21 June 2013

‘Raising the Bar’ Raises Its Head in Federal Court

Reckitt Benckiser Healthcare (UK) Ltd v GlaxoSmithKline Australia Pty Ltd [2013] FCA 583 (28 May 2013)

KilroyLess than two months after the majority of provisions of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 came into effect, the revised law has been considered in a decision of the Federal Court of Australia.

Two aspects of the recent patent reforms have arisen in the dispute between Reckitt Benckiser Healthcare (‘RB’) and GlaxoSmithKline Australia Pty Ltd (‘GSK’).  The first aspect relates to new provisions which are intended to prevent patents from being declared invalid on ‘technical’ grounds arising from a faulty chain of title from an inventor to an ultimate patent-holder.  The second aspect relates to raised requirements for the standard of disclosure required in a patent specification under section 40 of the Patents Act 1990.

To make matters interesting, the decision manages to wrongly interpret the effect of the reforms relating to disclosure under section 40.  Fortunately, on this occasion the error has had no impact on the outcome.  However, the fact that such a seemingly simple error could be made is cause for concern in view of the extensive amendments made to the Australian intellectual property laws, and the long time frame over which the courts will gradually come to consider each of the changes.

What the Patent is About

Reckitt Benckiser Healthcare (UK) Ltd (‘RB’) is the registered owner of Australian patent no. 2003283537, entitled ‘Improvements in and relating to liquid dispensing’.

The patent discloses and claims a liquid medicine dispensing bottle with a syringe, employed by RB in Australia for its ‘Nurofen for Children’ product (the linked page shows instructions for use, which are a little easier to follow than the patent specification).  RB says that GlaxoSmithKline Australia Pty Ltd (‘GSK’) intends to infringe the patent by marketing a liquid ‘Children’s Panadol’ product in Australia.  This decision, by Justice Rares, grants RB an interlocutory injunction barring GSK from marketing this product pending a final determination in the proceeding (or until further order).

GSK’s Invalidity Defence

GSK’s defence (other than denying that it infringes the patent – of course) is that the RB patent is invalid on a number of grounds.  However for the purpose of the interlocutory proceeding GSK relied only upon the grounds of lack of novelty and that RB is not entitled to the patent.

The court dealt swiftly with the novelty issue, as shall I.  There was simply insufficient evidence, at this stage of the proceeding, to support a credible attack on the ground that the claimed invention is not novel (at [52]).

The entitlement issue is of greater interest, because the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 changed the law in relation to invalidating a patent on this ground, as of 15 April 2013.

The Issue with Entitlement

Paragraph 138(3)(a) of the Patents Act provides that the court may revoke a patent if ‘the patentee is not entitled to the patent’.  This seems reasonable enough – if someone has appropriated patent rights to which they have no legitimate claim, it is absolutely fair that they should be deprived of those rights.

However, there is (or, more correctly, was) a problem with the Patents Act in relation to this entitlement issue, illustrated by the decision in Conor Medsystems, Inc. v The University of British Columbia (No 2) [2006] FCA 32.

That case concerned a patent jointly held by the University of British Columbia, and Angiotech Pharmaceuticals, Inc.  The invention claimed in the patent was the result of a joint research and development project.  There was no dispute between the two patentees that they were entitled to joint ownership as a result of the relevant research contract.  Conor Medsystems contended, however, that neither of the two University researchers named as inventors on the patent had actually made an inventive contribution.  If this was so – and despite the agreement between the University and Angiotech – there would be no basis under Australian law for the University to claim co-ownership of the patent rights.

The court found in that, if Conor was able to prove its contention (which would have been a matter for another day), then the patent would be invalid under paragraph 138(3)(a).  This would mean that Angiotech (which should have been legally entitled to 100% of the patent rights in this case) would also lose all rights.  Since the decision addressed only a preliminary issue, based on an assumption rather than proven facts, it was not necessary for the court to make any further decision regarding the fate of the patent rights.  However, at paragraph [22] of the decision, the court expressed some uncertainty as to whether other provisions of the Act might be invoked to preserve the rights to which Angiotech, at least, was legitimately entitled.

The ‘Raising the Bar’ Fix

This potential problem with the Act has been lurking in the background at least since the Conor decision in 2006.  The Raising the Bar reforms have finally corrected it, through at least two mechanisms.  The first is that new section 191A, subsection (2), empowers the Commissioner of Patents to correct the ownership of a patent in circumstances such as those assumed in the Conor decision, or indeed for any other purpose.

Secondly, new section 22A provides that:

A patent is not invalid merely because:
(a)  the patent, or a share in the patent, was granted to a person who was not entitled to it; or
(b)  the patent, or a share in the patent, was not granted to a person who was entitled to it.

Consistently with this, a new subsection (4) of section 138 provides that:

(4)  A court must not make an order under subsection (3) on the ground that the patentee is not entitled to the patent unless the court is satisfied that, in all the circumstances, it is just and equitable to do so.

First Judicial Consideration of ‘Raising the Bar’ Reforms

The court in Reckitt Benckiser considered these new provisions at paragraphs [53]-[55] of the reasons, finding:

Even if Glaxo were able to establish … that there was a sufficient doubt as to the assertions made by Ms Dallison and Mr Harrison that they were the inventors, s 22A of the Act provides that a patent is not invalid merely because it was granted to a person who was not entitled to it. Moreover, s 138(4) of the Act provides that the Court cannot make an order that a patent be revoked on the ground that patentee is not entitled to it unless the Court is satisfied in all the circumstances that it is just and equitable to do so. That requirement must be construed in the context of the circumstances here.

In this case, the two parties who, on Glaxo’s argument, have an interest in asserting rights to patent the invention, Reckitt, as successor in title to Boots, and HDB, agreed in 2006, when the issue of ownership of the intellectual property rights was squarely an issue between them that, first, Reckitt could proceed with an amended patent application that is now reflected in claim 1, and, secondly, HDB would not contest that amended patent. …

There can be little doubt, on the present evidence, that justice and equity would regard the position that the two parties with an interest in the invention had arrived at in their agreement in 2006 should not be disturbed at the suit of a third party (Glaxo).

At this early stage, then, it appears that the court is satisfied that the new provisions resolve the uncertainty identified in the Conor case.

The Reform Application Error

At paragraph [6] of the decision, the court states: 'Relevantly, following amendments that came into force on 15 April 2013, which the parties agree apply here, the Act provides as follows...' (my emphasis).

What follows is the quotation of a number of sections of the Patents Act 1990, including the new section 22A and revised section 138 (which indeed apply, as discussed above). Of some concern, however, is the fact that section 40 is recited, as amended.  However, under the application, transitional and savings provisions of the Raising the Bar Act, the changes to the substantive patentability requirements in section 40 apply only to patents filed on or after 15 April 2013, and to patents filed before 15 April 2013 for which a request for examination is filed after that date.

The amended section 40 certainly does not apply to a patent which was filed in 2003, for which a request for examination was filed in 2006, and which was granted in 2008!

Fortunately, none of the provisions of section 40 were actually relied upon in the interlocutory decision (so it is not clear to me why they were included).

Nonetheless, the fact is that the Federal Court has issued a decision which makes an incorrect assertion regarding the application of the amended section 40.  For people such as myself, who have followed Raising the Bar throughout its gestation and birth, this is a glaring error.  For others, however, who may come to the Patents Act only occasionally, or who may be encountering it for the first time, this decision could be somewhat misleading.

A Warning for Patent Litigators

There is also a passage at paragraph [44] of the decision which should serve as a caution to barristers and solicitors who may be arguing before Justice Rares in patent cases.  His Honour is not, it seems, a big fan of sitting through extensive summaries of the settled law relating to the proper construction of patent claims:

For reasons that seem to be embedded in the conduct of patent litigation, but generally unjustified, both parties spent considerable time seeking to re-till the barren ground of what is necessary to construe a patent. The principles have been settled since the High Court decided Welch Perrin & Co Pty Limited v Worrel [1961] HCA 91; (1961) 106 CLR 588. Those principles have been repeatedly applied in decisions both in the High Court, such as Kimberly-Clark Australia Pty Limited v Arico Trading International Pty Limited [2001] HCA 8; (2001) 207 CLR 1 at 19 [34] per Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ, and by this Court in cases too numerable to mention. Recently, Jagot J summarised the principles in Apotex Pty Ltd v AstraZeneca AB (No. 4) [2013] FCA 162 at [230]- [235].

You have been warned!


Less than two months after their commencement, the new provisions in sections 22A and 138(4) have been considered by the Federal Court, and thus far it appears that they have had the intended effect.  This is a good start to judicial consideration of the reforms!

On the other hand, as time goes on and further provisions introduced and/or amended by the Raising the Bar Act come up for consideration, the courts, and parties appearing before them, will need to be careful.  Determining which version of the law applies to particular patents will not always be entirely trivial, and oversights such as the one apparently made in relation to section 40 here may occur all too easily.

Perhaps a good, up-to-date commentary, which addresses all of these thorny issues would be an invaluable aid to the courts, and those appearing before them?!


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