Pfizer Corp v Commissioner of Patents - [2006] FCA 1176 - FCA 2006 case summary — Zoe

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Pfizer Corp v Commissioner of Patents

[2006] FCA 1176

Federal Court of Australia|2006-09-11|Before: Lindgren J, Bennett J

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Source facts

Court

Federal Court of Australia

Decision date

2006-09-11

Before

Lindgren J, Bennett J

Source

Original judgment source is linked above.

Judgment (29 paragraphs)

[1]

REASONS FOR JUDGMENT 1 The Patents Act 1990 (Cth) ('the Act') provides for the extension of term of patents relating to pharmaceutical substances. The statutory provisions that provide for the extension of term recognise the length of time taken for research and regulatory approval of the claimed products of such patents and the fact that this reduces the "effective life" of the patent. 2 The Commissioner of Patents, by her delegate the Deputy Commissioner of Patents, decided that an amendment should be made to the Register of Patents ('the Patents Register') to correct the extension of term of four patents ('the Pfizer patents') in the name of the applicants (collectively 'Pfizer') (Re Pfizer Corporation (2005) 67 IPR 201). This appeal by Pfizer from that decision raises two issues, which arise with respect to all four patents: · The validity of reg 10.7(7) of the Patents Regulations 1991 (Cth) ('the PatentsRegulations'). · The date from which an extension of term of a pharmaceutical patent is calculated.

[2]

the validITY of regulation 10.7(7) 3 Regulation 10.7(7) of the Patents Regulations provides that, in certain circumstances, the Commissioner must amend the Patents Register to insert the correct extension of term of a patent. In the decision under appeal, the Commissioner decided that she was required by reg 10.7(7) to amend the Patents Register (Re Pfizer Corporation at [41]). 4 The validity of reg 10.7(7) was considered by Lindgren J in H Lundbeck A/S v Commissioner of Patents (2006) 150 FCR 269. His Honour held that reg 10.7(7) is not invalid. Pfizer makes a 'formal submission' that reg 10.7(7) is invalid but limits its submissions to that contention. Pfizer relies upon the submissions presented by the applicant in Lundbeck as reflected in his Honour's reasons but does not repeat them or otherwise explain why reg 10.7(7) is invalid. 5 It is accepted by all parties that, for the purposes of this appeal, I will follow the Lundbeck decision that reg 10.7(7) is valid, prior to any determination to the contrary by the Full Court.

[6]

The ARTG 12 Schedule 1 to the Act defines the ARTG to mean 'the register maintained under s 17 of [the TG Act]'. At the time of commencement of the current Pt 3 of Ch 6 of the Act in January 1999, s 17(3) of the TG Act provided that the ARTG contains two parts, one relating to goods to be known as registered goods and the other relating to goods to be known as listed goods. By Item 46 of the Therapeutic Goods Amendment (Medical Devices) Act 2002 (Cth) ('the TG Amending Act'), despite the repeal of s 17, goods that were 'included in [theARTG]' prior to the TG Amending Act are taken to be included in the ARTG after its commencement. The distinction between listed goods and registered goods continues to apply in the TG Act, which now contains three parts - listed goods, registered goods and medical devices included in the ARTG under Ch 4 (s 9A of the TG Act, inserted by the TG Amending Act). The parties do not consider the difference between the old s 17 and the new s 9A to be material. 13 The Therapeutic Goods Regulations 1990 (Cth) ('the TG Regulations') provide for therapeutic goods of a certain kind to be included in the part of the ARTG for registered goods and therapeutic goods of a certain kind to be included in the part of the ARTG for listed goods (reg 10). The former encompasses goods which must be registered before they can be marketed in Australia while the latter encompasses goods manufactured in Australia for export only (Sch 4, Pt 1 of the TG Regulations). Section 17(4) provided and s 9A(4) of the TG Act provides that the regulations may prescribe the ways in which goods may be transferred from one part of the ARTG to the other part of the ARTG. Regulation 10B of the TG Regulations provides for such transfer. 14 It is apparent that, in the TG Act, "inclusion in the ARTG" relevantly refers to the inclusion of listed goods or registered goods. For example, s 6AAE(6) provides that, for the purposes of s 6AAE, where 'the Register' is the ARTG: 'A reference in this section to the inclusion of goods in the Register is a reference to the inclusion of the goods: (a) in the part of the Register for goods known as registered goods; or (b) in the part of the Register for goods known as listed goods; or (c) in the part of the Register for medical devices included under Chapter 4.'

[8]

Dr Walter's Evidence 19 Spirit Pharmaceuticals Pty Limited is an Australian pharmaceutical company with a commercial interest in the expiry date of at least one of the Pfizer patents. Spirit was joined as a respondent to this proceeding on 1 March 2006 (Pfizer Corp v Commissioner of Patents (2006) 67 IPR 646). 20 Spirit seeks to adduce evidence of Dr Walters, a person experienced in matters relating to the ARTG, to establish the regulatory requirements of Listed Goods and the extent to which a patentee with an export only listing can exploit a patent. The evidence is said to answer Pfizer's contention that there is no requirement to lodge extensive data in support of an application for inclusion in the ARTG as Listed Goods, which is a requirement for goods to be Registered Goods. Spirit also wishes to respond to any suggestion that an export only listing does not allow exploitation of the patent which compensates for regulatory and product development delays. Such evidence was tendered by Pfizer before the Commissioner and was referred to in the decision. Pfizer now contends that the issue is one of statutory construction to which this evidence is not relevant. 21 Pfizer submits that all parties now accept that there can be different inclusions in the ARTG. Pfizer accepts that it is necessary to provide data in support of an application for Listed Goods and that an export only listing enables the patentee to exploit the invention, albeit on a less than "fully effective" basis. The point that Pfizer wishes to make is that the provision of data for Registered Goods is more onerous and extensive. This itself is said to result in regulatory delay before there can be marketing in Australia and full exploitation of the patent. 22 Pfizer relies on the distinction between the evaluation of Registered Goods and Listed Goods in ss 25 and 26 of the TG Act and stresses that it is not necessary to provide data of efficacy for an application for Listed Goods. Section 25 of the TG Act sets out the matters relevant to the evaluation of Registered Goods, which include a positive requirement that those goods are evaluated for quality, safety and efficacy (s 25(1)(d)). Section 26, which deals with matters relevant to Listed Goods, makes no express reference to efficacy and is couched in negative terms, in the sense that the Secretary is 'not to refuse' to list goods unless satisfied of certain matters (s 26(1)(c) to (n)). 23 This distinction alone does not establish the extent to which the provision of data for Registered Goods is more onerous and extensive in practice. For example, it is a prerequisite for Listed Goods that any requirements imposed by the Secretary under s 31 in relation to the goods are complied with (s 26(1)(b)). This may include requirements imposed by the Secretary to provide information or documents relating to, among other things, safety, quality and efficacy (ss 31(2)(f) and (h) of the TG Act; regs 16AA(a) and (b) of the TG Regulations). 24 Spirit tendered a sample application form for Listed Goods. Pfizer initially objected to the relevance of the form, but later submitted that the Court need only look at the face of it to see that the required data for Registered Goods are more onerous. Pfizer submits that 'for registration you send a pantechnicon full of paper to the Authority and they assess the material'. No evidence was adduced by Pfizer to support that submission. 25 Dr Walters was formerly Chief Scientist of the Pharmaceutical Chemistry Evaluation Section of the Drug Safety and Evaluation Branch of the Therapeutic Goods Administration ('TGA'). Although she did not review applications for Listed Goods, as part of her duties it was necessary for her to review and keep up to date with TGA policies, including policies in respect of applications for Listed Goods in comparison with the requirements for Registered Goods. 26 To the extent that Pfizer has submitted that it is a more onerous and extensive process to apply for Registered Goods, Dr Walters' evidence on that issue is relevant. Dr Walters' evidence is that the data that an applicant would need to hold in order to obtain an export only listing would be substantially the same quality, toxicological and clinical data as would be required for submission to the TGA in an application for Registered Goods. This contradicts Pfizer's submission. 27 Dr Walters' evidence is otherwise not relevant to the matters in issue. 28 I do not consider the extent to which the provision of data for Registered Goods is more onerous than Listed Goods to be determinative of the substantive issue in dispute, which is the construction of s 70 and 77 of the Act.

[10]

First regulatory approval date 34 Section 77 refers to the 'earliest first regulatory approval date' (emphasis added). This recognises that the patent may cover more than one pharmaceutical substance and provides that the term of the extension is based on the earliest of the approval dates that apply to the patent. 35 Where there has been no "pre-TGA marketing approval", that date is 'the date of commencement of the first inclusion in [the ARTG]' (s 70(5)(a) of the Act). If "pre-TGA marketing approval" was given, that date is the date of the 'first approval' (s 70(5)(b) of the Act). 36 Pfizer's submissions can be summarised as follows: · "Pre-TGA marketing approval" is an approval to market a substance in Australia (s 70(6)). · If "pre-TGA marketing approval" was given, the first regulatory approval date (s 70(5)(b)) is the date of that approval. · The first regulatory approval date where there has been no pre-TGA marketing approval should be consistent with the meaning where there has been pre-TGA marketing approval. · Accordingly, where no pre-TGA marketing approval was given and the first regulatory approval date is determined by the date of commencement of the first inclusion in the ARTG, the inclusion must be an entry for the purpose of enabling marketing in Australia. That inclusion is the inclusion as Registered Goods, not as Listed Goods. · Such a construction is necessary for conformity with the purpose of the Act and applies for the purposes of s 70 and s 77 of the Act. · Section 77 provides a formula for calculating the term of the extension by reference to the period beginning on the date of the patent and ending on the "earliest first regulatory approval date" in relation to the relevant pharmaceutical substance. This embodies an assumption that both types of regulatory approval date are approvals for marketing in Australia. · Resort should be had to the history of the provision for extensions of term and extrinsic material with respect to Pt 3 of Ch 6 of the Act, and particularly s 70, in order to clarify the meaning of "first regulatory approval date". 37 Pfizer emphasises "pre-TGA" and the reference to "pre-TGA marketing approval was given" in s 70(5). Pfizer contends that "pre-TGA marketing approval" is a shorthand reference to approval for marketing in Australia prior to the commencement of the TG Act. It was the TG Act that established the ARTG in 1991 and the distinction between Listed Goods and Registered Goods. 38 Although Pfizer contends that "pre-TGA marketing approval" in s 70(5) means approval prior to the commencement of the TG Act, the expression is defined by s 70(6) to mean 'an approval (however described)'by a Minister or a Secretary to a Department to: '(a) market the substance, or a product containing the substance, in Australia; or (b) import into Australia, for general marketing, the substance or a product containing the substance.' 39 If there were approval by a Minister or a Secretary in the terms of s 70(6) prior to the commencement of the TG Act, there would be pre-TGA marketing approval. 40 In addition, the TG Act makes provision for the Secretary to grant approvals for the importation into Australia, or the supply in Australia, of specified therapeutic goods in certain circumstances and before the substance is included as Registered Goods in the ARTG (s 19A). That is, the definition recognises approval to import or supply in Australia outside entry in the ARTG. This is not approval prior to the commencement of the TG Act but allows the Secretary to make specific provision for certain goods. 41 Where the date of approval to market in Australia is the relevant date, that is specified. Where specific consideration was given to the date where pre-TGA approval was and was not given, provision was made for two different approaches. That is consistent with the application of two differently determined dates. If the intention were to define "first regulatory approval date" as the date of approval to market in Australia or the date of entry in the ARTG as Registered Goods, it would have been easy to have done so. It was not. There is no "unifying notion" that changes the meaning of "first inclusion in the ARTG" in s 70(5)(a).

[14]

The Intellectual Property Laws Amendment Act 1998 (Cth) ('IP Amendment Act'): Explanatory Memorandum and Second Reading Speech 47 The current regime for extensions of term of patents for pharmaceutical substances was enacted pursuant to the IP Amendment Act. 48 The Revised Explanatory Memorandum ('EM') to the Bill that became the IP Amendment Act refers to the Report and the Response. The EM states that an extension of up to five years will be available for a standard patent relating to a pharmaceutical substance that is the subject of 'first inclusion on [the ARTG]' (at 2). Further, the EM refers to the 'exceptionally long development time and regulatory requirements involved in developing and commercialising a new drug', with the aim of the Bill being to provide an '"effective patent life" or period after marketing approval is obtained, during which companies are earning a return on their investment' (at 3). The implementation of that objective is to provide an extension of term by reference to the 'first registration as a therapeutic good on [the TG Act]' of the substance. There is also reference to the time and work before which the product can 'enter the market' (at 3). 49 Much discussion in the Report and the EM concerns comparison with international competitors and allowance of spring-boarding. In that context, the EM considers the fact that spring-boarding at any time after an extension is granted would not reduce the period during which the originator company 'retains an exclusive right to sell its product on the Australian market' (at 8). This was said to be similar to the scheme in the United States, described as a maximum effective patent period of 14 years from marketing approval. 50 The notes on clauses section of the EM explains s 70(5) and s 70(6) as follows: 'Subsections 70(5) and 70(6) define the term "first regulatory approval date". For pharmaceutical substances that had not received marketing approval, or approval to be imported into Australia for general marketing, prior to being included in the Australian Register of Therapeutic Goods the first regulatory approval date is the date of commencement of the first inclusion in the Australian Register of Therapeutic Goods. For pharmaceutical substances that had already received marketing approval, or approval to import into Australia for general marketing, prior to inclusion in the Australian Register of Therapeutic Goods the first regulatory approval date is the date of the first such approval.' 51 The second reading speech refers to the time taken 'to register and market a new product' (Australia, Senate, Debates (1997) Vol S189 at 1375). It notes that 'the development of a new drug is a long process' and '[t]he objective of this part of the bill is to provide an "effective patent life"'. The speaker then states that an extension will be available for a patent relating to a pharmaceutical substance 'that is the subject of first inclusion on [theARTG]' (at 1376).

[17]

common law 60 Pfizer submits that, independent of s 15AB of the Acts Interpretation Act, the extrinsic materials are part of the legal and historical context of the Act. For this reason, it submits that it is appropriate to consider the extrinsic materials at the outset to ascertain and give effect to the purpose of the Act, or 'the mischief which the statute was intended to cure' (Newcastle City Council at 99, 112-3). 61 While no particular theory or rule of statutory interpretation obviates the need for close attention to the text and structure of the provision in question (Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 221 ALR 448 at [30]), the extrinsic materials are part of the context of the Act and relevant in interpreting the meaning of 'first inclusion in [the ARTG]'. 62 In Newcastle City Council, the relevant Law Reform Commission Report on insurance contracts madethelegislative objectiveplain (at 102). In the present case, it is difficult to detect any clear legislative purpose or intention with respect to the relevant entry in the ARTG. Although Pfizer points to the use of the words 'marketing in Australia', 'the Australian market' and 'first registration as a therapeutic good',the extrinsic materials also refer to the time available to 'exploit' the invention, the period during which patentees can 'earn a return' and 'first inclusion in [the ARTG]'. To the extent that the policy of the IP Amendment Act is discussed, the discussion is equivocal as to whether the intention was to grant an extension from the date of an approval enabling marketing in Australia rather than the date of approval for a more limited form of exploitation such as manufacture for export. 63 The extrinsic materials, for whatever reason, do not give any clear indication of how the IP Amendment Act took its final form. That makes it difficult, if not impossible, to fix upon the references to 'marketing approval in Australia'and 'bend' the language of the Act to meet that purpose (Stevens at [34]). 64 What is clear from the Response, which is given effect in the IP Amendment Act, is that the extension of term scheme was introduced in recognition of the need to compensate for the time before which a patentee of a pharmaceutical substance can exploit the invention. 65 Pfizer's submission that the relevant approval must be one which allows marketing in Australia in order to give effect to the policy of the IP Amendment Act ignores the fact that inclusion in the ARTG as Listed Goods permits the patentee to exploit the patent. This may not extend to marketing in Australia but it does enable a commercial return to the patentee. The consequence that this is less than full exploitation of the product in Australia is not contrary to the policy of the Act or the purpose of an extension to extend the "effective life" of the patent. The patentee's decision to obtain an early export only listing and thereby a shorter extended term is its choice and may have sound commercial reasons. 66 As the Deputy Commissioner observed in his decision, citing the second reading speech to the IP Amendment Act, the "mischief" sought to be addressed by the IP Amendment Act is (at [31]): '"The long development time, combined with the considerable regulatory process to register and market a new product, means that companies usually have considerably fewer years under patent in which to gain a return for their investment." which leads to the need to provide a longer effective patent life. This seems to apply equally whether pharmaceutical products are subject to export listing or registration because, while the former may not require the same level of regulatory testing and scrutiny in Australia, the development costs will be the same and generally foreign regulatory requirements will need to be met. It is also the case that manufacturing or importing a product for export constitutes exploitation of the patent and would be expected to generate a financial return for the patentee once export listing is achieved. Consequently, the policy benefit of providing an additional "effective term" in which a return on the patented invention is achieved would appear to apply from the first regulatory approval date regardless of whether that is an export listing or registration. Therefore, I do not think it can be said that an interpretation of "inclusion" that encompasses export and other listings on the ARTG is a construction that clearly would not promote the purpose or object of the legislation or leads to a result that is manifestly absurd or is unreasonable. Rather, a construction that would calculate the term of an extension from a subsequent regulatory approval date rather than the first would appear to be inconsistent with the policy of providing an extension of term of only up to 5 years.' 67 This is not a case where a 'strained construction' is necessary to give effect to the legislative purpose (Newcastle City Council at 113). To the contrary, the extrinsic materials tend to confirm the clear, ordinary meaning of "first inclusion in the ARTG".

[18]

The undertaking as to damages 68 Pfizer applies for an order that the Commissioner of Patents be restrained from amending the Patents Register to reflect the shorter extended term of the Pfizer patents ('the stay order'). 69 The Commonwealth filed a motion on 16 November 2005 seeking to intervene in relation to the stay order. The Commonwealth submits that, unless Pfizer can establish that no person could potentially suffer damage by the stay in rectification of the Patents Register, an undertaking as to damages should be required before a stay is granted. The undertaking is only sought in respect of one of the Pfizer patents, Australian Patent No 540769 in respect of the product NORVASC. Such potential damage would include, but not be limited to, damage to generic pharmaceutical companies which may wish to market NORVASC and damage to the Commonwealth in respect of the costs of the Pharmaceutical Benefits Scheme. 70 Pfizer's concern is that, if the entry in the Patents Register is amended and Pfizer succeeds on any appeal, the Commissioner would have no power to re-amend the Register. Pfizer's concern arises because of potential problems once the Patents Register is rectified by amending the date of expiry of the patents to the earlier date. This was the subject of consideration by the Full Court in Woolworths Limited v BP plc (2006) 150 FCR 134 ('Woolworths No 1') and Woolworths Limited v BP plc [2006] FCAFC 132 ('Woolworths No 2') in the context of the Trade Marks Act 1995 (Cth). Sundberg and Bennett JJ in Woolworths No 1 at [52] and the Full Court in Woolworths No 2 at [149] were of the view that the Court has power to order the Register of Trade Marks to be rectified on appeal. No detailed submissions have been made as to the application of the Woolworths decisions in the context of the Act. Pfizer has not informed the Court whether it still seeks the stay order. 71 An undertaking as to damages in support of a stay is required when it is necessary to protect against a perceived risk of loss (Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2002) 54 IPR 495 at [8]; Atlantis Corporation Pty Ltd v Schindler [1997] FCA 455). Pfizer submits that the matters raised by the Commonwealth, such as a generic manufacturer who relies on the Patents Register and declines to take steps to be ready to enter the market in April 2007, are speculative and not sufficient reason to require the undertaking. 72 Pfizer points to the presence of Spirit as a generic manufacturer fully aware of the proceedings. Pfizer also emphasises that these proceedings are public and the decision of the Commissioner and of this Court are publicly available. Pfizer offers to cause a notice to be published in the Official Journal to the effect that the Commissioner has determined that the Patent Register ought to be amended to vary the expiry date of the NORVASC patent to 14 April 2007 as a condition of the stay. Pfizer also suggests a limited form of undertaking, limited to the NORVASC patent, to generic manufacturers and the timing of any damage suffered. 73 No submissions have been made by the Commonwealth or Spirit in response to Pfizer's written submissions on the undertaking, filed after the conclusion of the hearing. 74 In the circumstances, I will hear further from the parties on the application for the stay and the undertaking.