IP Law Update: Patent Invalid for Lack of Novelty and Inventive Step

The Full Court has recently handed down its decision in the case of Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd (No 2) [2016] FCAFC 111. This draws the ongoing battle in respect of aripiprazole one step closer to a conclusion (for those of you following along at home, this is the fourth major decision handed down by the Federal Court in a case involving the drug aripiprazole). The Full Court has upheld the first-instance judgment of Justice Yates in Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd (No 4) (2015) 113 IPR 191; [2015] FCA 634, finding that the patent in suit was invalid for lack of novelty and inventive step.

The decision represents a blow for pharmaceutical giants Otsuka (the patentee) and Bristol-Myers Squibb (the Australian licensee of the product). Subject to any application for special leave to appeal to the High Court of Australia, generic pharmaceutical companies could now seek to list on the Pharmaceutical Benefits Scheme and enter the market with a generic aripiprazole product, which will lead to an automatic 16% price cut for aripiprazole.

The Full Court’s decision illustrates a number of potential pitfalls for patentees seeking to obtain patent protection for a “Swiss-style claim” (the use of a particular pharmaceutical compound in manufacturing a medicament for a particular, new, therapeutic use). The judgment also represents a strong rebuke of what is known in the patent world as ‘parameteritis’.

The Drug and the Patent

The relevant pharmaceutical substance, in this case, was aripiprazole. Aripiprazole is used primarily to treat patients suffering from schizophrenia and bi-polar disorder. It has been a hugely popular drug in the United States, with sales totalling approximately $6.9 billion between April 2013 and March 2014.

The patent that was at stake in this case (referred to in the judgment as the 772 patent), was not for the pharmaceutical compound itself (Otsuka has previously been involved in successful litigation in respect of that first line patent). Rather, the 772 patent essentially claimed the use of aripiprazole to create a medicament which would be used to treat disorders of the central nervous system which are associated with the 5-HT1A receptor. Furthermore, the patent claimed a monopoly only where the disorder had failed to respond to drugs that had been previously prescribed to treat the disorder. Accordingly, claim 1 of the patent was characterised by the primary Judge as a “Swiss-style” claim. Claim 7 was the use of that compound as a method of treating one of the named forms of cognitive impairment.

What is Schizophrenia?

Schizophrenia is a well-known, but little understood medical condition. The cause of schizophrenia is a matter of significant scientific debate, and there is no consensus in the scientific or medical community on this issue. Despite this, there was a substantial amount of scientific evidence led in this case to the effect that one reason that schizophrenia may be caused in a particular patient is as a result of a particular brain receptor known as the 5-HT1A. Aripiprazole has activity at the 5-HT1A receptor, which makes it a relatively unique pharmaceutical substance in the field of treating schizophrenia. The practical effect of this unique agonistic activity was that aripiprazole was said to be effective (or potentially effective) in treating schizophrenia where other drugs might fail. It was also said to be particularly effective in treating cognitive impairment, as opposed to the hallucinatory aspects of schizophrenia.

The Key Issues

At first instance the primary judge identified three key issues of contention:

1. The Association Feature – Whether the feature of the claim which described the named disorders as being associated with the 5HT1A receptor was one which represented a distinct essential feature of the claims, or was simply descriptive;
2. The Disorder Feature – What meaning should be ascribed to the reference in the patent to cognitive impairment being a disorder ‘caused by’ schizophrenia; and
3. The Failure to Respond Feature – What meaning should be ascribed to the reference in the patent to a ‘failure to respond’ to other drugs that might have been prescribed.

On Appeal, Otsuka alleged that Justice Yates had fallen into error in his characterisation of both the association feature and the failure to respond feature described above.

The Association Feature

This was the major point of contention in the case and received the most detailed examination by the Court.

The most critical limb of the appellant’s argument was that the association feature was an essential feature of the claimed invention, but that was not construed as such by Justice Yates. Accordingly, the appellants argued that his Honour had departed from the well-established method of claim construction, which requires the court to try to give meaning to each part of a claim. Besanko and Nicholas JJ did not disagree with that proposition. However, their Honours held that Justice Yates had not constructed the association feature to be an inessential feature. Rather, their Honours concluded that Justice Yates had held that the association feature was merely descriptive of, or an addition to existing knowledge. Thus his Honour considered the association feature to be a part of another essential feature, being the disorders to be treated by the pharmaceutical substance.

Justices Besanko and Nicholas rejected the appellant’s argument that a natural reading of the claim was that there were two classes of cognitive impairment, namely those that are and those that are not associated with the 5-HT1A receptor. Their Honours instead construed the association feature of being descriptive of the kinds of disorders there identified.

In his separate judgment, Justice Beach concluded that the association feature, were it a separate integer of the patent, would have infected the patent with parameteritis. Parameteritis is discussed in more detail below.

The Failure to Respond Feature

The dispute in respect of this feature was concerned with whether the word ‘drugs’, in the context in which it was used in the patent, referred to more than one drug, or whether it was a reference to ‘drugs’ generally. The language of claim 1 and claim 7 that is relevant to this feature was as follows:

“fails to [respond] to antipsychotic drugs selected from chlorpromazine, haloperidol, sulpiride, fluphenazine, perphenazine, thioridazine, pimozide, zotepine, risperidone, olanzapine, quetiapine, oramisulpride.”

The Appellant argued that the reference to “drugs” effectively meant “one or more drugs selected from the following list”. The Full Court did not accept this submission. Instead, the Full Court accepted Justice Yates’ construction, which characterised this feature as requiring that two or more drugs had been used. The effect of this was that Aripiprazole would need to be used as a third line treatment or later (which would potentially reduce the number of people who would be prescribed the drug for an infringing purpose). The Court also accepted Justice Yates’ conclusion that, while this was an essential feature of the claim, it was arbitrarily imposed, as the patent did not teach against using Aripiprazole as either a first or second line treatment.

The ‘Affliction’ of Parameteritis

Justice Beach concluded, in relation to the association feature, that even if he had accepted the appellant’s characterisation of this feature being an independent integer, it would have been invalid for lack of novelty as a result of what he described as parameteritis. His Honour’s conclusion was that the association feature added nothing to the invention, but merely stated an existing scientific theory as to the cause of disorders that were treated by the drug. In this sense, the claim was merely an old use of an old product, but phrased in a way that added additional integers to take it outside of the prior art. His Honour stated that the “artificiality” and “nebulous verbiage” of the claim gave him confidence that the claim was not an essential integer.

The parameteritis issue is one that would be familiar to people in the patent space. This latest rebuke by the Federal Court represents a timely reminder about the dangers of seeking to extend the effective monopoly that a patentee has by filing further patent applications which seek to avoid the existing prior art by stating only that which is known, rather than that which is new. Patentees should seriously consider the ramifications of such drafting. In the pharmaceutical space the dangers are substantial, particularly if the patentee has obtained an interlocutory injunction (and provided the requisite undertaking as to damages). The potential damages that a patentee could face could be particularly high if the Commonwealth Government continues its practice of pursuing patentees for the ‘overpayments’ it has made as a result of the automatic 16% price cut on PBS listed drugs not being activated earlier.

Where to Now?

The appellants still have time to file an application for special leave to appeal to the High Court. If no such application is filed, or the application is rejected, expect the parties to dig in for a protracted legal battle over the damages payable under the undertaking.