Alphapharm Pty Ltd v H Lundbeck A/S

The per se issue 33 Bennett J gave her reasons for dismissing Lundbeck's appeal from Lindgren J's order that the Register be rectified by removing the extension of the term of the patent in Lundbeck 177 FCR at 199-203 [223]-[247]. Her Honour had earlier made the finding that claim 1, properly construed, was to the purified or isolated (+)-enantiomer and required the preparation of that enantiomer. She said that one particular, measurable characteristic of the (+)-enantiomer could not be ascertained until the occurrence of the inventive step of obtaining the (+)-enantiomer that underpinned the invention the subject of the patent. That previously unknown characteristic was the ability of the (+)-enantiomer to rotate plane polarised light to the right (177 FCR at 197 [205]-[206]). 34 Lundbeck had argued in those proceedings that Lexapro was the first good included in the ARTG in which the pharmaceutical substance, being the (+)-enantiomer, was contained. And Lundbeck contended that that inclusion marked the first regulatory approval date for the purposes of s 70(3)(b), thus supporting its application for a full five year extension of the patent to 13 June 2014. Accordingly, Lundbeck asserted in the earlier proceedings that the earlier date of the inclusion of Cipramil in the ARTG was not relevant under s 70(3) because the inclusion of Lexapro in the ARTG had occurred after the inclusion of Cipramil, and the (+)-enantiomer was not previously separable or separated from the racemate. 35 Each of Lindgren J and Bennett J held that Cipramil was a good "containing" the pharmaceutical substance, being the molecule that was the (+)-enantiomer (177 FCR at 201-202 [326], citing Lindgren J at 76 IPR at 713 [512], and 203 [244]). That was because the racemate and the (+)-enantiomer were for therapeutic use and, as the invention showed, the latter was the molecule that "worked" in both the mixture and in its isolated form. Her Honour found that the definition of "pharmaceutical substance" focused on the ingredient for therapeutic use that involved the relevant type of interaction and that, in each instance, that ingredient was the molecule, being the (+)-enantiomer. She held that s 70(3), however, was not concerned with the therapeutic effect of the pharmaceutical substance, but was concerned rather with a simple comparison of "ingredients" between, on the one hand, those in, or being, a relevant pharmaceutical substance referred to in s 70(2)(a) and, on the other hand, those in the goods included in the ARTG (177 FCR at 202 [237]-[241]). Her Honour said (at 202 [240], 202-203[242]-[247]): 240 … What is required is an analysis of whether there are goods containing or consisting of (+)-citalopram and, if so, which of those goods had the first regulatory approval date. … 242 In my view, s 70 recognises that the pharmaceutical substance per se may not equate with the subject matter of the claim of the patent in terms. For example, a chemical compound claimed in a patent may not have the necessary therapeutic use or enable the required physico-chemical interaction unless formulated. It is sufficient if the pharmaceutical substance is in substance disclosed in the specification and in substance falls within the scope of the claim or claims. At that point in the scheme of s 70, the satisfaction of s 70(2), the necessary definition of the pharmaceutical substance by reference to the patent ceases. 243 A patent may be obtained if it discloses and claims, for example, a new method of preparation, or purification that results in greater efficacy, or improvement in the delivery of a known pharmaceutical substance already listed on the ARTG. The scheme of the 1990 Act does not provide for the extension of term of each such patent which relates to the same substance. 244 I have concluded, as a matter of construction, that the subject matter of Claim 1 of the Patent is the separated or purified or isolated (+)-enantiomer, (+)-citalopram. I have also concluded that the claim is not anticipated by the racemate. Lundbeck submits that such a conclusion is inconsistent with a finding that the racemate "contains" the (+)-enantiomer. However, the pharmaceutical substance per se is the molecule, the (+)-enantiomer. The racemic mixture is a solution that contains both (+) and (-) enantiomers in equal proportions. That (+)-enantiomer molecule per se fulfils the requirements of s 70(2). It is the molecule that "works" as a pharmaceutical substance alone, or together with other substances, in goods listed on the ARTG. These other substances may be components of a formulation or may otherwise be described as impurities, such as the (-)-enantiomer. 245 The primary judge considered at [542] whether the conclusion that the racemate contains the (+)-enantiomer is inconsistent with his construction of Claim 1 and did not accept that it was. In considering this aspect of the appeal, his Honour's construction is not relevantly different from the one I have preferred. I agree with his Honour that there is no inconsistency. 246 Having determined that, for the purposes of s 70 and in particular s 70(3), it is unnecessary to evaluate the therapeutic performance of the comparative substances, there is no need to rule on the issue of admissibility of evidence before the primary judge as to the relative pharmacological effect of the racemate and the (+)-enantiomer. 247 It follows that the term of any extension of the Patent is limited by the date of registration of Cipramil, that is, to 9 December 2012. However, as noted by the primary judge at [29], the time for such an application has expired. For that reason, as his Honour concluded at [544], the Register should be rectified by the omission from it of any reference to an extension of term of the Patent. (bold non-italic emphasis added) 36 The opponents argued that if the pharmaceutical substance per se were the pure, isolated or separated (+)-enantiomer, then the racemate in Cipramil could not have been found to contain it. That is, they contended that Bennett J found in [244] that the molecule, as opposed to the isolated molecule, was the pharmaceutical substance per se, because the molecule was part of the racemic mixture in Cipramil and was not isolated. 37 I reject that argument for the reasons given by her Honour in approving what Lindgren J had said (177 FCR at 202 [241]), namely: I see no error in his Honour's conclusions. The word "contain" does not import into the administrative process of determining whether an extension of the term of a patent is warranted a comparison of therapeutic effect or efficacy of the pharmaceutical substance. As the primary judge noted at [535] when referring to s 70(5) (which has the same combination of words as s 70(3)): In s 70(5)(a) it is 'goods' that are to contain or are to consist of the pharmaceutical substance in question. In this context, 'contain' signifies a physical relationship that is something less than 'consist of'. If goods A consist of B and C, they may be seen to contain B and to contain C, but not to consist of either alone. B and C will also be goods, although they need not be recognised as continuing to have a separate existence. For example, there is no difficulty in saying that a cake 'contains' milk and eggs although they are no longer recognised as having a separate existence in the cake. (emphasis added) 38 The racemate "contains" both enantiomers just as a cake, in Lindgren J's analogy, "contains" milk and eggs, although they no longer have a separate existence in the mixture or cake. Thus, in [241] and [244], Bennett J found that the pharmaceutical substance per se, for the purposes of s 70(2)(a), was the isolated (+)-enantiomer and that molecule was contained in the racemate even though the (+)-enantiomer was not isolated in the mixture. 39 As Bennett J reasoned, the (+)-enantiomer was a pharmaceutical substance that the racemate in Cipramil contained. Claim 1 of the patent identified, as its subject-matter, the isolated form of that molecule. The isolated (+)-enantiomer was the pharmaceutical substance per se for the purposes of s 70(2)(a). That substance, being the molecule, is contained in both Cipramil and Lexapro. 40 To use another analogy, I understand her Honour to have reasoned as follows. An egg consists of or contains yolk and albumen. If one separates the yolk from the albumen, each has individual properties that, when combined, they do not have. Once separated, the yolk per se is no different from the yolk inside the albumen, yet one can do different things with each and get different culinary and physical results. In the same way, claim 1 in the patent for the separate molecule, being the (+)-enantiomer, identified a pharmaceutical substance per se, for the purposes of s 70(2)(a). As Bennett J noted, the racemic mixture in Cipramil contained that molecule, but s 70(3) did not require that it be contained in any particular form or state or be identifiable separately or that its individual properties be known when it was so contained. 41 The opponents' argument sought to do what her Honour had held was impermissible, namely to import the qualifying expression "per se" from its singular usage in s 70(2)(a) (and s 78) into the general expression "pharmaceutical substance" used elsewhere in s 70 and Pt 3 (see 177 FCR at 200-201 [227]-[231]). 42 As I explained in Spirit Pharmaceuticals Pty Ltd v Mundipharma Pty Ltd (2013) 216 FCR 344 at 360 [50]-[51], the limitation of "per se" in s 70(2)(a) is connected to the alteration by s 78 of the rights that the patentee can enforce in respect of the extension period. While Dr Oppenheim's views are entitled to weight, I do not consider that his explanation that the "isolated" or pure (+)-enantiomer is not present in the racemate, as a matter of chemistry, affects the legal construction of the word "contains" in s 70(3)(a) that Bennett J and Middleton J found. Dr Oppenheim's is a construction based on chemical properties that is inconsistent with the legal construction of the section that the majority of the Full Court arrived at in approving Lindgren J's analysis, including his analogy referring to ingredients in a cake. 43 For these reasons, I reject the opponents' argument that the pharmaceutical substance per se, being the pure, separate or isolated molecule the subject of claim 1 in the patent, was not contained in the racemic mixture. The pure (+)-enantiomer was a pharmaceutical substance contained, for the purpose, and within the meaning, of s 70(3)(a), in the goods, being Cipramil, when they were first included on the ARTG. That is why Bennett J concluded (177 FCR at 203 [247]) that it followed from her process of expressed reasons that "the term of any extension of the Patent is limited by the date of registration of Cipramil". Had her Honour considered that the pure form of the molecule was in any material respect different from the molecule as it existed in the racemate, she could not have found that the registration of Cipramil in the ARTG had any relevance to the extension of the term of the patent.

The prior extension issue 44 I reject the opponents' argument that there had been a previous extension of the patent. The Register was rectified pursuant to s 192 of the Act to remove the extension of the term of the patent (to 9 December 2012) as a consequence of Lindgren J's order made on 19 June 2008 (that was not disturbed on the appeal). His Honour found, and the Full Court affirmed, that the original grant of the extension on 27 May 2004 to 13 June 2014, as varied to 9 December 2012 by the delegate on 19 May 2006 and entered in the Register, had been based, incorrectly, on the date of inclusion of Lexapro on the ARTG and should be rectified by the entry being removed. The ground of the decisions of Lindgren J and the Full Court was that that registration, as varied, being based on the inclusion of Lexapro on the ARTG, did not comply for the purposes of s 75(1) with one or more requirements of ss 70 and 71, namely ss 70(3)(a) and 71(2)(b). They all held that the only valid basis on which the patent could be extended was by reference to the date of the inclusion of Cipramil on the ARTG: Alphapharm 76 IPR at 718 [542]-[544]; Lundbeck 177 FCR at 199 [223]-[224], 201 [235], 202 [239], 203 [244]-[247]. 45 Critically, s 70(4) requires that the term of the patent for which an application is made to extend its term "must not have been previously extended under this Part". The words I have just emphasised demonstrate that the opponents' argument is without substance. The only basis on which the registration of the 2004 extension could have been, and in fact was, removed was that one or more of the requirements in ss 70 or 71 had not been satisfied: i.e. the cancelled registration was not made under Part 3. 46 Lindgren J ordered the rectification of the Register under s 192 of the Act because the delegate had made the extension decision on a basis not authorised by the Act. That was a jurisdictional error. The Full Court upheld that reasoning. 47 An extension of term is not made "under this Part" where the decision involves a failure to exercise jurisdiction or an excess of jurisdiction conferred by the legislation on the administrative decision-maker, here, the Commissioner by her delegate: Plaintiff S157/2002 v The Commonwealth (2013) 211 CLR 476 at 506 [76] per Gaudron, McHugh, Gummow, Kirby and Hayne JJ. Their Honours added that an administrative decision which involves jurisdictional error is "regarded in law, as no decision at all [see Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 614-615 [51] per Gaudron and Gummow JJ, at 618 [63] per McHugh J, at 646-647 [152] per Hayne J]". 48 The opponents' construction, namely than an extension that was granted by the delegate, but later set aside by the Court because it did not satisfy one or more of the mandatory requirements of ss 70 or 71 for the purposes of s 75(1), was nonetheless made "under this Part", ignored the fundamental reason why the Court ordered that the grant based on the inclusion of Lexapro on the ARTG be set aside; i.e. because that grant had not been made "under" Pt 3 and so was vitiated by the jurisdictional error involved in its making. The previous grant of an extension of term was "no decision at all". The consequential rectification of the Register under s 192 brought the Register into conformity with the true legal position, namely that there was no, and had never been any, extension under Pt 3. The invalid earlier extension was not a previous extension "under this Part" for the purpose of s 70(4).

The erroneous grant issue 49 I reject the opponents' argument that the delegate erred in granting the extension after deciding the opposition. Both ss 79 and 79A deal with issues that might arise from the immediate and delayed grant of an extension of the term of a patent under Pt 3. The Court has a plenary power to correct the Register of Patents under s 192, being a general provision, and express powers under s 160(d) and (e) on an appeal from a decision of the Commissioner such as this, under s 75(4), to affirm, reverse or vary the Commissioner's decision or "to make any order, that, in all the circumstances, it thinks fit". The existence of each of those plenary powers enables any possible adverse consequence of an erroneous entry of a grant of an extension of time on the Register of Patents to be corrected. 50 The corrective powers of the Court under ss 160 and 192 of the Act are ample to address any consequence of an erroneous registration of the antecedent, and legally operative, decision (or obligation where there is no opposition) to grant the extension, as the earlier decisions of Lindgren J and the Full Court showed. Moreover, Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ said in Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421 that: It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words. (footnotes omitted) 51 Indeed, the opponents could not suggest any reason of policy why the Commissioner, or a Court, having come to the conclusion that an extension ought be granted, could not give that decision an immediate effect, as the express words of s 76(1)(b) and (2) require. There is no qualification, by reference to time or appeals, to the mandatory duty of the Commissioner under each provision in s 76 to do what the relevant provision requires. A patentee would be entitled to a constitutional writ of mandamus under s 75(v) of the Constitution if the Commissioner delayed giving effect to its right to the implementation of the grant. 52 The opponents relied on a different construction of a similar provision in s 68(1)(b) of the Trade Marks Act 1995 (Cth) by Sundberg and Bennett JJ, over the dissent of Black CJ, in Woolworths Ltd v BP plc (2006) 150 FCR 134 at 141 [27]-[29]. In my opinion, that decision, first, is not binding on the construction of ss 75 and 76 of the Act since it dealt with a different legislative regime, and secondly, the rights under the Trade Marks Act were new rights that would flow from registration of a mark, not extensions of a present right that the Parliament intended be limited by ss 78, 79 and 79A. Moreover, a person who used a common law mark or engaged in conduct that amounted to passing off or a contravention of a provision such as s 18 of the Australian Consumer Law would be liable in damages to the person whose trade mark was ultimately found to be registrable. Thus, the delay in registration in such a case might not cause irreparable harm. The position of a patentee under the Patents Act is different. 53 There are significant perils for a patentee whose immediate entitlement to enforce an extension of the term of the patent for the exploitation of a pharmaceutical substance per se is delayed by the typically deep-pocketed opponent, being a litigious generic producer of pharmaceuticals who wishes to go to market. As soon as the patent is no longer enforceable, the generic manufacturer can apply to have its product included in the Pharmaceutical Benefits Scheme and, if that occurs, the price for the pharmaceutical substance immediately and irreversibly drops. The patentee can never exploit subsequently its extended, but more limited, monopoly at the earlier higher price. 54 A construction of ss 75 and 76 that prohibited the Commissioner from giving immediate effect to a decision to extend the term of a patent would not serve the legislative purpose of enabling the patentee to exploit its extended monopoly over the pharmaceutical substance per se subject to the newly imposed limitations under s 78A. In addition, an absence of power to give immediate effect to a decision to extend a patent would entail that the unsuccessful opponent would not need to give any undertaking as to damages and the successful patentee could be held out of recouping its reward from the exploitation of the limited extended exclusive rights under s 78 for years awaiting the ultimate outcome of litigation. While s 79 applies to protect the rights of a patentee where the extension is granted after the patent has expired, it is silent as to whether those rights include the value of the amount lost by any reduction in price paid by the Pharmaceutical Benefits Scheme once the original term expired. 55 The legislative policy reflected in s 78 is to enable the patentee to exploit the pharmaceutical substance per se, and only that, for the extended term. That policy would be subverted, not promoted, by construing the phrase "or the decision on appeal" in s 76(1)(b) as a legislative stay on an existing decision to grant. In my opinion, that phrase in the Act refers to a decision of the Court (including the Full Court or High Court) reversing a refusal to grant the extension. Having regard to the plenary corrective powers of the Court under ss 160(d), (e) and 192, there is no need to read down the ample power of the Commissioner, or a Court reversing her decision on appeal, to give immediate effect to a decision rejecting opposition to an application for an extension of the term of a patent under Pt 3.

The stay issue 56 I reject the opponents' application for a stay as meritless. The opponents could not suggest any prejudice to them from the refusal of a stay. For the reasons I have given on the erroneous grant issue, the balance of convenience is overwhelmingly in favour of maintaining the status quo, namely the immediate operation of the grant of the extension of the term of the patent. Moreover, here the limitation period of six years for infringement proceedings after 13 June 2009, when the original 20 year term of the patent expired, is imminent. If a stay were granted, the appellate process to the Full Court and the High Court may not be completed before that limitation period commences. If my decision is reversed on appeal, the opponents will be protected because any infringement action in respect of the period of the extension would cease to be maintainable. Moreover, the opponents have made no offer to submit to conditions that they would not plead or rely on the benefit of any expired limitation periods. In any event, there may be other persons, not parties to these proceedings, who could be liable for infringing during the extended term but liability for whose acts may become statute barred were the grant of the extension delayed pending the outcome of all litigation over that grant. 57 In granting a stay of his orders, Lindgren J referred to there being a doubt as to the Court's power to order reinstatement after removal of the particulars of the grant of an extension from the Register of Patents: Alphapharm Pty Ltd v H Lundbeck A/S (No 2) (2008) 78 IPR 338 at 340-341 [11]-[19]. He sourced that doubt to Woolworths 150 FCR at 141-144 [30]-[48]. Each of those cases concerned whether, in the absence of an order staying the implementation of an order requiring an entry to be made in, or removed from, a statutory register, an appellate court could restore the owner of a trade mark or patent, if a trade mark, or a claim for extension of term of a patent, had been ordered to be registered or removed from that statutory register, and the earlier order had been implemented on the register but that order subsequently was reversed on appeal. 58 The opponents have not suggested, far less established, any prejudice that they could suffer by the Commissioner giving immediate effect to the decision to grant the extension. There is no basis to think, and the opponents did not articulate, how the plenary powers of the Court under ss 160(d), (e) and 192 to correct the Register of Patents by removing the grant, if my decision were reversed, and to make any other appropriate order could possibly result in any prejudice in the circumstances of these proceedings. 59 For these reasons, I refuse to order any stay.

Conclusion 60 The appeal from the Commissioner must be dismissed with costs. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.