Merck Sharp & Dohme Corp. and Commissioner of Patents
[2013] AATA 71
•15 February 2013
[2013] AATA 71
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/1025
Re
Merck Sharp & Dohme Corp.
APPLICANT
And
Commissioner of Patents
RESPONDENT
DECISION
Tribunal The Hon. Brian Tamberlin, QC, Deputy President and
Dr T M Nicoletti, Senior MemberDate 15 February 2013 Place Sydney The decision under review is affirmed.
.........[sgd]...............................................................
The Hon. Brian Tamberlin, QC, Deputy President
CATCHWORDS
INTELLECTUAL PROPERTY – patents – extension of term – extension of time – whether there was an error or omission – whether the discretion should be exercised – decision under review affirmed
LEGISLATION
Patents Act 1990 ss 70, 71, 223
Patent Regulations 1991 reg 22.11
CASES
Kimberly-Clark Ltd v Commissioner of Patents (1988) 84 ALR 685
Re Aspen Pharma Pty Ltd and Commissioner of Patents & Anor [2012] AATA 851
Vangedal-Nielsen v Commissioner of Patents (1980) 33 ALR 144REASONS FOR DECISION
The Hon. Brian Tamberlin, QC, Deputy President and
Dr T M Nicoletti, Senior Member15 February 2013
This is an application for review of a decision of a Deputy Commissioner of Patents, as delegate of the Commissioner of Patents (the Commissioner), dated 21 February 2012 to refuse an application for an extension of time under s 223 of the Patents Act 1990 (the Act). The extension of time was sought to file an application for an extension of term of a patent under s 70 of the Act.
BACKGROUND
The patent that is the subject of the application is held in the name of Merck Sharp & Dohme Corp. (“Merck”) and claims certain compounds to inhibit HIV or prevent HIV infection or AIDS. The patent was granted on 29 October 1996 but the date of the filing of the complete specification was 6 August 1993 and so, subject to any extension of term, the patent would expire on 6 August 2013. The date of the first inclusion in the Australian Register of Therapeutic Goods (ARTG) of the pharmaceutical substance disclosed in the patent was 9 April 1999.
As a consequence, any application to extend the term of the patent was required to be made under the Act during the period provided for by s 71(2), that is to say by 9 October 1999, being six months from the date of the first inclusion of the active ingredient in the ARTG.
The potential extension of the term of the patent pursuant to Part 3 of Chapter 6 of the Act is 8 months and 3 days and if granted would extend the expiry date of the patent from 6 August 2013 to 9 April 2014.
On 29 June 2010, Spruson & Ferguson (Spruson) on behalf of Merck filed an application for an extension of time under s 223 to file the extension of term application. Accordingly, the extension of time required is in excess of 10 years.
On 10 January 2011, the examiner wrote to Spruson indicating a preliminary view that the extension of time should be refused.
Following a hearing, the Commissioner made his decision on 21 February 2012. In the reasons for this decision, the Commissioner accepted that Merck, through its employee Dr Hiscock, had an intention in July 1999 to file an application for an extension of term. The Commissioner considered that the reason for the application not having been filed was not readily apparent, but assumed that it arose out of some error of procedure or judgment on the part of Dr Hiscock, which resulted in instructions not being given to Mr O’Connor, a principal at Spruson. The finding was that the available evidence was consistent with an error occurring that prevented the filing of the application, rather than a deliberate decision not to apply, and that a causative error existed which might support an extension of time.
The Commissioner then proceeded to consider the exercise of discretion and concluded that because it was apparent that Merck had made a conscious decision immediately after the due date not to proceed with an extension of term application and was now seeking to change its position 10 years later, the discretion should not be exercised in Merck’s favour. Merck’s position was considered to be of its own making and it therefore should not be exempted from compliance with the time frames prescribed based on the changing of its perception of its commercial interests 10 years later.
LEGAL PRINCIPLES
Section 223(2) provides:
(2) Where, because of:
(a) an error or omission by the person concerned or by his or her agent or attorney; or
(b) circumstances beyond the control of the person concerned;
a relevant act that is required to be done within a certain time is not, or cannot be, done within that time, the Commissioner may, on application made by the person concerned in accordance with the regulations, extend the time for doing the act.
The term “relevant act”, for the purposes of s 223, is defined in s 223(11) to mean:
… an action (other than a prescribed action) in relation to a patent, … or any proceedings under this Act (other than court proceedings), …
Regulation 22.11(4) of the Patent Regulations 1991 prescribes actions as being excluded for the purposes of s 223(11). These excluded actions include the “filing, during the term of a standard patent as required by subsection 71(2) of the Act, an application under subsection 70(1) of the Act for an extension of the term of the patent”.
In a recent decision in Re Aspen Pharma Pty Ltd and Commissioner of Patent & Anor [2012] AATA 851, the Tribunal held that reg 22.11(4)(b) does not exclude s 70 applications from s 223, provided the extension of time application is filed within the term of the patent as required by s 71(2). That decision is presently subject to appeal to the Federal Court, but for the purposes of this decision the Tribunal will follow and apply the Aspen Pharma reasoning.
The principles relevant to the grant of an extension of time are set out in Kimberly-Clark Ltd v Commissioner of Patents (1988) 84 ALR 685 by Jenkinson J.
In his reasons in that case, Jenkinson J expressed the view that by no means every failure which can be found will answer the description “error or omission” in the ordinary meaning of those words, which in their context carry a connotation of obviousness of error. His Honour considered that the failure to do the act or take the step cannot itself be the error or omission by reason whereof the failure occurred. Where before the failure occurred a decision is made not to act there is no error or omission.
In relation to the exercise of discretion in that case, his Honour expressed the view that an application for an extension of time would have to go beyond a disclosure of the processes by which the agent’s errors came to be committed and expose frankly all the conduct, knowledge, beliefs and mental processes of the applicant relevant to an understanding of the way the failure to do the act or take the step occurred or which are relevant to an evaluation of the reasonableness of the conduct. He considered that an applicant’s claim to the exercise of the power could not be judged without the means to properly evaluate the applicant’s moral claim to an extension, as this would prejudice the efficient operation of the system. Jenkinson J considered that no material of that kind had been submitted to the delegate. In particular, he referred to the absence of material concerning the knowledge, or lack of knowledge, possessed by those of the applicant’s officers and agents responsible for deciding what instructions should be given. He also considered that an extension of time must not be granted “lightly” and that the power should be invoked where there is “a prompt, frank comprehensive and clear disclosure of all the circumstances relevant to the weighing of the discretionary considerations”. In that case, his Honour considered that the application was so seriously lacking in these respects that “the delegate could not reasonably have concluded that a proper case justifying an extension had been shown.”
In the course of his reasoning, Jenkinson J referred to and applied the reasons for decision of Bowen CJ in Vangedal-Nielsen v Commissioner of Patents (1980) 33 ALR 144 at 150, where the Chief Justice said:
The Commissioner will further have to have in mind where a serious opposition is foreshadowed, the public interest which has been mentioned, but he will have to require to be satisfied by an applicant for an extension that a proper case be made out justifying an extension. It would be wrong if he granted an extension simply because no one had raised rather exceptional circumstances why it should not be granted. Reasons why this is so include the desirability of operating the system efficiently and without unreasonable delays and also the interests of the applicant for a patent which are also clearly involved.
These observations indicate the importance of taking into account the fact that a regime for the filing of an extension of term and time had been prescribed by the legislation, which is not to be departed from lightly. These considerations are applicable in the present case.
Error or omission
There are two issues in relation to error or omission:
(a)Whether there was any error or omission by the person concerned or by his or her agent or attorney; and
(b)If there was an error or omission, whether it was causative of the failure to make the application within time.
In order to determine this question, it is necessary to consider the sequence of events prior to 9 October 1999, which was the deadline for filing an application for an extension of term of the patent in this case.
Mr Walton, a US patent attorney of Merck, asserted in a statutory declaration dated 22 December 2010 that the person with the primary responsibility for obtaining Australian patent term extensions in 1999 was Dr Hiscock, who was Assistant Counsel, European Patents, Merck, Sharp & Dohme Ltd.
On 12 July 1999, Dr Hiscock emailed various persons, including employees of Merck’s Australian subsidiary, seeking information relevant to the filing of an application for an extension of term of the patent.
On 26 July 1999, Mr Walton sent a fax to Spruson indicating his understanding that an application for an extension of term in relation to the patent would soon be filed. The next day, on 27 July 1999, Spruson sent a fax to Mr Walton confirming that 9 October 1999 was the deadline for the filing of an extension of term of the patent, and noting that instructions had not been received.
On the same day, Mr Walton wrote to Spruson with instructions “NOT” to proceed with the preparation of an “extension application at this time” (emphasis added). A copy of this communication was sent to Dr Hiscock.
On 28 July 1999, Dr Hiscock sent an email to Merck’s Australian subsidiary recording that 9 October 1999 was the deadline for filing an application for extension of term, and that Mr O’Connor of Spruson would be sent appropriate instructions in due course. Mr O’Connor was sent a copy of this email.
On 9 October 1999, the deadline for making an extension of term application expired without any application having been made.
On 17 November 1999, Dr Hiscock emailed Mr O’Connor of Spruson enquiring whether an application for extension of term had been filed and whether the deadline for doing so had been missed.
Also on 17 November 1999, Mr O’Connor emailed Dr Hiscock to advise that the deadline was 9 October 1999 and that if an extension was granted the extended term of the patent would expire on 9 April 2014, rather than 6 August 2013. Mr O’Connor stated that “in view of the short potential extension of this patent (8 months) weighed against the extended springboarding opportunity (14 years) we were not unduly concerned when we did not receive instructions to extend the patent.” Mr O’Connor pointed out that other clients of his had decided not to extend the term of patents for such short periods and he then stated that if Dr Hiscock decided the patent was to be extended, he would proceed immediately in applying for an extension of time in which to file the extension of term application.
On 23 November 1999, Dr Hiscock sought advice from Merck’s Australian subsidiary as to whether an extension of time application should be made. On 29 November 1999, Dr Hiscock was instructed not to apply for an extension of term on the basis that any benefit gained from an extension of patent term would be outweighed by allowing generic “springboarding”. On 29 November 1999, Dr Hiscock advised Mr Walton that Merck’s Australian subsidiary had decided not to apply for an extension of term of the Australian patent. On 17 December 1999, Dr Hiscock sent a fax to Mr O’Connor confirming the decision of senior management of Merck’s Australian subsidiary not to file for an extension of term.
On 29 June 2010, more than ten years later, an application was filed for an extension of time in which to file the application for an extension of term.
Having regard to the sequence of events and evidence filed, we are not satisfied that in this case there was any relevant error or omission on the part of Merck. Our reasons for this are as follows.
The evidence indicates that Dr Hiscock was aware of the need to file the extension of term application before 9 October 1999. Dr Hiscock was also aware of Mr Walton’s fax to Spruson which explicitly stated that an application was not to be filed then. Dr Hiscock recorded his intention in his email of 28 July 1999 to seek instructions. There is an absence of material from the period between 28 July 1999 and 17 November 1999. Dr Hiscock was not called to give evidence nor did he file any statement or affidavit. Despite the appearance that whether or not an application for an extension of term was applied for was ultimately decided by Merck’s Australian subsidiary, no one associated with Merck’s Australian subsidiary provided any evidence about the extent or nature of their involvement in the process of applying to extend the term of the patent before the relevant date. There was no evidence as to when any decision not to proceed with the extension in 1999 was first made.
The fact that Dr Hiscock found it necessary to enquire on 17 November 1999 as to whether an application for an extension of term had been filed, and whether the deadline had been missed, supports a conclusion that he was not actively involved in making or following through the filing of the application within time.
The evidence in our view does not sufficiently disclose the circumstances in which the failure to file the application occurred. It is clear that Merck decided not to pursue the application for commercial reasons but the material does not indicate when that decision was first made or by whom. The evidence is consistent with the conclusion that the application was not filed by 9 October 1999 because it was not considered worthwhile, having regard to the short extension period and the possibility of springboarding. Accordingly, we find that there was no causative “error or omission”.
DISCRETION
Even if (contrary to the Tribunal’s conclusion) there was a causative error or omission, we are not satisfied that the Applicant has made out a sufficient case to warrant the grant of an extension of time to file the extension of term application.
The extension of time applied for is a period in excess of 10 years. There have been no satisfactory explanations as to why, during that period, an earlier application for extension of time was not made. It is clear that a deliberate commercial decision was taken by Merck in 1999 not to file an application.
There has been no satisfactory explanation on the evidence as to the circumstances of the failure to make the application or give the instructions.
It is also important to take into account that the Act has in terms set forth a clear regime and procedure for the making of applications. This is described by Bowen CJ and Jenkinson J as the “system” provided for by the Act. The grant of an extension of time requires some reasonable explanation for the failure to take action and it is apparent that the failure after 1999 was due to tactical commercial strategy.
The case advanced by Merck is that there has not been shown to be any potential detriment to any other person in the event that the application is granted and therefore the time should be extended.
The difficulty with this contention is that, if accepted, it would substantially detract from the utility and purpose of the detailed time frame set in place under the legislation.
In this case, having regard in particular to the length of the delay, the failure to take any steps during that period, even after the springboarding provisions were amended in 2006, and in the absence of any explanation, we consider that the circumstances do not warrant the discretion being exercised in the Applicant’s favour. The mere absence of any detriment is not sufficient to warrant the grant of an extension.
This case can be contrasted with the Tribunal’s decision in Aspen Pharma. The Tribunal considered in that case that it was reasonable to grant an extension of time in the order of 10 years because in that case the applicant for the extension of time was awaiting the final determination through the appellate process of a question central to the issue. Success on appeal would have rendered it unnecessary for an extension of time to have been granted. Moreover, it was considered that the delay in making the application for the extension of time was fully explained and was reasonable notwithstanding that there was an element of commercial strategy involved. The present circumstances are in sharp contrast because no attempt has been made to satisfy the Tribunal that the delay was reasonable.
CONCLUSION
The decision under review is affirmed.
I certify that the preceding 42 (forty -two) paragraphs are a true copy of the reasons for the decision herein of The Hon. Brian Tamberlin, QC, Deputy President and, Dr T M Nicoletti, Senior Member ............[sgd]............................................................
Associate
Dated 15 February 2013
Date of hearing 7 December 2012 Counsel for the Applicant Ms K Howard SC and Mr A Maroya Solicitor for the Applicant Spruson & Ferguson Counsel for the Respondent Mr R Lancaster SC Solicitor for the Respondent Australian Government Solicitor
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