Eli Lilly and Company v Merial Limited

Case •

[2010] APO 1

•

3 February 2010

No judgment structure available for this case.

ABSTRACTS OF DECISIONS

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Patent Application                 :          Nos. 2002332975, 2004210542 and 2004210544 in the name of Eli Lilly and Company

Title:          Dosage form, device and methods of treatment

Action:          Requests for extension of time to serve evidence in answer by Eli Lilly and Company and oppositions thereto by Merial Ltd

Decision:          Issued  03 February 2010

Abstract

Extension of time allowed in respect of each of the patent applications.

Although an explanation for the delay was not found to be satisfactory, the extensions were granted on the basis of public interest.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Patent application Nos. 2002332975, 2004210542 and 2004210544 in the name of Eli Lilly and Company, and a request for an extension of time to serve evidence in answer by Eli Lilly and Company and an opposition thereto by Merial Ltd in respect of each of the above patent applications

BACKGROUND

Patent Application 2002332975

  1. Patent application 2002332975 directed to a Dosage form, device and methods of treatment was filed on 18 October 2002 by Eli Lilly and Company (hereinafter referred to “Lilly”). The patent application proceeded to acceptance and was advertised accepted on 3 February 2005.
  1. Ancare New Zealand Limited (hereinafter referred to “Ancare”) filed a notice of opposition to the patent application 2002332975 on 29 April 2005. A statement of grounds and particulars was served on 29 July 2005 and the service of evidence in support was completed on 26 October 2007. The service of evidence in answer by Lilly was due on 26 January 2008.
  1. Merial Ltd (hereinafter referred to “Merial”) filed a notice of opposition to the patent application 2002332975 on 6 July 2005 following an extension of time under section 223. A statement of grounds and particulars was served on 6 October 2005 and the service of evidence in support was completed on 22 March 2007. The service of evidence in answer by Lilly was due on 22 June 2007. On 22 October 2007, a Delegate of the Commissioner of Patents made a direction that the time for serving evidence in answer by Lilly will expire three months after the date Ancare completes service of their evidence in support, which was 26 January 2008.

Patent Application 2004210542

  1. Patent application 2004210542 directed to a Dosage form, device and methods of treatment was filed on 9 September 2004 by Lilly. The patent application proceeded to acceptance and was advertised accepted on 28 July 2005.
  1. Ancare filed a notice of opposition to the patent application 2004210542 on 14 October 2005. A statement of grounds and particulars was served on 16 January 2006 and the service of evidence in support was completed on 26 October 2007. The service of evidence in answer by Lilly was due on 26 January 2008.
  1. Merial filed a notice of opposition to the patent application 2004210542 on 28 October 2005. A statement of grounds and particulars was served on 30 January 2006 and the service of evidence in support was completed on 2 May 2007. The service of evidence in answer by Lilly was due on 2 August 2007. On 12 September 2007, the Delegate of the Commissioner of Patents made a direction that the time for serving evidence in answer by Lilly will expire three months after the date Ancare completes service of their evidence in support, which was 26 January 2008.

Patent Application 2004210544

  1. Patent application 2004210544 directed to a Dosage form, device and methods of treatment was filed on 9 September 2004 by Lilly. The patent application proceeded to acceptance and was advertised accepted on 28 July 2005.
  1. Ancare filed a notice of opposition to the patent application 2004210544 on 14 October 2005. A statement of grounds and particulars was served on 16 January 2006 and the service of evidence in support was completed on 26 October 2007. The service of evidence in answer by Lilly was due on 26 January 2008.
  1. Merial filed a notice of opposition to the patent application 2004210544 on 28 October 2005. A statement of grounds and particulars was served on 30 January 2006 and the service of evidence in support was completed on 2 May 2007. The service of evidence in answer by Lilly was due on 2 August 2007. On 12 September 2007, the Delegate of the Commissioner of Patents made a direction that the time for serving evidence in answer by Lilly will expire three months after the date Ancare completes service of their evidence in support, which was 26 January 2008.
  1. On 6 December 2007, Merial advised the Commissioner that they had acquired Ancare and proposed that in respect of patent applications 2002332975, 2004210542 and 2004210544 (hereinafter referred to “Patent Applications”), Ancare’s statement of grounds and particulars and evidence in support be incorporated into Merial’s case, and Ancare will subsequently withdraw its opposition. Merial’s request was given effect by the Delegate of the Commissioner of  Patents by way of a direction issued on 29 February 2008. Subsequently, Ancare withdrew their opposition to the patent applications in March 2008.
  1. Lilly filed a number of applications for extension of time to serve evidence in answer in respect of the patent applications which were granted. On 26 November 2009, Lilly filed further identical applications for extension of time from 26 November 2009 until 26 December 2009 in respect of each of the patent applications. They were opposed by Merial.
  1. On 9 December 2009, the Patent Office advised the parties that the Commissioner did not see a need for the matter to be heard orally and proposed to deal with the objections on the basis of written submissions. Consequently, the parties were given until 21 December 2009 to provide any written submissions to the Commissioner and to the other side at the same time. The parties were also given until 23 December 2009 to provide any response to the submissions of the other side to the Commissioner and to the other side at the same time.
  1. Lilly and Merial filed their written submissions on 21 December 2009 and the response to the submissions of the other side on 23 December 2009 via their patent attorneys Spruson & Ferguson, Sydney and F B Rice & Co, Melbourne respectively.

APPLICATIONS FOR EXTENSION OF TIME

14.Each application for extension of time requests an extension of time of one month from 26 November 2009 to 26 December 2009 in which to serve evidence in answer. The circumstances in which, and the grounds upon which, the applications for extension of time are made are stated to be as follows:

“Since the last application for extension of time, regular communications have been held with the experts, including phone conversations of 27 and 28 October, and 8 and 23 November, and e-mail communications of 27 and 30 October and 6, 9, 11, 12, 18, 23, 24 and 26 November. In view of these communications, and subsequent drafts of declarations in the experts’ names, further amendments are being made to the draft declarations, and will be forwarded to the experts for further review and comment in the very near future. It is anticipated that the Evidence-In-Answer will be completed and served within the extension period sought, although no definite assurances can be provided in this regard.

We submit that a serious defence of the application is being pursued, and that more time is required to allow the experts to review and amend the draft declarations, if necessary, and for our Australian attorneys to have further discussions, if required, with the two experts, and for the draft declarations to be finalised, executed and served on the Opponent.”

15.Each party filed almost identical submissions in respect of the patent applications. I will discuss these submissions as necessary in the reasons for my decision.

DECISION

Law relating to extension of time

  1. The time for serving evidence in answer can be extended under subregulation 5.10(2) of the Patents Regulation 1991 which provides that:

(2)The Commissioner may extend the time within which the party may take a step prescribed in this Chapter (not being a step that is taken under regulation 5.3 or 5.3AA, paragraph 5.4(a), subparagraph 5.8(1)(a)(i) or regulation 5.9A):

(a) on the application of a party in the approved form;  and

(b)on such reasonable terms (if any) as the Commissioner specifies; and

(b)after the party has served a copy of the application on the other party.

The above provision must be read in conjunction with subregulation 5.10(5) which provides that:

(5)The Commissioner must not give a direction under subregulation (1) or grant an application under subregulation (2) or (4) unless the Commissioner:

(a)if he or she proposes to grant an application by a party -  is reasonably satisfied that the other party has been notified of the application;  and

(b)if he or she proposes to act on his or her own motion - ensures that the parties are notified of the proposed action;  and

(c)in either case:

(i)gives the parties a reasonable opportunity to make representations concerning the application or proposed action;  and

(ii)is reasonably satisfied that a direction, an extension of time or the serving of evidence is appropriate in all the circumstances.

  1. Consequently, it is a prerequisite to any decision that the Commissioner must ensure that the other party has been notified, and that both parties have had the opportunity to make representations.  In the present case the other party has been notified, and all parties have been given the opportunity to make representations.
  1. An extension can only be granted if the Commissioner is reasonably satisfied that it is appropriate.  In exercising this discretion, I am guided by the decisions of Burchett J in Ferocem Pty Ltd v Commissioner of Patents (1994) AIPC 91-057; 28 IPR 243, Sackville J in A Goninan & Co Ltd v Commissioner of Patents (1997) AIPC 91-330; 38 IPR 213 and Goldberg J in National Starch & Chemical Co v Commissioner of Patents (2001) AIPC 91-697, 50 IPR 398. These decisions establish that:

(a)The power is discretionary: Regulation 5.10 confers a broad discretion, which cannot be reduced to imperative compliance with particular requirements.  It is necessary to give genuine and proper consideration to all relevant considerations. (Ferocem at AIPC 38,208; IPR 247-8, Goninan at AIPC 39,434; IPR 220)

(b)Explanation of delay: The reasons why the evidence was not served earlier are a relevant consideration, but a satisfactory explanation is not a mandatory requirement. (Ferocem at AIPC 38,207-8; IPR 247)

(c)The public interest: The public interest in determining a serious opposition on its merits is a relevant consideration. (Goninan at AIPC 39, 435-6; IPR 222)

*In order to do this, it is necessary for the Commissioner to form a view as to the nature of the evidence that it is sought to adduce, and the significance of that evidence for the opposition proceedings. (Goninan at AIPC 39,438; IPR 225-6)

*The significance of the evidence is assessed having regard to any relevant material available, not just the evidence itself.  (National Starch at [33])

*The public interest is not protected merely because some evidence has already been served.  (Goninan at AIPC 39,438; IPR 225)

(d)The interests of the party seeking the exercise of discretion: The interests of the party seeking the exercise of discretion are a relevant consideration. (Ferocem at AIPC 38,208; IPR 247)

(e)The interests of other parties: It is relevant to consider the disadvantage to the other party of delays in determining the opposition, and the effect of delays on the efficient and orderly administration of the Patent Office.  (Ferocem at AIPC 38,208; IPR 247, Goninan at AIPC 39, 436; IPR 222).

Explanation of the delay

  1. Merial criticized Lilly’s applications for extensions of time stating that these applications do not provide an acceptable justification for the delay in preparing evidence in answer in these opposition proceedings and even foreshadow that more time beyond 26 December 2009 will be required to complete the evidence.  Merial argued that a mere description of regular communication between Lilly and the expert witnesses is not a satisfactory explanation for the delay, and that Lilly have not submitted any evidence in the 33 months since Merial completed their evidence in support in relation to the opposition to patent application 2002332975 and 31 months in relation to the oppositions to patent applications 2004210542 and 2004210544. In Merial’s view, Lilly have had more than ample time to prepare and file their evidence in answer.
  1. On the other hand, Lilly submitted that while they may have already been allowed a period of up to 33 months in which to serve evidence in answer, this period does not take into account the events during the earlier period, such as incorporation of Ancare’s evidence in support into Merial’s evidence and a direction by the delegate in respect of the filing of the evidence in answer. It was indicated that Lilly have been aware of all the documents comprising the evidence in support for less than 26 months, and have only been aware of what exactly forms Merial’s evidence for less than 24 months. Lilly also submitted that the evidence in support served by Merial (including that served by Ancare) is voluminous and complex. Furthermore, significant amendments were proposed to the patent applications addressing major concerns raised in Merial’s evidence in support and these amendments were allowed in December 2008/January 2009. It was also stated that there was a change of personnel handling these matters at Lilly and that Lilly have been diligent in preparing the evidence in answer, and the declarations by the two experts are nearing completion.
  1. By their own admission, Lilly have had close to 24 months for preparing their evidence in answer. I appreciate that the preparation of evidence in answer can be time consuming especially when the evidence in support is complex. However, in the absence of any specific details from Lilly except the dates on which they communicated with their expert witnesses, I cannot conclude that the time taken so far by Lilly in preparing their evidence in answer is reasonable and that they have been diligent. In my view, a period of 24 months should have been more than adequate in preparing the evidence in answer in spite of Lilly proposing amendments to the patent applications and having a change of personnel.
  1. I consider that Lilly have failed to provide a satisfactory explanation of the delay. However, it is noteworthy here that while a satisfactory explanation of delay is a relevant consideration, it is not a mandatory requirement for granting an extension of time.

The public interest

  1. The public interest in opposition proceedings calls for a balance between said opposition being dealt with on its merits and expeditious processing. In order to determine the extent to which a correct and just determination of the opposition on its merits can be made, I need to assess the nature and the significance of the evidence that will be served.
  1. Lilly submitted that they are relying on two expert witnesses to defend their patent applications and substantial comments have been received from the two experts in relation to the patent applications and incorporated into draft declarations. It was also indicated that the patent applications relate to improved devices for dosing livestock to treat and/or prevent infestations of intestinal parasites, which can result in significant livestock mortality or failure to thrive, resulting in significant economic losses to farmers, which is of significant economic and cultural importance to Australia.  Lilly, however, did not provide any comments about the nature and significance of the evidence to be served which is a relevant consideration for the determination of public interest.   
  1. Merial did not comment on the nature and significance of the evidence in answer to be served, but instead argued that public interest will not be served by merely allowing a protraction to the opposition proceedings. They indicated that almost five years have passed since the patent applications were accepted and the delay by Lilly in serving their evidence in answer is contrary to the public interest that the opposition provide a swift and economical process.
  1. Lilly have already filed a part of its evidence in answer comprising of a statutory declaration by an expert witness in relation to each of the patent applications on 7 January 2010. Following a brief review, I note that the declaration provides significant comments in respect to exhibits raised in Merial’s evidence in support. Lilly have not indicated the nature of evidence that will be given by the other expert witness. Nevertheless, in my opinion the evidence is significant in that without it there will be no serious defence of the patent applications. Although a considerable period has passed since the evidence in support was completed by Merial, in my view the public interest in the present case overrides the consideration that the opposition be swift. Therefore, I conclude that the public interest favours extensions of time.

The interests of the party seeking the exercise of discretion

  1. Lilly submitted that their interests lie in defending the three opposed applications and to see that they proceed to grant as swiftly as possible without, however, compromising on the nature of those defences. Lilly further submitted that they would suffer significant disadvantage from effectively being shut out of serving evidence in answer if the applications for extension of time were refused. Merial, however, put the view that Lilly’s intention appears to be to drag out the progress of the oppositions.
  1. I consider that Lilly’s interests in these matters will be best served if they are able to defend their patent applications. At this juncture, Lilly have filed part evidence in answer and their cases will be clearly prejudiced if I were to refuse the extensions and thus preclude them from serving evidence from their other expert witness. I conclude that Lilly’s interests lie in obtaining the extensions of time.

The interests of the party opposing the exercise of discretion

  1. Merial submitted that it in their interest to have the matter heard and a decision reached as soon as possible to provide commercial certainty. Merial further stated that the delay of almost five years since the advertisement of acceptance of the applications is clearly contrary to the premise of opposition proceedings as being swift and economical means of settling disputes that would otherwise be dealt with in post-grant litigation. In response, Lilly submitted that they appreciate Merial’s view on this matter, however, Merial’s interests will not be unduly compromised by the allowance of the currently sought extensions of time.
  1. In my view, any unnecessary protraction of the opposition proceedings is to Merial’s disadvantage and their interests clearly lie in a timely determination of the validity or otherwise of the patent applications and a clear indication of the monopoly grounds that they can not encroach upon.  Therefore, I conclude that Merial’s interests lie in disallowing the extensions of time.

Interests of the Patent Office

  1. The interests of the Patent Office, although of no major significance, are in having the opposition matters resolved in a timely manner without undue delay because such delays lead to uncertainty in ownership of rights and loss of efficiency at the Patent Office. Considering that significant time has already elapsed since the evidence in support was completed, the interests of the Patent Office favour disallowing further extensions of time.

Balance of Considerations

  1. The interests of Lilly and Merial are largely offsetting. Public interest favours extension of time. Had I been provided a satisfactory explanation of the delay, then the balance of consideration would have clearly favoured the extensions. However, the absence of satisfactory explanation of the delay leaves the considerations finely balanced. Overall, I am of the view that public interest marginally outweighs the other considerations.

CONCLUSION

  1. I conclude that it is appropriate to grant extensions in all the circumstances.
  1. I grant the extensions of time to serve evidence in answer in respect of each of the patent applications until 26 December 2009.

COSTS

  1. Ordinarily in proceedings such as these, costs follow the event.  In the present case, Lilly have not provided a satisfactory explanation of the delay and have not demonstrated that they have been diligent in preparing their evidence in answer. While Lilly have been granted the extensions they sought, they should not be rewarded by an award of costs in this situation. Furthermore, I consider that Merial is not entitled to an award of costs as they have been unsuccessful in opposing the extensions.
  1. Therefore, I make no award of costs.

Dr S. K. Aggarwal
Delegate of the Commissioner of Patents

03 February 2010

Patent attorneys for Eli  Patent attorneys for Lilly  : Spruson & Ferguson, Sydney

Patent attorneys for Merial                   : F B Rice & Co, Melbourne

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Ferocem Pty Ltd v Commissioner of Patents [1994] FCA 981
Ferocem Pty Ltd v Commissioner of Patents [1994] FCA 981