Allens Biotech News is a fortnightly news service to keep you on top of developments in this fast-moving industry.
Experimental use exemptions
In brief: Since
early 2005, AAR Biotech News has been closely
monitoring the Advisory Council on Intellectual Property's recommendation
regarding patents and experimental use in Australia. Partner Dr Trevor Davies
(For previous Biotech News articles on this subject, see Biotech News – March 2005, Biotech News – November 2005 and Biotech News – 21 September 2006.)
Background
In a 6 August 2007 media release, the Parliamentary Secretary to the Minister for Industry, Tourism and Resources, Bob Baldwin, foreshadowed new amendments to the Patents Act 1990 (Cth) (the Act) that are aimed to help Australian researchers and drive strong economic growth.
This announcement came nearly two years after the publication of a report by the Advisory Council on Intellectual Property (ACIP), entitled Patents and Experimental Use (the report), that recommended that the Australian patent system include an experimental exemption to patent infringement.
In February 2003, ACIP was instructed by the former Parliamentary Secretary to the Minister for Industry, Tourism and Resources, Warren Entsch, to:
examine whether some types of patents are inhibiting research and development in Australia and determine whether both Australian researchers and business would benefit from introducing an experimental use exception provision (or some other provision) into the Australian patent legislation. In examining this question, ACIP should consider whether an experimental use exemption would help researchers more effectively use the patent system to commercialise their research and development.
Why are amendments needed?
A fundamental justification for the patent system is the granting of a limited monopoly to a patentee over their invention in exchange for the full disclosure of their invention. The rationale is that this limited monopoly provides a commercial incentive for innovators to invent, while society benefits from those inventions and their use for further innovation. Currently, there is a concern that the increasing enforcement of patent rights by patent holders, both in Australia and overseas, may be inhibiting research and development, leading to the stifling of innovation. This is especially prevalent in fields that have been the subject of extensive patenting, like biotechnology.
The proposed amendments aim to address this concern, as made clear by Mr Baldwin, who stated that they will 'give researchers greater scope to test fresh ideas and potentially discover something new about an invention without the threat of patent infringement'. This ensures patent monopolies will not undermine one of their justifications, the encouragement of innovation.
Some issues voiced against the proposed amendments include that they: undermine incentives for primary innovators to invest their time and money into research and development; undermine the ability of patent holders to commercially exploit their inventions; create a loophole for competitors to take advantage of; and may breach international laws requiring a certain level of protection be provided to patent holders. As ACIP noted, patentees are already concerned that there is insufficient return on investment in Australian research and development due to unsuccessful commercialisation of inventions, which may mean that the current availability and breadth of patent rights are essential minimums.
In addition to these considerations, the lack of certainty in Australian law with respect to 'experimental use' was relevant. As the law presently stands, it is not clear whether experimental acts in relation to patented inventions will give rise to an infringement action. This is due to a lack of legislation and case law on the subject, and a general tradition in Australia of not enforcing patent rights against possible experimental use infringements.
Although some submissions to ACIP suggested there was already sufficient protection, the lack of certainty that may increase inefficiencies and cause lost opportunities, and the increasingly aggressive enforcement of patent rights, led ACIP to conclude that amendments may be desirable if 'they can be drafted into patent legislation which prevents a damaging situation without introducing an even greater set of costs'.
Form of the amendments
ACIP recommended the following provision be inserted into the Act:
The rights of a patentee are not infringed by acts done for experimental purposes relating to the subject matter of the invention that do not unreasonably conflict with the normal exploitation of a patent.
Acts done for experimental purposes relating to the subject matter of the invention include:
- Determining how an invention works;
- Determining the scope of the invention;
- Determining the validity of claims;
- Seeking an improvement to the invention.
Those acts included as 'experimental purposes' do not amount to permitted acts, as they are still subject to the test of whether they unreasonably conflict with the normal exploitation of the patent. ACIP believes that this will allow researchers to continue experimenting on patented inventions, but a license will be required when such experimentation conflicts with the normal exploitation of a patent.
While no draft Bill has been prepared, it seems likely that the actual provision to be implemented will closely resemble that proposed above. Mr Baldwin's media release stated the amendments would allow certain research activities, and these activities correlated to those permitted in the recommendation by ACIP.
However, the Federal Government has not yet committed to the exact form of ACIP recommendations. In a paper entitled Australian Government Response to the Advisory Council on Intellectual Property report Patents and Experimental Use, the Government said that it accepted the ACIP proposal 'in principle' and that any exception introduced would reflect, to the extent possible, this recommendation and be consistent with Australia's international obligations.
The Government's concern may arise from a paper published by IP Australia in November 2006, entitled Overview of Responses to the Public Consultation Paper on the ACIP Report Patents and Experimental Use. In its conclusion, the paper noted that there still remained some concerns regarding possible compliance issues between recommendation 1 of the report and Article 30 of the TRIPS Agreement. Article 30 stipulates that exceptions to the exclusive rights conferred by a patent are permitted 'provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties'. ACIP included the words 'do not unreasonably conflict with the normal exploitation of a patent' in its recommendation in an attempt to avoid this concern.
In its report, ACIP made three additional recommendations to ensure the beneficial impact of the experimental use exemption clause. All three of these recommendations were accepted by the Government in its response to ACIP's report. The recommendations were:
- appropriate guidance in the Explanatory Memorandum to the amendment, explaining that the purpose of the exemption is to encourage the further development of patented fields of technology without unfairly devaluing the patent rights or breaching the TRIPS Agreement, and that the exemption is not intended to derogate from any other exemption from infringement that exists under the Act;
- IP Australia to provide general guidance on the new provision as part of its suite of guides on particular topics of patent law, and update this as the law develops; and
- IP Australia to consider actively participating in international forums on the issue of harmonisation of experimental use provisions, such as the current review by the Organisation for Economic Co-operation and Development Committee for Scientific and Technological Policy.
Moving forward
These amendments in their chosen form will have the benefit of clarifying the limits to patent rights, thus reducing uncertainty and resulting inefficiencies and underperformance in the research industry; complying with international law; substantially harmonising Australian law with European provisions; optimising total levels of innovation through an appropriate balance of rights; and providing courts with sufficient flexibility to reach appropriate, rather than literal, decisions when applying the exemption.
The potential downside of the proposed provisions include that some uncertainty may exist over the boundaries of the exemption, which can only be established over time through case law; it is not in harmony with current US law, it increases complexity for those operating in both the Australian and US systems; patent holders and researchers must become familiar with the clarified law and keep abreast of its evolution; and the risk of unforeseen, detrimental effects and loopholes.
What is clear is that the success of these amendments in protecting the rights of patentees, while encouraging research in fields currently covered by patents, will not be known until the courts demonstrate how they will use the considerable discretion given to them in the interpretation of the scope of the exemption.
Company news
In brief: Regular news from the biotech industry.
- Amgen successful in patent dispute with Roche
- Bristol-Myers Squib's new breast cancer drug approved by FDA
- GlaxoSmithKline and Tolerx enter potential US$750 million drug collaboration
- Pfizer and Taisho Pharmaceutical sign letter of intent for new schizophrenia drug
- Peptech's lead arthritis drugs completes Phase
- Uniseed Investee Company Colocare to merge with CCS
Amgen successful in patent dispute with Roche
24 October – A jury in the United States Federal District Court in Boston ruled that Roche's pegylated-erythropoietin (peg-EPO) product MIRCERA infringes 11 Amgen EPO patent claims. Amgen will now seek an injunction to prevent Roche from commercializing its peg-EPO product in the US in violation of Amgen's affirmed patent rights. The injunction hearing is scheduled for mid-November. Roche maintains its position that all of Amgen's patents for epoetin asserted against Roche are invalid and not infringed, and believes the facts and the law support that position. William M. Burns, CEO of the Pharma Division at Roche, said that the verdict was disappointing. 'Amgen has had an extended monopoly for the last 20 years in the U.S. blocking new therapeutic options to treat anaemia from being introduced,' he said.
[Source: Company announcement]
Bristol-Myers Squib's new breast cancer drug approved by FDA
17 October – Bristol-Myers Squibb has announced that the US Food and Drug Administration (FDA) has granted approval to IXEMPRA (ixabepilone) as monotherapy for the treatment of patients with metastatic or locally advanced breast cancer in patients whose tumours are resistant or refractory to anthracyclines, taxanes, and capecitabine. Previously, patients with aggressive metastatic or locally advanced breast cancer no longer responding to currently available chemotherapies had limited treatment options. IXEMPRA is a microtubule inhibitor belonging to a class of antineoplastic agents known as the epothilones. Bristol-Myers Squibb anticipates that IXEMPRA will be available within days.
[Source: Company announcement]
GlaxoSmithKline and Tolerx enter potential US$750 million drug collaboration
23 October – GlaxoSmithKline (GSK) and Tolerx Inc have announced the execution of a worldwide alliance to develop and commercialise otelixizumab (TRX4), a novel humanised anti-CD3 monoclonal antibody that has potential across a broad range of autoimmune and immune-mediated inflammatory diseases, including type 1 diabetes. Under the terms of the agreement, Tolerx has the option to co-promote otelixizumab in the US with GSK, while GSK will have exclusive rights to develop and commercialise otelixizumab in all other indications in the rest of the world. Tolerx will receive an upfront payment, equity and advance R&D funding totalling US$70 million. In addition, Tolerx may receive up to US$680 million in future development costs, approval and development milestone payments and sales milestone payments. In clinical trials, otelixizumab has been shown to preserve the function of insulin-producing beta cells in the pancreas in patients with type 1 diabetes, reducing the amount of administered insulin needed to control blood glucose levels.
[Source: Company announcement]
Pfizer and Taisho Pharmaceutical sign letter of intent for new schizophrenia drug
30 October – Taisho Pharmaceutical, a leader in over-the-counter drugs in Japan, and Pfizer have concluded a letter of intent with regard to TS-032, a new schizophrenia drug candidate, discovered by Taisho, currently in the pre-clinical stage. TS-032 is a novel mGluR (metabotropic glutamate receptor) agonist that may offer a new treatment option for central nervous system disorders, including schizophrenia. The letter of intent relates to a proposed license agreement regarding rights for development and commercialization of the substance outside Japan. Through the proposed license agreement, Taisho would grant exclusive development and commercialization rights outside Japan for TS-032 to Pfizer. If the license agreement is signed, Taisho will receive from Pfizer an initial payment of US$22 million. Taisho will also receive milestone payments tied to progress of development, as well as royalties and milestone payments tied to sales if TS-032 is approved by regulatory authorities and launched.
[Source: Company announcement]
Peptech's lead arthritis drugs completes Phase
29 October – Australian biopharmaceutical company Peptech has announced the completion of the Phase I trial of its lead compound for rheumatoid arthritis, PN0621. PN0621 is an anti-TNF, a name given to a class of drugs being developed for the treatment of auto-immune diseases such as rheumatoid arthritis, psoriasis and Crohn's disease. The drug has been tailored to be smaller than a conventional antibody while retaining similar properties in terms of capacity to bind to other molecules. This is anticipated to provide advantages over existing antibody therapies in the treatment of inflammatory diseases. Data from the trial completed in 30 healthy volunteers indicates that ascending single doses of PN0621 administered intravenously and subcutaneously were well tolerated in humans. The company has already manufactured sufficient quantities of PN0621 to proceed to Phase II trials. There is a need for new treatments for severe rheumatoid arthritis such as PN0621 because some patients develop resistance to prolonged treatment, yet respond when switched to an alternate antibody therapy.
[Source: Company announcement]
Uniseed Investee Company Colocare to merge with CCS
1 November – UIIT Pty Ltd (Uniseed), an established Australian pre-seed and seed stage venture capital fund, has announced that its investee company Colocare Holdings has completed a merger with the private Sydney-based company Continence Control Systems International (CCS). CCS is a technology spinout from Cochlear Limited, which is developing bionic sphincters known as the UTROL system, used for the treatment of Stress Urinary Incontinence (SUI). CCS believes the bionic sphincter can be used in both males and females who suffer SUI. This is significant as the market for urological implantable devices is already forecast to be a growth area, with compound annual growth rates of surgically implanted medical devices for women exceeding 20 per cent. The combined entity will provide a focus for the commercial development of related continence management technologies and is expected to pursue a public float during 2008 to provide additional capital to complete product development and commence operations in the US. While the technologies of CCS and Colocare are different, there are significant synergies in the commercialization paths, especially within the regulatory, clinical and quality system frameworks required to access the US and other international medical markets.
[Source: Company announcement]
BioTip: Extensions of time
Australia's patent legislation has provisions for applicants and patentees to seek an extension of time for doing an act that was missed due to an error or omission by the person concerned or by their agent or attorney. If a date has been genuinely missed due to an error or omission, it is important to request an extension of time without delay and proceed to carry out the act. As the grant of an extension of time by the Commissioner of Patents is discretionary and open to opposition by third parties, it is important to provide a prompt, comprehensive and clear disclosure of all the facts relevant to the case.
Events
Information on the latest conferences
See conferences in: November
NEW – Medical Devices Industry Action
Agenda: What's been happening in 2007
Thursday, 8 November, 5.30pm –
7.30pm
NSW Department of State & Regional Development, Level 47, MLC
Centre, 19 Martin Place, Sydney
http://www.ausbiotech.org/
Pharma Partnering Event – One-to-One License
Meetings
Monday, 12 November – Tuesday, 13 November
Hilton Hotel,
Barcelona, Spain
http://www.pharmavenue.com/
NEW – AgBiotech in Oz: A Canadian
Perspective
Tuesday, 13 November, 7am – 9am
Lion Function Room,
The Lion Hotel, Melbourne Street, North Adelaide
http://www.ausbiotech.org/
Pacific Rim Summit on Industrial Biotechnology and
Bioenergy
Wednesday, 14 November – Friday, 16 November
Honolulu,
Hawaii
http://www.bio.org/pacrim/
Asian Patent Attorneys Association (APPA) Annual
Meeting
Saturday, 17 November – Tuesday, 20 November,
2007
Adelaide Convention Centre, South Australia
http://www.apaa2007.com/
As active members of APAA, we look forward to attending what promises to be a very enjoyable and rewarding conference and, of course, to meeting many of our clients and contacts there. If you are planning to attend this meeting, please do take the opportunity to come and visit us in our Sydney or Melbourne office while you are in Australia. Let us know by getting in touch with Dr Trevor Davies (contact details below).
Victorian Biotechnology Trade Mission to England's North West
Region
Sunday, 18 November – Friday, 23 November
United
Kingdom
http://www.ausbiotech.org/
For further information, please contact:
- Dr Trevor DaviesPartner, Allens Arthur Robinson Patent & Trade Marks Attorneys,
Sydney
Ph: +61 2 9230 4007
Trevor.Davies@aar.com.au
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