Pfizer Corp & Ors v Commissioner of Patents & Anor [2007] HCATrans 93 (2 March 2007)

Last Updated: 29 March 2007

[2007] HCATrans 093

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S487 of 2006

B e t w e e n -

PFIZER CORP

First Applicant

PFIZER LIMITED

Second Applicant

PFIZER INC

Third Applicant

PFIZER RESEARCH & DEVELOPMENT COMPANY N.V./SA

Fourth Applicant

and

COMMISSIONER OF PATENTS

First Respondent

SPIRIT PHARMACEUTICALS PTY LIMITED

Second Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 2 MARCH 2007, AT 10.17 AM

Copyright in the High Court of Australia

__________________

MR J.M. IRELAND, QC: If the Court pleases, I appear with my learned friend, MS K.J. HOWARD, SC, on behalf of the applicants. (instructed by Spruson & Ferguson Lawyers)

MR S.B. LLOYD: I appear in this matter on behalf of the first respondent. (instructed by Australian Government Solicitor)

MR S.C.G. BURLEY: May it please the Court, I appear with my learned friend, MR C. DIMITRIADIS, for the second respondent. (instructed by Blake Dawson Waldron)

GLEESON CJ: Yes, Mr Ireland.

MR IRELAND: If the Court pleases, this case raises two significant points of law in relation to the provisions of Division 2 of Part 3 of the Patents Act 1990. Sections 70 to 79A of that Act, which were introduced in 1988, are all concerned with the extension of the term of patents relating to pharmaceutical substances. The scheme of the Act is to allow a patentee to make application to the Commissioner for an extension of such a patent. This kind of an extension, up to five years, is over and above the standard patent term of 20 years. It is awarded to reflect the regulatory requirements which may hamper the marketing of pharmaceutical substances and the delays which may arise between the date of grant of a patent relating to such a substance and the legal permission to market a drug or other product in this country.

These days such products may have to be listed under the Therapeutic Goods Act before they can legally be sold and marketed in Australia and the delays associated with that legislation are therefore recognised under the patent law. In the present case the applicants secured an extension of four patents and the mechanism that was followed is that which is set out commencing at section 70 of the Act, if your Honours have it. We have provided a folder, your Honours, with the relevant sections under tab - - -

GUMMOW J: What was the nature of the inventions? Hypertension drugs, were they?

MR IRELAND: Yes, that is so. Your Honour, the schemer commencing at section 70 is to fix upon something which is called for the first time in subsection (3), “the first regulatory approval date for the substance”, and it is that date which confines and constrains the possible extension of the term. Section 70(5) deals with two cases. It deals with a case where there has been, as is described, “no pre-TGA marketing approval was given in relation to the substance” and in that case the relevant date of commencement is that, “of the first inclusion in the Australian Register of Therapeutic Goods”. Subsection (5)(b) deals with the situation where there has been what is described as a “pre-TGA marketing approval”.

GUMMOW J: What is the distinction between a “TGA marketing approval” and “inclusion in the register”?

MR IRELAND: A “pre-TGA marketing approval” gathers up the case where there may have been some marketing approval before the current Therapeutic Goods Act had operation. Your Honour sees in subsection (6):

For the purposes of this section, pre-TGA marketing approval, in relation to a pharmaceutical substance, is an approval (however described) by a Minister, or a Secretary to a Department, to:

(a) market the substance –

So, it is clear in alternative (b) it is the marketing of the substance in Australia which is the pivot for the commencement of time which will count against the patentee in respect of the extension application. Because the Therapeutic Goods Act Register has more than one part – at the relevant time I think it had two parts. It now has three parts. It has a part which is concerned with the listing of products and it has a part which is concerned with the registration of products.

The listing of products, your Honours might remember, sanctions manufacture in Australia but not marketing in Australia. What happened in this case – this is common ground – is that there was a listing achieved in respect of these relevant products.

GUMMOW J: Is the point that it could be manufactured here and exported?

MR IRELAND: Yes.

GUMMOW J: But whilst manufactured here it could not be sold here for consumption here?

MR IRELAND: Correct. And what the Full Court said, we say erroneously, the importation into Australia of drugs or products, according to the patent, is within the scope of the monopoly and hence a potential infringement, hence it is part of the exportation of that, and therefore it is in some way that we challenge logically sound that a permission to manufacture in Australia for export should count equally and conceptually against the extended term of the patent.

Our argument comes to this, rejected by the Full Court, that one reads into subsection (5)(a) after the words “Therapeutic Goods” the words “for marketing”.

GUMMOW J: Just a minute, (5)(a)?

MR IRELAND: Section 70(5)(a) one reads the words “for marketing” after “Therapeutic Goods” so that it does not – because of the scheme of the Act and there is extensive reference in the Full Court judgment to the - - -

GUMMOW J: I am sorry, where does one insert these words?

MR IRELAND: In (5)(a) it says, “of the first inclusion in the Australian Register of Therapeutic Goods”, we say “for marketing of goods”.

GUMMOW J: I see.

MR IRELAND: That is something, we respectfully submit, that ought to be introduced to give coherence between the two situations. That was the argument of construction rejected by the Full Court. Our second ground, and we would hesitate to say a perhaps more powerful ground, relates to the validity of the regulations. If I can just encapsulate what then occurred. We having been granted the extension of our patents, the Commissioner then moved to action under regulation 10.7 which is found in the supplied materials under tab 8.

Regulation 10.7 in its original form ended at subregulation (6) and it was devoted in those original provisions to what is the correction of “clerical error or an obvious mistake.” There is no quarrel that the regulation to that point was supported by the regulation-making power which resides in section 228 of the Act. Can I just ask your Honours for a moment to go to section 228 of the Patents Act which is the regulation-making power. The first subsection of section 228 says this, and this is an overwhelming requirement, we would suggest:

The Governor-General may make regulations, not inconsistent with this Act:

(a) prescribing matters required or permitted by this Act to be prescribed; and

(b) prescribing matters necessary or convenient to be prescribed for carrying out or giving effect to this Act –

Then subsection (2) has a catalogue of particular matters and the relevant one for our present purposes is (2)(e):

making provision for and in relation to the amendment of an entry in the Register to correct a clerical error or an obvious mistake, –

and then these critical words –

or for any other purpose –

The Full Court said that the words “or for any other purpose” had carried wide consequences. Our argument rejected below was that they are incidental to the notion of “clerical error” or “obvious mistake”. The relevant regulation, if I can now return to tab 8 in the folder provided, which was a suite of provisions commencing at subregulation (7) and running through to (9) had this effect. It introduced to the Commissioner the right to take an initiative to - - -

GLEESON CJ: The duties take an initiative?

MR IRELAND: Yes. Subregulation (7)(b), if:

the Commissioner becomes aware that the first regulatory approval date in relation to the pharmaceutical substance is earlier than:

and then reflective of the provisions I have shown your Honours in the Patents Act:

(i) the date of commencement of the first inclusion in the A

Australian Register –

your Honour is right – a duty:

the Commissioner must amend the relevant entry in the Register –

Subregulation (8) is a notice requirement. In other words, “If the Commissioner”, acting on whatever information has stimulated this, “proposes to amend an entry” then a hearing is required. And, critically, (9):

An appeal lies to the Federal Court against a decision of the Commissioner to amend the Register under subregulation (7).

Our submission is that all of those regulations, which are concomitant regulations, are invalid as an enacted under section 228.

GLEESON CJ: What is the ground of invalidity of (9)?

MR IRELAND: Your Honour, it seems to be accepted if (7) fails, (8) and (9) fall over with it.

GLEESON CJ: So that is the only ground of invalidity?

MR IRELAND: Yes. The court has received supplementary submissions from the parties here about an independent invalidity of (9) which would not depend on the primary argument I have just articulated and that is the question whether, because the right of appeal granting jurisdiction to the Federal Court is found within the regulation, it may offend the requirements of section 76. Your Honour, all parties have responded to that matter, I think, by saying that the right of appeal – that is well arguable, that point, and open on this Court’s most recent remarks. Your Honours know and I do not think I need to go over this ground extensively but the matter was - - -

GLEESON CJ: Is it a point that we would be obliged to consider, regardless of the attitude of the parties, if special leave were granted?

MR IRELAND: It certainly would be. The vehicle in which this proceeding is travelling is an exercise of the right of appeal over which the question mark stands in subsection (9) so it would inevitably come up for this Court’s attention.

GUMMOW J: But without a contradictor?

MR IRELAND: That is so. It is said in the submissions of the Commissioner that unless the invalidity argument as it applies separately to regulation 10.7 is worthy of this Court’s attention, then it is beside the point. This is not a suitable vehicle. That is probably correct. We face up to that. In other words, we are not here to ventilate the single point that the proceeding that we bring here is invalid. We are here to say that the regulation is invalid for reasons advanced in our written submissions and there may be an additional reason why subregulation 10.7(9) is also invalid. We say, your Honour, the case brings to a head two important points of a machinery which on the face of it places in the hands of the Commissioner a task and a duty, as your Honour the Chief Justice observes, which is out of conformity with the Act, finds itself in a regulation based on what is really a provision for matters ancillary to “clerical error” or “obvious mistake” and it is very much these regulations fall outside the purview of section 228. Those are our respectful submissions.

GLEESON CJ: Thank you, Mr Ireland. Mr Lloyd.

MR LLOYD: If I can address the three issues in turn. One is the question of whether or not regulation 10.7(7) is invalid, separately there may be the question of regulation 10.7(9) and then, thirdly, the question of construction. I would respectfully adopt - - -

GUMMOW J: The construction of section 70?

MR LLOYD: Of section 70, yes. I would respectfully adopt the reasons of the court below and Justice Lindgren in relation to the regulation 10.7(7) issue. In my submission, one of the arguments advanced, although my friend has not addressed it orally but advanced in writing, was that there could not be an error under 10.7(7) if the answers on the form were the correct answers. One answer to that is that the regulations make it clear that Pfizer was required to provide certificates under the Therapeutic Goods Act, including certificates that related to the listing of the goods and not just the registration of the goods.

That is where the error first arose and that is an error which, in my submission, the Commissioner is entitled to and, having become aware of it, obliged to correct under regulation 10.7(7). In my submission, the words “for any other purpose” in section 228(2)(e) do have substantive meaning beyond, as my friend put it, an incidental aspect to the first words and that both Justice Lindgren and the Full Court below were correct in saying that it was unexceptional in the scheme of the Act that the Commissioner could be given under that power a power to correct the register in order to ensure that the register accurately reflected the effect of section 77.

Section 77 is what determines the length of the term of the extension, not anything that the Commissioner does and for that matter not what the Register of Patents says. The Register of Patents is only prima facie evidence of the length. The length of the term is that specified in section 77 of the Act. An additional at least potential difficulty which I have raised in my submissions as to the suitability of this proceeding for appeal on the question is that insofar as the applicant’s case relies upon an argument that they complied with certain forms, those forms, we accept, were filed in the Federal Court pursuant to Order 58, rule 6 but were never tendered in evidence.

If my friends are going to rely upon that argument, there would be a question in this Court hearing an appeal in the strict sense whether or not simply because it was filed in the Court but not tendered in evidence would be enough to bring it properly before this Court. In my submission, there is a real prospect that it would not be and the applicant’s argument to that extent would then be without any evidential basis to support it. Another argument advanced in writing by the applicants in support of the regulation 10.7 point is that section 75(4) and 192 should be seen as an exhaustive statement of the capacity to amend the register but, in my submission, that cannot be so because section 228(2)(e) specifically envisaged the creation of regulations that achieve that purpose.

Another reason for not granting special leave is that this is a matter in which the uncontroversial principles of statutory construction were considered by the Full Court, unanimously adopted by three judges by the Full Court and by the judges at first instance. So, from the point of view of the importance of statutory construction principles, it is not a case that merits the grant of special leave. There is also a suggestion in my friend’s argument that the Full Court erred by failing to appreciate that the patent term is enshrined in the register. As I have contended in my outline, that is not the case because the register does not determine the length of the patent term.

In relation to the regulation 10.7(9) issue your Honour the Chief Justice asked whether or not the Court would have to deal with it. As my supplementary note indicated, it would have to deal with it on the current structure of the appeal. All I flag is that it may be possible for the applicant to amend. Their original notice of appeal was in part reliant upon regulation 10.7(9) but also reference was made to section 154 of the Patents Act which vests jurisdiction.

Given the grounds that they have sought and have agitated, there is no doubt the Federal Court would have had jurisdiction to hear an application for prohibition under section 154 and it may be that it would be possible to amend nunc pro tunc the original appeal into an application
under section 154 which then would mean that the 10.7(9) issue would not even arise on any appeal.

In relation to the question of the construction of section 70, again I would rely upon the reasons of Justice Bennett and of the Full Court below. Those judgments simply apply the natural language of the provision. An argument was advanced for why, if not the.....point of view, a different construction should be adopted with words added, as my friend has said. In paragraphs 66 to 69 of the reasons of the court below which appear on page 60 and 61 shows that the construction advanced by the applicants would lead to a curious result that a patent holder could both exploit their patent and reserve for a later point in time the marketing in Australia and thereby, as it were, have their cake and eat it too.

In my submission the approach taken by the court below not only is consistent with the natural language, but also is consistent with the object of ensuring that patent holders have the ability to exploit their patent for an extended term, having regard to the time it takes to begin exploiting the patent, but not to allow them to exploit the patent by, for example, manufacturing and exporting as opposed to manufacturing in Australia.

It is a choice under the legislation of a patent holder whether they wish to have it listed or registered and if there is a commercial advantage to have it listed early, manufactured for export, then they should pay the price of having their patent term run for that period and that is a natural result of the natural reading adopted by the courts below and, in my submission, does not merit a grant of special leave. May it please the Court.

GLEESON CJ: Thank you, Mr Lloyd. Yes, Mr Burley.

MR BURLEY: May it please the Court. Your Honours, in relation to the question of the ultra vires of regulation 10.7(7), importantly, a distinction is to be drawn between any application to amend the patent and an application to amend the register which records the term of the patent. That distinction is one which our learned friends for the applicant might blur. The duty on the part of the Commissioner recorded under regulation 10.7 operates to confer on the commissioner the ability to adjust the entry in the Patents Register to insert the correct term.

The Act recognises a clear distinction between the amendment of a patent and the amendment of the register and so, for instance, under Chapter 10 Part 2 of the Act, sections 102 and 104 through to 107 deal with rigorous terms in which amendments to patents per se can take place. The term of the patent which achieves the benefits of the rights of exploitation under section 13 of the Act is conferred or described under section 67 of the Act being for “20 years from the date of the patent”. That is prescribed and set automatically.

By contrast, the register is dealt with in Chapter 19 of the Act, to which the Full Court referred at paragraph 28 and following of their judgment. The register is to be kept and maintained by the Commissioner of Patents and to include registrations of particulars of patents and it is to that which regulation 10.7(7) is directed. As my learned friend, Mr Lloyd said, section 195 of the Act records that the register is only prima facie evidence of the particulars registered in it and so it is a record of the position, prima facie, as far as, in this case, the term of the patent.

Insofar as section 70 and their regime concerning the extension provisions is concerned, section 77 prescribes a mechanism by which the extended term can be calculated by reference to the first regulatory approval date. That, just as section 67 does, prescribes a particular means by which the extension of – or period for the extension of term and it is that which the Commissioner is mandated to correct in the event that she discovers that it is in error.

Thus, the distinction between an amendment to the patent and an amendment to the Register of Patents is observed in the regulation-making power of section 228, and the Full Court observed this at paragraphs 30 to 32 of the decision, observing in particular 228(2)(e), concerns the register itself and not the extension of term of the patent. By applying that the public is informed of the correct or the prima facie position, as far as the patent and its extension. So, your Honours, in the application book the register itself is set out at page 86 and 87 insofar as it concerns one of the four patents. Your Honours will see there the computer printout that manifests the patent register for this particular patent.

The term of the patent in its unextended form is 20 years from the complete filing date, which is recorded at around point 15 of page 86 and the extension of term provision is at page 87 at about line 39 and following and there one can see the dates entered for that. The need for there being a final expiry date recorded at about line 42 on page 87 arises because, rather than the fixed 20 year period, it is the formula within section 77 which prescribes the term for the extension. The distinction, therefore, between an extension of term itself and the register recording the term that was observed both by the Full Court and also by Justice Lindgren in the Lundbeck decision which is effectively the decision below.

GUMMOW J: What is your client’s interest in this matter?

MR BURLEY: Your Honours, our client has a commercial interest in the duration of the term of the first patent, that which I have just taken your Honours to, it having expressed an intention upon the expiry of the term to market the products or to utilise the products. Your Honours, insofar as regulation 10.7(7) was introduced, Justice Lindgren observed at paragraph 50 of his decision that it was to deal with the circumstance where the Commissioner becomes aware that data entered into the formula in section 77 was incorrect. In our respectful submission, the provision in section 228(2)(e) for amendment to an entry in the register to correct a clerical error, or an obvious mistake, or for any other purpose is entirely consonant with the regulation 10.7(7), that being a provision which ensures, consistent with the scheme of the Act, that the register accurately reflects the true position as far as the patent is concerned.

Turning now to the construction argument of section 70(5) of the Act, in our respectful submission, the point observed by each of the Full Court, the learned primary judge and also the Commissioner of Patents, and it is uncontroversial arising from our learned friend’s oral submission, that one needs to insert words into section 70(5)(a) in order to achieve the reading which our learned friends contend for. However, the construction adopted by the Full Court is supported both by the provisions of the Patents Act, which includes a cross-reference to the Therapeutic Goods Act. Your Honours will have observed that the Australian Register of Therapeutic Goods is a defined term within the Schedule 1, the dictionary to the Patents Act, and makes specific reference to section 9A of the Therapeutic Goods Act which identifies the register.

In the respondent’s authorities a bundle of legislative provisions have been provided and, your Honours, we simply draw attention to the dictionary which is at page 7 of the bundle which defines Australian Register of Therapeutic Goods meaning “the register maintained under section 9A of the Therapeutic Goods Act”. Then at page 12 of the bundle, section 9A of the Therapeutic Goods Act is included subsection (3) which says:

The Register is to contain these 3 parts:

(a) a part for goods to be known as registered goods; and

(b) a part for goods to be known as listed goods; and

(c) a part for medical devices included in the Register under Chapter 4.

In our submission, it is, and as found below, completely uncontroversial to find that the words “first inclusion” in the Australian Register of Therapeutic Goods means any of those forms which the registration under the Therapeutic Goods Act is stated to include, including, of course, listed
goods which are the subject of our learned friend’s extension application. Nor, in our respectful submission, is there any principle of construction which would suggest when applied to these particular facts that that plain reading should be diverged from as the Full Court in its careful analysis of the legislative history and the effect of that Act as well as the Therapeutic Goods Act found.

The purpose of the extension terms under the Patents Act is directed to ensure that there is an effective patent life which is protected by means of providing an extension. That effective patent life, in our respectful submission, would equate to a capacity to exploit the patent in whichever way the Patents Act permits. Your Honours have been referred to the definition of “exploit” which is also contained in the secondary materials that we have provided including manufacture, keeping or disposing of, not confined, as our learned friends would have this particular section so confined, to the question of manufacture.

So, in our submission, it would be invidious to confine the particular operation of the extension provisions to a marketing usage where the legislation has properly left it open to the patentee to elect in what manner it would choose to exploit the patent, whether by manufacturing locally, for export or otherwise. Nor, in our respectful submission, would it be appropriate to create an ambiguity in the reading of section 70(5)(a) by reference to subsection (5)(b). Indeed, the Full Court found that a pre-TGA marketing approval within subsection (b) is an approval not only referring to approval before the operation of the Therapeutic Goods Act, but a marketing approval, however given, including by the Minister, under the provisions of section 18A and 19A of the Act to which the Full Court referred.

Finally, your Honours, in relation to regulation 10.7(9), we join our friends in the proposition that this would not be an appropriate vehicle for consideration of 10.7(9) and the only matter, apart from that adoption, which is additional to the submissions made is to make the observation that 10.7(9) would, assuming it invalid, be severable from 10.7(7) as a separate provision which would leave regulation 10.7(7) unscathed and in tact with alternate routes of appeal available to a patentee should they be aggrieved by the decision, including, as my learned, Mr Lloyd, observed, a prohibition under section 154 or, indeed, rectification under section 192 of the Patents Act. If it please your Honours.

GLEESON CJ: Thank you. Mr Ireland.

MR IRELAND: Dealing first with the submissions on behalf of the Commissioner. The attempt to say that the arguments which have been put forward by the applicants are fact dependent ought not to be accepted. The
construction of section 228 and the associated validity requirement does not depend on any facts. The question of section 70 which has been raised equally does not depend on any facts.

New arguments, not reflected in the written material, introduced on behalf of the second respondent which seems to set up a dichotomy between the term of the patent and what is in the register. Insofar as that suggests re-attention to the interplay between section 70(7) which provides for the extended term in section 13 which sets out the rights, we would say that that argument, a fresh argument, throws up matters equally inviting attention of this Court. We would press our application for special leave.

GLEESON CJ: In this matter there are insufficient prospects of success of an appeal to warrant a grant of special leave and the application is dismissed with costs.

AT 10.51 AM THE MATTER WAS CONCLUDED