Beecham Group Plc v Secretary of the Department of Community Services & Health

[1993] FCA 214

Re: BEECHAM GROUP PLC
And: SECRETARY OF THE DEPARTMENT OF COMMUNITY SERVICES AND HEALTH and B.C.
ASHLEY
No. VG379 of 1991
FED No. 214
Number of pages - 7
Patents
(1993) 25 IPR 537
(1993) AIPC 91-009
(1993) 42 FCR 82

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop J(1)

CATCHWORDS

Patents - Extension of term of patent - interpretation of s92 Patents Act 1952 - circumstances in which marketing approval certificate is to be given

Patents Act 1952 ss90, 92

Patents Act 1990 s72

Therapeutic Goods Act 1989

HEARING

MELBOURNE, 15 March 1993

#DATE 19:4:1993

Counsel for Applicant: Dr C.N. Jessup QC with Miss J.E. Richards

Solicitors for Applicant: Arthur Robinson and Hedderwicks

Counsel for Respondent: Ms E. Strong

Solicitors for Respondent: Australian Government Solicitor

ORDER

THE COURT DECLARES AND ORDERS THAT:

1. The request made pursuant to s92 of the Patents Act 1952 by the

applicant on or about 5 June 1990 to the Secretary of the Department of Community Services and Health (the "Department") for the issue of a marketing approval certificate for the pharmaceutical substance specified in the request is valid and remains effective pending the determination by the Department of the application by the applicant pursuant to the Therapeutic Goods Act 1989 for marketing approval of the said pharmaceutical substance.

2. Upon marketing approval of the said pharmaceutical substance being

granted by the Department, the Secretary of the Department, pursuant to s72 of the Patents Act 1990, must immediately give a marketing approval certificate in the approved form to the applicant in respect of the said pharmaceutical substance.

3. The respondents pay the applicant's costs.

Note: Settlement and entry of orders is dealt with in Order 36 of The Federal Court Rules.

JUDGE1

NORTHROP J This application raises for consideration the proper construction and application of s92 of the Patents Act 1952 (the 1952 Act) in force immediately prior to 30 April 1991. On that day the Patents Act 1990 (the 1990 Act) came into operation. The 1952 Act was repealed by s230 of the 1990 Act. Section 72 of the 1990 Act is the corresponding section of s92 of the 1952 Act. To assist in understanding the issue raised, it is helpful to refer to the history of the relevant legislation.

1. Before 15 December 1989, Part IX of the 1952 Act was headed "Extension of Patents" and comprised sections 90-98. These provisions enabled a patentee who considered he had been inadequately remunerated by his patent to apply to a court for an order that his patent be extended for a further term. The only limitation on the right was that the patent had to be a standard patent. It was difficult to establish the grounds for an extension of term. The application for the order had to be made at least six months before the expiration of the term of patent, but the court could allow a further period.

2. The Patent Amendment Act 1989 (the Amendment Act) came into operation on 15 December 1989. It repealed the then Part IX of the 1952 Act and inserted a new Part IX headed "Extension of Certain Patents". The new Part IX comprised sections 90 to 96C. The policy of the Amendment Act appears clear. The general right to seek an extension conferred on patentees was, with one exception, abolished. Under the new Part IX, the class of patentees who could apply for an extension of term of patent was limited to patentees of a standard patent where "a pharmaceutical substance is in substance disclosed in the complete specification of a standard patent and in substance falls within the scope of the claim or claims of that complete specification"; see paragraph 90(1)(a) of the 1952 Act. A definition of the phrase "pharmaceutical substance" was inserted into s6 of the 1952 Act by the Amendment Act but it is not necessary to refer to the terms of that definition.

3. A further limitation was imposed on the right to apply for an extension of term of a patent for a pharmaceutical substance. Pharmaceutical substances, as defined in the 1952 Act, are therapeutic goods under the Therapeutic Goods Act 1989. That Act is administered by the Department of Community Services and Health ("the Department"). The object of the Therapeutic Goods Act is "to provide ... for the establishment and maintenance of a national system of controls relating to the quality, safety, efficacy, and timely availability of therapeutic goods that are: (a) used in Australia, whether those goods are produced in Australia or elsewhere; or exported from Australia." It is an offence to market in Australia therapeutic goods without the approval of the Department. The evidence shows that normally it takes over two years between the time an application for approval is lodged with the Department and the approval is given or refused.

4. The second limitation imposed on the right to apply for an extension of term of a patent under the new Part X of the 1952 Act was in connection with marketing approval of pharmaceutical substances under the Therapeutic Goods Act. Under the 1952 Act a standard patent could be granted with respect to a pharmaceutical substance for which no marketing approval existed under the Therapeutic Goods Act. Thus, a pharmaceutical substance the subject of a patent could, but need not, be permitted to be marketed in Australia. Since the Amendment Act came into force on 15 December 1989, before an extension of term of a patent could be granted, the pharmaceutical substance had to be able to be marketed in Australia. The existence of marketing approval is a condition for the grant of the extension, but the non-existence of the pre-approval is not a bar to making an application for an extension of term. The non-existence of the approval is a bar to the granting of the extension.

5. Much of the new Part IX of the 1952 Act is directed to the procedures which give effect to the policy of the Amendment Act. Thus, s91 of the 1952 Act provides that an application for an extension of the term of a patent lapses if the applicant does not give to the Commissioner of Patents a marketing approval certificate in respect of the pharmaceutical substance to which the application relates. The Amendment Act inserted a definition of the phrase "marketing approval certificate" into s6 of the 1952 Act. Thus, unless the contrary intention appears, and in this case there is none, in the 1952 Act:
   

"'marketing approval certificate', in relation to a pharmaceutical substance, means a certificate given by the Secretary to the Department of Community Services and Health certifying that he or she has approved the marketing of the substance, or a product containing the substance, in Australia;"

1. Under s96C of the 1952 Act, the Secretary has power to delegate the powers conferred under Part IX.

2. Under the provisions of the new Part IX of the 1952 Act the Commissioner for Patents, not the Department, has power to grant the extension of term of the patent. The period of the extension is limited to four years and may be granted even though the term of the patent has expired. Provision is made for the advertising of the application for extension, s93, and for persons to oppose the granting of the extension. Grounds of opposition are limited to non-compliance with the procedures required and whether the claims claim matters other than pharmaceutical substances, s94. Where the Commissioner is satisfied as to these requirements, he must grant the extension.

3. It is apparent that the procedures are of vital importance. For present purposes, the relevant procedures are set out in sections 90 and 91. Under s90, an applicant for an extension of term must have made a request for a marketing approval certificate at the time that the application for extension of term is made. In other words, the making of the request is a condition precedent to the making of the application for extension of term. This is so irrespective of whether the pharmaceutical substance the subject of the patent is, at that time, permitted to be marketed in Australia or not. The procedures to be followed are the same where the substance is permitted to be marketed in Australia as where the substance is not permitted to be marketed in Australia. Sub-sections 90(1), (2) and (3) are set out:
   

"90.(1) Where:

(a) a pharmaceutical substance is in substance disclosed in the complete specification of a standard patent and in substance falls within the scope of the claim or claims of that complete specification; and

(b) the patentee has requested the issue of a marketing approval certificate in respect of that substance, the patentee may, by notice in writing in accordance with the prescribed form given to the Commissioner not later than 12 months before the end of the term of the patent, apply for an extension of the term of the patent in respect of that substance and any other pharmaceutical substance which is in substance disclosed in the specification and in substance falls within the scope of the claim or claims of the specification.

(2) Where a patentee makes an application for an extension of the term of a patent, the patentee shall forthwith send a copy of the application to the Secretary to the Department of Community Services and Health.

(3) Where a patentee makes an application for an extension of the term of a patent the Commissioner shall forthwith publish in the Official Journal a notice stating that the application has been made and is open to public inspection."

1. Section 92 contains provisions relating to the giving of a marketing approval certificate. Section 92 is contained within the Patents Act, but directed to the Secretary of the Department of Community Services and Health. It imposes a duty on the Secretary. The section provides the method by which a marketing approval certificate is given, the certificate being the evidence which forms an essential basis for the granting of an extension of term by the Commissioner. If the certificate is not given to the Commissioner by the applicant for an extension of term, the application lapses, s91. The certificate is given by the Secretary to the patentee seeking the extension of term. Section 92 is set out:
   

"92. Where:

(a) a patentee makes a request in writing to the Secretary to the Department of Community Services and Health for the issue of a marketing approval certificate in respect of a pharmaceutical substance; and

(b) the Secretary to the Department of Community Services and Health has approved the marketing of the substance, or a product containing the substance, in Australia; the Secretary shall forthwith give a marketing approval certificate in the prescribed form to the patentee in respect of that substance."

1. The facts of this application are not in dispute. The applicant Beecham Group Plc is the patentee of a group of substances containing nabumetone, a pharmaceutical substance under the 1952 Act. The patent was due to expire on 9 September 1990. Nabumetone was not permitted to be marketed in Australia. The applicant desired to seek an extension of term of its patent. The Amendment Act had come into operation on 15 December 1989. Before that date, the applicant could have made an application for an extension of term under the provisions of the old Part IX of the 1952 Act, up to six months before the expiration of its patent. Under the new Part IX, section 90 required the application to be made no later than 12 months before the end of the term of the patent. Part III of the Amendment Act contained transitional provisions. Under s11 of the Amendment Act, the applicant had until 15 June 1990 within which to make an application for extension of term under the new Part IX.

2. To enable it to make an application for extension of term, the applicant made a request for the issue of a marketing approval certificate. The application for the extension of term of the patent could not be made until after the request had been made, see s90 of the 1952 Act. By letter dated 1 June 1990, the applicant requested the Secretary, Department Community Services and Health, for a certificate of a marketing approval under s92 of the 1952 Act. The letter explained that the applicant's patent for the nabumetone substances expired on 9 September 1990 and it intended to apply for an extension of term of the patent under the provisions of the Patents Act. Reference was made to the marketing approval which had been sought from the Department and that the processing of the request would take a long time. The letter concluded with a reference to s92(b) of the Patents Act and the provision that, when the conditions of s92 are satisfied, the Secretary to the Department "shall forthwith give a marketing approval certificate to the patentee". The letter then continued "Would you kindly issue the relevant certificate in relation to this request, as required by the Patents Act".

3. This letter was forwarded to the Department of Community Services and Health under cover of a letter dated 5 June 1990 from one of the Beecham group of companies. The letter read:
   

"At the request of our Principals we forward the attached letter in which a request is made for the issue of a marketing approval certificate for the pharmaceutical substance specified. A copy of the patent specification is enclosed for your records."

1. These two letters were received by the appropriate officer in the Department being within the Therapeutic Goods Administration of the Department.

2. On 8 June 1950, in conformity with the prescribed form, the applicant made application to the Commissioner of Patents under s90 of the 1952 Act for an extension of its patent in respect of nabumetone. The application contained the following paragraph:
   

"3. We have requested the issue of a marketing approval certificate in respect of the following pharmaceutical substances ... "

1. By letter dated 21 August 1990, the respondent Dr B.C. Ashley, in his capacity as Director, Drug Education Branch, Therapeutic Goods Administration, of the Department wrote to the applicant's patent attorney as follows:
   

"I refer to your letter dated 8 June, 1990 seeking a Marketing Approval Certificate for NABUMETONE.

A Marketing Approval Certificate cannot be issued for a pharmaceutical substance unless the substance or a product containing the substance has been approved for general marketing in Australia. As TGA records indicate that no general marketing relating to NABUMETONE has been given in Australia to date, I am unable to proceed with your application. Should you have information to show that general marketing in Australia has already been given for this pharmaceutical substance and you provide TGA with details of the approval, your application will be re-activated. If general marketing does not already exist for NABUMETONE it will be necessary for you to make a fresh application after general marketing approval is given for NABUMETONE in Australia."

1. Thereafter, a Mexican stand-off developed between the applicant on the one side and the Department and Dr Ashley on the other. Correspondence from the applicant made it clear that no marketing approval had been given, that application for marketing approval had been made and that the request for the certificate had been made to the Department and that, by s92 of the Patents Act, the Secretary of the Department was bound to give the Marketing Approval Certificate forthwith after approval of the marketing of the substances in Australia. The Department and Dr Ashley persisted with the view that any request for a certificate under s92 could be validly made only after marketing approval had been given.

2. The applicant commenced these proceedings under the Administrative Division (Judicial Review) Act 1977 to resolve what appeared to be a childish deadlock. The applicant was concerned that the Commissioner might take the view that, if a second request for a certificate had to be given, the applicant could be in breach of s90 of the 1952 Act and thus not entitled to an extension of term of patent.

3. The submissions made on behalf of the applicant were clear and short. Section 92 was contained in the Patents Act and had to be construed accordingly. A request for a certificate had to be in existence at the time the application for extension of term of patent was made to the Commissioner of Patents. A marketing approval certificate had to be supplied to the Commissioner before an extension of patent could be granted. Section 92 provided a procedure by which the applicant for an extension of term of patent could obtain the necessary certificate. The giving of the certificate was dependant upon a prior request. It did not matter whether the request was made before or after the giving of marketing approval under the Therapeutic Goods Act. Two pre-conditions had to be satisfied for the giving of the certificate, namely the request and the marketing approval. There was nothing in the Patents Act requiring the request to be made after marketing approval had been given. The one request was sufficient compliance for both s90 and s92 of the 1952 Act. On its true construction, upon the happening of the last of the two pre-conditions set out in s92, the Secretary to the Department was required "forthwith" to give the certificate. There is much force in these contentions.

4. Counsel for the respondents contended that the use of the present tense in paragraph 92(a) of the 1952 Act, namely, "Where: (a) a patentee makes a request ... ", made it clear that any request made before marketing approval had been given could not be used to satisfy the granting of a certificate. Otherwise, the past tense should have been used, namely, where a patentee has made a request. This was supported, so it was said, by the use of the word "forthwith", which suggests the certificate had to be given forthwith upon the request being made and of necessity this postulated the existence of the approval at that time. In this regard, it is noted that the word "forthwith" applies to each of paragraphs (a) and (b).

5. This submission on behalf of the respondents is rejected. It does not give any weight to the fact that s92 of the 1952 Act is related to patent law and an extension of term of a patent. The mere existence of marketing approval under the Therapeutic Goods Act is not sufficient to empower the Commissioner of Patents to grant the extension. Thus, in the absence of a marketing approval certificate, the Commissioner is not authorized to grant an extension. Section 90 requires a request to have been made at the time the application for extension is made. A copy of the application must be sent to the Secretary to the Department. The prescribed form of application contains a reference to the fact that a request has been made. The request is to the Department, not the Commissioner. In these circumstances, the reference to "request" in s92 should refer back to the same request as in s90. The use of the present tense in s92, namely where a patentee makes a request, logically refers back to the request forming part of the application under s90. Section 92 refers to the request which forms part of the application under s90.

6. The word "forthwith" relates to the giving of the marketing approval certificate. The certificate is subject to two pre-conditions, namely those referred to in paragraphs 92(a) and (b). Irrespective of the order in which those two pre-conditions are satisfied, the certificate must be given when the second in time of those two pre-conditions has been satisfied. It must then be given forthwith, in other words, without further delay. A delay caused as a result of the Department notifying the person who had applied for approval to market the therapeutic goods in Australia that approval had been given and thereafter forcing the same person to request the Secretary of the Department to issue a marketing approval certificate under the Patents Act would not be a compliance with the requirement of s92 that the certificate be given forthwith upon the two conditions specified in that section being satisfied. The certificate is for the purposes of the Patents Act, not the internal affairs of the Department.

1. The submissions by counsel for the respondents are based largely on the assumption that s92 of the 1952 Act stands in isolation and applies only to activities within the Department. The Therapeutic Goods Act contains many provisions by which marketing approval may be proved to have been given with respect to particular pharmaceutical goods, but those are not sufficient for the purposes of the Patents Act. There is no basis for accepting the submission on behalf of the respondent.

2. During the course of the hearing, a number of other submissions were made based upon authorities relating to interpretation of statutes, second reading speeches, explanatory memoranda and other factors. None of these other submissions are of assistance in determining the issue before the Court.

3. Chapter 23 of the 1990 Act contains transitional provisions. Under s235, the application by the applicant for an extension of term of patent under s90 of the 1952 Act is to be dealt with as if it had been made under the corresponding provision of the 1990 Act. There are a number of differences in the provisions of Part IX of the 1952 Act and the provisions of Division 2 of Part 3 of Chapter 6 of the 1990 Act, but for the purposes of this application, the differences between s90 and 92 of the 1952 Act and s70 and 72 of the 1990 Act are immaterial. In section 72 the reference is to "asks" instead of "requests" and the word "immediately" is used instead of "forthwith".

4. The words "marketing approval" were not defined in the Amendment Act and so no definition of them appears in the 1952 Act. The 1990 Act does contain a definition. In Schedule 1 to the Act, under the heading Dictionary, the words "marketing approval" when used in the 1990 Act, unless a contrary initiative appears, are given the following meaning:
   

"'marketing approval' in relation to a pharmaceutical substance, means the approval of the Secretary to the Department of Community Services and health for the marketing of the substance, or a product containing the substance, in Australia."

1. For reasons similar to those already given, the applicant does not need to make a further "request" by way of asking for a certificate once marketing approval has been given.

2. Accordingly, for the reasons given, the applicant is entitled to obtain the orders and declarations sought in the application but in a form more in accord with the reasons for judgment.

3. Orders accordingly.