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Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2021] FCA 947

As foreshadowed in our recent article on Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643 (Ono), the Federal Court of Australia has issued Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2021] FCA 947 (MSD), a further decision regarding patent term extension (PTE).

Whereas Ono considered PTE in the context of a pharmaceutical substance listed on the Australian Register of Therapeutic Goods (ARTG) by a third party prior to the patentee’s ARTG listing, MSD relates to PTE in the context of a patent that covers two or more pharmaceutical substances listed on the ARTG by the patentee or a related entity.

MSD had two pharmaceutical substances listed on the ARTG, both covered by claims of the one patent. Based on the pharmaceutical substance first listed on the ARTG, the patent was ineligible for PTE, because 5 years had not elapsed between the effective filing date of the patent and listing of the first pharmaceutical substance on the ARTG. However, based on the second pharmaceutical substance with the later listing on the ARTG, the patent was granted PTE, because greater than 5 years had elapsed between the effective filing date of the patent and that listing on the ARTG.

Merck Sharp & Dohme Corp. (MSD) initiated proceedings against Sandoz Pty Ltd (Sandoz) alleging threatened infringement during the PTE period. In response, Sandoz cross-claimed that the PTE based on the second pharmaceutical substance was erroneous and sought rectification of the patent register to indicate that the patent expired 20 years after its effective filing date.

MSD proposed a construction on the calculation of the extension of term with reference to Ono, effectively by replacing recitation of “s70(2)” in s77 with “s70(3)”. At [49], Jagot J noted that “MSD relies heavily on Ono at [118] and [144].” However, Jagot J was not swayed, not least in noting at [53] that:

All of the above paragraphs from Ono [relevant to MSD’s construction] are obiter dicta. The ratio of the case is confined to the answer Beach J gave to the issue of construction with which he was dealing, namely, as identified at [27]:

…whether an application for an extension must be filed within 6 months of the first inclusion in the ARTG of goods containing or consisting of any pharmaceutical substance falling with the claims of the patent:

(a) where the goods were those of the patentee (the applicants’ position); or
(b) irrespective of whether the goods were those of the patentee, that is, they could be the goods of a third party that had nothing to do with the patentee and, moreover, might be a competitor (the Commissioner’s position).

In short, Jagot J held that recitation of “earliest” in s77 relating to calculation of PTE duration meant exactly what is said. Therefore, the duration of PTE was to be calculated using the date of listing the pharmaceutical substance listed first on the ARTG, not the pharmaceutical substance listed second (or subsequently) on the ARTG. It followed that the term of the patent should not have been extended, or technically, the PTE should have been calculated as zero days.

Consequently, it remains best practice to pursue each pharmaceutical substance likely to be listed on the ARTG in a separate divisional application.

For more information, please contact Malcolm Lyons.

Our Expert Project Lead

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