Biosimilars Deals 2021

Scidera, Inc. v Meat and Livestock Australia Limited [2025] FCA 308

Introduction

Justice Rofe has handed down an interlocutory judgment in Federal Court proceedings between Scidera, Inc. (Scidera) and Meat and Livestock Australia Limited (MLA) and other respondents, in a patent dispute relating to methods for identifying traits in cattle through genetic testing.  Her Honour dismissed the respondents’ application to strike out Scidera’s statement of claim.

Background

Scidera is the patentee of AU2010202253 (the Patent) entitled ‘Compositions, methods and systems for inferring bovine traits’.  Scidera alleges that MLA, along with the Agricultural Business Research Institute (ABRI), Zoetis Australia Pty Ltd, DataGene Limited and Genotyping Australia Pty Ltd (together, the Respondents), directly infringed or authorised infringement of the Patent through the provision of genomic selection services in Australia for identifying bovine traits in cattle using high density SNP chips.

By way of interlocutory applications dated 19 April 2024, the Respondents sought orders pursuant to r 16.21(1) of the Federal Court Rules (the Rules) that Scidera’s statement of claim (SOC), or parts thereof, be struck out.  Following an initial hearing at which the Respondents ventilated their concerns, Scidera prepared an amended statement of claim (ASOC), which among various changes, added a sixth respondent, Xytovet.

Key Issues

The Respondents collectively raised several objections to Scidera’s pleadings, arguing the ASOC should be struck out on various grounds.  These grounds can be summarised as follows:

Multiple and Inconsistent Constructions

The Respondents argued that Scidera advanced multiple, inconsistent constructions of the Patent claims, making it unclear what activities were alleged to constitute infringement:

• MLA contended that the term “beef cattle genotyping” was inadequately defined and that Scidera appeared to be advancing inconsistent claim constructions.
• Zoetis argued that the ASOC propounded at least three inconsistent constructions of the Patent.
• ABRI submitted that the multiple “further or in the alternative” acts alleged to constitute infringement involved inconsistent allegations prohibited by r 16.06 of the Rules.  Rule 16.06 prohibits a party from pleading inconsistent allegations of fact or inconsistent grounds or claims except as alternatives.

“Acting in Concert” Allegations

The Respondents challenged allegations that the genomic testing laboratories were “acting in concert” with ABRI and DataGene to perform the claimed method steps:

• Zoetis contended that no common design or procurement was pleaded to support joint tortfeasorship.
• ABRI argued it was unclear which party committed which acts and that no particulars supported the “acting in concert” allegations.
• DataGene similarly argued that the meaning of “together with” in these allegations was ambiguous.

Territorial Issues and Particulars

Zoetis raised territoriality concerns, asserting that some genetic testing was performed outside Australia and questioned whether this could constitute infringement.  The Respondents also argued that Scidera failed to provide sufficient particulars of instances of infringement as required by r 34.42(3)(b) of the Rules.  Additionally, MLA disputed allegations that it controlled ABRI or encouraged the testing laboratories, arguing these assertions were unsupported by the particularised documents.

Consideration

Prior to giving her substantive reasons, Justice Rofe emphasised that the power to strike out a pleading is discretionary.  Her Honour also emphasised the contemporary pragmatic approach to pleadings in the context of modern case management principles.  Her Honour cited Murphy J in Gall v Domino’s Pizza Enterprises Ltd (No 2) (2021) 391 ALR 675, who observed that courts have often taken a “less strict approach” to pleading principles, preferring to use pre-trial disclosure and interventionist case management.  Justice Rofe noted that Murphy J broadly agreed with the approach of Martin CJ in Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82, finding that the courts should be reluctant to spend time debating technical pleading rules, provided that a pleading fulfils its basic functions of identifying issues, disclosing an arguable cause of action and apprising parties of the case to be met.

Justice Rofe also noted that:

• the parties were sophisticated litigants with experienced patent litigation advisers; and
• after the Respondents had provided detailed explanations of their concerns, it was difficult to see how they were not sufficiently apprised of the case against them.

Her Honour then proceeded to address the main arguments raised by the Respondents.

Construction and Consistency Challenges

Justice Rofe rejected concerns that Scidera was maintaining multiple constructions to enable broad discovery, noting that Scidera had been explicit about the construction it propounded and the two bases on which infringement was alleged, being:

• That the acts carried out by each of the genomic testing laboratories, Zoetis and Xytovet, constitutes a use of the claimed method; and
• A “combined infringement case” based on the steps carried out by the genomic testing laboratories, plus the further steps carried out by ABRI or DataGene when they receive the text file of the results of the SNP testing, upon which they analyse the results and provide a report in which the traits are inferred.

Her Honour also made clear that she had set out the Respondents’ complaints and Scidera’s submissions at length in order to:

• mitigate any subsequent misunderstanding of the pleadings; and
• prevent any attempt by Scidera to “seek broad ranging or ‘fishing style’ discovery”, but at the same time noting that she did not have an impression that such a discovery application was likely.

“Acting in Concert”

Justice Rofe was not persuaded that the Respondents were unable to understand the allegations involving parties “acting in concert”.  While acknowledging that the location of these pleadings under the heading “Direct Infringement of the Patent” might be superficially confusing, her Honour did not consider that the Respondents’ sophisticated legal representatives were unable to understand the pleading.  Justice Rofe directed that the final version of the ASOC should remove “Direct” from the heading.

“Further or in the Alternative”

Justice Rofe rejected arguments that pleadings framed as “further or in the alternative” were confusingly intermixed or inconsistent so as to rise to the level of being ‘embarrassing’ or ‘causing prejudice’ under r 16.21(d) of the Rules.  Her Honour noted that r 16.06 explicitly recognises that pleadings may contain inconsistent facts or claims if pleaded as alternatives, and cited Kennet J in Commissioner of Taxation v White (No 2) [2024] FCA 1291 who recognised that alternative pleadings are “a normal, and sometimes necessary, feature” in complex cases.  While the ASOC contained several alternatives, her Honour found that there was a finite and identifiable number of combinations which could be understood.

MLA’s Control Over ABRI

Justice Rofe declined to strike out the Scidera’s allegations regarding MLA’s control over ABRI and that MLA cooperated with, encouraged or had the power to prevent the actions of the testing laboratories, conclusions which MLA claimed were not supported by the pleadings.  Her Honour noted that the prospects of the allegations did not bear upon the consideration of whether they ought to be struck out, and that Scidera only had access to public documents and summaries of certain agreements.

Territoriality Issues

On territoriality, her Honour acknowledged this was likely to be an important issue but found it was not a reason to strike out the ASOC, finding that it would be better addressed with evidence in a summary judgment application or as a preliminary question.

Particulars

Justice Rofe found that the ASOC provided sufficient particulars of each instance of infringement alleged, noting that the pleadings set out in detail the steps undertaken by each respondent and aligned these with the integers of the patent claims, including providing particulars of the SNP chips used and traits identified.  Her Honour found that the pleading of infringement of the claims in the ASOC was “more than ‘an overarching allegation of infringement of certain claims’ referable to ‘generally described acts’ with more details to be provided after discovery”.

Outcome and Implications

Justice Rofe dismissed the Respondents’ applications and allowed Scidera to file the ASOC, subject to minor amendments.  Further, her Honour ordered that Xytovet would be joined as the sixth respondent, Scidera must pay the Respondents’ costs thrown away from the earlier hearing, and other costs would be costs in the cause.

Justice Rofe’s decision reinforces the modern pragmatic approach to pleadings in complex patent litigation.  In particular, her Honour emphasised that the Federal Court Rules should not overshadow the primary purpose of pleadings in identifying issues, disclosing arguable causes of action, and apprising parties of the case they must meet.  Her Honour’s reasoning also highlights that applications to strike out pleadings will face an additional challenge where the legal representatives are sophisticated litigants who are expected to be able to navigate complex pleadings without requiring technical perfection.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.

Novartis AG v Pharmacor Pty Limited [2025] FCAFC 33

Highlight

In a unanimous decision, Justices Burley, Rofe and Downes of the Full Court of the Federal Court dismissed Novartis’ appeal against the first instance decision of Justice Yates in which his Honour found that Pharmacor’s sacubitril/valsartan generic products do not infringe Novartis’ composition patent AU2003206738 relating to Novartis blockbuster Entresto® and that Novartis’ patent term extension (PTE) was wrongly granted.  The Full Court agreed with the primary judge’s findings on construction upon which his Honour’s findings on infringement and the PTE were based.  In doing so, the Full Court affirmed the central importance of claim construction and the need to give words their ordinary meaning when determining the scope of the claims.  Novartis has now exhausted all appeal avenues, with the High Court dismissing Novartis’ special leave application with costs on 7 August 2025.

Novartis’ Entresto® empire has also now been opened to generic competition in Australia with the PBS-listing of sacubitril/valsartan generic products by Pharmacor and Apotex and a secondary brand from Novartis.

Background

Novartis AG and Novartis Pharmaceuticals Australia Pty Ltd (together, Novartis) are the owners of patent AU2003206738 entitled “Pharmaceutical compositions comprising valsartan and NEP inhibitors” (the Patent).  Claim 1 of the Patent is directed to a pharmaceutical composition comprising:

(i) the AT 1-antagonists valsartan or a pharmaceutically acceptable salt thereof; and

(ii) the NEP inhibitor [sacubitril] or [sacubitrilat] or pharmaceutically acceptable salts thereof; and

(iii) a pharmaceutically acceptable carrier.

The claimed pharmaceutical combination/composition is for the treatment or prevention of hypertension, heart failure, and myocardial infarction.

This appeal stems from the primary decision in Pharmacor’s favour delivered by Justice Yates in November 2024 holding that Novartis had not established that Pharmacor threatened to infringe claim 1 of the Patent, and that the term of the Patent had been wrongly extended.  The term of the Patent had therefore ended on 16 January 2023, three months before Pharmacor’s April 2023 sacubitril/valsartan generic ARTG registrations.  This appeal was expedited as the Department of Health required Pharmacor to withdraw its PBS application by 24 March 2025 if the matter remained unresolved.

Key Issues and Consideration

The central issue on appeal concerned the proper construction of claim 1 of the Patent, the determination of which would resolve the questions of infringement and the validity of the PTE.  The key question was whether integers (i) and (ii) of claim 1 were satisfied by a complex containing anionic valsartan, anionic sacubitril and pharmaceutically acceptable cations (such as sodium cations).

At first instance, Novartis argued that claim 1 was directed to any pharmaceutical composition including a carrier that delivers valsartan and sacubitril/at as the relevant active agents or ingredients, and in particular that:

• there was no limitation in claim 1 that excluded a pharmaceutical composition in which there were non-covalent bonds between the valsartan and sacubitril; and
• claim 1 did not require that integers (i) and (ii) be discrete physical substances, each with a unique set of physicochemical properties.

At first instance, the primary judge held that the invention of claim 1 was not defined in terms that implied that integers (i) and (ii) were combined to produce a new chemical entity, being a unique, single entity with its own properties.  Novartis advanced numerous criticisms of the primary judge’s reasoning on the construction of claim 1 through multiple grounds of appeal.

For the following reasons, the Full Court was unable to detect error on the part of the primary judge in reaching his conclusion as to the construction of claim 1 (which are detailed in our report on the first instance decision):

1. Nature of the Claim: The Full Court found that claim 1 was for a pharmaceutical composition. Integers (i) and (ii) served to identify the characteristics of the product.  The words “the AT 1-antagonist valsartan” in integer (i) served to identify first, that the component must be an AT 1-antagonist and secondly, that it must be valsartan or a pharmaceutically acceptable salt thereof.  The words “NEP inhibitor” in integer (ii) were to be understood in a similar way.  So, the skilled person would understand that integer (i) of claim 1 could not be satisfied by something that also satisfies integer (ii).

2. Distinct Components Required: The Full Court agreed with the primary judge’s finding that claim 1 did not claim, through integers (i) and (ii), a complex formed from valsartan and sacubitril/at or their pharmaceutically acceptable salts.  The conjunction “and” between integers (i) and (ii) indicated that there must be both the AT 1-anatagonist of integer (i) and also the NEP sacubitril/at of integer (ii) in the composition, as distinct and separate components.

3. Expert Evidence: The experts agreed that:

• the composition of claim 1 included two active pharmaceutical ingredients or their pharmaceutically acceptable salts;
• claim 1 required two salts; and
• in contrast, a complex was a singular entity or one salt.

4. Product v Preparation: The Full Court agreed that claim 1 was a product claim relating to the state of components when in the pharmaceutical composition as prepared, not to components involved in preparing a pharmaceutical composition or something that happened after administration, including how it worked in the body.

5. ‘Double Salt’ is a Single Salt: The Full Court held that the primary judge relied on sound scientific justification for concluding that a salt complex or “double salt” did not fall within the scope of claim 1, such that a “double salt” was a single salt with neither the properties of a salt of valsartan nor the properties of a salt of sacubitril/at.

6. Support from the Specification: The Full Court found that the primary judge had appropriately considered the specification to support his construction. Passages in the specification referred to components (i) and (ii) as separate components which could be administered “together” (meaning one after the other, not as a complex) or “separately” (the components being separate in one combined unit dose form, or in two separate unit dose forms that was not administered ‘together’).  So, the specification supported the construction that claim 1 did not include a complex formed from those components.

7. Preparation in Solution: The Full Court rejected Novartis’ argument that it would be a perverse outcome if the claim encompassed a solid of salts, but, when the salts were put in solution as a means of administering them, they were not within the claim. The primary judge had found that a pharmaceutical composition in accordance with claim 1 could be prepared in the form of a solution, depending on the choice of an appropriate solvent.

The Full Court’s view on construction also resolved Novartis’ challenge to the primary judge’s findings of non-infringement and PTE invalidity.  As Pharmacor’s generic sacubitril/valsartan included a single chemical entity consisting of sacubitril, valsartan and sodium associated by non-covalent bonds, it did not infringe the Patent.  And, as Novartis’ Entresto®, being the ARTG-registered product upon which the PTE had been based, was a film-coated tablet that contained an active ingredient which was a salt complex of the anionic forms of sacubitril and valsartan, sodium cations, and water molecules, it followed that Entresto® did not contain or consist of the claimed combination, being (a) valsartan or a pharmaceutically acceptable salt thereof; (b) sacubitril or a pharmaceutically acceptable salt thereof; and (c) a pharmaceutically acceptable carrier.

Outcome

The Full Court concluded that no error had been shown in the primary judge’s reasons regarding the construction of claim 1.  This conclusion on construction was determinative of all other grounds of appeal, including the patent infringement and PTE grounds.  As the appeal was dismissed, it was unnecessary for the Full Court to consider the cross-appeal, notice of contention or application for interlocutory relief.  The Full Court ordered that Novartis pay Pharmacor’s costs of the appeal, cross-appeal and interlocutory application.

Implications

The decision reinforces the Court’s strict approach to claim construction, giving effect to the ordinary meaning of the words, and rejecting constructions that inappropriately refer to the specification to broaden the meaning of claims.  Critically, the decision also reinforces the central importance of claim construction to the issues of patent infringement and PTE validity.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.