Pfizer Appeal Success Opens Door for Patent Litigation Over ENBREL Biosimilar

Back in March, I reported on a decision of Justice Stephen Burley denying Pfizer an order for preliminary discovery to confirm its belief that Samsung Bioepis AU (‘SBA’) was infringing a patent covering methods of producing Pfizer’s biological medicine for treatment of autoimmune diseases marketed under the name ENBREL.  At the time, I noted that the decision appeared to create a substantial barrier to enforcing patents relating to methods of producing biologics, since the very characteristics that make biosimilarity difficult to quantify – i.e. that similar physicochemical, biological, immunological, efficacy and safety characteristics may be observed despite variations in the structure of the complex biologic molecules – were what prevented Pfizer from convincing the court that it had a sufficient belief that infringement was occurring.  I therefore indicated that I would not be at all surprised to see the decision appealed.

Pfizer did indeed appeal, and a Full Bench of the Federal Court of Australia has now handed down its decision, with three judges unanimous in overturning Justice Burley’s decision and granting Pfizer preliminary discovery: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193.

The key to Pfizer’s successful appeal lies in the wording of Rule 7.23(1)(a) of the Federal Court Rules, which relates to a precondition for an order for preliminary discovery that ‘the prospective applicant … reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent’ (emphasis added).  The primary judge had determined that evidence provided by an expert witness on behalf of Pfizer did not provide a reasonable basis for its belief that SBA was infringing the Pfizer patents, but rather amounted to ‘mere suspicion’.  On appeal, the Full Court shifted focus away from evaluating the factual correctness, or otherwise, of expert evidence (which was, inevitably, in dispute between the parties), and back to the language of the Rule.

Thus, as Chief Justice Allsop stated (at paragraph [81] of the Full Court decision), ‘[i]t was not a matter of which body of expert evidence to prefer; rather, it was whether Pfizer reasonably believed that it may have a right to relief.’  Or, as Justice Perram observed (at paragraph [134]), ‘[t]he question was not whether [SBA’s expert] Professor Gray was right and Dr Ibarra was wrong. The question was whether the belief held by Mr Silvestri, the Assistant General Counsel and directing mind of Pfizer, was reasonable’.  Both judges also criticised a tendency for applications for preliminary discovery to mutate into ‘mini-trials’, in which a form of fact-finding takes place due to a ‘perceived need to show the reasonableness of a belief that a right to relief exists rather than might exist’ (at [119]).

This decision should provide comfort to patentees of biological processes, and indeed of manufacturing and other ‘hidden’ processes more generally.  It confirms that what a prospective applicant needs to prove in order to be granted preliminary discovery is not a likelihood that infringement is actually occurring, but only that there is some reasonable basis for its subjective belief that infringement may be occurring.  This should not only make preliminary discovery easier to obtain, but also ensure that applications for preliminary discovery do not continue to turn into costly and time-consuming mini-trials.

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Tags: Biologics, Biotechnology, Discovery, Infringement, Pharmaceuticals

Enforcing Patents on Processes for Producing Biologics – Easier Said Than Done?

A biological medicine, or biologic, is a medicine that contains one or more active substances made by a biological process or derived from a biological source.  Compared to conventional pharmaceuticals, which are made by chemical synthesis using different organic and/or inorganic compounds, biologics are generally much larger molecules that are derived from the living cells of micro-organisms or animals by utilizing the metabolic processes of the organisms themselves.  In many cases, cells are genetically engineered, using recombinant DNA technology, to co-opt their expression capabilities and turn them into tiny ‘factories’ for producing the desired biologic molecules.  The first such substance to be approved for therapeutic use was synthetic ‘human’ insulin, developed by Genentech and first marketed by Ely Lilly in 1982.  Since then, biologics have become increasingly important, and hundreds of biologic medicines are now in use, including therapeutic proteins, DNA vaccines, monoclonal antibodies, and fusion proteins.

The chemical structures of traditional ‘small molecule’ pharmaceuticals are usually well-defined.  Biologics, on the other hand, are often difficult, and sometimes impossible, to characterise structurally due to their size and complexity.  In many cases, some components of a finished biologic may be unknown.  Protecting biologics with patents can therefore be challenging, given the potential difficulty in claiming the active biologic molecule in terms that are sufficiently precise to meet legal requirements for the invention to be clearly defined, while also being broad enough to encompass variations that may have the same therapeutic properties, and satisfying the tests for novelty, inventive step and subject-matter eligibility.

The complexity of biologics also means that they are more difficult to produce than small molecule pharmaceuticals.  Minor differences in the production process, raw materials, temperature, pH, or cell line can result in a significant alteration in a medicine’s quality, efficacy, or safety.  While this creates challenges in manufacturing and quality control, it also creates opportunities for the protection of intellectual property, by securing patents on methods of producing biologic medicines either in place of, or in addition to, trying to claim the active molecules themselves in some form.

Process claims are all very well if the patentee can established that a suspected infringer is using the patented method of production.  But what happens when the suspect company keeps its manufacturing processes secret, as indeed is most commonly the case?  Well, then the patentee may need to convince a judge to issue an order for preliminary discovery, compelling the accused infringer to disclose relevant information about its processes.

This is exactly what Pfizer recently sought to do in preparation for possible patent litigation against Samsung Bioepis AU (‘SBA’) in relation to Pfizer’s product ENBREL (active ingredient etanercept), which is a biological medicine used in the treatment of autoimmune diseases such as rheumatoid arthritis, juvenile rheumatoid arthritis and psoriatic arthritis.  Unfortunately for Pfizer, Justice Stephen Burley has denied its application for discovery, ruling its evidence insufficient to establish a ‘reasonable belief’, as opposed to a ‘mere suspicion’, that SBA is infringing its patents relating to a process for producing etanercept: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCA 285.

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Tags: Biologics, Biotechnology, Discovery, Infringement, Pharmaceuticals

The Limitations of Patents in a Globalised Economy

Advances in information technology, transport and communications, along with the implementation of multinational trade agreements, have resulted in a great acceleration in cross-border movement of goods, services, technologies and capital over the past few decades.  Patents, on the other hand, continue to exist as rights having only national scope.  Even within the European Union, which has established a highly-integrated single internal market, and where the European Patent Organisation provides a mechanism for central examination and grant of European patents, ongoing maintenance and enforcement of granted rights remains a matter for the national patent offices and courts.  (This will change once the Unitary Patent and Unified Patent Court come into effect, however since the ‘Brexit’ vote the timetable for their implementation is uncertain.)

The potential difficulties with the limited national scope of patents are illustrated by a recent Australian Federal Court decision, Load and Move Pty Ltd v Container Rotation Systems Pty Ltd [2016] FCA 843. 

In broad terms, Load and Move is an Australian company that owns Australian patents, and which found itself in competition with other Australian companies (including Container Rotation Systems) to supply products to overseas customers (specifically, in Eritrea) that Load and Move believed may be covered by its patents.  Container Rotation Systems (CRS) promotes and sells its products via its website, www.containerrotationsystems.com, which can, of course, be accessed from anywhere in the world with an internet connection.

The potentially infringing products, as it turns out, are manufactured at the same Chinese factory that makes the products for Load and Move.  Profits from the supply of the products no doubt accrue to the Australian competitors, however the products themselves are shipped directly from China to Eritrea, and thus never enter or leave Australian territory.

In these circumstances, it is understandable that Load and Move might feel, at least on some moral level, that its rights are being infringed, and that there ought to be something it could do to prevent competitors operating out of its own home market of Australia from ‘stealing’ business through the expedient of conducting all material (though not operational or financial) activities overseas.

However, ‘feeling’ wronged, and actually being legally wronged, may be two entirely different things.  In this case, the court found that it was not ‘objectively reasonable’ for Load and Move to believe that it had any right to relief in respect of the activities of CRS and other competitors in directing the overseas manufacture and supply, notwithstanding that they were operating out of Australia.

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Tags: Australia, Discovery, Infringement

Dispute Over Claim Construction Fails to Limit Discovery

Siemens Water Technologies Corp v GE Betz Pty Ltd [2011] FCA 641 (2 June 2011)

Practice and Procedure – whether extent of discovery may be limited by reference to the parties’ contended claim construction

As many readers – and particularly those from common law jurisdictions – will be aware, ‘discovery’ (or ‘disclosure’) is the process by which the parties to a legal dispute are able to obtain relevant evidence from each other prior to the commencement of the main trial.

Discovery can be vital in patent infringement proceedings, because sometimes it is not possible to demonstrate that a particular accused product or process infringes a patent without access to technical information known only to the alleged infringer.  Often the patentee will seek discovery of a wide range of material, while the accused infringer will resist extensive discovery on the basis that much of what is being sought will not be relevant, and the patentee is merely engaging in a ‘fishing expedition’.

Of course, an apparatus or process will only be infringing if it falls within the scope of one or more claims of the patent.  Consequently it is possible, in principle at least, that the legitimate extent of discovery may depend upon the proper construction (i.e. interpretation) of the patent claims.  In Australia, disputes over claim construction are decided by the court during the main trial, and not at some preliminary stage (such as the ‘Markman hearings’ normally held for this purpose in the US).

So what happens if the parties disagree on the proper construction of the claims in the course of discovery?

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Tags: Australia, Claim construction, Discovery, Federal Court practice