27 April 2014

High Court to Consider Pharmaceutical Term Extension Question

PillsIn the latest development in a long-running saga, the High Court of Australia has agreed to hear an appeal over whether or not it is possible to obtain an extension of time within which to apply for an extension of the term of a patent relating to a pharmaceutical substance.

The substance in question in this case is the antidepressant drug escitalopram, marketed in Australia as LEXAPRO, and covered (at least until 13 June 2009) by Australian patent no. 623,144 owned by H Lundbeck A/S.  Lundbeck is looking to extend the term of the patent to 9 December 2012, which it would be entitled to do as compensation for delays in obtaining regulatory approval to market LEXAPRO in Australia.  But, in order to do this successfully, it requires an extension of time to allow its application for an extension of term to be considered, because it was filed about ten years too late!

So far, the Australian Patent Office, the Administrative Appeals Tribunal, and a (unanimous) Full Bench of three experienced judges of the Federal Court of Australia have all upheld Lundbeck’s claim to the extension of time. 

However, the additional three-and-a-half years of patent term presumably represents a great deal of money in prospective damages to be paid by generic pharmaceutical manufacturers, who have been selling products in competition with LEXAPRO, and so they not given up on appealing!  And, it seems, rightly so – because on 11 April 2014 the High Court of Australia granted ‘special leave’ (transcript at Alphapharm Pty Ltd v H Lundbeck A/S & Ors [2014] HCATrans 79), allowing generic manufacturer Alphapharm Pty Ltd to appeal the Federal Court decision.

In fact, Alphapharm was only 50% successful in its bid.  The High Court declined to take the question of whether it was ‘reasonable’ for Lundbeck to be granted an extension of an entire decade any further, presumably feeling that the tribunals below had weighed up all of the relevant factors correctly.  The High Court appeal will therefore be limited to the single question of whether an extension of time to apply for an extension of term is available at all under the provisions of the Australian Patents Act 1990 and Patents Regulations 1991.

Background

As noted above, Lundbeck’s problem with its term extension application is that it missed the deadline by around 10 years, and therefore requires a rather lengthy extension of time in order to make a valid application for an extension of term.  There is, of course, a legitimate explanation for this sorry state of affairs, which can be summarised as follows:
  1. LEXAPRO was entered onto the Australian Register of Therapeutic Goods (ARTG) on 16 September 2003, and Lundbeck duly applied for, and was granted, an extension of term based upon this listing, until 13 June 2014;
  2. it turned out, however, that the extension of term was invalid, because LEXAPRO was not the first product to be listed on the ARTG containing escitalopram due to the fact that CIPRAMIL – listed on 9 December 1997 – contains a mixture of escitalopram and another, less effective, form of the same compound;
  3. this was, in the opinion of many in the field, a surprising outcome, so Lundbeck actually had a pretty good excuse for its error (see Pharmaceutical Extensions and International Inequities for further details);
  4. however, it meant that Lundbeck should have applied for an extension of term no later than 27 July 1999 and, on 12 June 2009 (just one day prior to the original patent expiry date), it made an application along with an accompanying request for an extension of the deadline by the ten years or so required to make the application valid;
  5. on 1 June 2011, against objections from various generic manufacturers, the Australian Patent Office allowed the extension of time (see Extension of Time Granted to Correct Extension of Term Error);
  6. on 4 December 2012, the Administrative Appeals Tribunal (AAT) upheld the Patent Office decision (see Lundbeck Wins Latest Round in LEXAPRO Term Extension Bout); and
  7. on 18 November 2013, a Full Bench of the Federal Court of Australia confirmed the AAT decision (see Aspen Pharma Pty Ltd v H Lundbeck A/S [2013] FCAFC 129).
Throughout these proceedings, there have been two aspects to the challenge brought by the generic opponents:
  1. Do the Australian Patents Act 1990 and Patents Regulations 1991 permit the grant of an extension of time to request an extension of term of a patent?
  2. If so, then do the circumstances in this case justify exercising the discretion to grant such an extension of over ten years?
At every level so far, both of these questions have been answered affirmatively.

What Has The High Court Agreed to Decide?

Alphapharm sought leave from the High Court to appeal the Federal Court’s unanimous findings on both of the above questions.

However, the Court has agreed only to hear an appeal on the first questions, i.e. whether the Act and Regulations permit the grant of an extension of time in any circumstances.

With the Court having denied leave to appeal the decision on whether or not the circumstances of the case justify the grant of a ten-year extension of time, then if it determines that an extension of time is permissible in principle, then the extension of term will become final, and Lundbeck’s patent will have expired on 9 December 2012.

Alternatively, if the court decides that an extension of time is prohibited by the terms of the Act and Regulations, then the extension of term will be void, and Lundbeck’s patent will have expired on 13 June 2009.

Why Is This Even an Issue for the High Court?

The problem in this case, which will be finally resolved by the High Court, is some (arguably) ambiguous drafting in the Patents Regulations.

Almost all deadlines established under the Patents Act can be extended, under section 223, in appropriate circumstances.  Most commonly, an extension is requested because of an ‘error or omission’ on the part of an applicant or patentee, or his/her agent.  In other words, the Patents Act recognises that ‘to err is human’!  In Lundbeck’s case, the relevant error was a misapprehension as to the correct application of the law regarding extensions of patent term, and the resulting misidentification of the appropriate ARTG product registration upon which its extension of term application should be based.

There is more than one event that can trigger a deadline to request an extension of patent term – specifically, the request must be filed by the latest of:
  1. six months of the date of first inclusion of a product containing the patented compound on the ARTG;
  2. six months of the date of grant of the patent; and
  3. 26 July 1999 (six months after commencement of the extension of term provisions).
Generally, one would expect that the relevant deadline (whichever one of the above applies – in fact it it is the third in Lundbeck’s case) could be extended under section 223.  However, certain deadlines are excluded from the operation of the general extension of time provisions, as ‘prescribed’ in Regulation 22.11.  One such prescribed act, under Regulation 22.11(4)(b) is:

filing, during the term of a standard patent under subsection 71(2) of the Act, an application under subsection 70(1) of the Act for an extension of the term of the patent.

On the face of it, this regulation might easily be read as saying that the time for filing an application for an extension of term is not extendible under section 223.  But if that is so, then it would appear that the words ‘during the term of a standard patent as required by subsection 71(2) of the Act’ are completely unnecessary.

However, the unanimous ruling of the Full Federal Court, agreeing with the Patent Office ad the AAT, was that ([2013] FCAFC 129, at [50]-[51]):

The making of an application under s 70(1) of the Act is governed by two time limits: the application must be made “during the term of the patent” and within six months of the applicable date in s 71(2)(a) to (c). Both time limits must be observed in order to make an application.

… Regulation 22.11(4)(b) does not simply prescribe the filing of an application under s 70(1) of the Act. The words “during the term of a standard patent under subsection 71 (2) of the Act” specifically identify the action that is prescribed. … Properly understood, reg 22.11(4)(b) distinguishes between separate actions and prescribes one, not the other. The result is that the action of filing the application under s 70(1) during the term of the patent is prescribed and cannot, therefore, be a relevant act to which s 223(2) refers. On the other hand, the action of filing the application within six months of the applicable date is not prescribed and is taken to be a relevant act to which s 223(2) can respond.

It has to be said, however, that the drafting of Regulation 22.11(4)(b) is hardly a model of clarity, and it is necessary to go looking for some way to give meaning to the condition ‘during the term of the patent’.  The intention appears to have been to prevent expired patents from being ‘revived’ by posthumous applications for an extension of term accompanied by a request for an extension of time.  If so, surely it could be said more clearly?

Conclusion – The High Court’s Word is Law

It is not entirely clear to me why the High Court has agreed to hear this case.  The particular set of circumstances is unusual – most patents are not eligible for extensions of term, and requests for extensions of time for those that qualify are even more rare.  Furthermore, every decision-maker who has looked at the question – including three experienced judges of the Federal Court – have agreed on the interpretation of Regulation 22.11(4)(b).  And the problem (such as it is) lies in the Regulations, not the Act, and could therefore be very easily amended to clarify the intended meaning, consistently with the Full Court’s decision.

I find it very difficult to believe that a majority of judges sitting in the High Court will reach a different conclusion, but I suppose you never know what might happen!  In any event, whatever the High Court decides will resolve the ambiguity in the Regulation, assuming it is not subsequently amended, because the Court’s word is law – there is no further avenue of appeal.

And there is no question that a great deal rests on the final resolution of this issue, because a Full Bench of the Federal Court already determined that Lundbeck’s patent is valid and infringed by the generic manufacturers (in H Lundbeck A/S v Alphapharm Pty Ltd [2009] FCAFC 70), and the High Court denied special leave to appeal from that finding.  Specifically, whether or not the generic manufacturers will need to pay damages to Lundbeck for sales of their escitalopram products between 13 June 2009 and 9 December 2012.
Disclosure/Disclaimer
My employer, Watermark – Intellectual Asset Management, represented Lundbeck in its application for an extension of term of the LEXAPRO patent, and provided evidence supporting its application for an extension of time.  The views expressed in this article are my own, and do not necessarily reflect those of Watermark or any of its other employees.  (Also see the 'About' page.)

2 comments:

Mark Summerfield said...

How about what happened with this invention below?

Director that contributes to company collapse, sends smiley face text to those affected, then shares in $3.8 million gain:

http://www.innovationmentor.com.au/1/post/2014/04/directorsmileytext.html

Mark Summerfield said...

The decision of the High Court on the appeal will have important ramifications for extensions of time in the context of pharmaceutical patent term extensions in Australia. babysitting jobs

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