Biosimilars Deals 2021

Anura Limited (Formerly Orion Marine Limited) v Sealegs International Limited [2024] NZCA 538

Highlight

The New Zealand Court of Appeal has handed down its second appeal decision in the long-running dispute between Sealegs International Limited (Sealegs) and Anura Limited (formerly Orion Marine Limited) and Smuggler Marine Limited (together, the Appellants).  The Appellants sought damages under an undertaking given by Sealegs in 2016 when it obtained an interim injunction before the trial of its claims that the Appellants were infringing copyright in works relating to amphibious boat technology.   Sealegs’ copyright infringement action ultimately failed.  Sealegs attempted to defend the Appellants’ damages claim by alleging that any sales prevented by the injunction would have been unlawful patent infringement.  The Court of Appeal has now ruled that this attempt constitutes an abuse of process in accordance with the principles in Henderson v Henderson [1843] EngR 917.

Background

In 2016, Sealegs sued the Appellants alleging infringement of copyright in the amphibious boat systems that Orion was making and supplying, and that Smuggler was attaching to its boats.  Sealegs obtained an interim injunction and gave an undertaking as to damages.

While Sealegs initially indicated that it would also commence a patent infringement claim, it ultimately did not after being given a June 2017 deadline to do so.  Sealegs succeeded in its copyright claim in the High Court, but the Court of Appeal overturned this decision.  That Court noted that “Sealegs had decided not to add a patent claim but to pursue a ‘simpler’ copyright infringement, leaving the patent to be relied on in the United States and other jurisdictions should litigation arise there”.

In 2020, the Appellants sought to enforce Sealegs’ undertaking as to damages.  Sealegs filed a defence and counterclaim alleging patent infringement.  The Appellants applied to strike out the patent claims, arguing they should have been brought with the original copyright infringement case and constituted an abuse of process under the Henderson v Henderson principle.  The High Court declined the strike-out application and the Appellants appealed.

Key Issues 

The Appellants argued that Sealegs could and should have raised its claim for patent infringement in the earlier proceedings and should therefore be prevented from raising that claim in this subsequent proceeding.  They submitted that the High Court judge (the Primary Judge) “lost sight of the abuse with which the [Henderson v Henderson] principle is concerned, incorrectly formulated the relevant test, and adopted a too restrictive approach”.

Sealegs supported the Primary Judge’s finding.  It also submitted that because it could “technically” have made a patent claim earlier, this did not mean that a patent claim “could have been brought”.  Sealegs argued that the proper question arising out of Henderson v Henderson was whether a patent claim could “practically” have been brought.

Having distilled the parties’ submissions, the Court of Appeal noted the following issues to be considered:

(i) Could Sealegs have brought, in (or with) the earlier proceeding, its current patent claim?

(ii) Should Sealegs have brought its current patent claim in (or with) the earlier proceeding, such that it is an abuse of process for it to now bring the claim?

(iii) If it is an abuse of process for Sealegs to bring its current patent claim for infringement, may Sealegs nonetheless raise patent infringement by way of defence?

Could Sealegs have brought, in (or with) the earlier proceeding, its current patent claim?

The court examined two distinct aspects of this issue – (i) the original amphibious systems and boats; and (ii) a later model of boat.

For the original amphibious systems and boats, Sealegs conceded that it technically could have included the patent claims, but argued practical barriers prevented this for two reasons.  First, adding a patent claim would have delayed the trial.  Second, the patent was under amendment at the time.  The Court dismissed these arguments as “rather arid”, finding that such practical difficulties were relevant to whether Sealegs “should” have brought the claims, not whether it “could” have done so.

The newer boat model had been developed after the original trial so could not have been specifically the subject of a patent claim.  There was a factual dispute as to whether that model was so similar to the model considered at trial that its infringing status would have been determined anyway.  The Court held that this factual dispute could not be resolved in a strike-out application, meaning the appeal had to fail to the extent it related to the new model, leaving this aspect of the counterclaim to be determined at trial.

Should Sealegs have brought its current patent claim in (or with) the earlier proceeding, such that it is an abuse of process for it to now bring the claim?

The Court first determined that both the copyright and patent claims fundamentally concerned the same subject matter – they involved the same parties, the same amphibious systems, the same boats, and the same conduct by the Appellants.

Sealegs argued that different legal elements were involved in patent claims as apart from copyright claims.  The Court rejected the significance of this distinction, noting that both claims were different ways of alleging the Appellants had breached Sealegs’ legal rights.  Citing Wigram V-C in Henderson v Henderson, the Court concluded that the two claims were clearly parts of “the same subject of litigation”.  The Court noted that if Sealegs’ submissions were accepted, this would confine abuse of process to cases “where the causes of action were the same or had the same elements (and therefore raised the same issues)”.  The Court observed that this would make the abuse of process principle redundant beyond cause of action estoppel and issue estoppel, contrary to the authorities considered.

The Court also rejected Sealegs’ argument that the absence of a “collateral attack” on the earlier copyright ruling should weigh against finding an abuse of process.  The Court found that the Primary Judge had erred to this extent (who had weighed this heavily), observing that a “collateral attack” refers specifically to challenging prior findings in proceedings between different parties or of a different nature.  The Henderson v Henderson principle, the Court clarified, extends beyond just preventing “collateral attacks”, making the absence of such an attack merely a neutral factor in determining abuse of process.

The Court was particularly critical of Sealegs’ position that it could not practically include the patent claims due to timing constraints which would have, according to Sealegs, resulted in a significant adjournment of the trial date.  Initially, Sealegs had indicated that it would bring patent claims and estimated a 4-6 week trial including both copyright and patent matters.  The Court concluded that Sealegs would have been prepared for a combined copyright and patent trial commencing in September 2017.  It also noted that after obtaining the interim injunction, Sealegs delayed pursuing even the copyright claims and changed its mind about including patent claims without consulting the Court or the Appellants.  Had it done so, the Court found that a longer trial could have been accommodated if needed.  This conduct was particularly problematic given that Sealegs had obtained an interim injunction.

The Court found other defences raised by Sealegs to be either unconvincing or neutral factors.  Ultimately, the Court concluded that Sealegs should have brought its patent claims with the earlier proceeding.  Accordingly, raising them in a later proceeding constituted an abuse of process and was “oppressive and wasteful of scarce judicial resources”.

If it is an abuse of process for Sealegs to bring its current patent claim for infringement, may Sealegs nonetheless raise patent infringement by way of defence?

Sealegs argued that striking out a defence was more extreme than preventing a party from enforcing its patent and suggested that the Henderson v Henderson principle should be applied more leniently to defences.  However, the Court found this argument unsupported by legal authority and inconsistent with both the Henderson v Henderson principle as well as the related principle of issue estoppel, which prevents re-litigation regardless of whether a party is acting as plaintiff or defendant.

The Court acknowledged that the way a matter is re-litigated (e.g. as a defence rather than a claim) might be relevant to the broader assessment called for by Henderson v Henderson, but it found this consideration was offset by the fact that Sealegs’ defence related to a claim arising solely from its own decision to obtain an interim injunction in the very proceeding that gave rise to the abuse of process with which the Henderson v Henderson principle is concerned.  Consequently, the Court concluded that it was equally abusive for Sealegs to raise patent infringement as a defence.

Outcome

The Court ordered that Sealegs’ counterclaim be struck out, except to the extent that it related to the alleged sales of the newer boat model.

Implications

This decision underscores the crucial importance of carefully strategising litigation proceedings when holding multiple IP rights.  While it is common for businesses to have overlapping IP protections (such as patents, copyright, and designs), this decision demonstrates the risks of attempting to litigate these rights separately.  The Court showed little sympathy for Sealegs’ arguments, especially regarding the alleged timing constraints.

Perhaps the most sobering aspect of this case is its timeline, with the dispute now stretching over 8 years and the damages claim yet to be heard.  The Appellants, despite ultimately succeeding, have suffered the very prejudice and disruption that the Henderson v Henderson principle seeks to prevent.  Parties must carefully weigh the immediate and strategic advantages of separating or excluding claims against the risk of being prevented from raising them later, and the potential for dramatically extending the over timeline of the dispute.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.

Cytec Industries Inc. v Nalco Company (No 4) [2024] FCA 1318

Introduction

Justice Burley of the Federal Court of Australia has delivered another judgment in the ongoing patent dispute between Cytec Industries Inc. (Cytec) and Nalco Company (Nalco), this time refusing Nalco’s latest attempt to amend its patent application.  The case concerns patent application AU2012220990 entitled ‘Reducing aluminosilicate scale in the Bayer process’, which discloses methods for reducing silica scale formation in Bayer process tanks by adding specific chemical mixtures resulting from reactions between certain compounds.  The Bayer process itself involves dissolving crushed bauxite in hot caustic liquor to extract alumina, during which unwanted silica deposits accumulate as scale on tank surfaces.

The case has a complex procedural history.  After Nalco filed its patent application in February 2012, it faced opposition from Cytec in August 2015.  What followed was a series of amendment attempts and opposition proceedings before the Patent Office, eventually leading to Federal Court proceedings.  As previously reported, in August 2021, Justice Burley found that the claims lacked support and sufficient disclosure, but rejected Cytec’s submissions in respect of lack of novelty or best method.  In response, Nalco filed further amendment applications aimed at overcoming the lack of support and sufficient disclosure findings, culminating in its sixth proposed amendment (the Amendment Application) which is the subject of this decision.

Key Issues 

Cytec raised multiple grounds of opposition, submitting that the Amendment Application would lack support, lack clarity, claim matter that extends beyond that disclosed in the specification, and fail to disclose the best method.  Cytec also argued that the Amendment Application should be refused on discretionary grounds as it did not overcome the deficiencies identified in the 2021 judgment and because of alleged delay and misconduct in seeking the amendment.

Justice Burley condensed the dispute into three key issues:

(i) the proper construction of the claims as amended;

(ii) the consequence of that construction under sections 105(4) and 102(2) of the Patents Act 1990 (Cth) (the Act); and

(iii) the exercise of discretion under section 105(1A) of the Act.

Nalco’s Amendment Application sought two key changes.  First, Nalco proposed the following narrowing amendment to claim 1:

(1)    A method for the reduction of aluminosilicate containing scale in a Bayer process comprising the steps of:

(2)    adding to the Bayer process stream an aluminosilicate scale inhibiting amount of a composition comprising at least one small molecules is selected from the group consisting of compounds:

(3)    (I) through (IX), (XXVIII) (XIII), (XV) through (XXX) and (XXXII) through (XLVII), (LIII) through (LVIII) and (LX)

(4)    within a product mixture formed from the reaction of a) hexane diamine, ethylene diamine or 1-amino-2-propanol; b) 3-glycdixoypropyltrimethoxysilane; and c) 2-ethylhexyl glycidyl ether:

Second, Nalco sought to separate claim 1 into five independent claims, which specified:

(i) a choice of amine: hexanediamine (claim 1); ethylenediamine (claims 2 and 3); and 1-amino-2-propanol (claims 4 and 5); and

(ii) whether the product mixture has undergone a hydrolysis step prior to being added to the Bayer process stream, in the case of claims 1, 2 and 4; or not, in the case of claims 3 and 5.

Construction

Nalco submitted that there were two issues of claim construction arising for determination:

(a) Whether the proposed amended claims include[d] within their scope product mixtures made up of all of the particular small molecules identified in the claims (being 13 identified small molecules for claim 1, 14 small molecules for claims 2 and 3, and 3 small molecules for claims 4 and 5) but no others (Small Molecule Construction Issue); and

(b) Whether claims 1, 2 and 4 [were] directed to a product mixture that has undergone a hydrolysis step and claims 3 and 5 directed to a product mixture that has not undergone a hydrolysis step prior to being added to the Bayer Process stream (Hydrolysis Construction Issue).

Small Molecule Construction Issue

Nalco argued that its amended claims were directed to a complex product mixture formed from the reaction of A (amine) + GPS (3-glycidoxypropyltrimethoxysilane) + E (2-ethylhexyl glycidyl ether), that contained all the identified small molecules plus additional molecules and polymers.  Nalco based this argument on three main points:

1. the practical impossibility of creating a mixture with only the specified molecules to the exclusion of other small molecules and polymers;

2. the meaning of terms like “within” and “formed” in the context of a “product mixture” would lead a skilled person to understand that the claims do not include within their scope a product mixture that contains only the small molecules listed; and

3. the removal of phrase “at least one” and “selected from” means that the small molecules are “within” a product mixture, and thus as a matter of ordinary English, the claims cannot refer to the entirety of the product mixture to the exclusion of other small molecules and polymers.

Justice Burley rejected Nalco’s arguments, and instead accepted Cytec’s construction that the amended claims encompassed product mixtures containing only the listed small molecules.  Consistent with the evidence in the Joint Expert Report, his Honour found that, while the claims required all specified small molecules to be present, they did not require the presence of additional molecules – more may be included, but were not essential.

Moreover, Justice Burley rejected Nalco’s argument based on “practical impossibility”, noting that the claims should be understood according to their terms, and not by reference to technical limitations or practical impossibilities.  His Honour noted Nalco’s approach assumed that the construction of the claims is to be “driven by the technical contribution to the art described in the specification”, which has been long forbidden per Welch Perrin & Co Pty Ltd v Worrel [1961] HCA 91.

Hydrolysis Construction Issue

Nalco argued that the amended claims were directed to product mixtures that have either undergone a hydrolysis step (claims 1, 2 and 4), or have not undergone a hydrolysis step (claims 3 and 5), prior to being introduced to the Bayer process stream – on the basis that a skilled person would understand there to be a distinction between those two groups of claims.

Justice Burley rejected Nalco’s construction for several reasons.  First, his Honour noted that none of the amended claims contained any language requiring or excluding a hydrolysis step, and the preference of the Court to construe claims in a manner that avoids redundancy between claims cannot serve as a basis to incorporate into the claim words that were not present.  In any event, Justice Burley did not consider the claims to be redundant as there was no overlap between the claims.  Further, his Honour observed that, although the specification made a distinction between hydrolysed and non-hydrolysed product mixtures, the language of the claims did not and thus should not be read down.

Grounds of Opposition

Having resolved the construction issues in Cytec’s favour, Justice Burley turned to the grounds of opposition to the Amendment Application.  The grounds of lack of clarity and failure to disclose the best method fell away as they were based on Nalco’s rejected construction.  The remaining grounds concerned his Honours findings regarding the Small Molecule Construction Issue.  Cytec argued that the Amendment Application should fail on three alternative bases:

1. The amendment would be futile and should be refused as a matter of discretion.

2. The amendment would claim matter beyond the disclosure in the complete specification in breach of section 105(4) and section 102(1) of the Act.

3. The specification would fail to meet the requirements for “clear enough and complete enough disclosure” and support.

Justice Burley accepted each ground.  Particularly notable was his Honour’s finding that the amended claims suffered from the same defects as the original claims – they still encompassed product mixtures containing only the specified molecules without providing sufficient technical disclosure to support such claims and without providing a clear enough and complete enough disclosure for the invention to be performed by a person skilled in the art.

On the issue of futility, Justice Burley observed that pre-grant opposition proceedings are meant to provide a “swift and economical” way to resolve disputes, not become a “decade-long war of attrition” through multiple rounds of amendments.  His Honour emphasised that the discretionary power of the Court under section 105(1A) of the Act should not be understood as providing a “magic pudding of opportunity for the creative endeavours of a patentee to craft ways of avoiding the consequences of adverse findings”, and nor should it be regarded as a “mechanism to provide a patent applicant with a basis for attempting to relitigate an issue that has already been before the Court”.  Rather, the principle of finality insists that a “patent applicant should, on appeal from an opposition, advance its best and final version of the specification and claims that it desires to litigate and the decision on appeal should be regarded as resolving any controversy regarding the scope and construction of the specification”.

Finally, Justice Burley declined to consider Cytec’s additional submissions regarding unreasonable delay, finding it unnecessary given the conclusions reached on the other grounds for refusal.

Outcome

Justice Burley concluded that the Amendment Application should be refused.  Nalco have subsequently filed an application for leave to appeal to the Full Court of the Federal Court.

Implications

Justice Burley’s decision reinforces several key principles in patent amendment proceedings.  First, it confirms that patent claims will be construed according to their ordinary meaning, and potential issues of redundancy between claims will not serve as a basis for reading integers into claims that are not present in the claims.  Second, it clarifies that the discretionary power of a Court under section 105(1A) is not meant to provide endless opportunities to avoid adverse findings – patentees should present their strongest amendments early in opposition proceedings.  Finally, patentees should also ensure their specifications provide sufficient technical disclosure to support their claims from the outset, rather than trying to fix fundamental deficiencies through multiple and protracted amendments.  Attention now turns to Nalco’s application for leave to appeal and whether the Full Court of the Federal Court will decide to weigh in.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.

Cipla Australia Pty Ltd v Novo Nordisk A/S [2024] FCA 1414

Highlight

In a comprehensive Federal Court judgment, Justice Perram has ruled that pharmaceutical formulations can constitute a “pharmaceutical substance per se” under the Patents Act 1990 (Cth) (the Act), dismissing Cipla’s attempt to invalidate Novo Nordisk’s patent term extension (PTE) for its liraglutide formulations patent.  The decision maintains Novo Nordisk’s patent protection until 26 August 2025, preventing Cipla from launching its generic product in January 2025 as initially planned.

Background

The case concerned Australian Patent AU2004290862 (the Patent), which claims formulations of liraglutide, a peptide used to treat type 2 diabetes.  The Patent was originally set to expire on 18 November 2024, however, following a successful PTE application by Novo Nordisk in February 2011, the expiry date was extended to 26 August 2025.

Cipla proposed to launch a liraglutide product in January 2025.  Cipla commenced proceedings seeking rectification of the Patent Register under section 192(1) of the Act to restore the original expiry date, arguing the extension was granted without sufficient cause.  Novo Nordisk cross-claimed for injunctive relief to prevent Cipla’s product launch before the Patent’s expiry.

Key Issues 

Under the Act, a patentee can apply for a PTE only if at least one “pharmaceutical substance per se” is disclosed and claimed in the patent.  The Patent claims two formulations of liraglutide: one containing liraglutide with two excipients (disodium phosphate dihydrate and propylene glycol), and another adding phenol as a third excipient.

Two key issues arose for determination:

1. Whether the definition of a “pharmaceutical substance” in the Act includes formulations; and

2. If so, whether the excipients must have therapeutic uses distinct from the active ingredient, and, if so, whether the excipients in this case met that requirement.

Justice Perram noted that it was not in dispute that, if the Patent included a claim for a pharmaceutical substance, it also disclosed a pharmaceutical substance per se.  The definition of “pharmaceutical substance” is set out in Schedule 1 of the Act as follows:

pharmaceutical substance means a substance (including a mixture or compound of substances) for therapeutic use whose application (or one of whose applications) involves:

(a) a chemical interaction, or physico‑chemical interaction, with a human physiological system; or

(b) action on an infectious agent, or on a toxin or other poison, in a human body; but does not include a substance that is solely for use in in vitro diagnosis or in vitro testing.

Ultimately, whether the formulation claims of the Patent met this definition was a question of statutory construction.

Cipla presented five key arguments as follows:

1. Two appellate decisions bound the court to find that formulations could not be pharmaceutical substances: H Lundbeck A/S v Alphapharm Pty Ltd [2009] FCAFC 70 (Alphapharm (FC)) and Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42 (Alphapharm (HC)).

2. If the Court was not bound by those decisions, the ordinary meaning of a “pharmaceutical substance” excluded formulations.

3. The legislative history and secondary materials relating to the PTE provisions and definition of “pharmaceutical substance” showed formulations were excluded.  In particular, Cipla submitted that the terms of section 119A introduced in 2006 (the Springboarding Provisions), which permits generic drug companies to take steps to obtain registration of a generic product prior to expiry of the originator patent, were inconsistent with the proposition that a formulation may be a pharmaceutical substance.

4. The policy underlying the PTE provisions supported this construction.

5. While two earlier first instance Federal Court decisions in Pharmacia Italia SpA v Mayne Pharma Pty Ltd [2006] FCA 305 (Pharmacia) and Spirit Pharmaceuticals Pty Ltd v Mundipharma Pty Ltd [2013] FCA 658 (Spirit) had found formulations could be pharmaceutical substances, these were decided before the High Court’s judgment in Alphapharm (HC) and considered versions of the Act which pre-dated the introduction of section 119A, and were therefore distinguishable (or alternatively, wrongly decided).

Legislative History and Policy of the Extension Provisions

Justice Perram began by analysing the legislative evolution of the concept of a pharmaceutical substance, starting with the introduction of the definition of “pharmaceutical substance” by the Patents Amendment Act 1989 (Cth) through to the introduction of the concept of a “pharmaceutical substance per se” by the Intellectual Property Laws Amendment Act 1998 (Cth).  Notably, his Honour found that the introduction of the concept of a “pharmaceutical substance per se” did not narrow the existing definition to exclude formulations.  Justice Perram rejected Cipla’s argument that statements in the explanatory materials suggested otherwise, noting that implied amendments must be found in the terms of the amending provisions, not the explanatory materials alone.

Justice Perram then considered the introduction of the Springboarding Provisions by the Intellectual Property Laws Amendment Act 2006 (Cth).  Justice Perram carefully analysed the “interpretive choices” available in light of the fact that section 119A(3) distinguished between a patent claiming a “pharmaceutical substance” and a patent claiming a “product relating to a pharmaceutical substance”.  Ultimately, his Honour found that the Intellectual Property Laws Amendment Act 2006 did not amend the definition of pharmaceutical substance and that a patent claiming a formulation continued to be eligible for an extension.

Ordinary Meaning

Justice Perram examined Cipla’s three main textual arguments about why formulations did not fall within the meaning of a “pharmaceutical substance”:

1. Cipla argued that the requirement that a pharmaceutical substance be “for therapeutic use” confined the definition to active ingredients only.  Justice Perram rejected this submission, noting it raised a broader question about whether therapeutic use must be found in each component of the formulation or as a homogenous mixture.

2. Cipla claimed that references in the Explanatory Memorandum for the Intellectual Property Laws Amendment Act 1998 to mixtures and compounds within the definition of “pharmaceutical substance” reflected an intention to only include combinations of active ingredients each of which were themselves pharmaceutical substances.  Justice Perram, however, considered that the Explanatory Memorandum was not “a firm basis to divine an intention to exclude formulations”.

3. Most significantly, Cipla argued that the reference to “application” in the definition of “pharmaceutical substance” meant the “application of the pharmaceutical substance to the biological target” (here, the GLP-1 receptor).  If correct, it would follow that only the active pharmaceutical ingredient in a formulation (in this case, liraglutide which binds to the GLP-1 receptor) may be a “pharmaceutical substance”.  In reply, Novo Nordisk argued that “application” means, in effect, “use”.  Justice Perram ultimately rejected Cipla’s argument for several reasons, concluding that “application” simply meant “use”, which avoided the problems in Cipla’s construction and better aligned with both ordinary language and the legislative history.

Whether Meaning Affected by Other Provisions of the Act

Justice Perram examined several provisions of the Act that Cipla argued supported excluding formulations from the definition of “pharmaceutical substance”.  Cipla’s main argument focused on section 70(3)(a), which distinguished between registered therapeutic goods that “contain” versus “consist of” a pharmaceutical substance.  Cipla argued that the distinction would be meaningless if formulations were pharmaceutical substances, since a formulation (already having excipients) would typically constitute the entire good rather than be contained within it.  Justice Perram rejected the significance of this distinction, noting that therapeutic goods could include components beyond excipients (like capsules) and that formulations could themselves be further formulated, as shown by the Patent itself.

Justice Perram found other arguments raised by Cipla repetitive or underdeveloped, concluding that none of the Act’s provisions required or supported excluding formulations from the definition of “pharmaceutical substance”.

Case Law Concerning the Meaning of Pharmaceutical Substance

Justice Perram examined several key cases concerning the meaning of “pharmaceutical substance”, including:

1. Boehringer Ingelheim International v Commissioner for Patents [2000] FCA 1918, Boehringer Ingelheim International GmbH v Commissioner of Patents [2001] FCA 647, Prejay Holdings Ltd v Commissioner of Patents [2003] FCAFC 77.  These cases focused on whether method claims could be “pharmaceutical substances per se”, but did not address whether formulations qualified as pharmaceutical substances.

2. Pharmacia and Spirit which directly supported including formulations as pharmaceutical substances.

3. Alphapharm (FC) and Alphapharm (HC) which Cipla argued supported its position that formulations were excluded.  However, Justice Perram found these cases did not address the issue.  Although some statements by Bennet J in Alphapharm (FC) provided limited support for excluding formulations, his Honour considered that these statements were obiter and potentially contradictory.  Justice Perram also considered that Cipla’s reliance on a footnote in the Alphapharm (HC) decision which mentioned that “tablets” did not fall within the PTE scheme was misplaced.  Justice Perram considered that Cipla misunderstood the footnote, which in his view “exhibit[ed] a conclusion that a patent for a tablet discloses a pharmaceutical method of delivery”, and is therefore not a pharmaceutical substance per se.

Considering the authorities in their entirety, Justice Perram concluded that nothing in the case law required him to depart from his conclusions based on legislative history and textual analysis that formulations could be pharmaceutical substances.  However, his Honour acknowledged that, if the footnote in Alphapharm (HC) was “not read as an illustration of a method”, this would be inconsistent with his interpretation.  However, Justice Perram stated that, if it was not merely an illustration of a method claim, he would respectfully, although hesitantly, decline to follow it.

Cipla’s Alternative Case

Justice Perram addressed Cipla’s alternative argument that, even if formulations could be “pharmaceutical substances”, these particular formulations were not because their excipients lacked therapeutic use.  Justice Perram concluded that this argument essentially repeated Cipla’s primary case that a formulation can never be a pharmaceutical substance, and thus should be rejected for the same reasons.  His Honour noted that Rares J’s judgment in Spirit merely served to demonstrate that every element of the formulation in that case (including the excipients) happened to have a therapeutic effect, not that this was a necessary requirement to fall within the definition of a “pharmaceutical substance”.

Despite his rejection of Cipla’s alternative case, Justice Perram went on to consider whether the excipients in the relevant formulations had a therapeutic use.  Notably, Justice Perram held that “therapeutic use” must be determined objectively from the patent specification itself, and not from later-discovered effects.  This follows from the statutory definition’s focus on the “purpose” of the therapeutic use, and the practical need to know at grant whether a PTE applies.  His Honour considered that allowing later evidence of therapeutic effects would create uncertainty in the PTE regime by potentially transforming non-pharmaceutical substance patents into pharmaceutical substance patents post-grant.  This led Justice Perram to reject Novo Nordisk’s expert evidence about additional therapeutic effects of the relevant excipients, as these were not disclosed in the specification.

While the relevant excipients generally prevented adverse effects, Justice Perram found that they did not actively influence physiological processes as required by the definition in the Act.  For example, the use of a buffer (disodium phosphate dihydrate) kept the pH of the formulation between 5 and 8, as formulations outside of this range might cause pain to the patient.  Thus, the buffer did “not act upon the physiological process by which the pain is generated but rather simply avoid[ed] the circumstances which would provoke the pain response in the first place”.

Outcome

Having found that formulations can be pharmaceutical substances, Justice Perram ruled that Cipla’s rectification suit must fail.  Accordingly, Justice Perram dismissed Cipla’s application and upheld Novo Nordisk’s infringement cross-claim.  His Honour also took the opportunity to comment on Cipla’s unexplained delay in not commencing proceedings until near the Patent’s expiry, which required expedition and thus disadvantaged other pending cases before the Court.  His Honour observed that such delay might provide a basis for refusing rectification, which is a discretionary remedy.

Implications

Justice Perram has delivered a comprehensive decision explaining clearly why patents for pharmaceutical formulations are eligible for PTEs.  Following a thorough analysis of the Act’s text, history and context, his Honour has confirmed that formulations can qualify as “pharmaceutical substances”, and thus qualify under the PTE regime.  It remains to be seen whether Cipla will appeal Justice Perram’s judgment to a Full Bench of the Federal Court.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.

Zoetis Services LLC v Boehringer Ingelheim Animal Health USA Inc [2024] FCAFC 145

Background

The Full Court of the Federal Court of Australia has dismissed Zoetis Services LLC’s (Zoetis) appeal against Justice Rofe’s two decisions upholding Boehringer Ingelheim Animal Health USA’s (Boehringer) opposition to the grant of three patent applications relating to pig vaccines.  We reported on Justice Rofe’s two decisions here and here.

The three patent applications in issue were:

• AU2013243535 entitled “Mycoplasma hyopneumoniae vaccine” (the ‘535 Application);
• AU2013243537 entitled “PCV/Mycoplasma hyopneumoniae combination vaccine” (the ‘537 Application); and
• AU2013243540 entitled ‘PCV/Mycoplasma hyopneumoniae/PRRS combination vaccine” (the ‘540 Application).

In her Honour’s first decision, Justice Rofe held that the claims of all three patent applications were invalid on various grounds apart from claim 2 of the ‘535 Application.  In her Honour’s second decision, Justice Rofe held that specific combination claims which had not been addressed in her first decision were also invalid and that claim 2 of the ‘535 Application was invalid for failure to disclose the best method of performing the claimed invention.

In dismissing Zoetis’ appeal with costs, the Full Court has again provided valuable guidance on the scope of the patentee’s obligation to disclose the best method of performing the invention known to it, as well as on the level of expectation which must be shown to prove lack of inventive step.

Key Issues 

The Full Court was required to determine the following two issues in the appeal:

1. whether the three applications disclosed the best method known to Zoetis of performing the inventions; and

2. whether specific claims in the applications which related to single dose vaccines (the single dose claims) involved an inventive step.

Best Method

The ‘535 Application disclosed a composition which provided immunity to mycoplasmal pneumonia, a common disease in pigs.  This composition was made by growing M. hyo in pig serum, and then separating the resulting culture into soluble and insoluble parts.  Claim 2 of the ‘535 Application provided a method of removing the immunoglobulin G (IgG) and other immune complexes which remained in the soluble part (supernatant) after the separation step. It was the supernatant which had immunogenic qualities, the efficacy of which was reduced by the presence of IgG and other immune complexes via a phenomenon called “interference”.  IgG and other immune complexes were present in the supernatant because the pig serum came from pigs which would most likely have been exposed to disease.

The ‘537 Application disclosed a bivalent composition made from the ‘535 Application M. hyo supernatant (treated with Protein A and Protein G) to which an antigen of the pig circovirus type 2 (PCV-2) had been added.  PCV-2 causes Post-weaning Multisystemic Wasting Syndrome (PMWS) in pigs.

The ‘540 Application disclosed a trivalent composition made from the ‘535 Application supernatant to which antigens of both PCV-2 and porcine reproductive and respiratory syndrome virus (PRRSV) had been added.  PRRSV causes Porcine Reproductive and Respiratory Syndrome (PRRS).

The Full Court considered the best method challenge as it applied to the ‘535 Application, on the basis that Boehringer’s best method challenge was identical for all three applications and so the outcome of the appeal on best method for the ‘535 Application would apply equally to the ‘537 and ‘540 Applications.

In upholding Justice Rofe’s decision on best method, the Full Court noted that:

• The best method requirement necessitates disclosure of the best method known to the patentee of performing the invention.  The nature and extent of the disclosure required depends on the nature of the invention itself.
• In deciding whether the best method has been disclosed, it is necessary to look at the invention disclosed in the specification as a whole, not merely the claims.  On this point, the Full Court considered the Full Court’s best method reasoning in Firebelt Pty Ltd v Brambles Australia Ltd [2000] 51 IPR 531, in which the Full Court focused on the form of the claims in reaching the conclusion that there had not been a failure to disclose the best method.  The Full Court in Zoetis v Boehringer stated:

…[w]ith respect to their Honours, if they are to be taken as saying that the form of the claims is determinative, we do not agree. The fact that none of the claims in that case was to a lid opening device operating at any particular time could not of itself be an answer to the best method challenge if the timing of such operations was advantageous to the working of the combination or the quality of the outcomes achieved from its use.

• The patentee has an obligation to include aspects of the method of manufacture that are material to the advantages it is claimed the invention brings.

The Full Court went on to note that Justice Rofe had summarised the invention in the ‘535 Application as an improved immunogenic composition or vaccine to elicit a protective response in pigs against the disease caused by M. hyo, using an M. hyo supernatant which can also be used as a base or platform for a combination vaccine with at least one additional antigen protective against selected microorganisms (other than PCV-2, as there are no claims to an M. hyo/PCV-2 combination).  The Full Court agreed with Justice Rofe’s characterisation of the invention, noting that the two key advantages of the invention were:

1. the ability of the vaccine to be administered in a single dose; and

2. he suitability of the hyo composition to be used as part of a combination vaccine conferring immunity against both M. hyo and one of a number of other pig viruses.

The ‘535 Application referred to investigational vaccine products (IVPs).  The ‘535 Application disclosed that the vaccine could be made with a given range of M. hyo antigens but did not identify the antigen concentrations of the IVPs other than by comparison to a reference vaccine (the antigen concentration of which was not disclosed in the specification).  Critically the different IVPs demonstrated different levels of efficacy within the range provided and the efficacy of the IVPs was measured against the reference vaccine.  This meant that it would not be possible for the skilled addressee to make any of the IVPs because the specification only stated the antigen concentration of each IVP by reference to the antigen concentration of the reference vaccine which was not disclosed.

As the advantages presented by the invention were the ability to deliver a composition conferring immunity against M. hyo in a single dose, and that the composition could be used as a platform to deliver immunity against other pig viruses, it followed that it would confer an advantage on the skilled addressee to know what antigen concentration would result in the composition being most effective when administered as a single dose and which balance between the antigens would result in a combination vaccine that could confer immunity against M. hyo and PCV-2.

Boehringer alleged that, prior to the filing of the ‘535 Application, Zoetis had formulated a number of the IVPs, each of which was a method of performing the invention in the ‘535 Application and one of which must be the best method.  The Full Court agreed, noting that the evidence showed that the IVPs varied in efficacy and the logic of this entailed that one of them was the most efficacious (i.e. the best method).  Accordingly, Zoetis had failed to disclose the best method in the ‘535 Application.  The Full Court also concluded that in the circumstances, and contrary to Zoetis’ submission, there was no need for Boehringer to identify which of the IVPs was best in order to prove its lack of best method case.

Inventive Step

Zoetis also appealed from Justice Rofe’s finding that the single dose claims did not involve an inventive step.

At first instance, Justice Rofe had held that the single dose claims were not inventive in light of the expert evidence that tests as to dosage and duration of protection would be routine in the course of developing an M. hyo supernatant.  Justice Rofe therefore considered that the skilled addressee would start with a single dose as part of those routine tests.

The Full Court agreed with Justice Rofe, dismissing Zoetis’ appeal against Justice Rofe’s lack of inventive step finding.  The Full Court stated:

It is an unremarkable proposition in the circumstances of this case that a person skilled in the art would undertake testing of a new vaccine product for the purposes of determining duration of protection. Among other things, it would be necessary to have such information for the purposes of determining the need for, and timing of, any second dose (if two doses were being contemplated) and whether the vaccine (in whatever dosage) would be effective for the intended lifespan of the pig. This is consistent with, and supported by, the expert evidence of Professor McVey.

 

…the person skilled in the art would thereby be directly led as a matter of course to the invention disclosed by the single dose claims. The experts agreed that it was desirable that any such product be administered as a single dose if that was feasible. The revelation that the composition could be administered in a single dose to achieve the requisite protective immune response during such tests would be no more than the direct outcome of what is essentially routine and non-inventive work to ascertain an appropriate dosage, which is consistent with a finding of obviousness…

 

Further, the person skilled in the art would directly be led, as a matter of course, to undertake such work in the expectation that it might well produce a useful alternative to, or a better vaccine than, existing (single dose) vaccines…

The Full Court distinguished between evaluating the character of the expectation and the steps the skilled addressee would have taken.  The Full Court stated that the relevant expectation was to be measured against the ordinary level of expectation and risk inherent in routine work in the particular field.  The relevant test was not knowing that steps will or would or even may well work, but merely expecting that the steps may well work.  The Full Court also considered that it was not always necessary that the skilled addressee knew, or even expected, a particular outcome at the outset of the hypothetical task.  This meant that, in the field of drug formulation, it might not be necessary that the skilled addressee would expect a specific known dose to provide adequate single dose protection if they would expect the routine and non-inventive work in which they are assumed to engage might well result in the identification of such a dose from within a range.

Outcome

So, the Full Court dismissed Zoetis’ appeal with costs, upholding both the lack of best method and lack of inventive step findings made by Justice Rofe at first instance.  Critically, all three applications were invalidated in their entirety as a result of the lack of best method finding.

Implications

The Full Court’s decision continues the line of cases in which patents are being invalidated in their entirety for lack of best method.  The Full Court’s decision illustrates the power of the lack of best method ground for parties seeking to invalidate patents and provides valuable guidance for patentees on the scope of their obligation to disclose the best method of performing the invention known to it.  The decision also provides valuable guidance on the level of expectation which must be shown to prove lack of inventive step.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.

EIS GmbH v LELO Oceania Pty Ltd (Expert Evidence) [2024] FCA 1334

Background

In a recent development in the ongoing patent dispute between EIS GmbH (EIS) and LELO Oceania Pty LTD and LELOiAB (LELO), Justice Downes of the Federal Court has ruled on the participation of an expert witness in joint expert conferences.  The proceedings concern EIS’ allegations that LELO infringed patent AU2018200317, which relates to feminine pressure wave massagers.  LELO has denied infringement and cross-claimed for revocation.  The trial is scheduled for February 2025.

This decision follows an earlier judgment in the same proceedings we previously reported on, in which Justice Downes granted leave to LELO to rely on evidence of experiments performed by Mr Duff.

The primary issue before Justice Downes in this decision was whether Mr Duff should be permitted to participate in joint expert conferences concerning novelty and inventive step, following EIS’ application seeking orders against his participation.  EIS also sought orders denying LELO permission to rely on a substantial portion of Mr Duff’s ninth affidavit at trial (of which there were ten affidavits in total), which was intended by LELO to serve as evidence ‘in reply’ on the issues of novelty and inventive step.

Key Issues 

LELO submitted that, as Mr Duff had given evidence-in-chief on the issues of novelty and inventive step, it should be entitled to rely upon Mr Duff’s ninth affidavit as evidence on novelty and inventive step.  However, Justice Downes observed that it was not apparent that Mr Duff had given expert evidence on the issues of novelty and inventive step for the following reasons:

(i) the first four of Mr Duff’s affidavits lacked both the expert declaration required by r 23.12(1)(b) of the Federal Court Rules and the necessary acknowledgement under r 23.13(ga);

(ii) Mr Duff did not appear to have been specifically instructed to address those issues in any of the first eight affidavits; and

(iii) there was a lack of clarity around which parts of Mr Duff’s affidavits constituted expert evidence in chief on novelty and inventive step.

Justice Downes also considered that EIS had proceeded on the basis that Mr Duff was not being called as an expert witness in relation to novelty and inventive step, having not been aware of LELO’s intention until four weeks prior to the scheduled conferences when the proposed ‘Topics for Joint Expert Conferences’ was served.  Her Honour accepted EIS’ evidence that they had prepared for trial on the understanding that LELO was calling only one expert on these issues (someone other than Mr Duff).

LELO attempted to rely on oral submissions made by its senior counsel during an interlocutory injunction hearing in December 2023 as providing notice of Mr Duff’s status as an expert on the issues of novelty and inventive step.  However, Justice Downes found these submissions only related to one affidavit, of which only four paragraphs were arguably relevant to novelty and inventive step.  Her Honour also rejected LELO’s argument that statements made during later case management hearings were sufficient to put EIS on notice of its intention to rely on Mr Duff as an expert on these issues.

Importantly, Justice Downes also noted that LELO had never raised with her that it intended to rely on two experts on the issues of novelty and inventive step, and had it been raised, would have expressed concern about having two experts from one party on the same issues.  Justice Downes cited the observations of Beach J in Novartis v AG Pharmacor Pty Ltd [2022] FCAFC 58 at [25]:

…the default position is that a party should not adduce expert evidence [in the context of patent litigation] from more than one expert in any single discipline, absent telegraphing its intention to do so to the opposite party and the Court at the earliest opportunity.

Lastly, given the conferences were scheduled to commence only a week later, EIS’ expert would have to review Mr Duff’s first four affidavits and the impugned paragraphs of the ninth affidavit (which she had not yet seen) prior to the conferences.  Her Honour deemed this unsatisfactory, noting that an expert should not be required to absorb, consider and deal with evidence “on the run”.  Furthermore, Justice Downes was concerned that having an additional expert and material would leave insufficient time to address all topics in the conferences and lead to inefficiencies at trial.

Outcome

Justice Downes ordered that Mr Duff was not permitted to participate in the joint expert conferences concerning novelty and inventive step.  The question of whether LELO can rely on select paragraphs of Mr Duff’s ninth affidavit was reserved for determination at trial.

Implications

Justice Downes’ decision reinforces several key principles relating to expert evidence in patent proceedings.

First, LELO’s late indication that Mr Duff’s evidence was relevant to novelty and inventive step, coupled with the absence of the necessary expert declaration, demonstrates the need for parties to give clear and sufficient notice as to the expert evidence they intend to rely on.

Second, experts must have adequate time to properly consider evidence before conferences.  Justice Downes found it unacceptable that EIS’ expert would need to review multiple unseen affidavits just before the conferences were scheduled to begin.

Third, parties must clearly identify which parts of affidavit material constitute expert evidence on specific issues.

Finally, as demonstrated by Justice Downes’ endorsement of the Novartis principle, the Court will not look favourably on parties seeking to rely on more than one expert in respect of a single discipline, especially without early notification to both the opposing party and the Court.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.

Dei Gratia Pty Ltd v Commissioner of Patents [2024] FCA 1145

Introduction

In a recent Federal Court decision, Justice Rofe has dismissed an appeal by Dei Gratia Pty Ltd (Dei Gratia) against the Commissioner of Patents’ (the Commissioner) refusal to grant its patent application AU2019200581 (the Application) for a ‘Last Mile Logistics’ system.  The Application, which described a logistics system for delivering goods to consumers through “modified local outlets”, was rejected by the Commissioner on the basis that it did not constitute a manner of manufacture under section 18(1)(a) of the Patents Act 1990 (Cth).  This latest decision provides further clarity on the patentability of computer-implemented inventions following the equally divided High Court decision in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29 (Aristocrat has been granted leave to appeal the remitted Federal Court decision, as reported on here).

Background

The Application underwent five examination reports which involved two separate hearings by the delegate.  In the decision from the first hearing, the delegate found in favour of Dei Gratia, concluding that the invention was not a “mere collocation” and comprised an inventive step, contrary to the objections set out in the third report.  Following further examination, a second hearing was conducted, which focused on whether the invention comprised an inventive step in light of further prior art, as well as whether it was merely a computer-implemented scheme and thus not a manner of manufacture.  The delegate concluded that it was not a manner of manufacture and characterised the invention as a logistics system.

Key Issues 

Summary of the Invention

The claimed invention was to a system for delivering goods to consumers through “modified local outlets” (such as convenience stores or petrol stations).  Essentially, the system would allow for customers to input a planned travel route, and then automatically select the most convenient local outlet along that route as a collection point for their online purchases.  The system was designed to address several problems with existing delivery methods, such as the need for customers to be home for deliveries, risks of perishable items spoiling when left outside, theft of delivered items, inefficiencies in returning items and multiple deliveries to customers in close proximity.  The Application described the system as using standard computer technology – a regular server with a database to store orders, which communicates over a network with customers who can use any common device to place their orders.  There was nothing technologically special or innovative about the hardware and software being used.

Submissions

The parties made a number of competing submissions.

First, Dei Gratia argued that the claimed invention was not simply an idea for delivering goods more efficiently, but a detailed, practical implementation of physical components to achieve that idea.  The Commissioner contended that it was merely making logistics more efficient using existing concepts and technology, and did not go beyond the parameters of an abstract idea, citing the Full Court in Commissioner of Patents v Aristocrat Technologies Pty Limited (2021) 163 IPR 231 (Aristocrat FCAFC) that “[o]ne cannot patent an idea for … a method of doing one’s laundry more efficiently”: at [5] (per Middleton and Perram JJ).

Second, citing Research Affiliates LLC v Commissioner of Patents (2014) 109 IPR 364 at [103]–[105] (per Kenny, Bennett and Nicholas JJ), Dei Gratia argued that the law did not require inventions to specifically improve computer technology itself, and distinguished this case from Aristocrat FCAFC on the basis that the claimed invention here did not involve the use of a computer to merely gather, process and present financial or business information, but rather the computer processing was only one component of the invention.  The Commissioner disagreed, arguing that the entire inventive concept itself was driven by computer technology at almost, if not every, step.

Third, the Commissioner argued that although the invention brought about a physical outcome, and thus was not limited to inputting a scheme into a computer, the substance of the invention did not reside in the “modified local outlets” themselves or the physical delivery of the goods, but the computer-implemented scheme which enabled deliveries to be made.  The Commissioner noted that Dei Gratia had conceded during the examination stage that the invention did not reside in overcoming any technical problem or difficulty within the computer, and submitted that the specification did not disclose any specialised computer technology or algorithm for calculating route optimisation.

Consideration

Justice Rofe found that, while the claimed invention did create physical outcomes (the delivery of goods to collection points), the computer system was central to the entire invention and should not be downplayed “as just one component of a combination invention”.  Her Honour agreed with the Commissioner that the key innovation – automatically calculating optimal collection points – relied entirely on conventional computer technology used in a standard way.  Further, the mere use of “modified local outlets” and the classification of certain types of goods stocked or delivered, were not in and of themselves patentable subject matter, but were abstract concepts that were “part of a logistics scheme and a solution to a business problem” (emphasis added).

As such, her Honour observed that the claimed invention must be contemplated through the lens of a computer-implemented invention.  Following the approach of the Full Court majority in Aristocrat FCAFC at [26] (per Middleton and Perram JJ), Justice Rofe noted that it must be determined whether the invention or ingenuity lies in an advancement of the computer technology itself, or whether it is a mere scheme implemented by a computer.

Her Honour agreed with the Commissioner that the implementation of the logistics scheme involved the use of technology for its well-known and understood functions, and did not disclose any advancement in computer technology, specialised technical capabilities or algorithms by which the route optimisation method was implemented.  Citing Nicholas J in Aristocrat FCAFC at [112], Justice Rofe affirmed that the use of generic computer technology for its well-known and well understood effects provided a “useful signpost when deciding whether, what began as an abstract scheme or idea, has been transformed into something that is sufficiently different to constitute an artificially created state of affairs”.  Her Honour noted that the invention did not provide a solution to a technical problem, but rather a business or commercial problem that sought to save the consumer time and money through the use of “modified local outlets”.

Justice Rofe also addressed comparisons made to earlier decisions in the submissions.  Her Honour distinguished UbiPark Pty Ltd v TMA Capital Australia Pty Ltd (No 2) (2023) 177 IPR 254 (reported on here), noting the invention there created “concrete, tangible, physical observable effects” through the interaction of specific technical components (such as raising a barrier to a car park by determining whether certain entry/exit criteria was met via smartphone signals).  Her Honour found Dei Gratia’s system to be more analogous to the circumstances in F45 Training Pty Ltd v Body Fit Training Company Pty Ltd (No 2) (2022) 165 IPR 111 (reported on here), where adding physical elements to a computer-implemented business scheme was not sufficient to make the invention patentable.

Outcome

Justice Rofe dismissed Dei Gratia’s appeal, holding that the ‘Last Mile Logistics’ system was a computer-implemented business scheme and thus not a manner of manufacture.  Her Honour also directed Dei Gratia to bear the costs of the Commissioner in the proceeding.

Implications

Justice Rofe’s decision reinforces and clarifies several key principles regarding the patentability of computer-implemented inventions in Australia:

• Physical outcomes or physical aspects of an invention are not enough to transform a business scheme into a patentable invention.  Here, the use of “modified local outlets” in the delivery of goods was not patentable subject matter, but rather abstract concepts that were part of a broader logistics scheme that utilised generic computer technology.
• The fact that a computer-implemented system may be novel or innovative from a business perspective does not make it patentable subject matter – there must be a technical innovation in the computer-implementation itself.

The decision indicates that companies developing innovative computer-implemented business schemes will face difficulties obtaining patent protection unless they can demonstrate genuine technical advancement in how the computer implementation operates rather than what commercial solutions they might be able to achieve.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards - Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.