Balancing liberal pragmatism and literal absurdity – the Federal Court of Australia attempts to demystify the requirements for Patent Term Extensions (PTEs)

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Where an Australian patent claims a pharmaceutical substance per se and regulatory approval is first given after the patent grants, its term may be extended by up to 5 years. While the statute satisfactorily deals with routine inquiries as to eligibility, its application has always been unclear at its edges.

Australian patent no. 2011203119 claims a range of anti-programmed cell death 1 (PD-1) human monoclonal antibodies, including KEYTRUDA (pembrolizumab; Merck Sharpe & Dohme) and OPDIVO (nivolumab; sponsored by Bristol Myers Squibb Australia). The patentee (Ono Pharmaceutical Co, Ltd and E.R. Squibb & Sons, LLC) had filed a request to extend its expiry date from 2026 to 2031 based on the regulatory approval of OPDIVO. The extension had been refused in the initial decision of the Commissioner of Patents.[1]

On Judicial Review, Beach J’s ruling in Ono Pharmaceutical Co, Ltd v Commissioner of Patents[2] partially clarifies the requirements for Patent Term Extensions (PTEs) in Australia in circumstances where the subject patent covers two or more different pharmaceutical substances that have each been given regulatory approval.

Specifically, Beach J resolved whether the earlier regulatory approval of KEYTRUDA should enliven the timing requirements of the PTE provisions and prevent the patentee from basing the PTE request on the later regulatory approval of OPDVIO.[3]

This polarized factual matrix was framed as a battle of the patentee’s commercial interests versus the statutory language which the Commissioner had earlier decided could be triggered by the actions of a “stranger or even a competitor”.[4] Beach J looked through the language to the legislative intent behind its drafting, and highlighted that the provisions were intended to be beneficial and remedial[5] in nature to “remedy the mischief of a shortened period for an effective monopoly that has been caused by delays in obtaining regulatory approval”. And so, a “liberal rather than a literal construction” should be favoured, and the “absurdity or unreasonableness” or “strict textualism” advanced by the Commissioner should be rejected.

On these bases, his Honour set aside the earlier decision and ordered that the PTE be granted on the basis of the regulatory approval of OPDIVO.

Not the death of it

For the time being, this decision will change how the Patent Office assesses PTEs.

Where a patent covers two or more different pharmaceutical substances that have each been given regulatory approval, any such substance that is made by a competitor will be ignored in assessing the “earliest first regulatory approval” used to calculate the duration of the term extension.[6] This liberalism is constrained by earlier authority which held that the patentee cannot pick and choose which of two or more regulatory approvals to base the extension on for a particular pharmaceutical substance of its own.[7]

However, in terms of providing legal precedent, this decision is somewhat limited. In many instances, the factual matrix is less polarized – in particular, pharmaceutical substances are often commercialized by licensees, and in those cases the patentee would typically be well-aware of the dates on which regulatory approval was awarded, and naturally whether the pharmaceutical substance falls within the patent claims. A licensee is often neither a “stranger” nor a “competitor”. While an exclusive licensee has the same right to request a PTE as a patentee, a non-exclusive licensee does not. Would a licensed product always enliven the timing requirements for filing a PTE? This question remains unsettled, although Beach J’s passing reference to the relationship between patentee and licensee suggests that it would[8] presumably if potentially commercially sensitive information is laid bare in the request.

The other issue that was seemingly not considered by Beach J is that KEYTRUDA is exploited in Australia by MSD under license following the worldwide settlement of litigation that commenced in 2014, before KEYTRUDA or OPDIVO were given regulatory approval – a settlement that has been widely reported since 2017. It stands to reason that the patentee believed that KEYTRUDA fell within the scope of the claims in 2014, was aware of its regulatory approval and had derived a commercial benefit from its patent as a result of the settlement. In such circumstances, many of the commercially pragmatic reasons given in support of the liberal construction adopted by his Honour are moot. Perhaps the OPDIVO PTE would be vulnerable to removal from the register on application by a sufficiently motivated party, such as a generic.

At the time of writing, the Commissioner has not indicated whether the decision would be appealed. In any event, the Commissioner has already foreshadowed “the frightful spectre of a need to rewrite the statutory provisions”[9] if the case was lost. We would not be surprised to learn of an upcoming review of the statute.

For brevity we have not outlined the numerous legislative provisions for obtaining a PTE, in part because the application of those requirements is self-evidently fact specific. Nor have we outlined strategies for maximizing the benefits provided by the PTE provisions, but we are happy to discuss these with you and seeking our advice is always encouraged.

[1] Ono Pharmaceutical Co., Ltd. et al [2020] APO 43.
[2] [2021] FCA 643.
[3] [2021] FCA 643, [27].
[4] [2021] FCA 643, [69].
[5] [2021] FCA 643, [135].
[6] Patents Act 1990, s.77.
[7] Pfizer Corp v Commissioner of Patents [2006] FCAFC 190, [71]; [2021] FCA 643, [174]
[8] [2021] FCA 643, [156].
[9] [2021] FCA 643, [119].