28 February 2015

Regulator’s Action Against Pfizer is a Fizzer

LipitorAustralia’s competition watchdog has failed to convince a Federal Court judge that a strategy employed by pharmaceutical company Pfizer, to enter the market for generic products upon expiry of its patent covering blockbuster cholesterol-lowering drug LIPITOR, constituted an illegal misuse of market power, or ‘exclusive dealing’: Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd [2015] FCA 113.

From the year 2000, when it acquired Warner Lambert LLC, Pfizer was the owner of an Australian patent protecting the drug atorvastatin, and the exclusive supplier of the drug to the Australian market under the brand name LIPITOR.  The patent expired on 18 May 2012.  However, Pfizer faced initial limited generic competition from 19 February 2012, from which date Ranbaxy Australia Pty Ltd was able to supply atorvastatin to the Australian market under the terms of a settlement agreement reached with Pfizer in earlier proceedings.

Pfizer’s internal modelling indicated that the expiry of the patent, and the consequent entry of generic competition to the market, would have a significant impact on revenues.  A 2009 estimate suggested that the value of sales of LIPITOR would fall from $771 million in 2011 (i.e. that last full year before patent expiry) to just $70 million in 2015.

Pfizer therefore devised a strategy according to which it would produce its own generic (i.e. ‘unbranded’) atorvastatin, and that would enable it to leverage the final year or so of the market exclusivity, which it enjoyed as a result of its patent rights, into a form of ‘loyalty scheme’ that would encourage pharmacies to stock the Pfizer generic product in preference to the products of other generic suppliers.

The Australian Competition & Consumer Commission (ACCC) alleged that Pfizer’s scheme involved a misuse of the market power it enjoyed during the term of its patent, contrary to section 46 of the Competition and Consumer Act 2010 (‘CCA’), as well as exclusive dealing contrary to section 47 of the CCA, and commenced proceedings against Pfizer in the Federal Court of Australia.

The case was heard over 14 days in October 2014.  The court (Justice Flick, who also decided the MPEG LA v Regency Media case at first instance, in which he was soundly rolled on appeal) has now handed down its decision, finding that the ACCC failed to establish that Pfizer had acted contrary to section 46 or 47 of the CCA, and thus that Pfizer’s strategy is not contrary to Australian competition law.

21 February 2015

Should I Apply for Patents in My Tech Start-Up? (Part 2)

Soap bubble question markIn my previous article (which you can find here, if you have not already read it) I wrote about the strategic role of patents, and other forms of intellectual property, in capturing the intangible assets of a business in a form that can be owned and managed.

I also outlined some of the reasons why a start-up venture might choose not to pursue patent protection for some, or all, of its innovative technology namely:
  1. the start-up’s technology is not eligible for patenting;
  2. the timing is not yet right, and the business has higher priorities;
  3. a patent is not the best option for protecting the company’s IP; or
  4. the value that a patent will add to the business does not justify the cost.
In this second part I will discuss some of the benefits that patents may bring to technology start-ups, including: assisting in obtaining funding; setting a business up for success; providing additional revenue streams; protecting market share; establishing technology leadership; and strengthening the company’s position in business negotiations.

15 February 2015

Should I Apply for Patents in My Tech Start-Up? (Part 1)

Soap bubble question markAnybody starting a new technology venture based on some novel idea will need to address the issue of whether or not to apply for one or more patents to protect the idea.  In fact, the question is not merely whether to apply, but also when to apply and what to apply for.  Furthermore, these questions must be considered in the context of the overall business strategy of the start-up venture.

For the purposes of this article I am assuming that the bulk of the value in a technology start-up resides in its intellectual assets.  This should be self-evident – a new company typically has no tangible assets to speak of, and generally relies on what its founders bring to the table, namely their ideas, creativity, experience and skills in the relevant fields of technology and business.  The biggest problem with these initial intangible assets is not that you cannot ‘see’ them, it is that you cannot nail them down, buy them or sell them.  If a key founder bails, burns out, or suffers illness or accident, the start-up could be over before it has even begun.

Of course, investors and financiers know all this.  Up to a point, they will invest in people despite the inherent risks.  Indeed, the people are critical because the only way the risk can be mitigated at all is by trying to ensure that the right team is in place.  But ultimately people are not possessions to be owned, bought and sold.  They are free to come and go as they please, and they are subject to the whims of fate.

Patents provide one mechanism by which ‘free’ knowledge and ideas can be captured and owned by a business, in order to increase competitive advantage and add value.  In this series of two articles I will look at how this happens, and discuss some of the main issues to be considered when deciding whether or not to apply for patents.  Later in this first article, I will run through some of the reasons why a start-up might decide not to file patent applications.  The second article will focus on the key considerations on the other side, i.e. when and why start-ups should file patent applications.

High Court Will Hear Appeal in Myriad BRCA Gene Patent Case

GenesOn Friday, 13 February 2015, the High Court of Australia granted ‘special leave’ to appeal a decision of five judges of the Federal Court of Australia that upheld the patent-eligibility of isolated genetic material. 

The original (unsuccessful) challenge to the patent, owned by Myriad Genetics, Inc along with two co-patentees, was launched by cancer-survivor and ‘gene patent’ opponent Yvonne D’Arcy, along with advocacy group Cancer Voices Australia (which has since disbanded and withdrawn from the case).  Ms D’Arcy is seeking revocation of claims 1 to 3 of Australian Patent no. 686004, each of which is directed to ‘an isolated nucleic acid coding for a mutant or polymorphic BRCA1 polypeptide…’.  Mutations in the BRCA1 gene are correlated with increased breast cancer risk, and can therefore be used as a basis for early detection of a predisposition towards development of cancer.

Corresponding claims in Myriad’s US patent have been found to be ineligible for patent protection by the US Supreme Court.  However, the unanimous decision of the five judges sitting as a Full Bench of the Federal Court, which was issued in September last year, made it very clear that the ‘manner of manufacture’ test for patent-eligibility under Australian law is different from the test that applies in the US under 35 USC 101.

According to a media statement issued by Maurice Blackburn – the lawyers representing Ms D’Arcy – a hearing will take place in April.  I would therefore expect that a final judgment will issue later in the year.

09 February 2015

‘Shark Tank’ Debuts Down-Under

Shark Tank LogoShark Tank is a ‘reality’ TV show in which people with innovative ideas pitch to a panel of wealthy business people – the eponymous ‘sharks’ – in the hope that one or more of them will bite and invest a chunk of their own cash in exchange for a hunk of the business.  It has been a huge success in the United States, where it premiered in August 2009, and screens on Friday evenings.  I know this because when the US Shark Tank is on-air (Saturday morning, local time), my Twitter feed is alive with comments as many of the people I follow on Twitter watch and Tweet in real-time.

The Australian version of the show debuted on Channel 10 at 8pm last night (i.e. Sunday, 8 February 2015).  I have my fingers crossed that it will catch on here, and based on tonight’s opening episode it is certainly in with a chance.  But I would have to say it is no sure thing.  Australians, broadly speaking, are different from Americans.  While Australian people are clever and creative, this country lacks the ingrained entrepreneurial culture that can be found in the US.  This was on display in tonight’s opening episode, in the attitudes and behaviour not only of the Australian would-be investees, but also of the Australian sharks.

The thing is that we have been here before.  The Shark Tank format was not new when it launched in the US in 2009.  It was derived from the UK version, Dragon’s Den, which has been running since 2005, and which continues to spawn international franchises under various names.  The format originated in Japan, in 2001, where it was called ‘マネーの虎 (Manê no Tora)’, or ‘Money Tigers’.  Australia already had our own version of Dragon’s Den on Channel 7 in 2005, which ran for only one season before being cancelled due to poor ratings.

08 February 2015

‘Unjustified Threats’ Provisions: A (Tarnished) Silver Bullet for Trolls?

Angry bulletIn Australia, if somebody threatens you with patent infringement proceedings, you can sue them for making ‘unjustified threats’.  If you win, you can be awarded not only your costs of the proceedings (i.e. what the Americans call ‘fee shifting’, and we call ‘business as usual’ here in Australia) but also an injunction to prevent continuing threats, and damages in compensation for any harm you can show has been done to you as a result of having been accused of infringing a patent.

This could be great news if you receive a letter from some shady patent-owner with a dubious claim, whom you suspect is just trying to shake you down for a quick settlement in order to avoid the expense of possible full-blown, time-consuming and expensive proceedings in the Federal Court of Australia on infringement and validity of the patent.

Unfortunately, however, the ‘unjustified threats’ provisions do not specifically target bad actors such as ‘patent trolls’.  As a result, invoking the right to sue somebody for making (allegedly) unjustified threats is likely to lead to full-blown, time-consuming and expensive proceedings in the Federal Court of Australia on infringement and validity of the patent – and I have written previously about cases in which this is exactly what has happened.

In my opinion, a balanced approach to dealing with dubious threats made by opportunistic patent-owners offers a genuine means of dealing with the ‘troll issue’ – not just in Australia, but in the US and elsewhere.

However, what we have at present is not balanced.  The existing ‘unjustified threats’ provisions adversely impact patent-owners who are acting in good faith.  They are also counter to the wider public interest, in that they provide an incentive for patentees to ‘sue first and ask questions later’ (contrary to the intent of the Civil Dispute Resolution Act 2011).  So what is the value of the ‘unjustified threats’ provisions in the Patents Act 1990, and should they be reformed to improve the balance, and make them more effective?

01 February 2015

Is It Inevitable? ‘Inherency’ in Australian Patent Law

Darts targetOne of the most fundamental requirements for an invention to be validly patentable is that it must be novel, i.e. new.  An invention lacks novelty or, in other words, is anticipated by a prior art  reference, only when a single reference discloses each and every element of the claimed invention.  If there is some difference between the claimed invention and the single reference, then the invention is novel – though it may nonetheless lack an inventive step if the difference is insignificant or would have been obvious to the skilled person.

Finding lack of novelty is straightforward when a prior art reference clearly and unambiguously discloses exactly the same thing that an inventor claims to have invented.  However, the situation can be more complex if the reference arguably contains an implicit or inherent disclosure of one or more elements of the claimed invention.

Questions of inherent disclosure most commonly arise in the chemical and pharmaceutical fields, particularly where an invention is based upon some newly-discovered property of a previously-known compound.  If the compound always had the ‘new’ property, and it is only that nobody had noticed, then can the invention be novel?

The issue of what, exactly, is ‘implicitly’ disclosed in a prior art reference arises in a decision of a full bench of the Federal Court issued on 23 January 2015 (Bristol-Myers Squibb Company v Apotex Pty Ltd [2015] FCAFC 2) in an appeal relating to a long-running dispute over the validity of a patent covering the antipsychotic drug aripiprazole.  The drug is marketed in Australia by Bristol-Meyers Squibb (BMS) as ABILIFY, under license from the patentee Otsuka Pharmaceutical Co., Ltd.

The Full Court has upheld the earlier finding of a single judge of the court that the patent is valid, notwithstanding that there is prior art teaching which, if carried out in a particular manner, could result in the claimed product.  On the other hand, it seems that there are many ways in which it could be carried out that would not result in the claimed product.

Licensee Wins, But Loses, Termination Appeal

Crying stick figureA full bench of three judges of the Federal Court of Australia has ruled that the Australian Patents Act 1990 does not authorise the termination of a licence covering multiple patents in circumstances where some, but not all, of the patents have ceased to be in force (Regency Media Pty Ltd v MPEG LA L.L.C [2014] FCAFC 183).

The decision is important because it would appear to settle the interpretation of a provision, in section 145 of the Patents Act, that has long been regarded as potentially ambiguous.  In over a century, however, this provision, and its precursors in the Australian and UK patent laws, has not been closely examined with a view to resolving this potential ambiguity.

In the interests of full disclosure, I should point out that Regency Media (the licensee, and appellant, in this case) has been a Watermark client for a number of years.  I have personally worked closely with them, and Watermark Intellectual Property Lawyers represented Regency in the appeal.  This post will therefore focus on the legal reasoning of the Full Court.  The judgment itself summarises the factual background, should you wish to read more.  I published a similarly dry summary of the original decision of a single judge of the court, back in March last year.

Interestingly (or frustratingly, depending upon your point of view) this was a case in which the appeal court ruled that the judge at first instance had got it wrong.  As the Full Court stated, at [18], ‘Regency succeeds in the appeal.’  However, MPEG LA went on to succeed based on an argument first raised in an amended notice of contention filed in the appeal.  It is thus notable that the period within which Regency could have applied for special leave to appeal the Full Court’s decision to the High Court of Australia has expired, and no application has been filed.

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