01 July 2012

Celgene Tries – and Fails – Again With Drug Safety Business Method

Celgene Corporation [2012] APO 71 (25 June 2012)

Manner of Manufacture – whether a system for dispensing a drug which provides a ‘prescription approval’ is patent-eligible

Friendly PharmacistBack in January, we reported a decision of the Australian Patent Office in which patent claims from Celgene corporation, relating to a method of dispensing drugs with significant safety issues (such as thalidomide), were rejected as being directed to an unpatentable ‘business method’ (see Evergreening by Business Method? Patent Office Says ‘No’!).

Celgene has appealed that decision to the Federal Court of Australia (case no. VID102/2012), but in the meantime a further divisional innovation patent, no. 2011101702, directed to substantially the same invention has been undergoing examination.

Unsurprisingly, the claims of the divisional application were also rejected.  An adverse examination report was issued on 16 April 2012.  Celgene provided minor amendments addressing clarity objections in the examination report, and asked that a formal, appealable, decision be issued if the examiner was not persuaded to certify the patent.

Again, unsurprisingly, the examiner was not persuaded to certify the patent, and a written decision, maintaining rejections on grounds of lack of manner of manufacture (i.e. the the claims are not directed to patent-eligible subject matter), lack of novelty, and lack of inventive step, has now been issued by the same Hearing Officer who decided the fate of the parent patent back in January.


In reaching a decision, the Hearing Officer did not consider Celgene’s new claims in detail on their own merits.  Rather, he conducted a comparison of the features in the claims with corresponding features in the claims of the patent patent, concluding (at [12]) that ‘the features of the claims of the present patent correspond to features of the claims of the parent application (except that claim 1 is directed to a different aspect of the invention, i.e. a system).’


On novelty and innovative step, the Hearing Officer found that the claims were invalid, for the same reasons as in the parent case (at [13]):

I discussed the law on novelty and innovative step in my earlier decision, and found that the citation discloses a method that is the same as that of the parent patent. The citation discloses a system, involving a database (computer readable storage medium), and communication by telephone, fax or web-based means. To the extent that the same method is used, the systems involved are also the same. It follows that claims 1, 2, 3 and 4 lack novelty for equivalent reasons to those given in my earlier decision. Claim 5 is different, as it corresponds to claim 2 of the parent patent. Claim 2 was found to be novel, so the same conclusion applies to claim 5 of the present patent. However, claim 2 was found to lack innovative step. For reasons equivalent to those in the earlier decision I consider that claims 1 to 5 lack innovative step.


On manner of manufacture, the Hearing Officer similarly relied on the reasoning in his earlier decision.  Although we have criticised the reasons provided in a number of recent Patent Office decisions finding claims to computer-implemented inventions to be unpatentable, we had some positive things to say about the first Celgene decision:

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.

It follows that we are inclined to believe that the decision in this case, again rejecting the claims, was also correct.  Regrettably, it is more difficult on this occasion to praise the reasoning behind the decision.  While we can appreciate the need for some additional explanation of why the claimed system is not a manner of manufacture, given that all of the parent claims were directed to a method, the rationale in this case appears problematic.

We are particularly concerned by the following reasoning, which appears at paragraph [15] of the decision:

The system in claim 1 can be a computer system. While a computer system is a tangible article, in the present case that computer is characterised solely by the processing that it carries out. As a consequence, the essence of the claimed system is the processing of information about registration of persons and the risk to a patient, and the generation of a prescription approval code. The purpose of the processing is the minimisation of the risk of harm to patients. While this is clearly a sensible thing to do, the way in which it is achieved by the system does not lie in the useful arts, or the field of economic endeavour.

If this reasoning is carried to its logical conclusion, then no computer-implemented invention would be patentable. And while we can almost hear the cheers of the 6500 or so people who have so far signed the Electronic Frontier Foundation’s Defend Innovation petition at this prospect, this is not the current state of the law in Australia.

We are also disappointed to see the Hearing Officer relying (at [15] and [16]) on the recent Patent Office decisions in Invention Pathways Pty Ltd [2010] APO 10 and Jumbo Interactive Ltd & New South Wales Lotteries Corp v Elot, Inc. [2011] APO 82.  As noted in the above quotation from our earlier report, one of the more pleasing aspects of the first Celgene decision was its sound reliance on the judicial authorities.


There is nothing surprising in the outcome in this case.  Celgene expected its claims to be rejected, and thus requested an appealable decision without exercising its right to be heard.  No doubt this patent will be added to Clegene’s existing Federal Court appeal, thus ensuring that the court will be looking at the patentability of both method and corresponding system/apparatus claims.

We would expect that, as before the Patent Office, the system and method claims will stand or fall together.  If a method is not patentable, then merely programming a general purpose computer to perform the method should not alter the position.  If some technical problem needs to be solved in order to automate a method, then that may be a different matter.  But that is not the case here.

In our opinion, Celgene’s system and method claims ought all to be found unpatentable, as not being directed to a manner of manufacture.  The court may well agree that they are not novel or innovative either, but those are less interesting issues since they do not touch on fundamental questions of what is, and is not, patent-eligible in Australia.

It is unlikely that the appeal will be heard before 2013.  It is also probable that the appeals in the RPL Central and Research Affiliates cases will be heard and decided first, which may influence the outcome for Celgene.

As for why we think that Celgene’s claims should not be patent-eligible, we plan to take that question up in a separate post.


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