‘A reasonable and commercial construction?’

21 June 2021

The Federal Court overruling of a decision by the Australian Patents Office and extending BMS’ Opdivo patent to 2031 provides “important certainty” for Australia, argue Gadens’ lawyers Kelly Griffiths and Eric Chen, saying Australia could otherwise have been at a competitive disadvantage in global trade.  

Background

BMS and Ono Pharmaceuticals sought judicial review by the Federal Court of Australia after the Australian Patents Office (APO) rejected their patent term extension (PTE) application for cancer drug OPDIVO (nivolumab) under Section 70 of the Patents Act 1990 (Cth).

The APO ruling rejected the PTE application because it had formed a view that an application must be filed within six months of the first inclusion on the Australian Register of Therapeutic Goods (ARTG) of any pharmaceutical substance falling within the claims of the patent.

The APO (erroneously) believed this extended to pharmaceutical substances of third parties and not just the patentee’s goods. In this case, MSD, competitors to BMS and Ono Pharmaceuticals, had registered KEYTRUDA (pembrolizumab) with the ARTG more than six months prior to the application for extension, and the APO determined that the registration of Keytruda was the relevant date.

BMS and Ono Pharmaceuticals appealed to the Federal Court, arguing that the six months’ time restriction ran from the date that the patentee, not a third party, registers their goods on the ARTG.

Federal Court decision

Justice Beach found in favour of BMS and Ono Pharmaceuticals and determined that the APO Commissioner’s position would lead to “absurdity or unreasonableness” if accepted.  While the APO Commissioner favoured “‘literal form of textualism”, Justice Beach considered the policy considerations underlying patent law and the broader commercial context, including:

1. The purpose of a PTE is to provide patentees with an effective patent life by restoring the time lost by the patentee prior to gaining market approval, thereby compensating the patentee for the additional time, expense and difficulty in commercialising its new product;
2. Despite the enormous time and resources used to develop a drug, the protection provided under the patent system for a pharmaceutical product is less than what is provided for other technologies, because of time lost in developing and gaining marketing approval for new drugs. The industry thus gains a more restricted return on its investment compared to other industries and is restricted in the development of new products;
3. The laws of comparable jurisdictions, such as the US, Japan, and the European Union, are consistent with BMS and Ono Pharmaceuticals’ position; and
4. The Commissioner’s position would lead to commercial absurdities, for example, if a patentee’s product was approved by the TGA at year nine and a competitor’s product was approved by the TGA at year six, the patentee who applied for a PTE would only receive a one-year patent extension instead of the legislated five years. This would likewise fail to achieve the intended policy outcome of compensating the patentee for time lost due to delays in obtaining marketing approval.

Conclusion

This is an important decision for the industry as it confirms the long understood policy underpinning the patent term extension regime.

As Australia and the UK announced the finalisation of the terms of their Free Trade Agreement last week, this decision provides important certainty for a global industry regarding the Australian Government’s position on intellectual property protection.

If the decision of the APO were to stand, it would have undermined negotiations on issues of trade and access to medicines by effectively reducing the effective patent term extension period in Australia and putting Australia at a competitive disadvantage to other countries such as the US, UK and European Union.