Biotech News 28 September 2007

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Allens Biotech News is a fortnightly news service to keep you on top of developments in this fast-moving industry.

Contributory infringement in relation to patents

In brief: Patent attorney and lawyer, Dr Rob Silberstein, provides an overview of contributory infringement in relation to patents in Australia, including a historical jurisprudential and legislative account of the issues raised by this vexed area of law. 


Attribution of liability to a person (or entity) for supplying product or means to another person enabling that person to infringe the claims of a patent has a long and tortuous history in many jurisdictions. Such conduct is commonly referred to as contributory infringement. Governments and judges alike have had great difficulty grappling to strike an appropriate balance between the competing interests surrounding the attribution of liability for contributory infringement. The competing interests are, as Justice Mansfield put it in Collins v Northern Territory of Australia [2006] 70 IPR 614 (the Collins decision) at [1]: 

On the one hand, the interests of protecting a patentee against infringement of the patent, and on the other hand, recognising the rights of a supplier to freely trade its products in the marketplace even where that product is or may be used by a third party to infringe the patent.

Ultimately, it is a question of the extent to which the law should ensure that there is no unwarranted extension of the patentee's monopoly by attributing liability for contributory infringement. This is particularly controversial in circumstances where the product or means supplied comprises less than all of the essential integers of the claimed invention. As US jurisprudence frames one of the issues raised by such (and other related) circumstances, it is essential that misuse of the patent by the patentee is prevented. 

The difficulties with finding the appropriate balance between the competing interests are compounded by the vast array of items for which patent protection is sought. As time progresses, new technologies evolve and people increase their usage of the intellectual property systems globally to protect their innovations, the array of items protectable, or sought to be protected, grow. The manner in which liability may be attributed for contributory infringement may also differ depending on whether the relevant claims in the patent are directed to a product or to a process or a method. 

The difficulties revolving around contributory infringement were well summarised by Justice Rich who was one of the judges participating in the US Supreme Court decision of Dawson Chemical Co v Rohm and Haas Co 448 US 176 (1980). His Honour has been quoted as commenting that: 

They call patent law the metaphysics of law, and I would say that this contributory infringement business is the metaphysics of patent law.

Accessorial liability for infringement – common law principles

Many jurisdictions including Australia, the US, several European jurisdictions and others have now legislated to deal with contributory infringement. However, long before the enactment of such provisions, common law principles in several jurisdictions had imposed liability on a person as an infringer who aided or induced or procured another to infringe a patent. In Australia, this liability was, and continues to be available under tort law. 

In an action for accessorial tortious liability, it is not enough that the person against whom action has been taken sold an article knowing that it would be used in a way which would infringe the patent of another (Dow Chemical AG v Spence Bryson & Co Ltd (1982) 8 FSR 397 (CA)). The conduct required to attract liability must be a kind that would characterise a person as a joint tortfeasor at common law. It must be shown that the joint tortfeasor made a concerted action with another in commission of the infringement or engaged in a 'concerted design' (Morton-Norwich Products Inc v Intgercen Ltd [1978] RCP 501 (per Justice Graham at 513). However, mere facilitation of an infringement does not amount to procurement or involvement in it (Collins v Northern Territory [2007] FCAFC 152 (the Collins appeal decision), per Justice French at [25] referring to the decision of Lord Justice Dillon in Molnlycke v Procter & Gamble (No 4) [1992] RPC 21 at 29). 

As Justice French points out in the Collins appeal decision at [28]:

 Involvement as an accessorial or joint tortfeasor continues in both the United Kingdom and Australia as a basis for imposing liability notwithstanding the enactment of statutory provisions for contributory infringement ...

In any event, one component of the statutory provision under Australian patent law now appears to resemble the common law principle for accessorial liability for patent infringement. 

Basis for the introduction of legislative provisions in Australian patents legislation

In 1984, the Australian Industrial Property Advisory Committee (IPAC) produced a report entitled Patents, Innovation and Competition in Australia. On the issue of contributory infringement, IPAC considered that the common law approach used up to that time needed expansion for the greater protection of patentees. In paragraph 14.2 of its report, IPAC said:

A patentee may encounter serious difficulty in enforcing his patent where it is prone to infringement by the eventual consumer who is supplied by an unauthorised person with the means to infringe.

For example, a process patent for using a selective herbicide which is a known chemical would be infringed by a farmer who bought a container and followed instructions for use which, when followed, unknown to the farmer, resulted in infringement of the patent. Even if the patentee where prepared to bear the high cost of detecting infringement by the farmer and then to bring infringement proceedings, the result would almost certainly be unsatisfactory. The farmer would ordinarily be unaware of the patent and an award of damages would therefore be most unlikely. The farmer would be left with a stock of herbicide he was forbidden to use, and the patentee would find himself with no damages and an unsatisfied potential customer. To complicate the matter, there may be hundreds or thousands of such ultimate customers.

It is unreasonable and wasteful of resources for a patentee to have to sue all of the direct infringers with such an unsatisfactory result in each case, when the supplier is, in a real sense, far more responsible for the commission of the infringing acts.

We believe that it would be far more effective, realistic and just for the patentee to be able to take action against the supplier or middleman who facilitates the commission of the infringing act by the ultimate consumer...

...A distinction may be drawn between those cases where a supplier knows that goods sold will be used to infringe or takes positive action to induce another to infringe, and those were he makes goods available merely knowing that they may possibly be used for an infringing purpose. It would be an unwarranted interference with commercial activities if a patentee were to be able to prevent another person from selling a stable commodity with a wide variety of possible users simply on the grounds that it might be used for an infringing purpose. This is quite distinct from the case where there is no possible use except as part of an infringing product or an infringing process...

We believe that no action should be allowed against the supplier of the staple product unless it can be shown that the supplier was accompanied by a positive inducement to perform acts that would infringe a patent, and irrespective of whether the product was in fact subsequently used in a direct infringement. Where the goods supplied have no reasonably conceivable use other than an infringing use, however, the patentee should be able to stop the supply at its source by suing the supplier for infringement...

IPAC then went on to recommend that infringement provisions be included in the Australian patents legislation to address these issues.

Enactment of Section 117 of the Patents Act 1990 (Cth)

On the basis of IPAC's recommendation, section 117 was inserted into the Patents Act 1990 (Cth) (the Act). That section provides the following:

117 Infringement by supply of products

  1. If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent.
  2. A reference in subsection (1) to the use of a product by the person is a reference to:
    1. If the product is a capable of only one reasonable use, having regard to its nature or design – that use; or
    2. If the product is not a staple commercial product – any use of the product, if the supplier had the reason to believe that the person would put it to that use; or
    3. In any case – the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier.

In comparing these provisions to the common law principles of accessorial liability, Justices Branson and Sundberg commented in Collins appeal decision at [135] that subs(2)(a) and (2)(b) were expansions of the common law but that subs(2)(c) 'would appear to reflect the common law position'.

Since s117 came into force, it has been used in a range of circumstances by patentees seeking to enforce there rights against third parties (as opposed to direct infringers). The proper construction of the provisions has been the subject of considerable judicial debate. In particular, judges have varied their approaches to the starting point for the consideration whether or not s117 applies to the particular circumstance of a case.

In Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 111 ALR 205, Justice Gummow suggested that because the term 'infringe' was not defined by the Act, the starting point for any enquiry in relation to infringement (including contributory infringement) was with the definition of 'exploit', being the exclusive right granted to the patentee by a patent pursuant to s13 of the Act.

'Exploit' is defined by the Act as follows:

exploit, in relation to an invention, includes:

  1. where the invention is a product—make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or
  2. where the invention is a method or process—use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use.

In that case, it was submitted that the supply of certain devices (which were themselves allegedly infringing products), with instructions for use, was itself an infringement of a method claimed by the supplier. At [154], Justice Gummow said:

...where the invention relevantly claims a method or process, exploitation occurs, other than by use of the method or process, only by the doing of an act mention in para (a) of the definition of 'exploit'. There must be an act done 'in respect of a product resulting from such use'.

The product resulting from the use was for the treatment of snoring and/or obstructive sleep apnoea in a patient. As the product used by the respondent was a device, Justice Gummow concluded that there was no product resulting from 'such use' and that accordingly s117 had no operation.

On appeal (Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 50 FCR 1) the full Federal court held that the patent was wholly invalid and, therefore, did not need to consider questions of infringement. Justice Sheppard did not consider the construction of s117 and Justice Lockhart merely suggested agreement with the reasons of Justice Gummow on this issue, without providing reasons for that agreement. Justice Wilcox agreed with the substantive decisions of Justice Lockhart.

However, as Chief Justice Black and Justice Lehane later pointed out in Bristol-Myers Squibb Co v F H Faulding & Co (2000) 97 FCR 524 (Bristol-Myers v Faulding) at [92] 'there can be no doubt that the observations of Justice Lockhart , with which Justice Wilcox agreed, were unnecessary to the decision in Rescare and they were made without elaboration and in passing: they are obiter in the true sense of the words.' Chief Justice Black and Justice Lehane then went on to say that it was therefore appropriate for them to examine the proper construction of s117 and, in concluding that the approach taken by Justice Gummow Rescare was incorrect, they overturned the primary judge's (Justice Heerey) decision.

In analysing Justice Gummow's approach in Rescare, in her article entitled 'Contributory Infrigement of a Process Patent under the Patents Act 1990: Does it Exist after Rescare?' (1995) 6 AIPJ 217 at 223, Ms Ann Minotti suggested that his Honour's 'line of reasoning leads to a regrettable result'. She said:

Gummow J acknowledges the method claim is infringed by use of the product, but implies that the only product whose use can amount to an exploitation of the method or process within section 13(2) is the product that results from use of the patented process. Therefore, if there is no such product, there is no room for the application of section 117. However, in making this assumption, it appears to over look the fact that a primary purpose of section 117 was to catch the person who supplied the product (usually unpatented) for use in a patented process, and it was not specifically intended to provide further protection for supply of a product that results from the use of such process. The latter action is already a direct infringement of the exclusive rights of the patentee.

As Chief Justice Black and Justice Lehane held in Bristol-Myers v Faulding, 'if the views expressed in Rescare are right, section 117 has a very limited operation...' Their honours went on to agree with Ms Minotti's conclusion that Justice Gummow's construction in Rescare (which he also reiterated in Sartas No 1 Pty Ltd v Koukourou & Partners Pty Ltd (1994) 30 IPR 479) substantially deprived s117 of effective operation. They said:

We may say, with all the advantages hindsight, that the drafting of section 117 is less than felicitous:... It is perhaps a pity that the drafter chose to use the phrase 'use of product' , which contains such a clear reference to the terminology of par (a) of the definition of 'exploit'. But section 117 provides its own dictionary, in subs (2).

In the Collins decision, Justice Mansfield avoided considering whether Justice Gummow's Rescare approach was correct or not by deciding the issue via a different route. In the Collins appeal decision, the minority found no need to revisit the correctness or otherwise of Justice Gummow's approach and the majority preferred to adopt a variation of the majority's decision in Bristol-Myers v Faulding. None of the four Federal court judges who passed judgement in the Collins cases took particularly kindly to the argument that because the patented process required use of the 'wood and bark' from the trees as opposed to the 'timber', there could not have been a supply of the 'product' within the meaning of s117.

For the time being, it seems that the proper construction of s117 is not to be made with reference to the definition of 'exploit'.

The proper construction of 'supply of a product' and of various terms used in s117(2) were addressed in detail by the courts in the Collins cases.

The Collins cases

In AAR's Intellectual Property Bulletin of September 2007, we reported on the Collins decision and do not propose reiterating the substance of that report here. However, the Collins' appealed the decision and the Collins appeal decision has recently been handed down.

The Collins are the registered owners of Australian patent no 742711 entitled 'Methods of producing essential oils from the species of Callitris Intratropica' (the patent). It is a patent for producing blue cypress oil comprising the step of obtaining the oil from a mixture of the bark and the wood of the Callitris Intratropica. The Northern Territory Government had granted various licences under the Crown Lands Act 1992 (NT) to the Australian Cypress Oil Company Pty Ltd (ACOC). The licences entitled ACOC to take timber, including from trees of the species Callitris Intratropica, from the failed Howard's Spring Plantations. The Northern Territory Government had originally grown the trees for use for commercial timber and associated products, but after having received advice that they were not of sufficient quality for their initially intended use, they granted these licences to ACOC. The Collins alleged that the timber was used by ACOC to produce the blue cypress oil, and commenced proceedings against the Northern Territory Government alleging contributory infringement.

At first instance, Justice Mansfield held that the licences which the Northern Territory Government granted to ACOC were 'permissive' as ACOC was not obliged to enter upon the land, being only permitted to do so. On that basis, the judge concluded that the licences did not amount to the 'supply' of the timber to ACOC so as to expose the Northern Territory Government to liability as a contributory infringer of the patent under s117. It was open to the judge to refrain from making any further comment once he had established that there was no 'supply' within the meaning of the section. Nevertheless the judge went on to consider whether the timber was a 'staple commercial product' within the meaning of s117(2)(b) and in this regard, held that as the trees were not 'some special product not generally available in the marketplace', they remained within the meaning of staple commercial product and therefore could not invoke s117(2)(b). The Collins' appealed the decision.

By 2:1 majority, the full Federal court overturned Justice Mansfield's decision holding that the Northern Territory Government was liable for contributory infringement under s117. The minority decision was handed down by Justice French who agreed with both findings (all be it for more substantive and, perhaps, different reasons) of Justice Mansfield at first instance. The majority decision handed down by Justices Branson and Sundburg disagreed on both counts with the primary ruling of Justice Mansfield and the minority decision of Justice French.

At first instance and on appeal, all the judges proceeded on the basis that the claims of the patent were valid and that ACOC had infringed the claims of the patent.

'Supply of a product' (s117(1))

All three appeal judges vigorously assessed the express terms of the licences granted by the Northern Territory Government to ACOC with a view to establishing whether or not there had been a 'supply' within the meaning of s117.

Those terms of the licences which were critical to all three of the judges' findings required, inter alia:

  • the payment of a royalty by ACOC in respect of trees (or timber) sold or of products derived from the use of the trees (including oils);
  • the lack of a right for ACOC to a lease or a license to use the land for residential purposes;
  • the power granted to the Northern Territory Government to terminate on 14 days' notice for breach of any of the conditions;
  • the requirement for ACOC to ensure that all plantation trees including stubs were removed;
  • the requirement that ACOC rehabilitated the site to a standard to allow reasonable access by a tractor/slasher; and
  • the right for the Northern Territory Government, absent compliance with the last two conditions, to enter on the land and do all things necessary to that end at the expense of ACOC.

After undertaking a detailed analysis of the statutory scheme for the granted licences and the related case law, Justice French concluded by accepting the Northern Territory Government's submissions that the licences created a private statutory right akin to those conferred by a profit a prendre. The judge said (at [95]):

The right to enter and remove the timber under the licences in issue in this case, was coupled with obligations in incidental rights associated with the disturbance and rehabilitation of the land. They are indicative of something more than a mere right to enter and remove standing timber as chattels. The licences are better regarded in this case as grants in the nature of a profit a prendre conferring interests in the land to be exercised by the severence and removal of the trees upon the specified terms and conditions which involve extensive rehabilitation of the relevant areas.

Justices Branson and Sunburg disagreed entirely. Their Honours held that the conditions on ACOC requiring it to remove all trees and stubs and to rehabilitate the site imposed a positive obligation on ACOC to enter the land and harvest the trees and remove the timber. They held that the Northern Territory Government had 'supplied' ACOC with the timber within the meaning of s117.

Having established that s117 could be brought into operation by the actions of the Northern Territory Government, the majority turned to consider whether the timber so supplied was a 'staple commercial product' within the meaning subs(2)(b).

'Staple commercial product' (s117(2)(b))

Justice French's judgement provides a detailed and thorough historical analysis of the jurisprudential and legislative developments of contributory infringement in several jurisdictions. A critical theme in that historical development was the notion that a third party should not be liable for contributory infringement for providing 'staple' products to a person who ultimately uses them to infringe a patent. After referring to the US jurisprudence and setting out the definition of 'staple' from the shorter Oxford English Dictionary, Justice French concluded (at [70]) that:

The word 'staple' brings to the collocation 'staple commercial product' the notion of an important or leading or principal item of commerce....[that] element is satisfied by requiring that the product be a commonly available commercial product. The staple commercial product excluded from the scope of s 117(2)(b) therefore will be a product of the kind commonly available in trade or commerce and having more than one reasonable use.

Taking the example of 3 cm nails, his Honour pointed out that 'that construction leaves open the question of the definition, for the purposes of characterisation, of the product class to which the impugned product belongs. He said:

The question might arise, in connection with the supply of such nails, whether they would constitute a staple commercial product as part of the class of nails or as part of the class of 3 cm nails. If 3 cm nails were not much in demand and were hard to come by there might be an argument that they were not staple commercial products. Nails generally however would constitute a staple commercial product.

Justice Branson and Sundberg referred to the definition of 'staple' in the Macquarie and Oxford English Dictionaries. They noted that from a case law perspective in Australia, very little judicial consideration has been given to the meaning of 'staple commercial product'. In Theta Developments Pty Ltd v Leonardis (2002) 59 IPR 368 at 388, Justices Wilcox and French held that a bottom cover spacer used in connection with the construction of building foundation frameworks was a 'staple commercial product', and in Hexal Australia Pty Limited v Roche Therapeutics Inc. (2005) 66 IPR 325 at 331, Justice Stone noted that there is a dearth of authority in Australia on the meaning of 'staple commercial product'. Ultimately, their Honours accepted the analysis given by the authors of Terrell on The Law of Patents (16th ed, Sweet & Maxwell, 2006) in giving consideration to the corresponding provision of the UK patent legislation, that (at para 8.37):

...the use of the word 'staple' is presumably a reference to raw materials or other basic products commonly available and with a multitude of possible applications...

Turning to the 'product' itself, their Honours gave detailed consideration to the evidence of the Director – Land Administration of the Northern Territory Department of Planning and Infrastructure and of a forester – Northern Territory Department of Natural Resources, Environment and the Arts, among others, and to the licences granted by the Northern Territory Government to the Collins' and to various other third parties over the years in relation to the trees of the species Callitris Intratropica. They concluded at [157] that:

...the evidence before... [Mansfield J]...suggests that a person wishing to obtain unmilled Callitris Intratropica trees, at least in the Northern Territory, must apply to the Crown for a licence or permit to harvest the trees from Crown land. For such a licence or permit to be granted, it appears that the applicant must assume significant obligations, including insurance and operational obligations, in respect of the harvesting process.

A quality of a staple commercial product, their Honours said at [158] 'is that it is an item of commerce in the sense that it is ordinarily available for purchase from an entity that trades in that product.' They concluded that unmilled trees of the species Callitris Intratropica could not be regarded as a 'staple commercial product' within the meaning of s117(2)(b).

Referring to the full Federal court decision in Bristol-Myers v Faulding, their Honours agreed that a literal interpretation of the provisions of s117 incorporating reference to the uses referred to in subs(2) (rather than a reference to the definition of 'exploit') was the appropriate way to construe the section. They held that the Northern Territory Government was liable for contributory infringement and overturned Justice Mansfield's finding.

'Reason to believe' (s117(2)(b))

As the Northern Territory Government had not contested that it had 'reason to believe' that ACOC would put the timber to use in a process that would infringe the patent, the majority did not pass any judgement on this point. However, as Justice French gave a historical overview of the development of the law concerning contributory infringement, he did have occasion to consider the meaning of the words 'reason to believe'.

After remarking that these words have long standing statutory antecedents, his Honour said that in s117(2)(b) the term must be assessed by reference to an objective basis for belief without the necessity of actual belief. However, because this particular point was not an issue in the appeal, he went on to comment at [66] that 'the preceding observations about the proper construction of the 'reason to believe' requirement are therefore strictly obiter' .

Concluding remarks

The common law principle of accessorial tortious liability remains available in spite of the enactment of s117, and the view of the majority in Collins appeal decision confirms that in relation to certain uses, that section extends beyond the liability imposed by common law.

Although the Collins appeal decision has shed further light on the construction of the contributory infringement provisions of the Act, given the vast difficulties that the operation of such provisions or common law principles have experienced throughout the years, it seems possible that future proceedings in relation to contributory infringement will see ongoing judicial debate.

What this means for you

The existence of third-party patent rights should always be considered when supplying products, particularly in the biotechnology area. Given the majority's findings in Collins appeal decision, we note that the question of 'supply of a product' may not always be straightforward and this must also be borne in mind in this context.

Company news

In brief: Regular news from the biotech industry.

BTF and bioMerieux - World leaders of industrial microbiology join forces

12 September – Australian biotech BTF has been acquired by bioMerieux, a world leader in the field of in vitro diagnostics for over 40 years. BTF provides precise quantitative reference standards for microbiological testing. Its patented BioBall™ technology is used in quality assurance, to verify the performance of control methods. 'This is a wonderful development for BTF, at a time when the company is experiencing strong growth', says Mark Gauci, co-founder and CEO of BTF. 'The BTF team has done a marvelous job of developing the company to this point. Now, by integrating BTF's unique products and technologies into bioMerieux's commercial network, the company is poised to rapidly realize its full potential.' BTF will operate as a standalone subsidiary, so existing customers will not see any changes in the short term.

[Source: Company announcement]

AstraZeneca and Abbott advance development of single pill to target major lipids

31 August – AstraZeneca and Abbott announced that jointly they will advance into Phase III clinical trials on the development of Abbott's next-generation fenofibrate (ABT-335) and AstraZeneca's CRESTOR (rosuvastatin calcium) in a fixed-dose combination treatment. Both ABT 335 and CRESTOR are lipid reducing agents. ABT-335 is an investigational compound that is part of a class of medications called fibrates. Fibrates have been shown to raise HDL-C 'good cholesterol', reduce triglycerides and moderately lower LDL-C 'bad cholesterol'. CRESTOR is part of a class of medication called statins, which has been shown to significantly reduce LDL-C while raising HDL-C. The single pill would target all three major blood lipids. Abbott will continue the clinical trial program and be responsible for regulatory registration of the new combination therapy. AstraZeneca will hold the New Drug Application. Following successful completion of the clinical program, a regulatory application for the new combination therapy is targeted for submission in 2009. 

[Source: Company announcement]

AstraZeneca opens unit in China in partnership with Peking University

4 September – AstraZeneca has announced a strategic partnership with Peking University 3rd Hospital to open its first Clinical Pharmacology Unit (CPU) in China. Under the co-operative agreement, AstraZeneca will provide Peking University 3rd Hospital with personnel training, system audits and consulting services, and will also invest to upgrade facilities necessary for clinical research of medicines for infections, diabetes, and cardiovascular diseases. David Brennan, CEO of AstraZeneca, said 'the CPU is using a new and innovative operating model for partnership between AstraZeneca and a premier Chinese University hospital that will result in a faster, more efficient and flexible link between phase I studies and our phase II & III clinical research projects.' Mr. Brennan added 'China plays an increasingly important role as an emerging market in AstraZeneca's global strategy. We will continue to implement our vision of being 'In China for China,' with long-term planning and investment. We fully support China's national focus on innovation by substantially increasing our R&D investment, both in financial terms and in terms of scientific collaboration.'

[Source: Company announcement]

Avexa's HIV drug shows positive results

4 September – Melbourne biotech Avexa has announced positive data from the phase IIb clinical trial of its HIV drug apricitabine (ATC). The data demonstrate that, in over 80 per cent of patients treated with ATC, the level of HIV in the blood was reduced to below detectable levels after 24 weeks. Avexa also reported that in analysing CD4 cells of patients (CD4 cells are essential for a healthy immune system, and it is these cells that are primarily destroyed by HIV infection), there were CD4 cell increases of 28 – 39 per cent and 73 – 86 per cent in the ATC 600mg and 800mg arms respectively, compared to the 3TC treated patients. Avexa reported that no virus resistant to ATC has been identified after 24 weeks of therapy, which is consistent with the potent suppression of HIV replication and the ideal properties of a long-term anti-HIV therapy. 'These results clearly indicate that ATC regimens are potentially as effective, safe and durable as current first line regimens, but for drug-resistant patients that have already failed other drug regimens. This is excellent news for drug-resistant patients in need of potent, durable but safe new HIV therapies. These data will be submitted for presentation at a forthcoming international HIV conference' said CEO Dr Chick.

[Source: Company announcement]

Bausch & Lomb shareholders approve Warburg Pincus merger

21 September – Bausch & Lomb announced that its shareholders voted to approve the proposed merger with affiliates of private equity firm Warburg Pincus. More than two thirds of the total shares outstanding and entitled to vote at the shareholder meeting were voted in favour of the transaction. In accordance with the terms of the merger agreement, each outstanding share of common and Class B stock of Bausch & Lomb will be cancelled and converted into the right to receive US$65 in cash. The transaction is expected to close early in the fourth quarter. 

[Source: Company announcement]

Bayer to delist from the New York Stock Exchange

5 September – Bayer AG has announced its intention to file for delisting of its American Depositary Shares (ADSs) from the New York Stock Exchange (NYSE). It is also planned to deregister with the US Securities and Exchange Commission (SEC) and thereby terminate the respective reporting obligations. Bayer plans for trading in its ADSs on the NYSE to cease at the end of September or beginning of October 2007. The company expects its withdrawal from the NYSE to result in annual savings of some EU$15 million. Bayer intends to maintain its ADS program as a 'level one' program, so that U.S. investors may continue to hold their securities and trade them in the U.S. over-the-counter market. 

[Source: Company announcement]

Forest patent upheld by US Court

5 September – The US Court of Appeals for the Federal Circuit has affirmed an earlier decision by a US District Court which held that the US patent covering escitalopram, the active ingredient in Forest Laboratories' blockbuster depression drug Lexapro, was valid. The court also upheld an earlier injunction preventing sales of Cipla's and Teva Pharmaceutical's proposed generic version of the drug. Forest' patent rights for Lexapro will expire in March 2012.

[Source: Company announcement]

GlaxoSmithKline and Sepracor to commercialise insomnia drug

11 September – GlaxoSmithKline (GSK) and US company Sepracor announced an agreement for the commercialisation of Sepracor's insomnia drug eszopiclone. The agreement is for all markets worldwide excluding the US, Canada, Mexico and Japan. The drug will be marketed by GSK in these areas as LUNIVIA for the treatment of insomnia and is currently under review for marketing approval by the European Agency for the Evaluation of Medicinal Products. In Europe the sedative hypnotic market is valued at approximately US$500 million and in the five largest European markets an estimated 45 million people suffer from insomnia. Under the terms of the agreement if all milestones are met, Sepracor will receive US$155 million in licence and milestone payments from GSK.

[Source: Company announcement]

Novartis' new blood pressure medicine approved in the EU

27 August – Novartis has announced that their high blood pressure drug Rasilez (aliskiren) has been approved for use in the European Union. Rasilez is the first new type of high blood pressure medicine in more than a decade. The European Commission approved Rasilez for the treatment of high blood pressure alone or in combination with other high blood pressure medicines. Rasilez is the first in a new class of medicines called direct rennin inhibitors and acts by directly inhibiting rennin, an enzyme that triggers a process that can lead to high blood pressure. The drug received US FDA approval in March 2007 under the brand name Tekturna. In their announcement Novartis state that experts estimate that nearly one billion people globally have high blood pressure and that almost 70 per cent of these people do not reach healthy blood pressure levels.

[Source: Company announcement]

Pharmaxis' Bronchitol effective

29 August – Australian biotech Pharmaxis has announced that the Phase III study of its drug Bronchitol, for the treatment of people with bronchiectasis, has met its two primary efficacy endpoints: quality of life and mucus clearance. Data from the 362 subject study demonstrated a highly significant improvement in quality of life after 12 weeks of treatment with Bronchitol, in addition, there was a highly significant difference in mucus clearance at 12 weeks. Bronchiectasis is an incurable, degenerative and chronic lung condition. Over 600,000 patients worldwide suffer from bronchiectasis including 20,000 in Australia. Total US medical care expenditure per bronchiectasis patient is US$13,000, double that of patients without the disorder. Pharmaxis is developing Bronchitol as a daily treatment administered by inhalation to the patient's lungs. Earlier in August, Pharmaxis requested a Special Protocol Assessment review with the US FDA to commence a US Phase III trial with Bronchitol. Pharmaxis CEO Dr Alan Robertson said 'this is the largest single study ever conducted in bronchiectasis and we have collected a large amount of data on a variety of secondary endpoints which are still being analyzed. With no products currently indicated for bronchiectasis we look forward to discussing our complete data set and next steps with the regulators.'

[Source: Company announcement]

Phosphagenics to move forward with transdermal trials

17 September – Australian biotech Phosphagenics has announced plans to move forward with two of its transdermal clinical trials. Following successful preclinical studies it plans to undertake a Phase I transdermal oxycodone clinical trial aimed at providing chronic pain sufferers with a sustained-release pain management product. The trial, which is to be conducted at CMAX – an independent clinical research organisation located at the Royal Adelaide Hospital - will begin upon approval. Phosphagenics also announced that it has received approval to commence a Phase II clinical trial of its transdermal insulin, TPM/Insulin. The Phase II trial, to commence this month, will assess the efficacy of TPM/Insulin in patients with type 1 and type 2 diabetes. The company noted that 'our Phase 1b trial, conducted by CMAX at the Royal Adelaide Hospital, showed that our TPM/Insulin formulation safely penetrated through human skin and delivered insulin into the blood stream over a sustained period of time without adverse reactions.'

[Source: Company announcement]

Progenics' liver cancer drug granted orphan product status in EU

20 September – Australian small molecule therapeutics biotechnology company Progen Pharmaceuticals has announced that the Commission of the European Communities has granted orphan product designation for their drug PI-88 for the treatment of primary liver cancer. This grant follows a positive recommendation received in August from the European Agency for the Evaluation of Medicinal Products Committee for Orphan Medical Products.

[Source: Company announcement]

Teva Pharmaceuticals planning a generic version of Novartis' Famvir

7 September – Novartis has declared that it will keep defending its intellectual property rights for the antiviral medicine Famvir after Teva Pharmaceuticals announced that it will launch a generic version of the drug. The two companies have been in patent litigation since 2005. In 2006 Famvir had net sales of US$166 million and as a result of the recent developments Novartis has announced that it will take a one-time accounting charge in the range of US$250 to US$300 million for the impairment of intangible assets. Novartis claims that Famvir has various US patents valid until 2015. A trial date has not been set.

[Source: Company announcement]

US court rules that Roche infringes Amgen patent

28 August – The US Federal District Court in Boston granted Californian company Amgen a motion for summary judgment and ruled that Roche's peg-EPO product Mircera, which is currently undergoing US regulatory review as a treatment for anemia associated with chronic renal failure, infringes Amgen's EPO composition patent. The case will nevertheless be proceeding to trial as Amgen alleges that the Roche product infringes additional patents.

[Source: Company announcement]

BioTip: Negotiating commercial agreements

As a starting point for the negotiation of a commercial agreement, all parties should work together to ensure that they 'are on the same page' with respect to the proposed deal. Negotiations can become protracted and costly when agreements are drafted which do not wholly and correctly embody all the parties' intentions from the outset. Any subsequent changes in the respective commercial positions of the parties or the commercial landscape surrounding the deal may frustrate finalisation and settlement of the commercial agreement, leading to further delays and costs. Selecting the appropriate timing for the preparation of a first draft of an agreement for consideration by all parties is not always straightforward, and should be thought out carefully.


Information on the latest conferences

See conferences in: September | October | November


NEW – Global IP Exchange 2007
Sunday, 30 September – Tuesday, 2 October
Ponte Vedra Beach, FL, United States


Australian Bioscience and Scientific Industry Delegation to Hong Kong
Hong Kong
Via Austrade:; 03 9648-3192 or Via Hong Kong Trade Development Council:; 02 9261-8911

The Hong Kong Trade Development Council, with the support of Austrade, is planning an Australian trade delegation to Hong Kong in October to showcase Australian science and bioscience industry capabilities and establish business linkages with Hong Kong companies. Australian companies from the following sectors are invited to participate:

  • science and laboratory equipment manufacturers;
  • clinical trial CROs and trial site managers;
  • biomedical research institutes;
  • drug discovery and platform technology developers;
  • bio-clusters and state/local government representatives; and
  • biomedical companies seeking investors or manufacturing partner.

NEW – New Therapeutics Compliance Problems and Solution
Friday, 5 October, 3pm – 6pm (drinks & finger food provided)
Building 16 (Einstein's), The University of Adelaide, Thebarton campus, Thebarton

NEW – BioPartnering Europe
October 7-9, 2007
QEII Conference Centre, London, United Kingdom

2007 BIO InvestorForum
Tuesday, 9 October – Thursday, 11 October
Palace Hotel, San Francisco

AusBiotech 2007 National Conference & Business Partnering & Investment Forum
Sunday, 21 October – Wednesday, 24 October
Brisbane Convention & Exhibition Centre


Pharma Partnering Event – One-to-One License Meetings
Monday, 12 November – Tuesday, 13 November 2007
Hilton Hotel, Barcelona, Spain

Asian Patent Attorneys Association (APPA) Annual Meeting
Saturday, 17 November – Tuesday, 20 November, 2007
Adelaide Convention Centre, South Australia

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).

For further information, please contact:

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