Gavel pills

The Federal Court of Australia has recently made some important decisions around patent infringement that are particularly relevant to the pharmaceutical sector.

Does an offer to supply a product before a patent expires infringe that patent? Yes. Does applying  to list a drug on the Pharmaceutical Benefits Scheme before its patent expires infringe that patent? No, providing the date of listing is after the patent expires.

Section 13 of the Patents Act sets out the exclusive rights given by a patent to a patent owner and so defines the concept of infringement.

Section 13 gives to the patent owner the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention.

The Act defines “exploit” as including;

(a) where the invention is a product – to make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things or; 

(b)   where the invention is a method or process – use the method or process or do any act mentioned in the paragraph (a) in respect of the product resulting from such use.

It will be readily seen from the definition of exploit in subparagraph (a) of the definition that it is an exploitation of a patented invention to offer to sell a product which is the subject of the patented invention.

But what of the position where a person offers to sell or supply a product during the term of a patent but only upon the basis that sale or supply will not be completed until after expiry of the patent term? That scenario was considered in the UK in Gerber Garment Technology Inc v Lectra Systems Ltd. In that case Jacob J held that an offer to supply a patented product purely post-expiry was not an infringement even if made during the subsistence of the term of the patent. His Honour stated;

“It [the offer to sell in those circumstances] is not a disturbance of the [patent] monopoly. I can, for instance, see no reason why a trader should not say “X’s product is coming off patent at the end of the year. I will take orders now for supply next year.” That is not “offering a product which is the subject-matter of the patent”. The product offered is off patent." 

The view has been held by some that this principle ought to apply equally in Australia notwithstanding the definition of “exploit” in the Patents Act set out above.

Australian decision

However, the recent Pregabalin decision of the Federal Court has held that the principle in Gerber does not apply in Australia. The Court held;

“Section 13 confers on the patentee the exclusive rights to exploit the invention during the term of the patent. This includes the right to offer the invention for sale. When a person offers a patented product for sale during the term of the patent without the patentee’s consent that person infringes the patent even if no actual sale or delivery of the patent occurs before patent expiry.”

The decision goes on to provide other guidance of relevance in the pharmaceutical context.

The sale of most prescription pharmaceutical products in Australia is only viable if the product concerned is listed on the Schedule of Pharmaceutical Benefits (PBS) maintained under the National Health Act 1953. An applicant for PBS listing of a pharmaceutical product must guarantee that the listed product will be made available to wholesalers or approved pharmacists as from the date on which the pharmaceutical product is listed on the PBS.

Does an application for the listing of a generic pharmaceutical product on the PBS, during the term of a relevant patent, amount to infringement of the patent in the event that the PBS listing will only occur after the expiry of the term of that patent?

In the Pregabalin decision Nicholas J held that an application for PBS listing in those circumstances does not amount to an offer to sell or otherwise dispose of the product and therefore did not amount to patent infringement. His Honour held;

“All that [the generic supplier] proposes to do by applying for a PBS listing is to engage with the statutory scheme that may enable it to offer the products for sale at subsidised prices once the patent has expired. …Such an application would be a mere preparatory step which may enable [the generic supplier] to exploit the invention by offering to supply the products at subsidised prices at a later point in time.”

At first sight it seems problematic to reconcile the two findings in this decision. It must be understood, however, that, as a result of the earlier finding in the case in relation to liability the generic supplier was bound by a final injunction in terms which prevented supply of the product during the patent term. As there could be no “supply” nor any “offer to supply” the mere application for PBS listing did not therefore fall within the scope of the definition of “exploit”.

Conclusion

In the absence of some other conduct on the part of a generic supplier of a pharmaceutical product which otherwise amounts to infringement, for example, importing a patented product or keeping it for sale, then the “mere” making of an application for PBS listing during the term of a patent will not amount to infringement of the patent provided that the date of listing postdates the date of expiry of the patent.  



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