Salt in the Wound: Federal Court Dissolves Novartis’ Patent Claims and Takes Aim at Hypothetical Tasks

Novartis AG v Pharmacor Pty Limited (No 3) [2024] FCA 1307

Background

On 13 November 2024, Justice Yates of the Federal Court of Australia delivered his decision in the dispute between Novartis AG and Novartis Pharmaceuticals Australia Pty Limited (together, Novartis) and Pharmacor Pty Limited (Pharmacor) regarding patent AU2003206738 entitled “Pharmaceutical compositions comprising valsartan and NEP inhibitors” (the Patent).

Claim 1 of the Patent claims a pharmaceutical composition comprising:

(i) valsartan (an angiotensin receptor blocker) or a pharmaceutically acceptable salt of valsartan; and

(ii) the neutral endopeptidase (NEP) inhibitor, sacubitril or sacubitrilat, or a pharmaceutically acceptable salt of either of these NEP inhibitors (Sacubitril is an ethyl ester and a prodrug of sacubitrilat), together with a pharmaceutically acceptable carrier.

The aim of the claimed invention was to provide a pharmaceutical combination/composition for the treatment or prevention of hypertension, heart failure, and myocardial infarction.

Novartis alleged that Pharmacor threatened to infringe claim 1 of the Patent based on its intended supply in Australia of Valtresto, for which Pharmacor had six registrations on the Australian Register of Therapeutic Goods (ARTG) commencing in April 2023.  Pharmacor denied infringement and cross-claimed alleging that the Patent was invalid on the grounds of obviousness, fair basis and lack of best method (applying the statutory tests applicable under the pre-Raising the Bar version of the Patents Act 1990 (Cth) (the Patents Act); and in any event that the Patent, which was in its extended term, had been wrongly granted a patent term extension (PTE).

Justice Yates ruled in Pharmacor’s favour, holding that Novartis had not established that Pharmacor threatened to infringe claim 1 of the Patent, and that the term of the Patent had been wrongly extended. The term of the Patent had therefore ended on 16 January 2023, three months before Pharmacor’s April 2023 ARTG registrations for Valtresto.

Given his Honour’s findings on infringement and the PTE, Justice Yates did not need to determine the invalidity cross-claim.  However, his Honour went on to consider the invalidity cross-claim, finding that Pharmacor had not established that claim 1 was invalid for lack of inventive step and that the grounds of fair basis and lack of best method had fallen away because of his Honour’s decision on the construction of claim 1.

Justice Yates’ decision is highly relevant for many reasons.  In particular, his Honour’s decision:

1. illustrates the central importance of claim construction, with the construction of claim 1 ultimately determining the issues of infringement, the validity of the PTE, whether claim 1 was fairly based on the Patent’s specification and whether the Patent disclosed the best method;

2. provides invaluable guidance on the questions of “ascertainment” and “relevance” in the context of the pre-Raising the Bar version of the section 7(3) test for obviousness, as to whether the person skilled in the art could be reasonably expected to have ascertained, understood and regarded as relevant prior art information; and

3. highlights the many pitfalls and difficulties which face a litigant seeking to revoke a patent for obviousness.  His Honour cautioned against the pervasive use of the reformulated “Cripps question” in the framing of litigants’ obviousness evidence, emphasising that ultimately the statutory test set out in section 7(2) of the Patents Act posed a more fundamental question: that is, is the invention, as claimed, obvious?  His Honour also emphasised that “hindsight is insidious”, noting:

(a) the influence that the sequence of hypothetical tasks given to a key Pharmacor expert had on the decisions and choices he made in addressing these hypothetical tasks in his evidence; and

(b) his Honour’s concern about the utility of asking an expert to address a task that seeks the “solution” to a “problem” when the “solution” to the “problem” must already have been known to the expert.

Australian patent practitioners will also be interested to learn that all the experts were provided with standard instructions in relation to the giving of evidence on the question of inventive step.  On 8 June 2023, the Federal Court of Australia IP Practice Area User Group had presented a draft of these instructions for discussion at a meeting with Judges in the Court’s Intellectual Property NPA Patents and associated Statutes sub-area.  Justice Yates considered it appropriate that those instructions be used for the assistance of the experts in this case.  The instructions are reproduced in the Schedule to his Honour’s judgment.

Key Issues

Construction

The only issue on construction was whether integers (i) and (ii) of the pharmaceutical composition were satisfied by a complex containing anionic valsartan, anionic sacubitril and pharmaceutically acceptable cations (such as sodium cations).

Novartis argued that claim 1 was directed to any pharmaceutical composition including a carrier that delivers valsartan and sacubitril/at as the relevant active agents or ingredients.  In particular, Novartis argued that:

• there was no limitation in claim 1 that excluded a pharmaceutical composition in which there are non-covalent bonds between the valsartan and sacubitril; and
• claim 1 did not require that integers (i) and (ii) be discrete physical substances, each with a unique set of physicochemical properties.

Justice Yates rejected Novartis’ arguments stating that claim 1 was a product claim, claiming a pharmaceutical composition defined by identified components, having their identified pharmacological activities, in the state in which those components exist in the composition itself.  The identified active pharmaceutical ingredients were:

(valsartan or a pharmaceutically acceptable salt of valsartan) + ([sacubitril or a pharmaceutically acceptable salt of sacubitril] or [sacubitrilat or a pharmaceutically acceptable salt of sacubitrilat]).

The invention of claim 1 was not defined in terms that implied that integers (i) and (ii) were combined to produce a new chemical entity, being a unique, single entity with its own properties.   Justice Yates considered that his construction of claim 1 was also supported by the specification which made clear that a “therapeutically effective amount” of “each” component of the combination may be administered “simultaneously or sequentially and in any order”.  Justice Yates concluded by stating at [223] that:

To construe claim 1 as I have is not to “exclude” a complex.  It is simply to recognise that, by claiming the pharmaceutical composition in the way it has, Novartis has claimed a composition in which the component of integer (i) and the component of integer (ii) are each present as separate components.  One cannot “exclude” that which has not been claimed.

Infringement

Pharmacor’s Valtresto was a film-coated tablet incorporating an amorphous complex (SVT1), and excipients, in which valsartan anions, sacubitril anions, and sodium cations were present in a 1:1:3 ratio.  Critically, SVT1 was a single chemical entity consisting of sacubitril, valsartan and sodium associated by non-covalent bonds, that is, a complex, not two active ingredients that were separate salts of sacubitril and valsartan.  On this basis, Justice Yates held that Valtresto did not infringe claim 1 of the Patent.

Justice Yates considered that it was not to the point that Valtresto comprised an amorphous complex which formed due to the unique properties of the sodium salt of sacubitril and the sodium salt of valsartan when in combination.  This argument conflated the preparation of STV1 and the state of STV1 in Valtresto as a finished product.  It was also irrelevant that, upon administration, Valtresto disintegrated and SVT1 dissociated.

PTE

Pharmacor challenged the validity of the extension of term on the following alternate bases:

1. If claim 1 encompassed a combination (not a complex), then the requirement in section 70(3)(a) of the Patents Act (for goods containing or consisting of the claimed combination to be included on the ARTG) was not satisfied; or

2. If claim 1 did encompass a complex, then the requirement in section 70(2)(a) of the Patents Act was not satisfied on the basis that the complex was not also in substance disclosed in the complete specification of the Patent.

Given his Honour’s finding that claim 1 did not encompass a complex, Justice Yates only needed to consider the first basis, that is whether the section 70(3)(a) requirement had been satisfied.  Relevantly, Justice Yates found that Novartis’ Entresto, being the ARTG-registered product upon which Novartis’ PTE had been based, was a film-coated tablet that contained an active ingredient which was a salt complex of: (i) the anionic forms of sacubitril and valsartan, sodium cations, and water molecules in the ratio of 1:1:3:2.5 (TSVH), and (ii) excipients.  TSVH was a single salt with a unique set of physicochemical properties.  So, it followed that Entresto did not contain or consist of the claimed combination, being (a) valsartan or a pharmaceutically acceptable salt thereof; (b) sacubitril or a pharmaceutically acceptable salt thereof; and (c) a pharmaceutically acceptable carrier.

Accordingly, Justice Yates held that the PTE had been wrongly granted, and as a result, the Patent had expired in January 2023.

Obviousness

Pharmacor’s challenge to the invention claimed in claim 1 on the ground of obviousness relied on the common general knowledge (CGK) and prior art information, known as the Ksander paper and the Ksander patent (the Ksander documents).  To be able to rely on the Ksander documents, Pharmacor had to satisfy the test in section 7(3) of the Patents Act (in the form that it existed prior to the Raising the Bar amendments), that is, that the person skilled in the art could be reasonably expected to have ascertained, understood and regarded as relevant the prior art information in the Ksander documents.

In determining that the requirements of section 7(3) had been satisfied and rejecting all of Novartis’ arguments to the contrary, Justice Yates provided the following guidance to patent litigants on the section 7(3) test:

1. Ascertainment:

(a) Evidence of a hypothetical search is admissible, but not always necessary, to seek to prove ascertainment.  For example, the prior art information may have been published in a well-known journal that would have been consulted by the person skilled in the art, providing a sufficient basis to establish the reasonable expectation that the person skilled in the art would have ascertained the prior information.

(b) If evidence of a hypothetical search is relied on, it does not matter that the person skilled in the art could, would, or might have, conducted other searches in addition to the search that ascertained the prior art information in question, or found other prior art information.

(c) It was also not necessary for evidence to be adduced that the person skilled in the art would prefer, prioritise, or select the ascertained information over other information which the person could be reasonably expected to have discovered or found.

2. Relevance:

(a) Relevance is judged by reference to the subject matter of the claimed invention.

(b) The subject matter of the invention as claimed in the Patent was a composition that contained an identified angiotensin receptor blocker and identified NEP inhibitors.  This composition was said to address the need for an efficacious combination therapy for the treatment of hypertension, the treatment or prevention of heart failure, and the treatment and prevention of myocardial infarction and its sequelae.

Justice Yates then turned to answer the ultimate question of whether the claim 1 invention was obvious in light of the CGK considered together with the Ksander documents.  As already mentioned, Justice Yates found that the claim 1 invention was not obvious in light of the CGK considered together with the Ksander documents.

Justice Yates noted that Pharmacor had argued its obviousness case using the reformulated “Cripps question”:

Would the notional research group seeking to [come] up with a pharmacotherapy to treat each of HTN and HF, in all the circumstances (which include the CGK and the s 7(3) prior art), have been directly led as a matter of course to try the claimed invention in the expectation that it might well produce a useful or better alternative to other pharmacotherapies?

Justice Yates cautioned against “ … proceeding to answer the statutory question through the instrumentality of the reformulated “Cripps question” lest important considerations involved in answering the statutory question are masked”.  Justice Yates emphasised that sight should not be lost of the fact that the test under section 7(2) of the Patents Act posed a more fundamental question: that is, is the invention, as claimed, obvious?

Justice Yates also noted that:

• the reformulated “Cripps question” was premised on a problem/solution paradigm, and that not all inventions were premised on that paradigm; and
• the expectation of success expressed in the reformulated “Cripps question” was not a prediction of success.  It was, however, not sufficient that the person skilled in the art would consider that it was “obvious to try” or “worth trying” that which the inventor had claimed as an invention.

Justice Yates critically analysed the sequencing of the evidence provided by Pharmacor’s expert cardiologist, Professor Coats, noting the influence that this sequence had on the decisions and choices he made in addressing the hypothetical tasks he addressed in his evidence.

Ultimately, Justice Yates did not accept that the steps, decisions, and choices made by Professor Coats, although well-reasoned, were indicative of the steps, decisions, and choices of the uninventive person skilled in the art at the priority date, or that it was likely that the person skilled in the art would have been directly led as a matter of course to take those steps or to make those decisions and choices.  His Honour considered that the course that Professor Coats took in respect of each of his hypothetical tasks was akin to a “voyage of discovery”.

Finally, Justice Yates expressed his concern about the utility of asking an expert witness to address a task that sought the “solution” to a “problem” when the “solution” to the “problem” must already have been known to the expert.  In this regard, Justice Yates noted that:

• Entresto (which was entered on the ARTG on 20 January 2016 as a sacubitril/valsartan product in the form of a tablet for oral administration to adult patients for the treatment of chronic heart failure with reduced ejection fraction) must have been well-known to Professor Coats when he was asked to undertake his hypothetical tasks.
• No matter how conscientiously Professor Coats undertook the tasks he was assigned, Entresto, as a product for treating heart failure, could not have been eliminated from his mind.
• An expert, with a background knowledge of Entresto, should not have been put in the position of having to address the hypothetical tasks that Professor Coats was asked to address.
• The inquiry under section 7(2) was not whether the claimed invention could be explained as a rational choice of integers, but whether, at the priority date, it was obvious.

Fair Basis and Lack of Best Method

Pharmacor’s challenge to the validity of claim 1 on the basis that (i) the invention, as claimed, was not fairly based on the matter described in the specification and (ii) the complete specification did not describe the best method known to Novartis of performing the invention in claim 1, depended on a finding that integers (i) and (ii) of the pharmaceutical composition were satisfied by a complex containing anionic valsartan, anionic sacubitril and pharmaceutically acceptable cations.  As his Honour found to the contrary, both these invalidity challenges fell away.

Outcome

So, Justice Yates ruled in Pharmacor’s favour, holding that Novartis had not established that Pharmacor threatened to infringe claim 1 of the Patent, and that the term of the Patent had been wrongly extended.  As the term of the Patent had ended on 16 January 2023, three months before Pharmacor’s April 2023 ARTG registrations for Valtresto, Justice Yates considered it appropriate that the Patents Register be rectified to show the Patent as ceasing on 16 January 2023.  Pharmacor’s challenge to the validity of claim 1 was dismissed.

Justice Yates ordered that the parties propose agreed or, if not agreed, competing draft orders by 20 November 2024.  His Honour also noted that, if the parties could not agree on an appropriate costs order, his provisional view was that Novartis should pay Pharmacor’s costs of the issues on which Pharmacor succeeded and that Pharmacor should pay Novartis’ costs of the issues on which Pharmacor did not succeed.

Implications

Justice Yates’ decision is highly relevant for many reasons.  In particular, his Honour’s decision:

1. illustrates the central importance of claim construction to the determination of infringement, validity and PTE cases;

2. provides invaluable guidance on the questions of “ascertainment” and ‘relevance” for the pre-Raising the Bar version of the section 7(3) test for obviousness; and

3. highlights the many pitfalls and difficulties which face a litigant seeking to revoke a patent for obviousness.  Ultimately, his Honour was highly critical of the legal and evidentiary strategy which Pharmacor adopted to its obviousness evidence.  Justice Yates’ criticism emphasised the influence that the sequence of hypothetical tasks given to a key expert had on the decisions and choices he made in addressing these hypothetical tasks in his evidence.  Moreover, his Honour identified a fundamental problem with asking an expert to address a task that seeks the “solution” to a “problem” when the “solution” to the “problem” must already have been known to the expert.

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