01 March 2015

Patentee Punished for Failing to Heed Attorney’s Recommendation

SadnessA judge of the Federal Court of Australia has denied a request by patentee Les Laboratoires Servier (‘Servier’) to amend a patent in order to avoid cancellation for failure to disclose the best method of performing the claimed invention solely because it opted not to follow a recommendation made by its Australian patent attorneys during examination of the original application back in 2004: Apotex Pty Ltd v Les Laboratoires Servier (No 4) [2015] FCA 104.

Just be absolutely clear here, the court found that the requested amendment was allowable in principle (i.e. was not precluded by any provision of the Patents Act 1990), and that in all other respects Servier had acted promptly and appropriately, such that the court would otherwise have exercised its discretion to allow the amendment.  The one and only reason given for refusing the amendment request was that the patent attorneys had suggested that a similar amendment might be made prior to grant of the patent, but that the responsible person within Servier was of the opinion that the disclosure within the patent specification was adequate, and that the amendment was therefore not necessary.  The court bluntly describes this as ‘an error on her part’ (at [180]).

I find this decision frankly extraordinary, and I fully expect that it will be appealed.  The patent in question covers the compound perindopril arginine, which is the active ingredient in the brand name drug COVERSYL, which is used to treat hypertension (i.e. high blood pressure).  This patent, and foreign counterparts, have been extensively litigated in Australia and overseas.  It is clear that there is a great deal at stake in this case, and Servier is unlikely to abandon its efforts to save a patent that has been found, in all other respects, to be valid.

I should say, at this point, that the patent attorney firm in question here was Watermark, where I work.  However, Watermark no longer acts for Servier in relation to this matter, and nothing that I shall say in this article is based on anything other than publicly available information.  Opinions, as always, are my own, and should not be taken as representing the views of Watermark, its Principals, management, other employees or clients (past or present).

28 February 2015

Regulator’s Action Against Pfizer is a Fizzer

LipitorAustralia’s competition watchdog has failed to convince a Federal Court judge that a strategy employed by pharmaceutical company Pfizer, to enter the market for generic products upon expiry of its patent covering blockbuster cholesterol-lowering drug LIPITOR, constituted an illegal misuse of market power, or ‘exclusive dealing’: Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd [2015] FCA 113.

From the year 2000, when it acquired Warner Lambert LLC, Pfizer was the owner of an Australian patent protecting the drug atorvastatin, and the exclusive supplier of the drug to the Australian market under the brand name LIPITOR.  The patent expired on 18 May 2012.  However, Pfizer faced initial limited generic competition from 19 February 2012, from which date Ranbaxy Australia Pty Ltd was able to supply atorvastatin to the Australian market under the terms of a settlement agreement reached with Pfizer in earlier proceedings.

Pfizer’s internal modelling indicated that the expiry of the patent, and the consequent entry of generic competition to the market, would have a significant impact on revenues.  A 2009 estimate suggested that the value of sales of LIPITOR would fall from $771 million in 2011 (i.e. that last full year before patent expiry) to just $70 million in 2015.

Pfizer therefore devised a strategy according to which it would produce its own generic (i.e. ‘unbranded’) atorvastatin, and that would enable it to leverage the final year or so of the market exclusivity, which it enjoyed as a result of its patent rights, into a form of ‘loyalty scheme’ that would encourage pharmacies to stock the Pfizer generic product in preference to the products of other generic suppliers.

The Australian Competition & Consumer Commission (ACCC) alleged that Pfizer’s scheme involved a misuse of the market power it enjoyed during the term of its patent, contrary to section 46 of the Competition and Consumer Act 2010 (‘CCA’), as well as exclusive dealing contrary to section 47 of the CCA, and commenced proceedings against Pfizer in the Federal Court of Australia.

The case was heard over 14 days in October 2014.  The court (Justice Flick, who also decided the MPEG LA v Regency Media case at first instance, in which he was soundly rolled on appeal) has now handed down its decision, finding that the ACCC failed to establish that Pfizer had acted contrary to section 46 or 47 of the CCA, and thus that Pfizer’s strategy is not contrary to Australian competition law.

21 February 2015

Should I Apply for Patents in My Tech Start-Up? (Part 2)

Soap bubble question markIn my previous article (which you can find here, if you have not already read it) I wrote about the strategic role of patents, and other forms of intellectual property, in capturing the intangible assets of a business in a form that can be owned and managed.

I also outlined some of the reasons why a start-up venture might choose not to pursue patent protection for some, or all, of its innovative technology namely:
  1. the start-up’s technology is not eligible for patenting;
  2. the timing is not yet right, and the business has higher priorities;
  3. a patent is not the best option for protecting the company’s IP; or
  4. the value that a patent will add to the business does not justify the cost.
In this second part I will discuss some of the benefits that patents may bring to technology start-ups, including: assisting in obtaining funding; setting a business up for success; providing additional revenue streams; protecting market share; establishing technology leadership; and strengthening the company’s position in business negotiations.

15 February 2015

Should I Apply for Patents in My Tech Start-Up? (Part 1)

Soap bubble question markAnybody starting a new technology venture based on some novel idea will need to address the issue of whether or not to apply for one or more patents to protect the idea.  In fact, the question is not merely whether to apply, but also when to apply and what to apply for.  Furthermore, these questions must be considered in the context of the overall business strategy of the start-up venture.

For the purposes of this article I am assuming that the bulk of the value in a technology start-up resides in its intellectual assets.  This should be self-evident – a new company typically has no tangible assets to speak of, and generally relies on what its founders bring to the table, namely their ideas, creativity, experience and skills in the relevant fields of technology and business.  The biggest problem with these initial intangible assets is not that you cannot ‘see’ them, it is that you cannot nail them down, buy them or sell them.  If a key founder bails, burns out, or suffers illness or accident, the start-up could be over before it has even begun.

Of course, investors and financiers know all this.  Up to a point, they will invest in people despite the inherent risks.  Indeed, the people are critical because the only way the risk can be mitigated at all is by trying to ensure that the right team is in place.  But ultimately people are not possessions to be owned, bought and sold.  They are free to come and go as they please, and they are subject to the whims of fate.

Patents provide one mechanism by which ‘free’ knowledge and ideas can be captured and owned by a business, in order to increase competitive advantage and add value.  In this series of two articles I will look at how this happens, and discuss some of the main issues to be considered when deciding whether or not to apply for patents.  Later in this first article, I will run through some of the reasons why a start-up might decide not to file patent applications.  The second article will focus on the key considerations on the other side, i.e. when and why start-ups should file patent applications.

High Court Will Hear Appeal in Myriad BRCA Gene Patent Case

GenesOn Friday, 13 February 2015, the High Court of Australia granted ‘special leave’ to appeal a decision of five judges of the Federal Court of Australia that upheld the patent-eligibility of isolated genetic material. 

The original (unsuccessful) challenge to the patent, owned by Myriad Genetics, Inc along with two co-patentees, was launched by cancer-survivor and ‘gene patent’ opponent Yvonne D’Arcy, along with advocacy group Cancer Voices Australia (which has since disbanded and withdrawn from the case).  Ms D’Arcy is seeking revocation of claims 1 to 3 of Australian Patent no. 686004, each of which is directed to ‘an isolated nucleic acid coding for a mutant or polymorphic BRCA1 polypeptide…’.  Mutations in the BRCA1 gene are correlated with increased breast cancer risk, and can therefore be used as a basis for early detection of a predisposition towards development of cancer.

Corresponding claims in Myriad’s US patent have been found to be ineligible for patent protection by the US Supreme Court.  However, the unanimous decision of the five judges sitting as a Full Bench of the Federal Court, which was issued in September last year, made it very clear that the ‘manner of manufacture’ test for patent-eligibility under Australian law is different from the test that applies in the US under 35 USC 101.

According to a media statement issued by Maurice Blackburn – the lawyers representing Ms D’Arcy – a hearing will take place in April.  I would therefore expect that a final judgment will issue later in the year.