But for the grace of section 223 go I: licences for would-be patent infringers

Patents – extension of time to extend term – licences to exploit during period of extension of time application and beyond

H. Lundbeck A/S v Commissioner of Patents[2017] FCA 56

In these proceedings, Beach J considered the proper interpretation of s 223 of the Patents Act 1990 (Cth) as it concerns the application for licences by would-be infringers between the date of expiry of a patent and any application for an extension of time to revive (or in this case extend) the term of a patent.

These proceedings are related to the long-running patent infringement and validity dispute between H Lundbeck A/S and various producers of generic medications (“Generics”) about (+) enantiomers of the drug citalopram.

The original term of H Lundbeck’s patent expired on 13 June 2009. On 25 June 2014, the Commissioner granted an application by H Lundbeck to extend the term of the patent to 9 December 2012. It did so after numerous court battles and after Lundbeck applied for, and ultimately obtained, an extension of time to apply to extend the term of the patent.

Each of the Generics launched a pharmaceutical product containing escitalopram oxalate in Australia in the period between 13 June 2009 (i.e. the expiry of the Patent) and 23 July 2009 (i.e. the date when H Lundbeck’s extension of time application was advertised in the Official Journal). Between 18 December 2013 and 20 December 2013, the Generics filed with IP Australia applications pursuant to reg 22.21(2)(c) of the Patent Regulations 1991 (Cth), seeking a licence in respect of their conduct during the remainder of the extension of the term of the patent.

Sections 223(9) and (10) of the Act provide for protection of third parties and limitations to infringement proceedings where extensions of time to do a relevant act have been granted by the Commissioner of Patents. Regulation 22.21(2)(c) provided at the relevant time that persons “who availed themselves of or exploited, or took definite steps by contract or otherwise to avail themselves of or exploit, inventions: […] (c) in the case of inventions to which subsection 223(9) of the Act applies—within the period of time extended under that subsection; may apply, in the approved form, to the Commissioner for the grant of licences to exploit the inventions.”

In particular, s 223(9) of the Act provided that where “the Commissioner grants: (a) an extension of more than 3 months for doing a relevant act; or (b) an extension of time for doing a prescribed relevant act in prescribed circumstances; the prescribed provisions [eg, regulation 22.21(c)] have effect for the protection or compensation of persons who, before the day on which the application for extension of time is advertised under subsection (4), exploited (or took definite steps by way of contract or otherwise to exploit) the invention concerned because of the failure to do the relevant act within the time allowed, the lapsing of the patent application or the ceasing of the patent, as the case may be.”

These proceedings concerned a review of a decision of the Commissioner of Patents to consider licence applications under s 223(9) of the Act by the Generics, and H Lundbeck’s opposition to those licence applications, by way of a hearing on all issues. Of note, the Generics, in ongoing relevant infringement proceedings, had pleaded a defence of having applied for such licences.

As noted above, for the “protection or compensation of persons” to arise under s 223(9), the person must have “exploited (or [taken] definite steps by way of contract or otherwise to exploit) the invention concerned because of the failure to do the relevant act within the time allowed, the lapsing of the patent application or the ceasing of the patent, as the case may be”.

In construing s 223(9), Beach J first considered that the exploitation or definite steps may be occasioned by either one of the three (disjunctive) relevant causes, namely: the failure to do the relevant act within the time allowed; the lapsing of the patent application; or the ceasing of the patent. H Lundbeck had contended that the requirement was for the first requirement in conjunction with either the second or the third: [89]-[107].

Second, his Honour held that the effect of s 223(9) is not limited by s 79 of the Act, which provides that, after an extension of time is granted for a patent for a pharmaceutical substance, where the term had expired before the extension was granted, the patentee has the right to start proceedings in relation to an act done between the expiration of the patent and the date when the extension was granted. As part of a detailed analysis, his Honour found that there is no limitation of s 223(9) by s 79 as contended by H Lundbeck because:

[First] [s]ections 70 to 79A are dealing with the extension of term. Contrastingly, s 223 is dealing with extensions of time. And section 223(9) is dealing with the consequences of an extension of time.

Second, the regimes can work harmoniously together. For example, as the High Court discussed in Alphapharm, the second time requirement in s 71(2) is not excluded from s 223(2)(a) by reg 22.11(4)(b). Accordingly, s 223(2) applied to extend the time requirement calculated by reference to ss 71(2)(a), 71(2)(b) and 71(2)(c).

Third, the regimes also work harmoniously together by reason of the fact that the extension of time regime is anterior to the extension of term regime. In other words, until the extension of time has been validly made or given, there is no extension of term validly made or given. In other words, the regime in s 223 for the extension of time is anterior in one sense to the extension of term. Sections 223(2), 223(4), 223(7) and 223(9) have independent work to do. The present case does not concern the context of a general regime being inconsistent with a specific regime. [Emphasis in original]

In obiter, his Honour also foreshadowed that, to the extent of any inconsistency, s 223(10), which provides that infringement proceedings cannot be brought in respect of an infringement committed between cessation and restoration of a patent, may override s 79. On the question of the meaning of “ceasing” in the context of as 223(9), his Honour concluded that this would include expiry of the patent.