Licence to infringe: Patent Office grants Sandoz licence to exploit Lexapro® patent

Patents & Trade Marks

In brief 3 min read

In the latest chapter of one the longest-running sagas in Australian patent litigation history, the Deputy Commissioner of Patents has retrospectively granted Sandoz a licence to exploit Lundbeck's patent for its blockbuster antidepressant Lexapro® (escitalopram). The licence, only the second of its kind to be granted in Australia, provides Sandoz with a defence to Lundbeck's multi-million dollar infringement claim. Associate Claire Gregg and Law Graduate Bryanna Workman report.

Compensatory licences under the Patents Act

Section 223 of the Patents Act 1990 (Cth) allows the Commissioner to extend the time for doing a 'relevant act' where the deadline to do so was inadvertently missed due to an error or omission. For example, if an application for patent term extension (PTE) is not filed by the relevant deadline, the patentee can apply for an extension of time.

Further, s223(9) provides for the compensation of persons who exploit an invention after the relevant patent ceases if:

  1. the exploitation commenced before the application for an extension of time was advertised; and
  2. the person exploited the invention because of the patentee's failure to do the relevant act by the deadline (such as apply for PTE).

This compensation can be in the form of a patent licence.

Sandoz's licence

The Lexapro® patent expired at the end of its standard 20 year term after Lundbeck failed to make a valid PTE application by the relevant deadline. One day before the patent expired, Lundbeck filed an application for a 10 year extension of time under s223, together with a valid application for PTE. Following a lengthy dispute between Lundbeck and its generic competitors, including Sandoz (which we reported on here), both the extension of time and PTE were granted.

During the time that elapsed between the initial expiry date of the patent and the advertisement of the extension of time application, Sandoz exploited Lundbeck's invention by importing into Australia and selling its generic escitalopram product, Esitalo®. The Deputy Commissioner found that Sandoz had made the decision to launch its generic product at least in part because of Lundbeck's failure to apply for PTE by the relevant deadline. Accordingly, Sandoz was entitled to a licence to exploit the invention, which ran from the date of expiry of the initial 20 year patent term until the expiry of the extended patent term.

Significantly, the licence granted to Sandoz is an agreement between Sandoz and the Commissioner – Lundbeck is not a party to the licence in the normal sense and is not entitled to any royalties.

Limits on obtaining a licence under 223(9)

  • In order to obtain a licence under s223(9):
  • A person must show they either exploited the patent or took definite steps to exploit it during the relevant time. Sandoz's 'preparatory steps', which included obtaining ARTG registration, PBS listing, marketing and packaging the product, were not considered to be 'definite steps' to exploit.
  • A licence can only be granted if the act of exploitation occurred both before the day on which the application for extension of time was advertised and within the period of time extended under s223.
  • The power to grant a licence under s223(9) is discretionary. In this case, the Deputy Commissioner considered Sandoz's act of exploitation to be reasonable in view of Lundbeck's failure to indicate it intended to apply for an extension of time. This was despite Sandoz having obtained legal advice that Lundbeck could be granted an extension of time in the future.


This decision has important consequences for the long-running infringement and validity dispute between the parties. In 2018, the Federal Court found Sandoz had infringed the Lexapro® patent. This decision is currently on appeal, and the licence granted by the Commissioner provides Sandoz with a defence to infringement. The saga continues…