Re Aspen Pharma Pty Ltd and Commissioner of Patents
[2012] AATA 851
•4 December 2012
[2012] AATA 851
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2011/2515
Re
ASPEN PHARMA PTY LTD
APPLICANT
And
COMMISSIONER OF PATENTS
RESPONDENT
And
H LUNDBECK A/S
JOINED PARTY
File Number(s)
2011/2516
Re
SANDOZ PTY LTD
APPLICANT
And
COMMISSIONER OF PATENTS
RESPONDENT
And
H LUNDBECK A/S
JOINED PARTY
File Number(s)
2011/2517
Re
APOTEX PTY LTD
APPLICANT
And
COMMISSIONER OF PATENTS
RESPONDENT
And
H LUNDBECK A/S
JOINED PARTY
File Number(s)
2011/2518
Re
ALPHAPHARM PTY LTD
APPLICANT
And
COMMISSIONER OF PATENTS
RESPONDENT
And
H LUNDBECK A/S
JOINED PARTY
DECISION
Tribunal The Hon. Brian Tamberlin, QC, Deputy President and Dr T Nicoletti, Senior Member
Date 4 December 2012 Place Sydney The decision under review is affirmed.
.................[sgd DP Tamberlin]...............................
The Hon. Brian Tamberlin, QC, Deputy President
CATCHWORDS
INTELLECTUAL PROPERTY – patents – extension of term – extension of time application – decision under review affirmed
LEGISLATION
Patents Act 1990 ss 70, 71, 223
Patent Regulations 1991 regulation 22.11
CASES
Alphapharm Pty Ltd & Ors v H Lundbeck A/S [2011] APO 36; (2011) 92 IPR 628
Alphapharm Pty Ltd & Anor v H Lundbeck A/S (2008) 76 IPR 618
Merck & Co Inc v Arrow Pharmaceuticals Ltd [2003] FCA 1344; (2003) 59 IPR 226
SECONDARY MATERIALS
Intellectual Property Laws Amendment Bill 1997 (Cth) Explanatory Memorandum
Patents Amendment Regulations 1998 (No 8) (Cth) Explanatory Statement
REASONS FOR DECISION
The Hon. Brian Tamberlin, QC, Deputy President and Dr T Nicoletti, Senior Member
4 December 2012
This is an application for review of a decision of the delegate of the Commissioner of Patents (the Commissioner) granting an extension of time to H. Lundbeck A/S (Lundbeck) (the joined party) to make an application for an extension of time in which to apply for an extension of the term of a patent (the Lexapro patent) outside the prescribed period.
The four applicants are parties whose commercial interests are affected by the extension because they have launched generic products which compete with a product, Lexapro, which contains an active ingredient which is claimed in the Lexapro patent. They oppose the grant of any extension of time. The Commissioner was excused from appearing and did not make any submissions on this application for review.
The decision of the delegate is reported in Alphapharm Pty Ltd & Ors v H Lundbeck A/S [2011] APO 36; (2011) 92 IPR 628.
The conclusions of the delegate are set out in paragraphs 91-95 inclusive of the decision as follows:
[91] Regulation 22.11(4)(b) does not exclude section 70 applications from the provisions of section 223 provided these are filed within the term of the patent as required by section 71(2). In the current case, the section 70 application was filed one day before the original term of the patent had expired and therefore section 223 is generally available as a remedy to extend the time set out in section 71(2)(c) provided the requirements of section 223 are fulfilled.
[92] The patentee’s misunderstanding of the law led to their failure to apply for an extension of time based on the correct ARTG registration. While 121 months is an undoubtedly a long time, it is still reasonable in the circumstances given the uncertainty in the law and the length and complexity of the multiple court proceedings.
[93] While the opponents would be disadvantaged by the grant of the section 223, this is because of their commercial strategy to enter the market despite being aware of the earlier registration. This was a consequence of their own actions not those of the patentee and is not a discretionary factor against the granting of the extension.
[94] The purpose of the Extension of term provisions is to encourage research and development into new pharmaceutical drugs by ensuring adequate recompense for patentees for new and inventive drugs. In the current case, the patentee is entitled to an extension of term under section 70 because of delays in marketing approval. In such circumstances, the patentee should be provided with the opportunity to correct a genuine misunderstanding. While there is some disadvantage to the public because of the likely increased cost of the patented drugs for the short period of the extension, this is offset by the broader public interest of encouraging research and development in the pharmaceutical field.
[95] I therefore grant the section 223 extension of time to file the extension of term application. Subject to any appeal or review, the Commissioner will proceed to process the section 70 extension of term. If the Commissioner is advised of an appeal or review within 30 days, she will defer consideration of the extension of term until after that action is finally disposed of.
ISSUES
The issues for the Tribunal on this application for review are whether there is power to grant the application and, if so, whether the correct or preferable decision is that it should be granted or refused.
BACKGROUND
The matter has had a long and complex history over the past ten years both from a legal and factual viewpoint involving disputes as to decisions by the Commissioner and the courts up to the High Court.
An outline of the background to the dispute is as follows.
Lundbeck is a Danish pharmaceutical company which applied for the Lexapro patent on 13 June 1989. The invention claimed in the patent which was granted was the process for obtaining the “(+)-enantiomer of citalopram”, also known as the “S-enantiomer of citalopram” or “escitalopram”. Escitalopram is the active ingredient in the drug, Lexapro, which was registered in the Australian Register of Therapeutic Goods (ARTG) on 16 September 2003. The 20 year term of the Lexapro patent was due to expire on 13 June 2009.
The racemate citalopram was the subject of an earlier patent owned by Lundbeck. A racemate or racemic mixture comprises two enantiomers in equal measure. Enantiomers are non-superimposable mirror images of each other and are designated (+) or (-) based on how they rotate polarized light. Citalopram is in the class of a group of drugs called selective serotonin re-uptake inhibitors, which are widely used to treat depression and anxiety disorders.
Cipramil, which comprises a racemic mixture of the (+)-enantiomer and the (-)-enantiomer of citalopram as its hydrobromide salt, was registered in the ARTG on 9 December 1997.
Citalopram and escitalopram are different chemical entities with different physical properties and different pharmacological activities.
Lundbeck filed an application for an extension of the Lexapro patent on 22 December 2003, based on the date of inclusion of Lexapro in the ARTG (the first extension of term), being 16 September 2003. This application was granted by the Commissioner on 27 May 2004 without opposition, and the extended date was 13 June 2014.
On 7 July 2005, the solicitors for Alphapharm wrote to the Commissioner and Lundbeck contending that the extension of term application was filed out of time. The solicitors further asserted that Lundbeck had falsely represented in its application for the extension that the first product included on the ARTG consisting of or containing the (+)-enantiomer of citalopram was Lexapro, whereas they contended that Cipramil, which had been included in the ARTG on 9 December 1997, contained both the (+)-enantiomer of citalopram and the (-)-enantiomer of citalopram.
On 13 July 2005, Lundbeck’s patent attorney, Ms Sinclair of Watermark, was informed by IP Australia of Alphapharm’s letter. The letter stated that the Commissioner intended to amend the register to record the term of the patent as being extended to 9 December 2012 (rather than 13 June 2014 which was the date as extended in 2004) on the basis that the first inclusion on the ARTG of a good containing or consisting of the (+)-enantiomer of citalopram was Cipramil in December 1997, and not Lexapro on 16 September 2003.
On 14 July 2005, Ms Sinclair wrote to Lundbeck informing it of the letter from IP Australia and she raised the possibility that Lundbeck could file an application for extension of time in which to file a belated application for an extension of term. The full terms of this letter are set out below at [69]. On 21 July 2005, Ms Sinclair again wrote to Lundbeck and expressed the view that the Commissioner would probably not retain the expiry date of 13 June 2014, and observed that there could be some value in filing an application for an extension of time.
On 19 May 2006 the delegate of the Commissioner, Dr Barker, determined that the correct date for determining the extension of the term of the Lexapro patent was that based on the ARTG registration of Cipramil and not that of Lexapro.
On 24 April 2008, in proceedings in the Federal Court, Lindgren J handed down a decision that the Lexapro patent was valid. In his detailed decision, Lindgren J decided that Cipramil did “contain” the molecule identified as (+) citalopram (also referred to as S-citalopram or escitalopram).
In his judgment, reported in Alphapharm Pty Ltd & Anor v HLundbeck A/S (2008) 76 IPR 618 at [27] – [33], Lindgren J set out and considers in detail the history relating to the extension of time and concluded that the correct regulatory approval date was 9 December 1997 (the date when Cipramil was registered in the ARTG) and because the requirements for the application were not met by Lundbeck, the extension of the term based on the later ARTG registration of Lexapro was invalid.
An appeal was lodged by Lundbeck from the decision of Lindgren J to the Full Federal Court on 10 July 2008 and cross appeals were lodged by Alphapharm and Aspen Pharma (then known as Arrow Pty Ltd) later that month. In issue was both the validity of the Lexapro patent and the extension of term.
On 2 February 2009, Lundbeck’s submissions on the appeal notified Alphapharm and Aspen Pharma that Lundbeck would, prior to expiry of the unextended term of the patent, apply for an extension of time under section 223 of the Patents Act 1990 (the Act) to have the term of the Lexapro patent extended to 9 December 2012.
On 26 May 2009 Lundbeck’s solicitors (Corrs) wrote to Sandoz Pty Ltd (Sandoz) stating that should the Full Court find the extension of term of the patent was not valid it intended to seek an order that the extension of term not be removed from the Register, but that the extended term of the patent be amended to record it as expiring on 9 December 2012. The solicitors did not state that Lundbeck would or might file a further application for an extension of time in which to seek an extension of term.
On 4 June 2009 Corrs wrote to Apotex Pty Ltd (Apotex) to a similar effect and did not state that Lundbeck might file an application for an extension of time in which to seek an extension of term.
On 11 June 2009 the Full Federal Court affirmed Lindgren J’s decision, confirming that the correct reference date for the purposes of an application for extension of the Lexapro patent was the date of registration of Cipramil in the ARTG and not that of Lexapro.
On the morning of 12 June 2009, the Applicants appeared before the Full Federal Court to determine the form of orders of its decision the previous day. At this time, Lundbeck did not indicate to the Court that it might file a further application for an extension of term. However, later in that day after orders had been made in the Full Federal Court, Lundbeck’s solicitors wrote to each of the Applicants stating that it would that day file an application for an extension of time of 132 months pursuant to section 223(2)(a) of the Act, and in fact filed the application on that day.
On 13 June 2009, the Lexapro patent expired.
Each of the Applicants launched their own generic product containing (+)-citalopram in mid-June 2009, on or shortly after the date on which the patent expired.
Lundbeck filed an application for special leave to appeal the Full Federal Court decision to the High Court on 9 July 2009. (Alphapharm and Aspen Pharma had, prior to this date, filed their own applications for special leave to appeal on the grounds that the Full Court erred in finding the Lexapro patent to be valid.)
The High Court refused all applications for special leave to appeal on 11 December 2009.
The hearing of the Applicants’ oppositions to the application for extension of time was heard on 2 March 2011, and on 1 June 2011 the Commissioner’s delegate granted Lundbeck’s application for an extension of time to file an application for an extension of term.
Attached to these reasons and marked “A” is a detailed chronology of key dates and events reproduced from Lundbeck’s Outline of Submissions dated 2 August 2012 (footnotes omitted).
FIRST ISSUE – POWER TO EXTEND TIME
Section 223 of the Act gives discretionary power to the Commissioner to extend the time for doing a relevant act where, because of an error or omission the person or an agent or an attorney or circumstances beyond the control of the person concerned, the act is not or cannot be done within the time that is required for it to be done. There must be a “relevant act” and an “error or omission” which is causative of the delay.
The term “relevant act” is defined in section 223 as “an action (other than a prescribed action) in relation to a patent, a patent application, or any proceedings under this Act (other than court proceedings)”.
Section 70(1) provides that a patentee may apply to the Commissioner for an extension of the term of the patent provided the requirements of the section are satisfied.
By section 71(2), an application for an extension of the term of a patent must be made during the term of the patent and within six months after the latest of three dates, namely, the date when the patent was granted; or the date of commencement of the first inclusion in the ARTG of goods that contain, or consist of, any of the pharmaceutical substances referred to in section 70(3); or the date of commencement of section 71. It is common ground that section 71 commenced operation on 27 January 1999 and that any application for an extension of time should have been filed on or before 27 July 1999.
The filing of an application for an extension of term is an action in relation to a patent which would, unless excluded, come within the definition of a relevant act.
Regulation 22.11(4) of the Patent Regulations 1991 (the Regulations) excludes from the extension of time regime the “filing, during the term of a standard patent as required by subsection 71(2) of the Act, of an application under subsection 70(1) for an extension of the term of the patent” (emphasis added).
The Applicants submit that the combined effect of section 223(2) and regulation 22.11(4)(b) is that an application under section 70(1) of the Act for an extension of the term of the patent is not a “relevant act” for the purposes of section 223(2) and therefore cannot be the subject of a grant of an extension of time pursuant to that subsection. Lundbeck’s request for an extension of time it is said falls squarely within the exclusion in regulation 22.11(4)(b) on its plain and ordinary construction, because the act required to be done is the filing of an application for an extension of the term.
The Applicants also submit that this is consistent with the extrinsic material and they refer in particular to the Explanatory Statement in relation to the predecessor of regulation 22.11(4)(b) which states that “the paragraph prescribes the action of filing an application for extension of term under section 70 of the Act during the term of the patent as being an action for which an extension of time under section 223 of the Act is not available” (emphasis added).
Lundbeck in response submits that the “action … in relation to a patent” is the filing of an application for an extension of term. Section 71(2), which is expressly referred to in the regulation, imposes two temporal requirements on the making of an application to extend the term of the Lexapro patent, namely, that the application must:
(i)be filed during the term of the patent; and must also
(ii)be filed within six months of the latest of the dates specified in section 71(2)(a) to (c).
Lundbeck says that section 223 permits the Commissioner to extend the time limits, in section 71(2)(a) to (c). It says that the relevant exclusion under regulation 22.11 provides that the requirement that an application for extension of term must be filed “during the term of the patent” cannot be extended, but the further temporal requirements in section 71(2)(a) to (c) can be extended.
The role of regulation 22.11(4) Lundbeck submits is to exclude specified actions from the extension regime established by section 223. The prescribed acts include filing after the expiry of the term of a standard patent an application for extension of the term of the patent. The effect of the regulation is that such an extension is not permitted. In other words, it identifies the first of the two timing requirements in section 71(2), that is, filing an application for an extension of term during the term of the patent, as being ineligible for an extension of time if the patent has expired.
Lundbeck submits that the second time requirement that an application be filed within 6 months of the latest of the dates in section 71(2)(a) to (c) is not excluded by the definition in the Regulation and is a relevant act in respect of which time can be extended. This time requirement in which to seek an extension of term is therefore capable of being extended. It is the requirement that an application for the extension of term must be made during the term of the patent that is not capable of extension.
We consider that the correct approach is that advanced by Lundbeck because it accords with the plain language of the Regulation. The Regulation in its terms operates on only one of the two time limits referred to in section 71(2).
We note that this interpretation is adopted by the Patent Office Manual of Practice and Procedure which, after referring to the Regulation, observes that it does not preclude the granting of an extension of time from the due date to a later date provided the later date is still before the end of the term of the patent.
In addition, an interpretation which results in section 223 not being available in relation to an extension of term would be contrary to the remedial intent of that section and produce an anomalous result.
This conclusion is further supported by the Explanatory Memorandum which accompanied the Bill which inserted the current extension of term provisions in the Act. The Explanatory Memorandum states:
The extension of time provision under section 223 of the Patents Act 1990 will apply to all acts required to be done under the extension of term scheme provided that the relevant criteria are satisfied.
The approach of Lundbeck gives meaning and effect to the reference to section 71(2) in the Regulation whereas the Applicants’ approach does not. The Applicants’ submission is that reference to the expression “during the term of a standard patent as required by subsection 71(2)” appears as part of a description of the act in question, and that the description comprehends all of the timing requirements in section 71(2). We do not accept this, having regard to the language used which refers only to the expression “during the term of a standard patent” and not to the other time requirement that it must be made within six months of the specified dates.
The Applicants further submit that the extension of term application should be refused because if granted it would be futile, as section 70(4) of the Act provides that there can be no extension of the term of a patent where the term has been previously extended.
The Applicants contend that this requirement is satisfied because the term of Lundbeck’s patent had been previously extended, albeit invalidly, based on the ARTG’s registration of Lexapro.
This argument does not succeed because the extension referred to was subsequently found to be invalid and was removed by the Federal Court. The original extension, being invalid or void ab initio, could therefore have no operative effect to prevent the present application for extension.
Accordingly, we reject the argument based on alleged futility said to arise by reason of section 70(4) of the Act.
“ERROR OR OMISSION”
The Applicants submit that there has been no relevant “error or omission” by Lundbeck or their agents and, further, that the evidence does not disclose any causal connection between any error or omission and the failure to do the relevant act within the time.
The Applicants contend that the error or omission cannot be the same thing as the failure to do the alleged relevant act, and that the evidence filed by Lundbeck does not identify any “error or omission” for the purposes of section 223(2)(a) which was causative of, and independent of, the failure to file an application for an extension of term based on the registration of Cipramil within the time required.
Lundbeck identifies the error as being its mistake in considering that the extension could only be based on the registration of Lexapro and not Cipramil, and says that at all times it acted consistently with that understanding, as evidenced by its conduct. As a direct result of that error, it says that it failed to apply within the time limits set by the Act. Lundbeck submits that the error was directly causative of its failure to file within the statutory deadline, namely, within six months after 27 January 1999, and that if it had not been in error it would have filed its application in time.
The Applicants say that this does not reflect the evidence and does not satisfy the requirements of section 223(2)(a).
The Applicants submit that the relevant act relied on is the failure to seek an extension of term of the patent based on Cipramil, which is required to be done within a certain time, and the evidence is that Lundbeck had no such intention in July 1999 or for many years later. They say there is no evidence that Lundbeck had ever considered in 1999 whether the extension could or should be based on the inclusion of Cipramil rather than Lexapro in the Register. The evidence, the Applicants say, is that Lundbeck’s alleged misconception or misunderstanding of the position was in fact not causative of its failure to file within the statutory deadline.
We accept the evidence of Mr Petersen for Lundbeck on this matter as to his belief. He said (Exhibit C):
[10] At that time, I did not believe that Lundbeck had any Australian patents in force relating to escitalopram that could be extended because Australian marketing approval had not been obtained for any product containing or consisting of escitalopram. This view was shared by Lundbeck.
[11] As a chemist and patent attorney it is and always has been my view that Cipramil does not fall within the scope of the claims of the Lexapro patent. This view is shared by Lundbeck.
[12] On the basis that Cipramil does not fall within the scope of the claims of the Lexapro Patent and my view… that an extension of term of a patent is granted to allow the patentee the full term to sell … the product protected by the patent, prior to 2005, I and Lundbeck did not contemplate applying to extend the term of the Lexapro Patent on the basis of the marketing approval of Cipramil.
In our view, the evidence establishes that there was a relevant error or omission by Lundbeck in 1999.
The relevant error on the evidence, including the evidence of Mr Petersen, was the erroneous belief by Lundbeck and its maintenance of that belief up until the time of the dismissal of its application for special leave to appeal to the High Court. This error caused Lundbeck’s omission to file an application for an extension of time.
In relation to this issue we accept the evidence of Mr Petersen as to his belief and that of Lundbeck throughout that period.
Our reasons for the above conclusions in so far as they are based on the conduct of Lundbeck are set out in detail below where we examine the reasonableness and consequences of the conduct of Lundbeck in the relevant period between 1999 and 12 June 2009 concerning its belief.
CONDUCT OF LUNDBECK - DISCRETION
The Applicants claim that Lundbeck’s conduct in the relevant period from 1999 was such as to disentitle it from being granted an extension.
In particular, the Applicants refer to the following considerations:
·Length of the delay between 26 July 1999 and 12 June 2009;
·Failure to satisfactorily explain the delay;
·Making a deliberate choice to maintain its statutory monopoly as long as possible for commercial reasons;
·Failure to foreshadow the possibility that it might seek the present extension over four years of litigation until at the earliest February 2009;
·Misleading the delegate of the Commissioner by not disclosing advice received or not disclosing frankly all the conduct, knowledge, beliefs and mental processes of Lundbeck in relation to the extension of time;
·Adopting and maintaining the clearly erroneous view of the position taken by it before and even after the decisions of the Federal Court;
·Rejection of advice by its patent attorneys;
·Failure to make a contingent application for an extension of time;
·The public interest in publicising its proposal to make an application for extension of time;
·Taking a calculated commercial risk in not making a contingent application.
In considering the weight to be given to the conduct of Lundbeck in not making an earlier application for extension of time, it is convenient to consider the circumstances and reasoning of Lundbeck for its decisions at several points of time in the relevant period from 26 July 1999 onwards.
26 JULY 1999- JULY 2005
Lexapro was included in the ARTG on 16 September 2003. On 27 May 2004 an extension of term of the Lexapro patent was granted based on the 2003 Lexapro ARTG registration. The extension of term to 13 June 2014 was entered on the Register and only removed on 9 February 2010 after special leave to appeal to the High Court had been refused on 11 December 2009.
We consider that it was reasonable in this period for Lundbeck to act on the basis that the relevant ARTG registration date was that in relation to Lexapro, notwithstanding that some 10 years later it was finally concluded on appeal that its approach and interpretation was wrong in law. From 1999 until July 2005 we are satisfied that Lundbeck and its agents had no reason to conclude that its approach to the extension was in error. We are also satisfied on the evidence that the incorrect interpretation was a cause of the failure to make an application to extend the time on the basis of the Cipramil registration in this period.
The next relevant period at which to consider the conduct of Lundbeck is between July-August 2005 when Lundbeck received notice of proposed action by the Commissioner and legal proceedings were instituted and April 2008 when the judgment of Lindgren J was delivered.
JULY–AUGUST 2005 TO APRIL 2008
In early to mid-July 2005 Lundbeck was notified that Alphapharm had commenced proceedings in the Federal Court for (i) revocation of the Lexapro patent and (ii) removal of the extension of term for the Lexapro patent and that Alphapharm alleged that the earlier registration of Cipramil should have been the basis of which the extension of term application for the Lexapro patent, and that this was the only registration on which the Lexapro patent could be extended.
On 14 July 2005 the patent attorney for Lundbeck, Ms Sinclair of Watermark, patent attorneys, wrote to Lundbeck informing it of the institution of the Federal Court proceedings and the proposal of the Commissioner to rectify the register to show the expiry date of the Lexapro patent as 9 December 2012 based on the ARTG registration of Cipramil. This letter is of central importance to the Applicants’ case concerning the extension and reads as follows:
14 July 2005
…
Dear Ms Aalborg
Re: Alphapharm Pty Ltd v H. Lundbeck A/s
Federal Court of Australia NSD 1120/2005
(New South Wales District Registry)
and
Application under s.138 & 192 for revocation of Patent No 623144 or alternatively, rectification of the Register of Patents to remove the extension of term of the patent.
We refer to the above matter and acknowledge receipt of your email of 9 July 2005.
CORRECTION OF EXPIRY DATE OF PATENT
We yesterday received correspondence from the Deputy Commissioner of Patents in this matter. This correspondence is pursuant to a letter to the Commissioner dated 7 July 2005 from Alphapharm Pty Ltd.
Alphapharm Pty Ltd have advised the Commissioner that they will be seeking further orders from the Federal Court of Australia in respect of the extension of term of this patent unless the Commissioner takes appropriate action herself by correcting the term of the patent in the Register. A copy of Alphapharm’s letter to the Commissioner and a copy of their draft application to the Federal Court is attached.
You will see from the letter to us from the Deputy Commissioner that Reg. 10.7(7) of the Patents Act 1990 essentially states that the Register must be corrected where the Commissioner finds that the extended expiry date is incorrect. A copy of the relevant regulations is enclosed herewith. Note that the procedure associated with the correction is also set out in the regulations.
You will also see that the Commissioner intends to rectify the Register to show that the expiry day of patent is correctly 9 December 2012, not 13 June 2014. A copy of the Federal Court decision in Merck v Arrow Pharmaceuticals Ltd is also enclosed for your review. Prima facie, the Commissioner’s application of this decision to the facts at hand would appear to be correct.
REQUIRED CTION BY H. LUNDBECK
H Lundbeck A/S is required to advise the Commissioner by 12 August 2005 of any reason why the Commissioner should not proceed to make the correction to the Register, or alternatively, that you accede to the amendment being made. If you do not respond by 12 August 2005, an ex parte hearing will be conducted at which time it would seem certain that the correction to the Register will be made. It appears to us at first glance that there are only two avenues upon which you could reject an amendment to the Register:
1.that CIPRAMIL is not a racemate and does not contain the isomer which is subject of Australian Patent 623144; or that
2.the decision in Merck v Arrow is wrong (with supporting argument).
Either of these avenues is likely to be very difficult to pursue.
RAMIFICATION OF CORRECTION
You will also be aware that there are serious ramifications of acknowledging that CIPRAMIL contained the LEXAPRO isomer and that thus the LEXAPRO isomer was first entered on the ARTG in December 1997. Under section 71(2) of the Patents Act 1990, an application for extension of term must be filed within 6 months of the latter of:
a)The date the patent was granted; or
b)The date of entry of the pharmaceutical including the patented substance on the ARTG.
In this case, the application for extension of term was made (at the earliest) on 9 December 2003, over 10 years after the patent was sealed (31 August 1992), and over 5 years after the entry of CIPRAMIL on the ARTG. Thus, the application for the extension of term of the isomer that is LEXARPO was arguably filed out of time and should properly have been rejected on one view. This is the subject matter of claims 3 and 4 of the application NSD 1120/2005 to the Federal Court forwarded to you last week.
EXENSION OF TIME TO LODGE EXTENSION OF TERM
Reg. 22.11(4)(b) of the Patents Act 1990 appears to preclude seeking an extension of time to lodge an extension of term application. However, we have had advice previously from IP Australia (see letter dated 6 February 2001 attached) that an extension of term application can be subject of an application for an extension of time.
Thus, one immediate action we could take in defence of H Lundbeck’s position in this matter would be to file an belated application for an extension of time to lodge the extension of term application.
The immediate cost of doing so would be approximately A$7,000 and we would need to substantiate an error or omission which led to the late filing of the extension of term application within two months. Under the circumstances, we believe an error or omission could arguably be established, and taking this action would certainly complicate Alphapharm’s current intentions somewhat. Please advise if you wish us to elaborate further on this possibility.
CONCLUSION
In any event, clearly the matter of the Directions Hearing on 29 August 2005 is looming. The decision you make in relation to this advice from the Commissioner will impact on the hearing.
Please advise as soon as possible your intentions in relation to the Commissioner’s proposed action under Reg. 10.7(7). This advice is only preliminary and accordingly, if you require any further assistance, please do not hesitate to revert to us.
Yours faithfully
WATERMARK
Karen Sinclair
[Emphasis added]
A follow-up letter was written by Ms Sinclair to Lundbeck on 21 July 2005 which commented on the options available to Lundbeck in light of the Commissioner’s proposed amendment of the Register. The options suggested were (i) consenting to the Commissioner’s proposed amendment to the expiry date from 13 June 2014 to 9 December 2012; (ii) filing submissions that the Register should remain unamended; and (iii) filing no submissions.
Ms Sinclair pointed to the “value in consenting to the Commissioner’s proposed amendment of the expiry date to 9 December 2012, insofar as it may place you in a better position to counter Alphapharm Pty Ltd’s assertion that the Register should be rectified by amending the expiry date to 13 June 2009 on the basis that the extended patent was obtained by fraud, false suggestion or misrepresentation”.
The disadvantage perceived by Ms Sinclair of consenting to the amendment was that it would be a tacit admission that the original extension of term was made on a wrong basis. Ms Sinclair considered that it was possible that the Federal Court might construe the Act in a manner disadvantageous to Lundbeck but the likelihood of this construction was not necessarily high. She suggested, therefore, that there could be strategic value in filing a belated application for an extension of time. She noted that there was a wide range of issues to consider and observed that Corrs had been appointed to provide legal advice on these matters.
On 3 August 2005, Corrs advised that Lundbeck’s response to the Commissioner should be to: (i) challenge the validity of regulation 10.7(7) under which the Commissioner proposed to correct the Register; (ii) make submissions to the effect that, in light of the legislative history and rationale for the extension of term provision in the Act, the “date of commencement of the first inclusion in the [ARTG] of goods that contain, or consist of” escitalopram, is the date of registration of Lexapro; or (iii) make submissions that the decision in Merck & Co Inc v Arrow Pharmaceuticals Ltd [2003] FCA 1344; (2003) 59 IPR 226 (Wilcox J) relied on by the Commissioner as the basis for the proposed amendment was wrong or could be distinguished.
The letter also commented that it was unlikely that the Commissioner would decline to correct the Register having regard to the mandatory effect of regulation 10.7(7).
Mr Petersen acknowledged that the notification by Ms Sinclair as to the possible reduction of the patent term from 2014 to 2012 was regarded by Lundbeck as a serious matter and he noted the suggestion by her as to the possibility of applying for an extension of time at that time. However, he said that he did not treat the letter from Watermark as formal or final advice that Lundbeck should adopt this course, but rather he read the letter as being a preliminary comment and accordingly forwarded the letter to Corrs immediately for consideration as to Lundbeck’s legal position. He expressed concern about the short period given to respond to the Commissioner’s letter, and asked Ms Sinclair whether the time could be extended. He did not otherwise seek any further suggestions from Ms Sinclair in relation to lodgement of an application for extension of time. He did not consider that either the letter of 14 July 2005 or that of 21 July 2005 provided Lundbeck with a properly or finally considered or developed basis for action.
Mr Petersen was cross-examined at length in relation to this period and the above correspondence in an attempt to suggest he deliberately chose to reject the “advice” from Watermark in not making a contingent application for an extension of time at that point after serious doubt had been thrown on the validity of the extension.
The Applicants’ contention is that as a consequence of the correspondence and preliminary comments given to Lundbeck in July 2005 by Watermark, Lundbeck was on notice that it should immediately submit an application for an extension of time immediately to protect its position. The Applicants further contended that the failure in the light of this advice to adopt this course should be taken into consideration as a significant matter in deciding whether an extension of time should now be granted.
We accept the evidence of Mr Petersen as to Lundbeck’s belief and approach to the July-August 2005 advice and events. We accept that he preferred to rely on his consultations with, and advice from, Corrs and also that he continued at all times to hold the firm belief that Lundbeck should await the final outcome of the Federal Court proceedings, which involved related questions as to the validity of the patent and the extension of term, before taking any further action. He considered that the determination of the patent claim in that Court would be determinative as to both the validity of the Lexapro patent and its extension. We accept that he continued to believe that Lundbeck was entitled to an extension of time based on the Lexapro registration, and the conduct of Lundbeck up to and subsequent to that time was consistent with such a firm belief and in accordance with the advice from Corrs.
In our view, the Watermark letters setting out preliminary views, comments and possible strategic suggestions do not support a conclusion that the conduct of Lundbeck was in any way unreasonable in not making an application for an extension of time at that point.
In May 2006 the delegate of the Commissioner, Dr Barker, decided that the Register should be amended to reflect the extension of term based on the registration in the ARTG of Cipramil so that the expiry date should be 9 December 2012. At this point, there was no need for Lundbeck to apply for an extension of term or of time because the term as recorded on the Register had already been fixed by the delegate. Lundbeck acted consistently and reasonably and sought to maintain the 2014 date on the Register. The determination of the expiry date and the extension depended on the final outcome of the Court proceedings.
On 16 May 2007, at the conclusion of the hearing before Lindgren J, Mr Swinn of Corrs summarised the legal position of Lundbeck at the end of the trial, as perceived by him, as follows:
Issue Lundbeck’s position at end of trial Patent term extension Good The key issue is whether Cipramil contains a pharmaceutical substance which is the same as that disclosed in the patent, namely (+)-citalopram. Alphapharm/Arrow contend for the superficially attractive interpretation of the legislation that Cipramil contains both enantiomers of citalopram and, therefore, must by definition contain (+)-citalopram. Our principal answer is that Cipramil does not contain the isolated (+) enantiomer of citalopram. There are other arguments that the single enantiomer alone exerts a different pharmaceutical effect than when in a racemate. Lundbeck’s preferred construction does require a more in-depth analysis and more mental gymnastics than Alphapharm/Arrow’s. However, our argument is consistent with the policy underlying the legislation and is certainly a construction open on the words of the legislation. Again, the construction of (+)- citalopram will bear upon this issue. Overall, our impression is that Lundbeck is in a good position.
APRIL 2008
After the decision of Lindgren J was given on 24 April 2008 upholding the validity of the patent and deciding that the extension term was invalid, both sides appealed to the Full Federal Court. Lundbeck considered that the decision of Lindgren J was wrong and would be overturned on appeal, and reasonably continued to believe that it would win on the extension of term issue in addition to having been successful on the novelty issue.
Lindgren J stayed the making of orders correcting the Register pending the determination of the appeal. His orders and the terms of the stay were noted on the Register which was not then rectified until after the High Court refused the applications for special leave.
REASONABLENESS OF LUNDBECK’S CONDUCT
In support of the reasonableness of the course adopted by Lundbeck awaiting the final outcome of the Federal Court proceedings, evidence was led from Mr Caine, a patent attorney and partner of Davies Collison Cave Patent and Trade Mark Attorneys. He has had lengthy and broad experience as a patent attorney in making more than 140 applications for extensions of term of eligible pharmaceutical products on behalf of clients. His firm has been responsible for the greatest proportion of extension of term applications since the extension of term provisions were first introduced on 27 January 1999. He expresses both his own view and his awareness of the views and approach of other members of the patent attorney profession, namely, that the decision in the Federal Court did not accord with the views held in the profession and were regarded as incorrect in relation to the true construction of the words “contain, or consist of” in section 71(2)(b).
Mr Caine also expressed the view that if any “contingent” extension of an application were to have been filed by Lundbeck prior to the final outcome of the Federal Court proceedings, the Commissioner would have deferred dealing with an extension of time application until the final conclusion of the court proceedings.
There was no expert evidence called by the Applicants which refuted the evidence of Mr Caine.
Lundbeck also led evidence by Ms Irani a principal of the firm Spruson & Ferguson Patent and Trademark Attorneys, who has an honours degree in biochemistry and an honours Bachelor of Law degree. She has practised as a trademark attorney since 1993. One of her specialities is advising on and applying for extensions of terms of pharmaceutical patents. She has appeared before the Patent Office on up to 10 occasions and been involved in at least four appeals. Her firm has submitted more than 150 applications for extensions of patent term since 1999.
Ms Irani’s view of the decision by the Federal Court on the extension of term provisions was also that it did not accord with views widely held among patent attorneys. She did not consider the decisions could be reconciled with the plain reading of the provisions and the clear intention of the patent term extension regime. She says that if asked in 1999 whether Lundbeck could have an extension of the Lexapro patent based on marketing approval for Cipramil she would have said that it could not be so based.
In relation to the making of a “contingent” application for an extension of time prior to determination of the Federal Court proceedings, Ms Irani thought, from her experience, that where there are parallel court proceedings on foot, the Commissioner would be unwilling to consider or determine an application for an extension of time and that no useful purpose would have been served by filing such an application. She would have advised against it. She considers that the Patent Office would not have dealt with an extension of time application following the decision of Lindgren J, because it would have involved a finding that Lundbeck had made a relevant “error or omission” and, therefore, in her opinion the Commissioner would have stayed an application for extension of time if it had been filed while the application and appeal to the Full Federal Court was on foot.
No expert evidence from a patent attorney was called by the Applicants to contradict the evidence of Ms Irani.
In our view, the evidence of Mr Caine and Ms Irani provide support for the reasonableness of the position taken by Lundbeck in maintaining its view as to the correct interpretation of the Act and in deferring the application for the extension of time until at least the decision of the Full Federal Court was handed down in 2009.
WAS THERE ANY MISLEADING CONDUCT BY LUNDBECK
On 1 June 2011, Dr Ayers as the delegate of the Commissioner granted Lundbeck’s application for an extension of time.
The Applicants contend that the conduct of Lundbeck misled the delegate in not disclosing to the delegate the substance of the comments and suggestions received from Watermark and the advice from Corrs in 2005, and misrepresented the true position. They say that the finding of central importance in obtaining the extension of time in 2011 was the conclusion reached by the delegate that Lundbeck and its patent attorney were under a genuine misconception with respect to the extension of term provisions that the relevant date for the purposes of section 71(2)(b) was six months from the date of registration of Lexapro. They say that the delegate would not have reached that conclusion had Lundbeck disclosed the “advice” it had been given of the possibility and desirability of making an early application.
We do not consider that in making its application for the extension of time that it was necessary or appropriate for Lundbeck to inform the delegate of the “preliminary” observations and suggestions as to possible courses of action mentioned by Watermark in July 2005.
This is because the “advice” was expressed to be preliminary in the nature of a possible course of pre-emptive or protective action in respect of litigation which had just been commenced. Secondly, no practical or useful purpose would have been served by filing an application on a contingent basis as it would clearly not have been dealt with until the court proceedings had been finally resolved. Notwithstanding the suggestion of a possible application at that stage by Watermark, we find that Lundbeck genuinely and reasonably continued after taking appropriate legal advice to hold its view that the Lexapro registration date was the only relevant date, having regard to the widely accepted view among patent attorneys, including the view that the Merck decision was wrong or distinguishable.
In our view, until the application for the extension of time was filed on 12 June 2009, nothing of significance occurred which could or should have caused Lundbeck to change its view that it was not necessary or appropriate to make such an application before that time.
The Applicants contend that Lundbeck acted for purely strategic commercial reasons in delaying the making of an application for an extension of time between the decision of Lindgren J and the Full Federal Court’s decision in June 2009.
We consider it likely that commercial considerations were taken into account but, in our view, this does not alter the fact that Lundbeck reasonably maintained the view over this period that it did not have to submit an application and acted consistently with this view and considered advice from Corrs as to its options.
HARDSHIP TO APPLICANTS
In July 2008, Lundbeck, Alphapharm and Aspen Pharma appealed the decision of Lindgren J to the Full Federal Court. In submissions in reply filed in the Full Court appeal, Alphapharm and Aspen Pharma were given express notice of Lundbeck’s intention to apply for an extension of time in the event that it did not succeed before the Full Court.
On 26 May 2009, Lundbeck informed Sandoz that if it was unsuccessful before the Full Court it intended to seek an order that the extended term of the Lexapro patent should be amended to record the expiry date as of 9 December 2012. On 4 June 2009, Lundbeck informed Apotex of the same intention.
The Applicants submit that it is Lundbeck’s conduct that is in issue and the conduct of the Applicants’ is irrelevant. We accept this submission and it is therefore not necessary to address in detail the evidence adduced by the witnesses called by the Applicants on this point. However, we will briefly outline our views on this aspect.
In relation to Apotex, Mr Millichamp for that company pointed out that it was not involved in the Federal Court proceedings. Its product was registered in the ARTG on 24 July 2008. He stated that at the time Apotex’s product was launched, he considered that the application for the extension of time was “meritless”, and he still maintained that position. He asserted that Apotex lost an opportunity to consider and calculate the relevant risks associated with the launch. He did not give any detail of any specific or particular prejudice.
Alphapharm launched its product on 15 June 2009. It was aware from February 2009, as a result of submissions by Lundbeck to the Full Court, of Lundbeck’s intention to seek an extension of time. By 23 February 2009, Lundbeck’s position was “clear” to Alphapharm. The intention was set out also in the publication “Pharma in Focus” in February and early June 2009.
The hypothetical prejudice advanced by Alphapharm is that it may have received different advice in relation to the stay application made on the morning of 12 June 2009 if it had known earlier of the proposal by Lundbeck to file an application to file an extension of time on that day. The evidence of Mr Fraser did not advance the case for Alphapharm in relation to this aspect beyond a possible specified change of approach to the stay application.
Mr Sharkey, who was formerly employed by and gave evidence on behalf of Sandoz, indicated that Sandoz took a calculated commercial decision based on timing and commercial pressures. Sandoz took into account the strong commercial advantage of launching early and he gave detailed consideration as to whether the launch should proceed. In relation to prejudice, his evidence was to the effect that if he had been given earlier notice he may have made a different assessment of the risk, and this may have resulted in a delay of the launch of the product. In our view, this speculative and undefined possibility cannot not be given significant weight on this application for extension of time.
In relation to Aspen, Mr Ellis, the former head of Business Development, did not consider that there was any significant risk that Lundbeck would get an extension of time and he took this view into account before the launch of the product on 15 June 2009. The evidence does not indicate that earlier notice would have resulted in a delay or withdrawal of the launch. He was also well aware of the commercial advantage of being the first company to launch a generic product (called “the first mover advantage”).
All of the Applicants are experienced astute participants in a highly competitive and specialised field who, in our view, must have been fully aware of the provisions enabling an extension of time application to be made, and the fact that the Register had not been amended pending the outcome of the litigation, which was recorded on the Register.
In our view, the Applicants deliberately elected, for proper commercial decisions, to proceed with the launch of their generic products and take the commercial risks involved if an extension of term was ultimately granted. In two instances, the risk of the granting of an extension of time to seek an extension of the term of the patent was seen as minimal, while commercial gains to be obtained by an early launch and as the first mover were of a high order. The asserted disadvantages and hardships or prejudice claimed by the Applicants individually or cumulatively cannot be given any significant weight, and do not disentitle Lundbeck to an extension of time in which to seek an extension of term of the Lexapro patent, where the merits or otherwise of an extension of term can be fully ventilated and determined.
PUBLIC INTEREST
The Applicants further submitted that, having regard to the length of the delay, it would have been in the public interest for Lundbeck to have made an earlier application to let the public know that it intended to seek an extension of time if it was unsuccessful in the litigation. It also said that the Act specifically contemplates the advertisement and notification to the world at large of the making of an application for an extension of time. Had Lundbeck made a contingent application the public at large would have been put on notice at a much earlier time.
In considering this application, it is necessary to bear in mind that the Act expressly provides for an extension of time and this must have been known to all parties and to the world at large. The Register at all relevant times until 9 February 2010 showed the expiry date as 13 June 2014 based on the ARTG registration of Lexapro, and contained the orders made by Lindgren J and the Full Federal Court. A search of the Register would have indicated the fact that there was litigation on foot and that the extension of term was disputed. As a consequence of these considerations, there is no force in the submission that the conduct of Lundbeck was detrimental to the public interest so as to disentitle it from having an opportunity to make an application and put its case for an extension of term.
CONCLUSION
For the above reasons, the Tribunal affirms the decision to grant the extension of time.
I certify that the preceding 111 (one hundred and eleven) paragraphs are a true copy of the reasons for the decision herein of The Hon. Brian Tamberlin, QC, Deputy President and Dr T Nicoletti, Senior Member .............[sgd]...................................................
Associate
Dated 4 December 2012
Dates of hearing 13-17 August 2012 Counsel for the Applicants Mr D K Catterns QC and Mr C Dimitriadis Solicitors for the Applicants King & Wood Mallesons Solicitors for the Respondent No appearance Counsel for the Joined Party Ms K Howard SC and Mr R M Niall SC Solicitors for the Joined Party Corrs Chambers Westgarth ANNEXURE “A”
Event Name Australian Patent 509445 for citalopram (Cipramil) (Cipramil Patent) filed
5 January 1977
Cipramil Patent sealed
13 October 1980
Priority date of Lexapro Patent
14 June 1988
Filing date of Lexapro Patent
13 June 1989
Date of grant of Lexapro Patent
31 August 1992
Cipramil Patent expired
5 January 1993
Date of inclusion of Cipramil on ARTG
9 December 1997
Commencement of the extension of term provisions in the Patents Act
27 January 1999
Statutory deadline for filing the extension of term application (based on Cipramil)
26 July 1999
Date of inclusion of Lexapro on ARTG
16 September 2003
Date on which Lundbeck filed an application for an extension of term based on the ARTG registration of Lexapro
22 December 2003
Extension of term based on the ARTG registration of Lexapro granted
27 May 2004
Alphapharm Pty Ltd (Alphapharm) commenced proceedings seeking the revocation of the Lexapro Patent and the removal of the extension of term
6 July 2005
Alphapharm wrote to the Commissioner of Patents alleging that there was an earlier ARTG registration, for Cipramil, on which an extension of term of the Lexapro Patent could and should have been sought
7 July 2005
Letter from the Deputy Commissioner of Patents proposing to reduce the extension of term so that the Lexapro Patent would expire on 9 December 2012
13 July 2005
Hearing before the Delegate of the Commissioner of Patents
13 April 2006
Arrow (Aspen Pharma) commences proceedings seeking the revocation of the Lexapro Patent and the removal of the extension of term
17 May 2006
Decision of the Delegate of the Commissioner of Patents directing that the Register of Patents be amended to reduce the extension of term by reflecting the expiry date as 9 December 2012
19 May 2006
Lundbeck appeals the decision of the Delegate of the Commissioner of Patents to the Federal Court
5 June 2006
Justice Lindgren of the Federal Court upheld the validity of the Lexapro Patent but held that the extension of term was not valid
24 April 2008
Justice Lindgren orders that the extension of term be removed but stays the operation of that order
19 June 2008
Lundbeck appeals the decision of Justice Lindgren
10 July 2008
Alphapharm appeals the decision of Justice Lindgren
29 July 2008
Arrow Pty Ltd (Arrow), now Aspen Pharma Pty Ltd (Aspen Pharma) appeals the decision of Justice Lindgren
31 July 2008
Lundbeck's submissions in reply in the Full Court appeal puts Alphapharm and Arrow (Aspen Pharma) on notice of its intention to apply for an extension of time in the event it does not succeed before the Full Court
2 February 2009
Lundbeck writes to Sandoz Pty Ltd (Sandoz) informing it that if it is unsuccessful in relation to the extension of term before the Full Court it will seek an order that the extended term of the Lexapro Patent be amended to record the expiry date of the as 9 December 2012
26 May 2009
Lundbeck writes to Apotex Pty Ltd (Apotex) indicating that if the Full Court removes the extension of term it will apply to both the Court and the Patent Office seeking that the extension of term be recorded as expiring on 9 December 2012
4 June 2009
Full Federal Court upheld validity but dismisses Lundbeck's appeal
11 June 2009
Lundbeck writes to each of the Applicants advising them of its intention to apply for an extension of time
12 June 2009
Lundbeck files the application for an extension of time together with an application for an extension of term based on the ARTG registration of Cipramil
12 June 2009
Expiry of the original (unextended) term of the Lexapro Patent
13 June 2009
Alphapharm launched its generic escitalopram product in Australia
15 June 2009
Aspen Pharma, Apotex and Sandoz launch their respective generic escitalopram products
16 June 2009
Alphapharm files an application for special leave to appeal the Full Court’s decision to the High Court of Australia on the grounds that the Full Court erred in finding the Lexapro Patent to be valid
16 June 2009
Arrow files an application for special leave to appeal the Full Court’s decision to the High Court of Australia on the grounds that the Full Court erred in finding the Lexapro Patent to be valid
24 June 2009
Lundbeck files an application for special leave to appeal the Full Court’s decision to the High Court of Australia
9 July 2009
Lundbeck’s application for an extension of time advertised in the Official Journal of Patents
23 July 2009
Alphapharm opposes Lundbeck's application for an extension of time
3 August 2009
Sigma Pharmaceuticals (Australia) Pty Ltd (Aspen Pharma) and Apotex oppose Lundbeck's application for an extension of time
20 August 2009
Sandoz opposes Lundbeck’s application for an extension of time
21 August 2009
High Court refuses the applications for special leave
11 December 2009
Register of Patents amended by removing the extension of term
9 February 2010
Hearing of Lundbeck's application for an extension of term before the Patent Office
2 March 2011
Lundbeck signs an undertaking not to seek injunctive relief in any future infringement proceedings against each of the Applicants
21 April 2011
Delegate allows Lundbeck's application for an extension of time to file an application for an extension of term (based on Cipramil) (application under review)
1 June 2011
Applications for review filed with the Administrative Appeals Tribunal (AAT)
28 June 2011
Lundbeck applies to be joined as a party to the AAT proceedings
19 August 2011
Expiry of the extended term of the Lexapro Patent (if extended based on the ARTG registration of Cipramil)
9 December 2012
Expiry of the Lexapro Patent before the extension of term was removed (i.e. based on the ARTG registration of Lexapro)
13 June 2014
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