Eli Lilly and Company v the Rockefeller University

[2000] APO 17

OFFICIAL NOTICE

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Application  :          Nos. 695934 in the name of ELI LILLY AND COMPANY

Title:          Methods for Treating Diabetes

Action:          Application by Eli Lilly and Company for an extension of time under Regulation 5.10(2) to serve evidence-in-answer and objection thereto by The Rockefeller University.

Decision:          Issued  .

AbstractThe applicant gave, as reasons for the delay in serving evidence, their wish to not jeopardise settlement negotiations with a third party, who is the exclusive licensee of the opponent.  No evidence was provided to establish that the third party was acting on behalf of the opponent at any time.  It was held that the reasons for the delay provided did not of themselves justify an extension of time.

Though the applicant has not made out a proper case justifying the extension, an extension of time is warranted, as the applicant would be unjustly shut out if the extension was not allowed.  Though Rockefeller was concerned that the opposition should proceed in an orderly manner and not be unduly protracted, it was found that allowance of the extension would not impede the expeditious disposal of the opposition as a whole. 

It was also found that the evidence to be served is likely to have an important influence on the outcome of the case.  The interests of the applicant and the public both weigh heavily towards the grant of the extension, and the extension is appropriate in all the circumstances.

The extension of time to serve evidence in answer was granted.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Patent Application No. 695934 by Eli Lilly and Company and opposition under Section 59 of the Patents Act 1990 by The Rockefeller University for an extension of time under Regulation 5.10(2) in which to serve evidence in answer.

BACKGROUND

Patent application 695934 in the name of Eli Lilly and Company (hereinafter referred to as Lilly) was filed on 26 June 1996 as PCT/US96/10983.  The application was advertised accepted on 27 August 1998.  A notice of opposition to the grant of a patent was filed by The Rockefeller University (hereinafter referred to as Rockefeller) on 27 November 1998.  A statement of ground and particulars was served on 26 February 1999.

The patent application has also been opposed by Amgen Inc. (hereinafter referred to as Amgen).  On 28 April 1999, Rockefeller and Amgen jointly sought a direction from the Commissioner of Patents seeking to cross-rely on each other’s evidence.  Lilly did not oppose this request, and in a letter of 4 May 1999 the Delegate directed that evidence which is served in one opposition is deemed to have been served in the other opposition in respect of application 695934.

Rockefeller’s evidence in support was completed on 24 May 1999.  Under Regulation 5.8(2), evidence in answer was due on 24 August 1999.  On 24 August 1999, Lilly filed an application for an extension of time of three months till 24 November 1999 in which to serve evidence in answer.  The extension of time was granted without objection.  On 24 November 1999, Lilly filed a further application for an extension of time of three months to 24 February 2000 to serve evidence in answer. Rockefeller objected to this extension on 13 December 1999.

The matter came to a hearing in Canberra on 8 February 2000.  Lilly was represented by Ms Shahnaz Irani and Mr John O’Connor, patent attorneys of Spruson & Ferguson, Sydney, and Rockefeller was represented by Mr Martin O’Sullivan and Mr Gary Cox, patent attorneys of Wray & Associates, Perth.  Both parties appeared by telephone.

THE APPLICATION FOR EXTENSION OF TIME

The possible purchase of Lilly’s leptin portfolio by Amgen is the sole reason provided by Lilly in the application for an extension of time.   The application begins by stating that:

“We, Eli Lilly and Company have been engaged in negotiations with Amgen Inc. the second, joint opponent and licensee of IP rights of the Rockefeller University with a view to selling Lilly’s leptin patent portfolio which includes the presently opposed accepted Australian patent application serial No 695934.  The negotiations tentatively begun in May 1999.”

The application then details the progress of the negotiations from May 1999 to November 1999, and ends by stating:

“As is apparent from the above chronology, the current position is that Amgen and Lilly are still negotiating with Amgen having advised that they cannot give Eli Lilly an answer until some time within the first quarter of next year (2000), as Amgen are still requiring further time to determine their interest in the Leptin project and therefore their interest in purchasing Lilly’s leptin patent portfolio.  Accordingly, further time is required in order that Amgen can conduct further considerations regarding the possible purchase of Eli Lilly’s leptin patent portfolio including the present opposed patent application.”

SUBMISSIONS

Written submissions were provided by both parties prior to the hearing, and I will refer to these where appropriate in the body of my decision.

The applicant also referred to a declaration, dated 3 February 2000, by Mr Steven G. Davis, who states as follows:

“2. Since May, 1999, Lilly and Amgen, Inc. (hereinafter ‘Amgen') have been engaged in negotiations directed towards selling Lilly's leptin portfolio of patents and patent applications covering leptin and leptin anologs to Amgen.  As Lilly's Patent Attorney for leptin matters, I am aware of most events which have transpired during-these negotiations.

The most recent contact between Lilly and Amgen regarding this possible sale was the exchange of Voice Mail Messages between Mr. Guy Cipriani and Karol Pessin, Esq. on January 21, 2000.  Mr. Cipriani is from Lilly's Business Development Department and Ms. Pessin is from Amgen's Legal Department.  In his message to Ms. Pessin, Mr. Cipriani inquired whether Amgen was still interested-in purchasing Lilly's Leptin Patent Portfolio.  In her return message to Mr. Cipriani, Ms. Pessin confirmed that Amgen was still interested and stated that she would try to raise the attention of those in her organization who are deciding this issue.”

DECISION

The law on extensions of time under Regulation 5.10

The time for serving evidence in answer to an opposition is three months from the date on which evidence in support is served.  This time may be extended, and regulation 5.10(2) provides that:

(2)       The Commissioner may:
(a)       on the application of a party in the approved form; and
(b)       on such reasonable terms (if any) as the Commissioner specifies;

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 paragraph 5.4(1)(a).

Regulation 5.10(5) provides:

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

(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 further evidence is appropriate in all the circumstances.

A thorough consideration and summary of the law, as it stands, on the extension of time provisions was given by Burchett J in Ferocem Pty Ltd v Commissioner of Patents (1994) 28 IPR 243 and more recently by Sackville J in A Goninan & Co Ltd v Commissioner of Patents (1997) 38 IPR 213. It is clear from these decisions that regulation 5.10 confers a broad discretion, which cannot be reduced to an imperative compliance with particular requirements. On the contrary it is necessary to give proper, genuine and realistic consideration to all relevant aspects of the case. Relevant aspects include:

(a)The provision of an explanation or justification for the delay in completing the evidence in answer

The reasons why the evidence was not served in time are a relevant consideration, but a satisfactory explanation is not a mandatory requirement.

(b)       The public interest

The public interest in determining a serious opposition on its merits is a relevant consideration.  There is also the efficient and orderly administration of matters before the Patent Office to consider.

(c)       The interests of the parties involved in the opposition

Disadvantages to either the applicant or opponent are relevant considerations.

If I am to be reasonably satisfied that an extension of time is appropriate in all the circumstances, then I must take into account all matters relating to the above aspects when deciding the issue.

Application of the law to the facts

(a)       The provision of an explanation or justification for the delay;

Both parties agreed that the onus rests with the party seeking an extension of time to justify the need for the extension with sufficient details of the circumstances and reasons for needing the extension. 

The applicant’s reason for needing the extension primarily relates to their belief that negotiations with Amgen, concerning the selling of Lilly’s leptin patent portfolio, were proceeding well and that Amgen required further time to determine their interest in the leptin portfolio.  The extension of time application provides a brief summary and chronology of the negotiations from 12 May 1999 to 3 November 1999.  Submissions made at the hearing indicate that Lilly was unwilling to file evidence in answer as it felt that this might harm the settlement negotiations.

The applicant submitted that they have:

“…long understood the nexus between the opponents as one in which Amgen Inc performs the business liasing and Rockefeller University is the IP creator.  Eli Lilly was certainly under the impression that by talking with Amgen Inc, then any settlement reached with Amgen Inc would also be a settlement of the opposition by the Rockefeller University, given the joint opponents’ relationship in respect of the leptin subject matter.  In fact, it is fair to say that Eli Lilly would have been shocked to find the opposition by the Rockefeller University continue, once settlement with Amgen Inc was reached.  In effect, Eli Lilly, by so negotiating with Amgen Inc. as is set out in the extension of time application was under the impression that Amgen Inc spoke for both opponents…”.

I note that no evidence has been produced to show that Lilly has been in direct contact with Rockefeller, that Rockefeller are involved in the settlement negotiations, or that the opposition will be withdrawn should Lilly settle with Amgen.

The opponent submitted that the reasons set forth by Lilly do not justify the extension of time sought.  Mr O’Sullivan emphasised that:

“Although Amgen has licenced leptin technology from Rockefeller, Rockefeller is a separate and distinct entity and is involved in its own opposition to Application 695934.  Given that Rockefeller is not involved in the negotiations between Amgen and Lilly we submit that the negotiations provide no justification for the extension of time sought by Lilly in respect of the opposition by Rockefeller.  Any agreement that may be reached between Amgen and Lilly is immaterial to the merit and issues of Rockefeller’s opposition.”

I can certainly appreciate Lilly’s insistence that a strong nexus exists between Amgen and Rockefeller.  The opponents have had, for at least several years, a commercial relationship based around the leptin technology.  From comments made at the hearing, I would characterise this relationship as especially strong, as Amgen are the exclusive licensee of Rockefeller.  The request by both opponents to bind their evidence together, along with the manner in which they have conducted their respective oppositions, provides further support for Lilly’s view.  From these events, Lilly could quite reasonably assume that Amgen and Rockefeller were not opponents at arms length, and that any settlement with Amgen would result in the subsequent withdrawal by Rockefeller of their opposition.

In hindsight this approach appears to have been misguided.  It would be unlikely that the opponents have identical interests, and I note that no evidence has been provided to establish that at any time Amgen was acting on behalf of Rockefeller.  The very fact that Rockefeller saw fit to launch an opposition in addition to Amgen’s suggests that the opponent’s interests, though similar, are separate.  Mr O’Sullivan even suggested that should a settlement between Lilly and Amgen arise, action might continue between Amgen and Rockefeller.

On the whole I find the reasons for the delay provided by Lilly of themselves do not justify an extension of time.

(b)       The public interest;

The question of the public interest in the granting of extensions of time by the Commissioner has been considered in a number of Federal Court decisions.  From these decisions it is apparent that the public interest is ascertained by weighing often conflicting concerns.  For example the public has an interest in both the need for expeditious disposal of matters in the Patent Office and the concern expressed by Kitto J in Kaiser Aluminium & Chemical V. The Reynolds Metal Company (1969) 120 CLR 136 at 143, viz a serious opposition should be dealt with on its merits rather than be shut out as a consequence of a failure of procedure."  It is also the case that the public has an interest in encouraging innovation and so it follows that the applicant should have the opportunity to defend its patent application on its merits and not have its defence shut out as a consequence of a failure in procedure.

Ms Irani argued that the public interest is best served by granting the extension on the basis that:

“…negotiations are proceeding between the parties, for the simple reason that should settlement be reached by virtue of these negotiations, then the spending of public money in hearing the opposition is avoided and both time and resources of the Patent Office are saved enabling them to be utilised by other parties.”

Mr O’Sullivan countered with the suggestion that this would only be true if a settlement was reached, and that there was no guarantee that such an event will transpire.  Whilst I appreciate Lilly’s view that a negotiated resolution to this opposition is perhaps the most preferable outcome, I do not believe that the public interest is best served by granting extensions on the basis that an applicant believes a settlement is likely when reasonable doubts about the same have been expressed by the opponent.

I am also mindful that no evidence in answer has yet been served within the extended period currently granted for evidence in answer.  There is a public interest in the applicant not being entirely shut out from presenting any of its evidence.  However, in order for me to give proper genuine and realistic consideration to this aspect, it is necessary to consider the nature of the evidence the applicant seeks to adduce and the significance of it for the opposition proceedings.

In the present case, the applicant has not yet provided any evidence in answer and no submissions have been given concerning the nature of the evidence for which the extension has been sought.  The opponent has served a statement of grounds and particulars which makes it clear that a large part of the opponent’s case relates to grounds where establishing the common general knowledge could be very important.  Establishing the common general knowledge in opposition proceedings was discussed in Nalco Chemical Company v W.R. Grace and Co. –Conn. [1998] APO 65 (23 November 1998). I find the delegate’s comments at page 10 particularly apposite:

“These statement are made in the context of arguments about inventive step which depend on evidence of what is the common general knowledge of an ordinary worker in the art in Australia.  Statements about common general knowledge made by one individual are very liable to a criticism that they are unrepresentative.  In this context statements from other independent declarants, ie statements which corroborate those of another witness, as argued by the applicant, are likely to have an important bearing on the outcome of the case.  I do not believe it is necessary for me to go beyond this and to consider directly the applicant's other evidence.  Stephenson's statements go to the important issue of inventive step and are likely to have an important bearing on the outcome of the case whether they stand alone or whether they provide corroboration of the evidence on common general knowledge of another witness.”

I believe that a similar argument applies in this instance, and that evidence as to the common general knowledge is likely to have a significant impact on this case.  Thus I consider that the public interest will be best served if Lilly are afforded an opportunity to serve their evidence in answer.

The opponents have argued that a very important point of the public interest is to ensure that pre-grant oppositions proceed in an orderly manner and are not unduly protracted.  Mr O’Sullivan submitted that:

“This purpose of pre-grant opposition proceedings was recently discussed in Genetics Institute Inc v Kirin-Amgen Inc (1999) FCA 742 where the full bench of the Federal Court of Australia clearly directed that pre-grant opposition proceedings should provide a swift and economical means of settling disputes that would otherwise need to be dealt with by the courts in more expensive and time-consuming post-grant litigation; that is, to decrease the occasion for costly revocation proceedings by ensuring that bad patents do not proceed to grant. This purpose was also reflected in the explanation by the Minister for Science for the Federal Government’s policy decision to retain pre-grant opposition proceedings in Australia, despite the recommendation of the 1984 Industrial Property Advisory Committee…that they be abolished.”

I agree that proceedings should not be unnecessarily protracted, but do not believe that the public interest would be disadvantaged if I grant the extension sought.  In a contemporaneous decision involving the opposition of 695934 by Amgen, I have allowed Lilly an extension of time until 24 February 2000 in which to serve evidence in answer.  Furthermore, the evidentiary stages for both oppositions will need to be completed before the substantive opposition is held.  Even if I was to deny the extension of time, Rockefeller’s opposition could not proceed to a hearing until the evidence in the Amgen case was completed.

Accordingly, I think the public interest in this instance favours the applicant being granted an extension of time to complete evidence in answer.  Whilst I sympathise with Rockefeller’s concerns about the length of time taken so far, I consider that any benefit from the maintenance of an expeditious and orderly opposition process is outweighed by the detriment that would occur by denying Lilly the opportunity to submit their evidence.

(c)       The interests of the parties involved in the opposition;

At the hearing, the opponent argued that there was no guarantee that the applicant, even with this extension, could complete the service of evidence in answer.  Furthermore, Mr O’Sullivan stated that:

“There is no evidence that any action has been taken to prepare evidence in answer since the preliminary steps taken prior to 24 August 1999 and it is only about 3 weeks until the end of the period of the extension sought.  Thus, refusal of the extension sought is unlikely to exclude any evidence that Lilly may otherwise have served if the extension is granted.”

They had not displayed due diligence so far, and any extension, if granted, would unnecessarily protract the proceedings.  Mr O’Sullivan also said that any prejudice to Lilly by not having the extension of time granted essentially derives as a consequence of their own action or lack thereof. 

Whilst this submission has some merit it does not preclude me from considering other relevant factors, such as the prejudice to the applicant, and the public interest.  Indeed, by Mr O’Sullivan’s own submissions at the hearing, I am required to consider all the circumstances relevant to the request for extension. 

The interests of the opponent, Rockefeller, are clearly in not having the opposition proceedings unduly delay the hearing of the substantive opposition.  I am not aware of any other special circumstances that would specifically disadvantage the opponent if the present extension were granted.  Lilly suggested that:

“Assuming that negotiations are still proceeding between Lilly and Amgen with such negotiations being strongly persuasive on Rockefeller University by virtue of the Amgen/Rockefeller nexus, then it would certainly be in Rockefeller University’s interests that the extension be granted to allow time for the negotiations to proceed and for any settlement proposal to be considered.”

This was refuted by Mr O’Sullivan, who reinforced that Rockefeller are in the best position to determine what course of action is in their best interests.  I’m inclined to agree.

Clearly the interests of the applicant, Lilly, are in obtaining the extension in order that it may have the opportunity to serve evidence in answer in the opposition.  The facts of the case clearly indicate that the applicant's case would be seriously prejudiced if I were to refuse the extension and preclude it from adducing evidence to address the matters raised in the evidence in support.

On balance, I think the interests of the applicant in having the opportunity to present relevant evidence that would allow the opposition to be decided on its merits outweigh the interests of the opponent in these circumstances.  Though I am mindful of the opponent’s submission that I should give due consideration to the undue delay of the opposition proceedings, this is just one consideration and is not in my opinion the overriding one in the present case.

CONCLUSION

The applicant has not made out a proper case justifying the extension.  However in this instance I believe an extension of time is warranted, as the applicant would be unjustly shut out if the extension was not allowed.  Though Rockefeller was concerned that the opposition should proceed in an orderly manner and not be unduly protracted, I have found that allowance of the extension will not impede the expeditious disposal of the opposition as a whole. 

I also consider that the evidence to be served is likely to have an important influence on the outcome of the case.  The interests of the applicant and the public both weigh heavily towards the grant of the extension, and I believe that the extension is appropriate in all the circumstances.

Accordingly, I grant the applicant Lilly an extension of time from 24 November 1999 to 24 February 2000 to serve its evidence in answer. 

COSTS

Both parties, irrespective of whether the extension was granted or denied, argued that costs should be awarded in their favour.  The power of the Commissioner to award costs is based on section 210 and regulation 22.8.  The power to award costs is discretionary, so I must take into account all relevant considerations.

In the present case Lilly has succeeded in obtaining an extension of time under regulation 5.10(2).  However, I have found that to a large extent, the success of their application for an extension was based on matters of public interest.  In these circumstances, I consider it appropriate that I make no award of costs.

R.W.J. FINZI

Delegate of the Commissioner of Patents

Patent attorneys for the applicant:  Spruson & Ferguson, Sydney

Patent attorneys for the opponent:  Wray & Associates, Perth