26 January 2012

Evergreening by Business Method? Patent Office Says ‘No’!

Celgene Corporation [2012] APO 12 (17 January 2012)

Manner of Manufacture – whether a method of dispensing a drug with a ‘prescription approval’ step is patent-eligible – novelty – whether use of a ‘prescription approval code’ makes method new

evergreenWe wrote back in June last year about Celgene Corporation’s unsuccessful application for an extension of term of a patent for the drug REVLIMID the active ingredient of which is lenalidomide, a close relative to thalidomide which is well-known as a ‘teratogen’, i.e. it causes horrific birth defects when used during pregnancy.  (See Celgene Denied Term Extension on REVLIMID Patent.)  That application failed because although a new indication for REVLIMID – for treatment of the class of genetic blood disorders disorders known as myelodysplastic syndromes (MDS) – has recently been added to the Australian Register of Therapeutic Goods (ARTG), an extension of term can only be based on the original registration date of a product, and not upon a later date of amendment to the ARTG.

Celgene has since been pursuing certification of an innovation patent directed to unusual subject matter for a pharmaceutical company – a business method.  To be more specific, Celgene’s Australian innovation patent no. 2011100687 relates to a method of dispensing thalidomide to a patient. 

As explained below, Celgene has thus far been unsuccessful.  But its efforts nonetheless raise the question of why a pharmaceutical company should be pursuing a business method patent of this type.  The specification notes that ‘the Australian Therapeutic Goods Administration (TGA) has approved an application by Celgene Pty Limited to market thalidomide for the treatment of erythema nodosum leprosum (ENL) and multiple myeloma in specified circumstances’, and that it is expected that it will be useful in the treatment of other conditions.  ‘However,’ the specification continues, ‘due to the severe teratogenic risk of thalidomide, methods are needed to control the distribution of this drug so as to preclude administration to foetuses.’

We are therefore inclined to speculate that Celgene predicts growth in the prescription of thalidomide, and has come up with a creative ‘evergreening’-type strategy to benefit from this, irrespective of whether there are any patent rights relating to the treatments themselves, by securing a monopoly over a process for prescribing and dispensing the drug which reduces the risk of harm to patients and foetuses.  If the process were to be mandated by the government, Celgene would stand to benefit from every prescription of thalidomide, either by operating the scheme itself, or by collecting patent license fees from a third-party operator.


Celgene’s improved dispensing method is just like the conventional dispensing method, with one difference.  A doctor still prescribes the drug (thalidomide), and the patient still takes the prescription to a pharmacy for dispensing. 

However, in the Celgene method, the doctor, patient and pharmacist must all be registered in some form of central database (the specification is not very forthcoming about the nature of registration), and the pharmacist must obtain a ‘prescription approval code’ from a ‘Risk Management Centre (RMC)’ (which appears to be some form of database operations centre) before the drug can be dispensed.

The alleged advantage of this approach is that patients may be required to complete a questionnaire, and to be provided with literature explaining all of the risks involved, before they are qualified for registration.  In other words, the method provides a mechanism to ensure that patients are fully-informed of risks and precautions prior to supply of thalidomide, and an additional mechanism for preventing unsuitable patients from obtaining the drug, by denying inclusion in the register.

By way of example, claim 1 (as amended during examination) is as follows:

1.      A method of treating a patient with thalidomide by permitting a prescription for thalidomide to be filled by a pharmacy only after a prescription approval code has been communicated to the pharmacy to authorise the dispensing of thalidomide to the patient and dispensing that thalidomide for administration to the patient, comprising the steps of:

upon presentation by the patient of the prescription to the pharmacy, consulting a computer readable storage medium in which the patient, a prescriber and the pharmacy are registered, each patient having a unique patient identification number assigned to the patient, and in which is recorded an assessment of whether the risk of an adverse side effect occurring in the patient is acceptable;

associating a prescription approval code with the presentation by the patient of the prescription for thalidomide upon verifying that:

        the patient, prescriber and pharmacy are registered in the medium; and

        the risk of an adverse side effect occurring in the patient for this
        presentation is acceptable; and

communicating the prescription approval code to the pharmacy.

The Hearing Officer found that this claim – and all others – does not define a manner of manufacture, i.e. patent-eligible subject matter.


The applicant argued that the claim is directed to a method of treating a patient, and it is long-established that methods of treatment are patentable.

The Hearing Officer – quite rightly, in our view – disagreed (at [22]-[23]).  Opening the claim with ‘a method of treating a patient…’ does not necessarily make it so!  Claims directed to methods of treatment generally involve actual administration of therapies, such as administering a novel drug, or a novel combination of treatments, or a novel dosage regime for a known drug.  The method defined in the above claim certainly goes no further than dispensing thalidomide, as recited in the preamble, and the method steps themselves stop at the point when the ‘prescription approval code’ have been communicated to the pharmacy, i.e. prior to actual dispensing.


In considering whether the claims – despite not being directed to a method of medical treatment – are nonetheless for a manner of manufacture, the Hearing Officer identified a number of relevant principles in the authorities.
  1. From National Research Development Corporation v Commissioner of Patents (‘NRDC’) [1959] HCA 67, a claimed invention must produce an ‘artificially created state of affairs’.
  2. From Grant v Commissioner of Patents [2006] FCAFC 120, the refinement that the required artificial state of affairs is meant ‘in the sense of a concrete, tangible, physical, or observable effect’.
  3. Again from NRDC, a claimed process must offer ‘some advantage which is material, in the sense that the process belongs to a useful art as distinct from a fine art … that its value to the country is in the field of economic endeavour.’
  4. From NRDC, Grant and other cases, conventionally excluded subject matter involving human-made (i.e. artificial) results, but which do not provide the requisite material advantage and/or are not artificial in the relevant sense, include kits, printed matter, new use of a known substance, and the fine arts.  In Grant the transfer of an asset – a rearrangement of abstract human affairs – did not establish patentability.
  5. From Re Virginia-Carolina Chemical Corporation’s Application [1958] RPC 35 (cited in NRDC), determining the ‘advantage’ requires reference to the specification, and not merely ‘the form of words tentatively put forward as defining the invention’, so that ‘applications containing some useful additions to the known methods of preparation of articles or materials will not be imperilled by injudicious claiming clauses nor will claiming clauses ostensibly directed towards a manner of manufacture cloak the real nature of the applicant’s disclosure.’
In the absence of an explicit administration step, the claimed process, on its face brings about no material change.  There is – if the prescription is dispensed – a transfer of ownership of the drug purchased by the patient, but Grant appears to establish that a change of ownership, at least without something more, is not sufficient to bestow patent-eligibility on a claim.  The elusive ‘computer readable storage medium’ is consulted in the process, but unchanged by it.  A ‘prescription approval code’ (whatever that may be – the specification does not make it clear) is ‘associated’ with presentation of the prescription. 

The Hearing Officer therefore agreed with the examiner (at [57]-[59]) that the claimed method was directed to no more than a scheme for dispensing a drug, which is not patentable under the manner of manufacture requirements.


The examiner had cited US patent application 2007/0219825 as anticipating the claimed method.  An excerpt from the abstract if sufficient to illustrate the relevance of the cited document:

A method for restricted distribution of a drug to a patient while minimizing the occurrence of adverse side effects. The method restricts access to the drug by preventing distribution to certain patients for whom the drug may be contraindicated. The method permits a prescription to be filled by a pharmacy only after the pharmacy has received an approval for release of the prescription. Generation of the prescription approval depends on registration of a prescriber, pharmacy and patient in a central database, and the determination that the risk is acceptable that the patient will experience an adverse side effect.

Celgene argued that its method was distinguished from the prior art, primarily because the citation does not disclose the claimed feature of a ‘prescription approval code’.

While it seems possible that a practical computer-implemented embodiment of Celgene’s scheme could involve the generation of a unique code corresponding with each prescription, no such limitation was actually described in the Celgene patent specification.  And in the absence of any relevant implementation details, or any evidence on the point, the Hearing Officer was compelled to interpret the term ‘prescription approval code’ according to its plain meaning, according to which the code need not be unique nor particularly ‘sophisticated’ (at [40]):

In essence, a code is a representation of a piece of information. I have difficulty seeing why a word (such as YES) is not properly viewed as a code. Writing uses symbols (i.e. the letters of the alphabet) to create words that represent information. The coded nature of writing is apparent when a written message is given to a person who is illiterate. I believe that a YES or NO response can be regarded as a “prescription approval code”. However, if I am wrong in this view, there are two further matters that lead me to believe that a “prescription approval code” is the same as a “prescription approval”. First the signal sent to the computer at the pharmacy is not a YES, but an electronic signal that is decoded by the pharmacy computer as the word YES. The electronic signal is clearly a code. Second, YES is itself a shorthand (or code) for something like “you are authorised to dispense thalidomide to the person named in the prescription”. In either case a “code” is sent to the pharmacy.

As a result, the claims were found to lack novelty.


The Hearing Officer noted (at [60]) that it would be possible to amend the claims to insert an explicit method of treatment step, and thus considered whether such a ‘hypothetical claim’ might overcome the manner of manufacture objection.  Based again on the NRDC and Virginia-Carolina decisions, he concluded that it was unlikely (at [64]):

… the essence of the hypothetical claimed method is the checking of risk during the dispensing of thalidomide. However, no new risk factors are considered. All that is involved is double checking whether the original decision of the prescriber was correctly made, and confirming (or rejecting) that there is an acceptable risk associated with thalidomide treatment. This is analogous to a process of treating a patient characterised by the patient double checking the instructions on the bottle of tablets before taking a tablet. While this is clearly a sensible thing to do, the essence of the method clearly does not lie in the useful arts, or the field of economic endeavour. The hypothetical claims of the present innovation patent are similarly directed to a sensible thing to do, but the essence of the invention does not lie in the field of economic endeavour. I cannot see how the addition of an explicit treatment step could convert the method to a manner of manufacture.

Nonetheless, the Hearing Officer noted that the Act provides that an innovation patent should not be revoked unless the Commissioner ‘has, if appropriate, given the patentee a reasonable opportunity to amend the relevant specification for the purposes of removing a ground for the revocation of the patent.’  He observed further that the reasoning in his decision differs from that in the examiners reports, and therefore that Celgene is reasonably entitled to an opportunity to amend.  He has allowed the remainder of the certification period, i.e. until 29 February 2012.


In our opinion, the Hearing Officer reached the correct decision in this case and – to his great credit, given the approach taken in so many recent ‘manner of manufacture’ decisions – he did so purely on the basis of the binding court authorities, and without reference to the growing catalogue of dubious Patent Office decisions.

Furthermore, he quite rightly and fairly granted the patentee an opportunity to amend the patent (however futile he may believe the exercise to be) in view of the new reasons for revocation resulting from the hearing.  This contrasts again with the approach in a number of recent Patent Office decisions, in which Hearing Officers have concluded simply that they find nothing of substance in the specification as a whole from which claims to patentable subject matter could be drafted, and revoked or refused applications without providing any further amendment opportunity, leaving an appeal to the Federal Court of Australia as the applicant’s only option.

Additionally, a refusal to certify the innovation patent will put an end to whatever plans Celgene may have had to burden the Australian health system with an additional ‘tax’ on the prescribing of thalidomide.  In the absence of any real compensating benefit from the proposed scheme – which appears to be based on a questionable assumption that doctors and pharmacists may otherwise fail in their duty to properly question and inform their patients before describing and dispensing a drug with infamously tragic side effects – this can be no bad thing.


dk said...

"..he did so purely on the basis of the binding court authorities, and
without reference to the growing catalogue of dubious Patent Office

is this corruption going to continue as long as Gillard is in power? 

dk said...

my comment was removed. i was speaking the truth Mark.

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