Patent Worth Paper It’s Written On, and Then Some!

Jonker v Platform Solutions Pty Ltd [2012] FCA 237 (15 March 2012)

Interlocutory injunction – strength of prima facie case of infringement – strength of prima facie case of invalidity – irreparable injury – balance of convenience

A Federal Court judge has granted a preliminary injunction against a Brisbane-based supplier of industrial work platforms and telehandlers after one of the company’s directors told a patent-holder to ‘just do what you want’ because ‘patents aren’t worth the paper they’re written on.’

In retrospect – and particularly in the year that Apple managed to keep Samsung’s Galaxy Tab 10.1 out of the Australian market for four months based on its patent rights – this seems like a brave challenge.  In the event, it has cost Mitchell Ely and his company Platform Solutions Pty Ltd a trip to the Federal Court, where they have been unsuccessful in defending against an application for an urgent interlocutory injunction brought by John Jonker and his company Jonker Plant Hire Pty Ltd.  The injunction will prevent Platform Solutions from commercially exploiting a mobile lighting apparatus said to infringe an innovation patent owned by Mr Jonker.

To a considerable extent, Ely was his own worst enemy in this case.  His response to initial contact from Jonker became the primary basis for the court’s finding that there was a sufficient probability of patent infringement to support an injunction.  There is a lesson in this about the dangers of making any form of reply to a threat of patent infringement proceedings without the benefit of legal advice.

Australian Federal Court Blocks Generic ABILIFY (Aripiprazole)

Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd [2012] FCA 239 (16 March 2012)

Interlocutory injunction – prima facie case of infringement – strength of invalidity case – balance of convenience – Infringement – meaning of ‘exploit’ in Patents Act 1990 – interpretation of ‘Swiss-style’ claims – infringement of ‘method of treatment’ claims by supply of product – consideration of ‘Gillette defence’ and whether a discrete defence in Australian patent law

Even while the CRESTOR injunction saga continues (see Generics Unsuccessful in CRESTOR Injunction Challenges and Preliminary Injunction for CRESTOR—Not All ‘Tablets’ are Equal), the Federal Court of Australia has granted yet another preliminary injunction barring a generic product from the market pending a full trial on infringement and validity of relevant patents.  This time the drug in question is ‘atypical’ antipsychotic aripiprazole, marketed by Bristol-Meyers Squibb (BMS) as ABILIFY, under license from the patentee Otsuka Pharmaceutical Co., Ltd.

The recurring theme in these pharmaceutical cases is that the ‘balance of convenience’ will often favour the patentee and original drug manufacturer, as a result of the operation of the Australian Pharmaceutical Benefits Scheme (PBS).  Under the PBS, various approved drugs are subsidised by the government to improve availability and affordability.  In exchange for these subsidies (which undeniably increase levels of prescription, sale and use) the government exercises a degree of price control to ensure that taxpayers are not unduly burdened by the cost of patented drugs. 

One of the consequences of these price controls is that the entry of a generic product onto the market results in an immediate, and irreversible, 16% drop in the price that the government will pay for the drug.  A manufacturer can apply to charge a ‘brand price premium’, however if this is granted the additional cost is paid by the patient, not by the government, meaning that the generic product will be cheaper to the end user.

There are, however, some additional factors which set the ABILIFY case apart from the recent CRESTOR decisions – in particular the court’s discussion of the meaning of ‘exploit’ in the Patents Act 1990, its interpretation of ‘Swiss-style’ claims, and its consideration of the applicability of the so-called ‘Gillette defence’.

Australian Patents Act 1990 – As Amended

Patentology is indebted to fellow attorney Dr Julian Magarey, of Spruson & Ferguson Patent and Trade Mark Attorneys, for supplying a copy of the current Australian Patents Act 1990 marked-up to show the amendments made by the Intellectual Property Laws Amendment (Raising the Bar) Bill, which received parliamentary approval earlier this week (see ‘Raising the Bar’ Moves Another Step Closer to Law).

The document not only shows all of the changes, additions and deletions in ‘redline’ format, but also identifies the specific provisions of Raising the Bar corresponding with the changes, by Schedule and Item number.

‘Raising the Bar’ Moves Another Step Closer to Law

Hot on the heels of a ‘second reading’ on Monday 19 March 2012, the Intellectual Property Amendment (Raising the Bar) Bill 2011 was read a third time, and agreed to (i.e. passed), by the Australian House of Representatives on 20 March 2012.

The Bill will now pass to the Governor General to receive the Royal Assent, i.e. to be signed into law.  While we have been unable to identify a timetable for this step, it seems likely that the Bill will become law within the coming days.

At the second reading, members of both sides of parliament, along with the Australian Greens’ Member for Melbourne, Adam Bandt, spoke generally in support of the Bill, although there continue to be reservations expressed by members of the opposition on issues such as the patenting of genes, and the impact of patents on the cost and availability of healthcare (neither of which are specifically addressed by the legislation).

As anticipated (see Major Australian Patent Reform Passes in Senate), despite the customary use of the ‘debate’ by each side of politics to score a few political points against the other, the Bill was largely uncontentious and it was ordered that the Bill be reported to the House without amendment.

Why Attacks on Yahoo! Over Facebook Lawsuit Are Unjustified

Last week, Yahoo! sued Facebook in a US Federal District Court in San Jose, alleging that the soon-to-be public social media giant is infringing ten Yahoo! patents relating to online advertising, privacy, Web customization, social networking, and messaging.  (See Yahoo Sues Facebook for Patent Infringement… at allthingsd.com.)

The reaction from users and pundits across the internet has been almost uniformly negative, although this is perhaps not surprising considering that Facebook is rapidly heading towards one billion users.  Many of those users no doubt view themselves as part of a huge Facebook online community, and an attack on the company is – in a way – an attack on that community.

The move was described by All Things Digital as ‘either the boldest gamble of its history or the most boneheaded’, blaming Yahoo!’s ‘aggressive’ turn on new CEO Scott Thompson. Ars Technica kindly described one of the patents as being ‘written in dense legalese’, suggesting that they are overly broad and that Yahoo! has broken ‘a tacit agreement among major software firms not to sue competitors for patent infringement’.  Ars has also provided a discussion of each one of the ten patents on which Yahoo! is relying.  Even TangibleIP – the blog run by international intellectual property strategy and consulting company ipVA – has provocatively referred to Yahoo! as ‘the new troll on the block’.

IP Australia Changes Expedited Patent Examination Practice

For many years it has been the practice of the Australian Patent Office to accelerate examination of a patent application upon request by the applicant.  The authority to expedite examination is bestowed by Regulation 3.17(2) of the Australian Patents Regulations 1991.

Recent experience suggests that this practice has changed, and the Office now requires an applicant requesting accelerated examination to provide reasons sufficient to satisfy the Commissioner of Patents that examination should be expedited.

Recent requests for expedited examination are being rejected.  The standard rejection letter includes the following explanation:

Sub-Regulation 3.17(2) provides that the Commissioner may expedite examination if “reasonably satisfied that:

        a)   it is in the public interest; or
        b)   there are special circumstances that make it desirable.”

As your request did not provide any supporting reasons I cannot be satisfied that the examination of your application should be expedited.  Accordingly your request is refused.  If you believe that there are valid reasons for expediting examination you may file a new request with our office that clearly sets out those reasons.

It therefore appears that requests for expedited examination must now provide satisfactory reasons.

So You Wish to Register a Complaint?

What do you do if you have an issue with a Registered Australian Patent or Trade Marks Attorney?

Well, firstly you should raise it with the attorney.  The vast majority of problems which arise in the client-attorney relationship are the result of misunderstandings.  And while the attorney bears primary responsibility for keeping the client informed of actions, recommendations and anticipated costs, there are inevitably circumstances in which this is challenging, and breakdowns of communication occur.  If the relationship is otherwise on solid ground, these matters are usually easy to resolve.

But if this fails, or the concerns are more serious – typically implying a loss of the necessary trust between the client and the attorney – what recourse do you have?

If the attorney is a member of the Institute of Patent and Trade The Institute of Patent and Trade Mark Attorneys of Australia (IPTA), the matter may be brought to its Ethics and Disputes Committee, which considers complaints made to the Institute against any of its members.  However, membership of IPTA is not compulsory or universal, and the Institute has no formal powers to impose sanctions outside of the organisation.  Nonetheless, IPTA may act as an effective mediator when attorney and client have ceased to communicate productively.

The body charged with handling formal complaints against Australian Patent and Trade Marks Attorneys under the Australian Patents Regulations 1991, is the Professional Standards Board for Patent and Trade Marks Attorneys (PSB).  The PSB has the power to investigate complaints (and to compel the attorney to cooperate with the investigation), and to refer a complaint to the Patent and Trade Marks Attorneys Disciplinary Tribunal for adjudication.  The Tribunal has the power to impose sanctions of: reprimanding the attorney; suspending registration for up to 12 months; or cancelling registration.

Generics Unsuccessful in CRESTOR Injunction Challenges

Apotex Pty Ltd v AstraZeneca AB (No 2) [2012] FCA 142 (28 February 2012)
Watson Pharma Pty Ltd v AstraZeneca AB [2012] FCA 200 (9 March 2012)

Interlocutory injunctions – prima facie case – balance of convenience – whether additional evidence provides grounds to vary previous findings

At least five Australian pharmaceutical manufacturers are now ready to launch generic versions of cholesterol-lowering drug CRESTOR, while being barred from doing so pending the outcome of litigation over three patents held by the original manufacturer, AstraZeneca AB.

Back in December, Apotex Pty Ltd was unsuccessful in opposing an application by AstraZeneca for a preliminary injunction barring the sale by Apotex of a generic version of CRESTOR (see Preliminary Injunction for CRESTOR—Not All ‘Tablets’ are Equal).  Apotex had decided to contest the application only at the last minute, in the hope of preventing the grant of a limited injunction until 31 January 2012 pending a full hearing between the parties on the application.  Instead, the court granted an indefinite injunction finding that, having heard a substantive case from both parties, it was not appropriate to presume that Apotex was entitled to a further opportunity to oppose the injunction.  ‘Put simply,’ said Justice Rares, ‘a party is entitled to one bite at that cherry.’

This did not prevent Apotex from appearing before Justice Emmett on 31 January and arguing its case once again, this time armed with the evidence which it had not yet fully prepared at the time of the earlier hearing.

Meanwhile, two other manufacturers – Watson Pharma Pty Ltd and Ascent Pharma Pty Ltd – have been gearing up to follow Apotex’s lead in launching their own generic rosuvastatin products (rosuvastatin is the active ingredient in CRESTOR), and also faced applications by AstraZeneca for preliminary injunctions.  These applications were heard by yet another judge – Justice Jagot – on 1 March 2012.

Raising the Bar on ‘Dodgy’ Divisional Patent Applications

IP Australia has been expressing concerns for some time about what it considers to be the unreasonable practices of some applicants in relation to divisional applications.  These practices are largely based on the current ability to file a divisional application at any time up until the date of grant of the parent case.  Amongst other uses, this allows an applicant whose application has been opposed to undermine the opposition process by refiling as a divisional application.

The Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 includes provisions which will enable IP Australia to do away with this ‘loophole’ in the existing law, although without reading the Explanatory Memorandum it is not entirely apparent that this is the intention.  The amendments to sections 79B and 79C of the Patents Act 1990 (which provide for divisional standard and innovation patents, respectively) move many of the requirements for a valid divisional filing – including the final deadline – into the Regulations.

Correction:-

An earlier version of this post stated that the restrictions on divisional applications would come into effect immediately.  This was incorrect.  A 12 month commencement period applies.

Many thanks to Terry Moore at IP Australia for bringing this error to our attention.

And while proposed Regulations implementing the changes in the Raising the Bar Bill have yet to be published, IP Australia has made it very clear that it intends to set the divisional filing deadline to correspond with the end of the opposition period (i.e. the day three months following publication of acceptance in the Official Journal).  The Regulations will similarly restrict the ability to ‘convert’ a standard patent application into a divisional application after filing.

As with the Bill’s provisions raising the standards for patentability (see Australia’s ‘Raising the Bar’–What This Means for Patent Applicants), the new restrictions on divisional applications will come into effect 12 months after the Act is signed into law.  Anybody with an Australian patent application which is currently under opposition, or which comes under opposition in the coming months, will therefore have this limited period within which to take advantage of the existing right to file a divisional application.

Preliminary Injunction for CRESTOR—Not All ‘Tablets’ are Equal

Apotex Pty Ltd v AstraZeneca AB [2011] FCA 1520 (14 December 2011)

Interlocutory injunctions – prima facie case – balance of convenience – relevance of delay by patentee, complexity of proceedings, and parties’ conduct and obligations

In the first Federal Court decision to follow the ruling of the Full Court in Samsung v Apple (see Samsung v Apple – A Closer Look at the Appeal Decision) Justice Rares has granted a preliminary injunction to pharmaceutical company AstraZeneca, barring  Apotex from supplying a generic version of cholesterol drug CRESTOR (rosuvastatin) in Australia pending a final decision regarding the validity and infringement of three patents owned by AstraZeneca.

In reaching this decision, Justice Rares was bound by the ruling of the Full Court overturning the injunction originally granted to Apple against Samsung’s Galaxy Tab 10.1 tablet, which had been issued only two weeks earlier.  The Apple case confirmed that the correct approach to determining whether or not to grant a preliminary injunction is:

1. firstly, to assess whether the patentee has a sufficiently strong prima facie case upon which it may succeed at trial; and
2. if so, to weigh up the balance of convenience to the parties in the event that an injunction is, or is not, granted, to determine whether it is appropriate to do so in the circumstances.

Apple failed to defend its injunction because, while the merits and the question of convenience between itself and Samsung were fairly evenly balanced, this meant that Apple needed to demonstrate good prospects of success to justify imposing substantial prejudice on Samsung.  As Apple found to its detriment, it may be very difficult to establish ‘good’ prospects of success in a complex patent case, which might depend heavily on expert evidence to interpret patent claims, assess infringement issues, and evaluate inventiveness.

Not so AstraZeneca, however, which has been awarded an interlocutory injunction which will be effective until such time as the court orders otherwise – normally this will be after a final judgement on the merits of the case.

Australia’s ‘Raising the Bar’–What This Means for Patent Applicants

We recently reported passage of the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 through the Australian Senate (see Major Australian Patent Reform Passes in Senate).  On 28 February 2012 the Bill was introduced into the House of Representatives, where it is expected to pass quickly without amendment, in view of the substantial consultation that has already been conducted over the past three years.

The Bill is therefore likely to be passed into law within the next month or two, which means that it is time for all stakeholders to start thinking about the impact the changes in the law may have, and what this may mean for their business activities and patenting strategies.

There are many reforms in this Bill, but the ones which will have the greatest effect on users of the Australian IP system are those aimed at raising the standards required of a valid Australian patent.  It will be some time before we know exactly how far the bar has been raised, because it is likely to be a few years before any court decides a case involving a patent granted under the amended law.  However, there is no question that the reforms will make it more difficult to obtain a valid patent in Australia.

Appeals Court Finds Nadine Potatoes Protected Under PBR Act

Appeal Decision:	Elders Rural Services Australia Limited v Registrar of Plant Breeder's Rights [2012] FCAFC 14 (29 February 2012)
Appeal from:	Elders Rural Services Australia Limited v Registrar of Plant Breeder's Rights [2011] FCA 384
See also:	Federal Court Finds Fatal Flaw in PBR Act

A Full Bench of the Federal Court of Australia has overturned the April 2011 decision of a single judge of the court, who found that a drafting flaw in the transitional provisions of the Plant Breeder’s Rights Act 1994 left the Nadine potato without protection under the PBR Act.

In 1994, the PBR Act replaced the earlier Plant Variety Rights Act 1987.  The PVR Act differed from the PBR Act in a number of respects, notably in that it typically provided a shorter term of protection by measuring the 20-year period from the date of acceptance rather than the later date of grant of rights.  Additionally, a PBR provides a broader scope of protection, giving exclusive rights in relation to propagating material of the variety, whereas a PVR protected only the plants and their reproductive material (i.e. seeds).  The PBR Act also includes provisions whereby protection may be extended to a range of derived and related varieties.

The application to protect the Nadine potato straddled the two Acts, being originally filed and accepted under the PVR Act, but not being granted until after the PBR Act came into force.  At that time the PVR Act had been repealed, and therefore could not be the basis for a grant of rights.  As the appeals court has succinctly put the issue (at [40]), ‘either the [applicant] acquired PBR under the new Act by reason of the grant that occurred on 16 August 1995 or it acquired no right at all.’