Legal Insights

Earliest first things first – No patent term extension for a second generation product

By Ben Miller & Sophie Vo

• 14 February 2022 • 4 min read
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We recently wrote about two decisions in the Federal Court regarding the relevant goods when applying for a patent term extension, Ono Pharmaceuticals Co. Ltd v Commissioner of Patents [2021] FCA 643 (Ono) and Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2021] FCA 947 (Merck). Appeals to the Full Court were heard in both cases in November 2021 and judgment is expected shortly.

In the meantime, the Australian Patent Office (APO) has handed down a decision following Merck, deciding that the grant of the extension of term of a patent in the name of Bayer Pharma Aktiengesellschaft (Bayer) was incorrectly based on the registration of a product containing a pharmaceutical substance in 2008, and should have been based on an earlier product that received marketing approval in 2001.

The APO directed that the Register be amended to remove the term extension of Bayer’s patent.

The patent and application for term extension

Bayer’s patent relates to contraceptive pharmaceutical compositions comprising certain combinations of ethinylestradiol and drospirenone, and was due to expire on 31 August 2020 in accordance with the normal term of the patent.

An application for extension of the term of the patent under section 70 of the Patents Act 1990 (Cth) (Patents Act) was filed on 6 August 2008, which relied on the inclusion of the product YAZ in the Australian Register of Therapeutic Goods (ARTG) on 8 February 2008. The extension was granted and the patent was extended to 8 February 2023.

However, Bayer had another pharmaceutical composition YASMIN registered on the ARTG on 6 July 2001 which also comprised a combination of ethinylestradiol and drospirenone and fell within the scope of the claims. The earlier registration of YASMIN was only brought to the attention of the Patent Office when Generic Health’s lawyers made an application to rectify the Register to remove the term extension.

The decision

Noting that there was no dispute that both YAZ and YASMIN fell within the scope of the claims of the patent, the only argument raised by Bayer was to the effect that the statutory language permits a patentee to nominate the product on which to calculate an extension of term, even if it was not the first product which contained a pharmaceutical substance disclosed and claimed in the patent. Bayer relied on the statutory language in section 70.

The delegate of the Commissioner of Patents rejected this argument, noting that the statutory language of section 77 requires any calculation of a term extension to be based on 'the earliest first regulatory approval date … in relation to any of the pharmaceutical substances referred to in subsection 70(2)'. The delegate followed Justice Jagot’s decision in Merck, which similarly concerned two products for which the marketing approvals were held by the patentee, remarking that ‘the Act does not operate by reference to a nomination or selection of a pharmaceutical substance by the patentee, and that the extension is based on what is, in fact, the “earliest” inclusion on the ARTG.’

Because YASMIN was included in the ARTG earlier than YAZ on 6 July 2001, and that date is less than 5 years after the date of the patent as required by section 70(3) of the Patents Act, the delegate re-calculated the extension period as zero in accordance with section 77.

While Bayer is likely to appeal the delegate’s decision, at least to preserve a bet that the Full Court may overturn Jagot J’s decision in Merck, the odds of that happening must be long. In our view, neither the statutory language of the term extension provisions, nor the policy behind them, supports the proposition that a patentee may commercialise a patent in the form of a first generation product, then apply to extend the term of the same patent based on the later registration of a second generation product. Indeed it is difficult to see how the expression in section 77 'earliest first regulatory approval date in relation to any of the pharmaceutical substances [disclosed and claimed]' could be any clearer.

Key lessons

A number of recent cases in Australia have highlighted that patentees have obtained patent term extensions based on second generation products, without disclosing the registration of earlier ones. The decisions in Merck and Bayer illustrate that the term extensions in those circumstances should be removed, and the Full Court is expected to confirm that position.

By Ben Miller & Sophie Vo

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