HASSLE AB

[1999] APO 30

OFFICIAL NOTICE

DECISION OF A DEPUTY COMMISSIONER OF PATENTS

Patent Nos.:          529654 and 529116 in the name of Hassle A.B.

Titles:          Pyridyl Methyl Sulfinyl Substituted Benzimidazoles & 2,6-Dimethyl-4-(2,3-Dichlorophenyl)-1,4-Dihydropyridine-3,5-Dicarboxylic Acid-3-Methylester-5-Ethylester having Hypotensive Properties

Action: Requests for extension of term under section 70

Decision:          Issued            .

Abstract

The applications for extension of term should be treated as purported applications. The patents fall within the class of "standard patents granted for a term of 16 years and whose term at the time of the grant was due to end before 1 July 1995". Consequently they fall within the class of patents excluded under Part 8 of Schedule 1 of the Intellectual Property Laws Amendment Act 1998.  Therefore the extension of term provisions of the Patents Act 1990 do not apply to patents 529654 and 529116 and no further action will be taken in relation to these patents.  The Commissioner will not publish the applications for extension of term under section 72.

PATENTS ACT 1990

DECISION OF A DEPUTY COMMISSIONER OF PATENTS

Re:Patent Nos.529654 and 529116 both by Hassle A.B. and requests for extension of term under section 70 of the Patents Act 1990

BACKGROUND

This matter concerns requests by Hassle A.B. (Hassle) for the extension of term under section 70 of the Patents Act 1990 (the Act) of patent numbers 529654 and 529116. The two requests were both filed on 19 March 1999 and each indicated the date of the first regulatory approval. They were each accompanied by documentation to show that the pharmaceutical substances were included in the Australian Register of Therapeutic Goods (ARTG) and the relevant fee.

Hassle was advised by letters dated 7 April 1999 that the extension of term scheme did not apply to these patents and consequently the Patent Office would not process the applications further nor advertise the applications.  On 7 April 1999 Hassle, via their patent attorneys, advised that they wished to be heard on the matter.

The hearing was set down for 4 May 1999 in Canberra and Hassle was represented by Mr Malcolm Royal, patent attorney of Phillips, Ormonde and Fitzpatrick.

Mr Royal was advised by letter dated 8 April 1999 that the hearing officer would be Mr Dave Herald, Deputy Commissioner of Patents.  At the hearing, following submissions from Mr Royal, Mr Herald disqualified himself and I conducted the hearing.

HISTORY OF THE PATENTS

529654

This patent includes the pharmaceutical substance Omeprazole, otherwise known as Losec.  The patent application was filed on 11 April 1979 and the patent was sealed on 16 December 1983 for a term of 16 years.  The term was therefore due to expire on 11 April 1995.  On 19 May 1993 Hassle sought an extension of term of the patent under the extension of term scheme then available under the Act (the old scheme).  An extension of 4 years was granted on 11 April 1994 and the term of the patent was thereby extended to 11 April 1999.

The Register of Patents shows that Astra Pharmaceuticals (Pty) Limited was registered as an exclusive licensee of the patent on 11 December 1995.

Mr Royal described Losec as a pioneering invention that had revolutionised disease treatment.  It is the largest selling prescription pharmaceutical in the world.  Income from the sale of the drug in Australia is worth many millions of dollars each year.

529116

This patent includes the pharmaceutical substance Felodipine, otherwise known as Plendil.  The patent application was filed on 22 June 1979 and the patent was sealed on 28 November 1983 for a term of 16 years.  The term was therefore due to expire on 22 June 1995.  On 7 December 1993 Hassle sought an extension of term of the patent under the old scheme.  An extension of 4 years was granted on 8 February 1995 and the term of the patent was thereby extended to 22 June 1999.

Mr Royal described Plendil as one of the most effective drugs in cardiovascular treatment.

THE LEGISLATION

The provisions of the extension of term scheme for pharmaceutical substances are contained in Chapter 6 Division 2 of the Act. Section 70 provides that a patentee may apply to the Commissioner for an extension of term of a patent if certain specified requirements are met and section 71 lists certain requirements in relation to form and timing of the application. Section 72 requires the Commissioner to publish the application. Under section 74 the Commissioner must either accept or refuse the application depending on whether the Commissioner is satisfied that the requirements of sections 70 and 71 are satisfied. There are also other provisions providing for opposition to the grant, the grant itself, notification of the application and the rights of the patentee.

The extension of term scheme commenced on 27 January 1999.  [Hereinafter I shall refer to this scheme as “the current scheme”].  The amending legislation is in Schedule 1 of the Intellectual Property Laws Amendment Act 1998 (the amending Act).  Parts 3 and 4 of that Schedule incorporate the substantive provisions, with parts 1, 2 and 5 to 7 incorporating some consequential amendments. Part 8 sets out the application of those amendments, and is of fundamental importance to the present matter. That part provides:

8 Application of amendments
The amendments made by this schedule apply to:

(a)    Standard patents granted on or after the commencement of this item; and

(b)   Standard patents granted before the commencement of this item (other than standard patents granted for a term of 16 years and whose term at the time of the grant was due to end before 1 July 1995).

SUBMISSIONS

Mr Royal commenced by requesting that the original hearing officer, Mr Dave Herald, disqualify himself because of a perceived conflict of interest.  The hearing was therefore adjourned for a short time after which Mr Herald disqualified himself from the hearing.  It was proposed that I should conduct the hearing and Mr Royal raised no objection.

Mr Royal’s submissions were directed to two main issues. He considered that the raising of the objections to the requests for extensions of term in the letters dated 7 April 1999 were not within the scheme of the Act. He further submitted that the patents in question were not prohibited by Part 8 of Schedule 1 of the amending Act. Consequently Mr Royal considered that it was proper to direct that the requests for extension of term be considered and published.
In Mr Royal’s submission, it was inappropriate for the Patent Office to refuse to treat the requests for extension of term as applications under section 70. The applications were in the proper form, had the proper fees paid and in all respects met the formality requirements of applications. Therefore they should be considered as applications and dealt with under the provisions of the Act. He made an analogy with the situation where there is an imperfection in an application. This is normally dealt with by putting the application on record and properly considering it. He put to me that the proper course to follow was to consider that the applications had been made and then to consider them under sections 70 and 71 of the Act. The applications should therefore be advertised under section 72 and considered under section 74, which requires a consideration under sections 70 and 71.

Mr Royal was concerned that he was being heard in relation to applications which did not exist.  Consequently there were no provisions for appeal from this decision.  He pointed out that appeal to the AAT was restricted by section 224 of the Act to certain specific provisions, one of which was sub-section 74(3).  The legislature, in specifically providing for appeal to the AAT against a decision under sub-section 74(3), was therefore indicating that the extension of term provisions were a matter for the AAT.  Mr Royal therefore considered that review under the Administrative Decisions (Judicial Review) Act 1977 (AD(JR) Act) was inappropriate.

Mr Royal then made submissions to explain why, in his view, the patents in question did not fall within the exclusion in Part 8(b) of Schedule 1 of the amending legislation. Both patents were granted before the commencement of the amending legislation. He pointed out that to be excluded there were 2 requirements. The standard patent had to be granted for a term of 16 years and the term was due to end before 1 July 1995.  If a patent was not granted for a term of 16 years, then it was not excluded.

Patents 529654 and 529116 were both granted under the Patents Act 1952 (the old Act).  Sub-section 68(1) of that Act reads:

68. (1) Subject to this Act, the term of a standard patent shall be 16 years, reckoned from the date of the patent.

Mr Royal pointed out that, while the term of a patent might be 16 years, the actual term was "Subject to this Act".  He referred me to various parts of the old Act where the term of the patent could vary from 16 years, depending on the operations of various parts of that Act.  For example, section 94 of the old Act provided for an extension of the term for a further 5 or 10 years under certain circumstances.  Furthermore he pointed out that the old Act used the word "term" for periods other than 16 years.  For example section 68A required that the term of a petty patent be 6 years.  Therefore, in his submission, when the phrase "term of the patent" was used in the old Act it was "subject to the Act".

Mr Royal referred me to the Acts Interpretation Act 1901. Section 15AA requires that, in the interpretation of a provision of an Act, regard must be had to the purpose or object of the Act and the construction should be given which promotes that purpose. Mr Royal submitted that the purpose of the amending Act was twofold. It provided for a revised regulatory regime for patent attorneys and it provided an effective 15 year term of patents related to pharmaceutical substances. It was not the stated purpose of the amending Act to exclude patents. While section 15AB of the Acts Interpretation Act 1901 provides for the use of extrinsic material in the interpretation of a provision of an Act, it was only relevant where the provision was ambiguous or obscure or where it led to an absurd or unreasonable result.  In Mr Royal's submission, this was not the situation with the amending Act.

Mr Royal then pointed out that the two patents in question were not granted for a term of 16 years, but in fact they each enjoyed a term of 20 years, having taken advantage of the extension of term provisions available under the old scheme. In his submission the qualification "at the time of grant" in Part 8 of the amending legislation applied only to the second leg of the requirement, that is, to those patents due to end before 1 July 1995. The qualification did not apply to the phrase "granted for a term of 16 years" in the first leg. Furthermore the fact that the patents had 20 year terms was proof in itself that they were not granted for terms of 16 years. Therefore, he submitted, using statutory interpretation the plain and ordinary interpretation of Part 8 did not prohibit the applications for extension of term to be made.

Consequently, for all the above reasons, Mr Royal submitted that it was proper for me to direct that the applications be considered as applications and published.  He therefore requested a direction that the applications be advertised and then examined in the proper process provided for by the Act.

At the end of the hearing I asked Mr Royal about two notices that Hassle had put into the Australian Official Journal of Patents (AOJP) on 15 April 1999 which advised that Hassle had made application to extend the term of patents 529654 and 529116.  These notices had been submitted for publication before Hassle received the Patent Office notification that the extension of term scheme did not apply to these patents.  Mr Royal submitted that, in placing the notices, Hassle had acted responsibly in putting competitors on notice so that they did not infringe the patents if the extension of term process was delayed.  Section 79 of the Act allows a patentee to sue retrospectively for infringement occurring after the patent expires and before it is extended.  Patent 529654 had already expired and patent 529116 was close to expiry.

DECISION

I shall first consider whether the raising of objections to the requests for extension of term in the letters dated 7 April 1999 was within the scheme of the Act. I am inclined to agree with Mr Royal that the two requests should be treated as purported applications under section 70. If, as is the case for these two requests, the applications meet the minimum administrative requirements for applications for extension of term, this should be sufficient to initiate the administrative part of the process. This is in accordance with the administrative handling in general of requests for action by the Commissioner. It is also, as Mr Royal pointed out, in accordance with international treaty requirements for the handling of applications for patent matters.

If the requests for extension of term are treated as purported applications, then the question arises as to what should be the next step in processing these applications. Mr Royal submitted that the Commissioner should then proceed to advertise the applications under section 72 and then to consider them under sections 70 and 71. However I believe that the Commissioner should consider a preliminary question before proceeding to advertisement, and that is to determine whether the extension of term provisions actually apply in any particular case. This involves the determination in each case of whether an application falls within the class of application for which extension of term is available, as set out in Part 8 of the amending Act. If an application does not fall within the requirements set out in Part 8, then there is no point in considering it further. The Act does not apply to that application and consequently no further action can be taken on it.
Mr Royal was of the view that the determination of whether the extension of term provisions applied to a particular application could only be made by considering whether the requirements of sections 70 and 71 were satisfied. I respectfully disagree with this view. It is possible that an application could satisfy all the requirements of sections 70 and 71 and yet not fall within the class of applications for which the extension of term provisions are available. I believe that following Mr Royal’s reasoning would mean that a determination of whether an application was excluded from the provisions would never be made. Clearly this cannot be, since Part 8 of the amending Act defines those patents whose terms can be extended.

The question then arises as to when in the process the Commissioner should decide if extension of term is available to a particular patent. I have said that I believe this should be a preliminary question, and hence considered before any other actions are taken under the legislation. It makes no sense to advertise the application and consider it under sections 70 and 71, and then to tell the patentee that the patent is one to which the provisions do not apply. This may result in the patentee gaining the advantage of a de facto extension of term in circumstances where the patent has expired, but could also give the patentee a false sense of security that the extension would be granted.  I also believe that the public interest requires the Commissioner to determine whether the patent can be considered under the Act at the earliest possible stage to avoid uncertainty in the marketplace.  This early consideration is not inconsistent with other issues on which the Commissioner has previously made a preliminary determination.  For example the issue of locus in section 59(1) of the old Act was frequently dealt with before the main opposition in order to determine whether the opposition could proceed.

Mr Royal was also concerned that there was no avenue of appeal against a preliminary finding that the extension of term provisions did not apply to a patent. A decision by the Commissioner that certain provisions of the Act do not apply in a particular case is a question of law, and as such a review on the ground that it involves an error of law is always available under the AD(JR) Act. In relation to whether an appeal lies to the AAT, I believe there is no right of appeal to the AAT in this case because I am not refusing the applications under section 74(3). A refusal under section 74(3) is limited to the situation where the Commissioner is not satisfied that the requirements of sections 70 and 71 are satisfied. In this case the decision is whether the extension of term provisions apply at all. The point in the process at which this decision is made is irrelevant to whether appeal can be made to the AAT. It is not a decision to refuse under section 74(3) and hence the sole avenue for appeal is, I believe, under the AD(JR) Act.

I must now consider whether the two patents in question properly fall within the class of patents whose term can be extended under the Act. This involves determining whether they fall within the exclusion set out in Part 8(b) of the amending Act. There is no dispute that both patents were granted before the commencement of that item. Nor is there any dispute that, at the time of grant of each patent, the term was due to end before 1 July 1995. I agree with Mr Royal that, for the exclusion in Part 8(b) to operate, both legs of the test must apply. That is the standard patent must have been granted for a term of 16 years and the term at the time of grant was due to end before 1 July 1995.  The question to be answered is therefore whether the patents were granted for a term of 16 years.

I believe I should do as Mr Royal suggested and consider the plain and ordinary meaning of the words "standard patents granted for a term of 16 years" in Part 8. The term "granted" is used three times in Part 8. In sub-section (a) and in the first occurrence in sub-section (b) it is used to identify a particular point in time. I see no reason to accord the term a different meaning in the phrase "granted for a term of 16 years". In coming to this view I am applying the principle of statutory interpretation which requires that, where a word is used consistently in legislation, it should be given the same meaning consistently. This principle was enunciated by Hodges J in Craig, Williamson Pty Ltd v Barrowcliff [1915] VLR 450 at 452:

I think it is a fundamental rule of construction that any document should be construed as far as possible so as to give the same meaning to the same words wherever those words occur in that document, and that that applies especially to an Act of Parliament, and with especial force to words contained in the same section of an Act.  There ought to be very strong reasons present before the Court holds that words in one part of a section have a different meaning from the same words appearing in another part of the same section.

Therefore I believe that the term "granted" at the second occurrence in sub-section (b) must be interpreted as meaning at the time of grant.  Consequently there was no reason for the drafter of the legislation to add the qualification "at the time of grant" in the first leg of the requirement.

In my opinion the words "standard patents granted for a term of 16 years" can have only one meaning, and that is that the term of the patent at the time of grant was 16 years. If this is the case, then patents 529654 and 529116, which were both granted for terms of 16 years, fall within the exclusion of Part 8(b) and consequently the extension of term provisions of the Act are not available to them. There is no dispute that the two patents each in fact enjoyed a term of 20 years. However this was as a result of extensions of term being granted under provisions which subsequently became available. The patents are still "standard patents granted for a term of 16 years" and this status remains irrespective of subsequent events. By analogy, a patent applicant always remains within the class of patent applicants even after the application has proceeded to grant (Husky Injection Molding Systems Ltd v Commissioner of Patents (1991) 98 ALR 133).

There is one other point I will make in relation to the class of patents whose term can be extended under the Act.  To do this I need to briefly consider the history of the extension of term provisions.  The Act as enacted in 1990 provided for a 16 year maximum term for patents and included a mechanism to extend that term for a fixed period of 4 years for patents for pharmaceutical substances.  The Patents (World Trade Organization Amendments) Act 1994 (WTO Act) changed the term of patents whose 16-year term had not expired before 1 July 1995 from 16 to 20 years. At the same time the extension of term provisions for patents for pharmaceutical substances was repealed. It is this date of 1 July 1995 which has been carried through into Part 8(b) of Schedule 1 of the amending Act. The class of patents covered by the second leg of the exclusion in that part are those "whose term at the time of grant was due to end before 1 July 1995". Applying a purposive construction, I consider that this class was intended to cover those patents having a term of 16 years with the possibility of extension to 20 years under the extension of term provisions available prior to 1 July 1995. It does not include those patents whose term was changed automatically by the WTO Act. In other words, Part 8(b) of Schedule 1 of the amending Act was intended to exclude those patents, such as 529654 and 529116, whose terms were extended from 16 to 20 years under the old scheme.

I will now briefly consider Mr Royal's other submissions on this point.  I agree that the purpose of the amending Act was to provide an effective 15 year term for patents related to pharmaceutical substances.  However it does not follow that the purpose was to provide the effective term for all such patents. Clearly this was not the intention otherwise Part 8 would not have been included in the amending Act. In my view the words "other than" in Part 8 clearly mean that some patents are to be excluded.

Mr Royal also cited a number of examples where the term of a standard patent granted under the old Act was other than 16 years.  I do not disagree with his submission that the term of a patent could vary under the old Act.  However, as I have indicated above, I believe the question to be answered is "What was the term of the patents in question at the time of grant?"  Any subsequent changes to this term as permitted by the legislation are irrelevant to this question.  Mr Royal submitted that the words "Subject to this Act" at the start of sub-section 68(1) of the old Act should be read as qualifying the actual term.  I agree that this could be the case, but I consider the words mean that the original term of the standard patent was to be 16 years, but that subsequent actions under the old Act could vary that term.

CONDUCT OF THE HEARING

One final point I will consider is the issue of the conduct of the hearing.  Mr Royal properly raised his concerns about the potential conflict of interest in relation to the original hearing officer, Mr Herald.  However I am concerned that Mr Royal chose to raise this matter at the start of the hearing when he was aware for some weeks prior to the hearing that Mr Herald was to be the hearing officer.  He therefore had ample opportunity to air his concerns prior to the hearing.  While there is no bar to such matters being raised so late in the proceedings, I do not consider it good practice.  I believe that it is highly desirable for hearing officers to be given sufficient time to acquaint themselves with the details of a case prior to the hearing to maximise the possibility of a fair and just outcome.  One possibility in the present case would have been to adjourn the hearing to a later date.  Given the significance of the two patents in question, and the undesirability of having a de facto extension of term, I do not believe that lengthy adjournment was a possibility in this case.

IMPORTANCE OF DECISION

I am aware of the importance of these matters not only to the patentee, but also to the generic pharmaceutical manufacturers in Australia and to the general public who use prescription medicines.  Cursory inspection of the files indicates that there is significant third party interest in the two patents.  Mr Royal explained the significance of the pharmaceuticals and their worth in financial terms to the patentee.  Each patent has enjoyed a 20 year term during which the patentee has had the exclusive right to market Losec and Plendil.  If the terms of these patents can be further extended under the current scheme, then the patentee will have an ongoing right to exploit the market and to exclude others.  If no extension is available to these patents, generic pharmaceutical manufacturers will be entitled to enter the market, subject of course to obtaining the necessary regulatory approval.  Generic products generally result in a price reduction for pharmaceuticals and consequent cost reduction to the Government in the operation of the Pharmaceutical Benefits Scheme.

I also believe it is very important that the issues raised at this hearing be speedily determined in order to provide certainty in the marketplace.  If there is uncertainty as to whether the terms of the two patents will be extended under the current scheme, generic pharmaceutical manufacturers may not be prepared to risk entering the market.  The patentee may then gain a de facto extension of term pending final resolution of the issues.  In this regard I am concerned that the placing by Hassle of the notices in the AOJP may also have the effect of a de facto extension.  Mr Royal indicated that the notices were to serve as a warning to competitors, although he considered this a responsible action.

CONCLUSION

I have found that the applications for extension of term of patents 529654 and 529116 should be treated as purported applications. However, since the patents fall with the class of patents excluded by Part 8(b) of Schedule 1 of the amending Act, the extension of term provisions of the Act do not apply to them. Consequently no further action can be taken in relation to these patents.

My decision means that the Commissioner will not publish the applications under section 72.  However, given the notices placed in the AOJP by Hassle, I believe it is in the public interest to insert a notice in the AOJP to draw attention to this decision.

Janet Werner
Deputy Commissioner of Patents

Patent attorneys for the patentee:  Phillips Ormonde & Fitzpatrick, Melbourne