Merck & Co Inc v Arrow Pharmaceuticals Ltd
[2003] FCA 1344
•25 NOVEMBER 2003
FEDERAL COURT OF AUSTRALIA
Merck & Co Inc v Arrow Pharmaceuticals Ltd [2003] FCA 1344
PATENTS – Appeal from decision of a delegate of the Commissioner of Patents - Application for extension of term of patent – Patent for metabolite of prodrug – Prodrug had previously been the subject of a patent, now expired – Whether the applicant is entitled to an extension of its patent over the metabolite on the basis that the prodrug is listed on the Australian Register of Therapeutic Goods (‘ARTG’) and production of the metabolite is the only known therapeutic use of that prodrug – Alternatively, whether the applicant is entitled to an extension of term on the basis that small quantities of the metabolite are contained in its manufactured product, being a product listed on the ARTG.
Patents Act 1990 (Cth) s 70
MERCK & CO INC v ARROW PHARMACEUTICALS LIMITED
N 406 of 2002
WILCOX J
25 NOVEMBER 2003
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 406 of 2002
BETWEEN:
MERCK & CO INC
APPLICANTAND:
ARROW PHARMACEUTICALS LIMITED
RESPONDENTJUDGE:
WILCOX J
DATE OF ORDER:
25 NOVEMBER 2003
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. The appeal be allowed.
2.The decision of the delegate of the Commissioner of Patents to refuse an application for extension of the term of Australian Patent 535944 be set aside and, in lieu thereof, it be ordered that:
(a)the opposition to that extension be dismissed; and
(b)the said application be allowed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 406 of 2002
BETWEEN:
MERCK & CO INC
APPLICANTAND:
ARROW PHARMACEUTICALS LIMITED
RESPONDENT
JUDGE:
WILCOX J
DATE:
25 NOVEMBER 2003
PLACE:
SYDNEY
REASONS FOR JUDGMENT
WILCOX J:
This is an appeal against a decision made by a delegate of the Commissioner of Patents (‘the Commissioner’), refusing a request by the applicant, Merck & Co Inc (‘Merck’), for extension of Australian patent no 535944 (‘the patent’).
The application for extension was made pursuant to s 70 of the Patents Act 1990 (Cth) (‘the Act’). It was opposed, before the delegate, by Arrow Pharmaceuticals Limited (‘Arrow’). When it filed its notice of appeal in this Court, Merck named Arrow as the respondent to the appeal. However, at an early directions hearing, Arrow submitted to the order of the Court and obtained leave to withdraw from the proceeding. As the Commissioner took no part in the proceeding, this meant the appeal was undefended. There were no submissions put to the Court in answer to those advanced by counsel for Merck, Dr J Emmerson QC and Ms K Howard.
The statutory provisions
Section 70 of the Act relevantly provides:
‘(1)The patentee of a standard patent may apply to the Commissioner for an extension of the term of the patent if the requirements set out in subsections (2), (3) and (4) are satisfied.
(2)Either or both of the following conditions must be satisfied:
(a)one or more pharmaceutical substances per se must in substance be disclosed in the complete specification of the patent and in substance fall within the scope of the claim or claims of that specification;
(b)one or more pharmaceutical substances when produced by a process that involves the use of recombinant DNA technology, must in substance be disclosed in the complete specification of the patent and in substance fall within the scope of the claim or claims of that specification.
(3) Both of the following conditions must be satisfied in relation to at least one of those pharmaceutical substances:
(a)goods containing, or consisting of, the substance must be included in the Australian Register of Therapeutic Goods [(ARTG)];
(b)the period beginning on the date of the patent and ending on the first regulatory approval date for the substance must be at least 5 years.
(4) The term of the patent must not have been previously extended under this Division.’
The facts
The delegate set out the background to the extension application in her reasons for decision, at paras 1 - 5, as follows:
‘The matter concerns a substance called Lovastatin, and its ß-hydroxy metabolite. Lovastatin is entered on the Australian Register of Therapeutic Goods (ARTG) and is used for the control of cholesterol levels. Lovastatin is a pro-drug which, when administered, is metabolised into the ß-hydroxy form that is the substance that directly interacts with the physiological system to produce the therapeutic effect. There is no dispute that such a pro-drug falls within the definition of a pharmaceutical substance.
Normally the considerations under s.70 would not involve the consideration of any other application. However the facts of this case require a limited understanding of patent 532626 in the name of Sankyo Company Pty Ltd.
The Sankyo patent (532626) was applied for on 19 Feb 1980, with a priority date of 20 Feb 1979. The term of that patent expired on 19 Feb 2000. The patent claims a compound of a particular formula that Sankyo called Monacolin K – but which is now more generally referred to as Lovastatin. The patent describes obtaining the substance from micro-organisms of the genus Monascus. It does not disclose the ß-hydroxy metabolite of Lovastatin. No extension of term has been sought for this patent.
The current patent was applied for on 3 June 1980, with priority dates of 15 June 1979, 21 Sept 1979, and 23 Jan 1980. It describes substances of several formulae identified as compounds I to IV, which were obtained from the genus Aspergillus. [Both parties agreed that no issue arose from whether the compounds were obtained from Aspergillus or Monascus.] Compound I corresponds to Lovastatin; compound III is the ß-hydroxy metabolite of Lovastatin. The patent indicates that compounds I and III are generated at the same time by the micro-organism, and are separated. There is no teaching that the compounds should be kept together. The specification as filed included 2 broad claims to substances. The first (claim 8) specified compounds I & II. Claim 9 specified compounds III & IV. It is noteworthy that compound I was identical to the compound claimed in the Sankyo patent (i.e. to Lovastatin.) The issues concerning the request for the extension of term revolve around compounds I and III.
In the first examination report of the Merck patent, the examiner objected that claim 8 (and 16) was prior claimed by claim 1 of the Sankyo patent. [The objection extended also to claims 20 and 28, which define a pharmaceutical composition based on the relevant compounds.] No other objection was taken. In response to the examination report, compound I was deleted from claim 8. Claim 16 (which was specific to compound I) was deleted. Similar amendments were made with respect to claims 20 and 28. The patent was subsequently granted on this basis – that is, with the chemical entity Lovastatin having been specifically excised from the claims of the Merck patent.’
Immediately after the expiration of the Sankyo patent, Merck applied to the Therapeutic Goods Administration (‘TGA’) for listing on the ARTG of a product called ‘Mevacor’. Listing occurred some four weeks later.
After the listing of Mevacor on the ARTG, Merck applied for an extension of the term of the patent. Arrow opposed the application. The delegate conducted a hearing on 31 January 2002. On 17 April 2002, she handed down a decision refusing the application. I will refer later to aspects of the delegate’s reasoning.
On 7 May 2002, and pursuant to s 75(4) of the Act, Merck filed an appeal in this Court. It also filed affidavits made by two expert witnesses. These affidavits were read by Dr Emmerson at the hearing. Their contents, of course, were undisputed.
The deponent to the first affidavit is John Oliver Miners, Professor in Clinical Pharmacology and Chief Pharmacologist at the Department of Clinical Pharmacology at Flinders University. Professor Miners has worked in that Department since 1978. His main research interest has been drug and chemical metabolism in humans. Professor Miners explained that drugs and chemicals are metabolised; that is, converted into another chemical species, primarily by enzymes in the liver. He said his research ‘has focussed on understanding the enzymes that metabolise drugs and developing paradigms that can be used by the pharmaceutical industry in developing new drugs’.
Professor Miners deposed that he has been familiar with the drug lovastatin since the late 1980s. It is a cholesterol-lowering agent, this being its only known use.
Professor Miners explained that, in an aqueous environment, lovastatin may be converted to lovastatin beta-hydroxy acid (‘LHA’) and vice versa. Starting with either lovastatin or LHA, ‘in due course a mixture of lovastatin and LHA is produced’. Their proportions will depend on the conditions of the mixture, in particular, its acidity or alkalinity. Conversion to LHA is of crucial importance for the pharmacological action of lovastatin. LHA has potent cholesterol-lowering activity; lovastatin has not.
Professor Miners said lovastatin is administered orally. Up to about 10% of the substance converts into LHA prior to reaching the liver; the balance of the conversion takes place later, primarily in the liver. Professor Miners went on:
‘I note from the Certificate of Analysis that each 20mg tablet of MEVACOR contains 0.2% (i.e. 0.04 mg) of LHA derived from lovastatin. Absorption of drugs is generally consistent across species, and this appears to be the case with lovastatin … LHA is well absorbed (82%-100%) following oral administration of this compound to rats, dogs and monkeys. I would therefore expect that LHA absorption in humans lies within the range observed for other species. Thus, I would expect that most of the 0.04mg of the beta-hydroxy acid present in MEVACOR would be absorbed.
The majority of the pharmacological effect of MEVACOR is attributable to LHA derived from the lovastatin present in MEVACOR. Nevertheless, LHA already present in MEVACOR when taken by the patient will make a contribution to pharmacological effect. The Certificate of Analysis indicates that LHA is present at 0.2% and I am informed by the solicitors for Merck that this proportion may increase to about 0.6% on standing as some lovastatin converts to LHA. The LHA will be absorbed to a greater extent than is lovastatin and it will have a lower clearance by the liver. Therefore, the contribution of LHA to the pharmacological effect will be more than proportionate to its presence, although the contribution will still be small.’
The second affidavit was made by Gerald S Brenner, a pharmaceutical scientist who was previously Senior Director of Pharmaceutical Research and Development at Merck’s American research laboratory. Dr Brenner said the structural chemical formula of lovastatin is illustrated as compound I on page 1A of the specification of the patent. He described this as a ‘closed ring structure’, in contrast to the open ring structure of LHA (compound III on the same page of the specification). He went on:
‘Work carried out by my group under my supervision as part of the characterisation of lovastatin included studies of the stability of both lovastatin and LHA both in solid form and in solution. These studies included measurements of the amounts of lovastatin and LHA present in solution as a function of pH (a measure of acidity and alkalinity). We found that in due course the mixture would form a fixed proportion of lovastatin to LHA which depended on pH. When the pH was altered the relative amounts of lovastatin and LHA would change. At all values of pH characteristic of the human physiological system, if either lovastatin or LHA is introduced into solution, it will in due course turn into a mixture of lovastatin and LHA. Under more extreme pH conditions, it is possible to produce substantially pure lovastatin and substantially pure LHA.
…
Lovastatin was developed as a prodrug. It is converted in the body to LHA. LHA inhibits an enzyme in the cholesterol biosynthetic pathway (HMG-CoA reductase). Animal studies had shown that oral administration of lovastatin was more effective than LHA. The aim was that after oral administration, the drug would be absorbed into the blood circulation and the majority of the drug would be transported to the liver where it would be metabolised to LHA, which would inhibit cholesterol synthesis in the liver.
…
Lovastatin is the primary active ingredient of MEVACOR.’
Dr Brenner referred to a stability study on Mevacor. He said LHA was detected in all of the 86 batches included in the study, the range being from about 0.1% to 0.6%. There is a tendency for the proportion to increase over the two year shelf life.
The delegate’s decision
Merck argued its extension application on two alternative bases: first, that the relevant pharmaceutical substance was lovastatin and, second, that it was LHA.
Merck faced the difficulty, in relation to its lovastatin argument, that compound I (lovastatin) had been excluded from the claims of the patent. It will be recalled that an amendment to that effect was made in response to an objection made by the examiner arising out of the existence of the Sankyo patent. Consequently, in its extension application, Merck could not rely on the fact that compound I was included in the specification. However, Merck pointed out that compound III (LHA) was claimed in the specification. The delegate summarised Merck’s argument in this way at para 12:
‘Merck’s primary argument in support of their extension is that a good containing the substance Lovastatin is clearly entered on the ARTG, and that Lovastatin falls within the scope of the claims to the ß-hydroxy metabolite of Lovastatin. There is no suggestion that ß-hydroxy metabolite of Lovastatin is Lovastatin. Rather, Merck argues that the only reasonable use of Lovastatin is for a pharmaceutical use; that upon use Lovastatin is metabolised into the ß-hydroxy form; that such use constitutes infringement of claims to the metabolite; and therefore Lovastatin must fall within the scope of claims to the metabolite. They particularly rely on Beecham Group Ltd v Bristol Laboratories Ltd [1978] RPC 153 to support the proposition that the use of Lovastatin would be an infringement of the claims to the metabolite.’ (Original emphasis)
The delegate said she was prepared to assume, for the purpose of the decision, ‘that human pharmaceutical use of Lovastatin generates the ß-hydroxy metabolite, and that such use would constitute an infringement of claims to the ß-hydroxy metabolite in the Merck patent’. However, she thought it was a separate question ‘whether this infringement necessarily means that Lovastatin in substance falls within the scope of those claims’. After referring to provisions of the Act concerning infringement, she said at para 16:
‘The difficulty for Merck is that the infringement they rely upon comes about by the use (or intended use) of Lovastatin, not Lovastatin per se. The chemical entity Lovastatin is not embraced by the chemical formula in the claims – including allowing for routine variation of substituents that a person skilled in the art might have made. Infringement only comes about as a result of the use of Lovastatin – which use results in the formation of the ß-hydroxy metabolite that is the subject of the claims. While Merck have argued that the only reasonable use of Lovastatin is a human pharmaceutical use, the fact remains that use of Lovastatin in any other manner, or possession for a purpose other than such use, would not constitute an infringement of the claims to the metabolite.’ (Original emphasis)
The delegate referred to the test stated in The Distillers Company Ld Application (1953) 70 RPC 221 at 223: would the amendment ‘make anything an infringement which is not an infringement already’? At paras 37-39, she went on:
‘While Merck has argued that “since Lovastatin is an infringement of the claim to the metabolite, it must be in substance within the scope of that claim”, the Distillers test puts the question the other way around, giving focus on the basis or extent of infringement required.
In the present case, infringement of the claims to the ß-hydroxy metabolite by Lovastatin will only occur when there is pharmaceutical use of Lovastatin such that it is metabolised. Use (or intended use) of Lovastatin for any other purpose will not lead to the metabolite, and therefore will not infringe the claims to the metabolite. Accordingly an amendment to insert a claim to Lovastatin per se would make something an infringement that would not otherwise have been an infringement of the patent (i.e. Lovastatin per se, not being used pharmaceutically), contrary to the requirements of the Distillers test. It follows that Lovastatin per se is not in substance within the scope of the claims to the ß-hydroxy metabolite – and that therefore the requirements of s.70(2) have not been met.
There is a further difficulty with asserting that a substance falls within the scope of a claim based on the only reasonable use of a substance leading to infringement. For perhaps most infringement scenarios, an action that constitutes an infringement at one time during the term of a patent would be an infringement at any time during the term of a patent. Yet the type of test for infringement that arises in Beecham v Bristol, and in the contributory infringement provisions of s.119, involve a temporal element – to establish infringement, the test of “only reasonable use” must necessarily be applied as at the date of the alleged infringement. In the case of a new substance, it is quite common for new uses to be subsequently discovered – as is recognised by that body of patent law dealing with “new use of a known substance”. Consequently, while at one date in the life of a patent there might be only one reasonable use of a substance, it cannot generally be said that there will only ever be one reasonable use. Assessing what in substance falls within the scope of a claim on the basis of an “only reasonable use” infringement argument has the consequence of rendering this test time-dependant. The effect would be that matter in substance falls within the scope of the claim during the early life of the patent, but when a different use is discovered at a later date that matter would no longer fall within the scope of the claim.’
After referring to an argument put by Arrow about estoppel, the delegate expressed this conclusion about Merck’s first argument at para 21:
‘In conclusion, it is plain that Lovastatin is not expressly within the scope of any of the claims to the metabolite. The use of Lovastatin may constitute an infringement of the claims to the metabolite. However that fact does not itself establish that the substance in substance falls within the scope of those claims. Applying the Distillers test, it is clear that Lovastatin per se does not in substance fall within the scope of the claims, as the monopoly rights to Lovastatin per se would extend beyond the basis for Lovastatin being an infringement of the claims to the metabolite. Accordingly the requirements of s.70(2) have not been met as between the listing of goods containing Lovastatin on the ARTG, and the claims to the ß-hydroxy metabolite.’
In dealing with Merck’s alternative argument, the delegate did not question that LHA was disclosed in the specification of the patent and, in substance, fell within the claims of that specification, thus satisfying s 70(2)(a) of the Act. The issue, in the delegate’s view, was whether or not s 70(3)(a) was satisfied: was LHA included in the ARTG? In considering that issue, the delegate referred in some detail to the manner in which the ARTG was kept and to the relevant provisions of the Therapeutic Goods Act 1985 (Cth). She found that the ARTG ‘does not explicitly identify [LHA], the claims to which form the basis of the request to extend the term of the patent’.
At paras 46-47, the delegate expressed the following conclusion:
‘Merck argued in support of their request for an extension of term on the basis of two discrete arguments. On the first argument, I have concluded that while the use of Lovastatin might constitute an infringement of the claims to the ß-hydroxy metabolite, Lovastatin per se does not in substance fall within the scope of the claims to the metabolite. Therefore the requirements of s.70(2) have not been met with respect to Lovastatin. On the second argument, I have concluded that the ß-hydroxy metabolite is present on the ARTG, but only as an impurity; that the requirements of s.70(3)(a) are not met if the relevant substance is only included in goods on the ARTG as an impurity. Therefore the requirements of s.70(3)(a) have not been met with respect to the ß-hydroxy metabolite.
It follows that the criteria for granting an extension of term of this patent have not been met. I am also of the view that the deficiencies are not capable of rectification. Accordingly I refuse the request for an extension of term of the patent.’
The submissions on appeal
At the hearing of the appeal against the delegate’s decision, Merck argued that the delegate erred in relation to both of Merck’s arguments.
Counsel said the primary way in which Merck puts its case is that the requirements are satisfied in the case of lovastatin. The issue in relation to lovastatin is whether or not s 70(2)(a) of the Act is satisfied. The delegate’s crucial error in that regard, counsel said, appeared in para 16 of her reasons (set out in para 16 above). Counsel explained:
‘It is accepted that the claims in suit specifically set out the formula of LHA and do not specifically set out the formula of lovastatin. However, thereafter the reasoning pays insufficient attention to the context in which the claims are being considered. The context requires consideration of lovastatin not merely as a chemical entity but as a pharmaceutical substance. This requires consideration of its pharmaceutical use.’
Referring to the affidavits of Professor Miners and Dr Brenner, counsel said ‘this pharmaceutical use would necessarily involve infringement of the claim to LHA’. They said ‘there is authority that a claim to a metabolite is infringed by making, using or selling a pro-drug’. Counsel cited Beecham Group Limited v Bristol Laboratories Limited [1978] RPC 153 (‘Beecham Group’); Merrell Dow Pharmaceuticals Inc v HN Norton & Co Ltd (1995) 33 IPR 1 (‘Merrell Dow’); and Schering Corp v Geneva Pharmaceuticals Inc, 67 USPQ 2d 1664 (‘Schering’).
In relation to Merck’s alternative case, and relying upon the disclosure of LHA in the patent specification, counsel said:
‘MEVACOR tablets are included in the Australian Register of Therapeutic Goods and these contain LHA, albeit as a relatively minor component. It is submitted that this is sufficient to satisfy the test.
The Delegate fell into error in considering, not whether MEVACOR tablets contain LHA, but whether LHA is “on the ARTG”. This led to an irrelevant discussion of what could be found on the Register. Hence the Delegate’s decision on this point was also fatally flawed.’
Conclusions
It seems to me that Merck’s alternative argument is irrefutable. If only on that ground, the decision of the delegate should be reversed.
Subsection (3)(a) of s 70 makes it a condition of extension of a patent that ‘goods containing, or consisting of, the substance must be included in the [ARTG]’. Mevacor is included in the ARTG. And the undisputed evidence of Dr Brenner is that Mevacor contains LHA. LHA is a pharmaceutical substance per se disclosed in the specification of the patent.
Counsel for Merck are correct to say that it is irrelevant whether or not LHA itself is included in the ARTG. For s 70(3)(a) purposes, it is enough that it is contained in some other good (Mevacor) that is included in the ARTG.
Although Professor Miners thought its contribution to the pharmaceutical effect of the medication ‘will be more than proportionate to its presence’ (see para 11 above), LHA is present in Mevacor only in minute quantities. But I do not think that matters; s 70(3)(a) does not stipulate for any particular quantity or proportion of the substance in the registered goods.
Having regard to my conclusion about Merck’s alternative argument, it is not necessary for me to reach a concluded view about the primary argument. It will be recalled that this argument relies on the listing on the ARTG of lovastatin, and that the only known therapeutic use of that prodrug is for the production of a metabolite (LHA) which lowers cholesterol levels. The argument is that Merck’s claim to the metabolite (LHA) would be infringed by a person producing lovastatin, notwithstanding that Merck has no claim to lovastatin as such.
Although I express no concluded view, it seems to me the delegate was right to reject this argument. The reasoning contained in para 16 of her decision seems persuasive. If counsel’s argument is correct, Sankyo would have infringed Merck’s patent if it had produced or sold lovastatin in Australia during the currency of its patent for that substance, even though that patent had an earlier priority date than the Merck patent. That would have been an extraordinary situation.
The infringement case postulated by counsel is the reverse of the situation in two of the cases cited by them, Beecham Group and Schering. In each of those cases, the patent covered the prodrug (respectively, ampillicin and loratodin); the infringing substance was a derivative or metabolite of the prodrug. Those cases say nothing about the case postulated by counsel, where the patent covers the metabolite and the alleged infringing substance is the prodrug.
The patent application in Merrell Dow was for an acid metabolite of the prodrug terfenadine, the patent to which had expired. Factually, the situation was similar to the present case. However, the case turned on the question whether the acid metabolite patent was invalid for want of novelty. The decision is not of much assistance in the present case.
Disposition
The appeal should be allowed and the decision of the delegate set aside. In lieu thereof, it should be ordered that the opposition be dismissed and the application for the grant of an extension of the term of the patent be allowed. No costs order is sought.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox. Associate:
Dated: 25 November 2003
Counsel for the Applicant: Dr J Emmerson QC, Ms K J Howard Solicitor for the Applicant: Cropper Parkhill Date of Hearing: 28 October 2003 Date of Judgment:
25 November 2003
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