Full Federal Court clarifies rules for patent term extensions – Part 1

Merck Sharp & Dohme & Anor v Sandoz Pty Ltd [2022] FCAFC 40

18 March 2022

Full Federal Court of Australia

Allsop CJ, Yates and Burley JJ

Background

Australian patent law permits an extension of term, of up to five years, on patents that cover approved pharmaceutical substances.  Under the relevant provisions, an extension of term application must be made based on the “first regulatory approval date” of a pharmaceutical substance covered by the patent, and at least five years must have elapsed between the effective filing date of the patent application and the first regulatory approval date. 

The case concerned a patent term extension (PTE) granted in respect of Merck’s Patent No. 2002320303 (Patent), covering both sitagliptin and a combination of sitagliptin and metformin, which are used in the treatment of diabetes.  Merck’s Januvia® product (sitagliptin alone) was approved first, and less than five years after the relevant patent date.  Merck’s Janumet®, the combination product, was approved later.

Merck obtained a PTE based on Janumet®.   It commenced proceedings against Sandoz for threatened patent infringement.  Sandoz gave undertakings that it would not launch its sitagliptin product until after the original expiry date of the Patent but refused to give undertakings in respect of the PTE period, alleging that the PTE was not valid since it should have been based on the approval date of Januvia®, as the “first regulatory approval date”.  It counterclaimed in the proceedings seeking revocation of the PTE. 

Key Issues

Merck contended that the term “earliest first approval date” in the context of the relevant PTE provisions did not cover Januvia® because at least five years had not elapsed between the date of the patent and its regulatory approval.  Therefore, Merck’s position was that the regulatory approval of the combination product of sitagliptin and metformin qualified as the earliest first approval date. 

In contrast, Sandoz submitted that the “earliest first approval date” related to any pharmaceutical substances covered by the patent regardless of whether it rendered the patent ineligible for a term extension.  Under this interpretation, the regulatory approval of Januvia® would be considered the earliest first approval date, making the patent ineligible for a term extension.

Outcome

At first instance, Jagot J concluded that the PTE granted on the basis of Janumet® was invalid.  On her construction of the relevant statutory provisions, the ‘first regulatory approval date’ is the first ARTG approval date for the group of products covered by the patent.  Here, that was the approval date for Januvia® and since it was approved within five years of the relevant patent date, no extension was available.  The submission that the patentee could effectively choose between different approval dates for different products was rejected.

On appeal, the Full Court affirmed Jagot J’s reasoning in a unanimous judgment.  This followed from a straightforward reading of the relevant provisions.  However, the Full Court also rejected the submission that such a result was contrary to policy.  It emphasised that the purpose of the PTE scheme is to balance the competing interests of a patentee whose exploitation of its monopoly has been delayed due to regulatory requirements and the public interest in the unrestricted use of the pharmaceutical invention after patent expiry.  This was consistent with the recently introduced objects clause of the Patents Act 1990 (Cth) which also refers to balancing the interests of producers, owners and users of technology, and the public.  The fact that the earlier product could be exploited from a time less than five years after the relevant patent date achieved the policy objective and a reasonable balance between the competing interests at play.

Implications

The Full Court’s confirmation of Merck likely leaves a number of PTEs vulnerable to attack, potentially shortening the effective patent period for significant commercial products.   There has already been one instance of this (see our report on Bayer Pharma Aktiengesellschaft [2022] APO 7 at page 38), in which a third party successfully obtained rectification of the Patent Register in the Patent Office to remove a PTE on Bayer’s patent covering its successful YASMIN and YAZ oral contraceptive products.  Such strategies provide a cost effective and swift avenue to challenge PTEs, noting also that Merck demonstrates that a case of this kind can also be litigated in the Court to appeal conclusion in just over one year from issuing of proceedings.

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