstances given the uncertainty in the law and the length and complexity of the multiple court proceedings.
While the opponents would be disadvantaged by the grant of the section 223, this is because of their commercial strategy to enter the market despite being aware of the earlier registration. This was a consequence of their own actions not those of the patentee and is not a discretionary factor against the granting of the extension.
The purpose of the Extension of term provisions is to encourage research and development into new pharmaceutical drugs by ensuring adequate recompense for patentees for new and inventive drugs. In the current case, the patentee is entitled to an extension of term under section 70 because of delays in marketing approval. In such circumstances, the patentee should be provided with the opportunity to correct a genuine misunderstanding. While there is some disadvantage to the public because of the likely increased cost of the patented drugs for the short period of the extension, this is offset by the broader public interest of encouraging research and development in the pharmaceutical field.
I therefore grant the section 223 extension of time to file the extension of term application. Subject to any appeal or review, the Commissioner will proceed to process the section 70 extension of term. If the Commissioner is advised of an appeal or review within 30 days, she will defer consideration of the extension of term until after that action is finally disposed of.
COSTS
In matters before the Commissioner, costs generally follow the event. In this case, the patentee successfully argued that the section 223 should be granted. I therefore award costs against the opponents.
Karen Ayers
Delegate of the Commissioner of Patents
9
11
0