On 27 February 2020, amendments to the Australian Patents Act 1990 introduced, among other things, a new objects clause, providing a framework within which the provisions of the Patents Act are to be considered.
Section 2A states that:
“The object of this Act is to provide a patent system in Australia that promotes economic wellbeing through technological innovation and the transfer and dissemination of technology. In doing so, the patent system balances over time the interests of producers, owners and users of technology and the public.”
For the first time since its introduction, the objects clause has been referenced in a decision of Australia’s High Court, no less.
In Calidad Pty Ltd v Seiko Epson Corporation  HCA 41, the question of whether the sale of a patented product exhausts the patentee’s exclusive rights in that product was considered.
The product in question was a printer ink cartridge, the subject of patent protection, and the question being considered was whether the resale of a refurbished and refilled cartridge by a third party was an infringement of the patent.
The High Court held (in a 4-3 majority) that the patentee’s rights in the specific cartridge are exhausted upon the first sale of that cartridge and that there was, in this case, no infringement1.
In reaching this decision, reference was made to this new objects clause.
The Decision at  states that:
” It may be taken from the object stated in s 2A that one component of that object is to ensure the efficiency of the market economy. This topic has been dealt with earlier in these reasons. Another is to encourage innovation. This latter objective is achieved by ensuring that a patentee is rewarded for the often considerable efforts and expense which have contributed to a useful invention. That reward is obtained on the sale of a product on terms for which the patentee has negotiated. There is nothing in the Patents Act 1990 to suggest that a patentee is to be rewarded more than once.”
The Explanatory Memorandum2 in reference to the proposed introduction of the objects clause stated in paragraph 10 that:
“10. The introduction of an objects clause will clarify the underlying purpose of the patent system and over time will reduce uncertainty in the operation of the Patents Act. It will also provide broad guiding principles that will help ensure that the patent system remains adaptable and fit-for-purpose as new innovations are developed in the future.”
However, when the objects clause was being considered for introduction into the Patents Act, a number of parties, including the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) expressed concerns that the introduction of an objects clause as proposed would have the potential to be used to restrict the scope of patents and patentable subject matter. In particular, it stated that:
“… despite comments suggesting the contrary in the Explanatory Memorandum, it is clearly intended to significantly change the manner in which judicial patent decisions are made in relation to many aspects of patent validity, including the assessment of patent eligible subject matter and inventive step. In particular, the introduction of the word ‘technological’ to qualify the term “innovation” has the potential to cause significant misunderstandings and significant harm.” 3
While many of these concerns were raised in the context of patentability issues, the principle extends to the general application of the objects clause and in particular, to its judicial application in patent decisions.
Now that specific reference to Section 2A has been made by the High Court, It will be interesting to see how this is used by other courts in the future to shape their decisions, and whether the concerns raised against the introduction of the objects clause of acting to dilute patent rights will come to be realised.
2. Explanatory Memorandum, Intellectual Property Laws Amendment (productivity commission response part 2 and other measures) Bill 2019.
3. Institute of Patent and Trade Mark Attorneys of Australia (IPTA), Submission to the Senate Economics Legislation Committee, Inquiry into the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019, [Submission no. 50], 15 August 2019, p. 8.
Many years ago, the great philosopher Plutarch raised the following scenario:
The ship wherein Theseus and the youth of Athens returned from Crete had thirty oars, and was preserved by the Athenians down even to the time of Demetrius Phalereus, for they took away the old planks as they decayed, putting in new and stronger timber in their places, insomuch that this ship became a standing example among the philosophers, for the logical question of things that grow; one side holding that the ship remained the same, and the other contending that it was not the same. (Plutarch, Theseus, 75AD)
In simple words, does an object that has had all of its components replaced remain fundamentally the same object? Or is it a new object? If it is a new object, what is the threshold or requirement for the object to change from the original to a new object?
The High Court of Australia has had a hand in deciding whether modifications made to an original patented product to enable its re-use have amounted to the making of a new infringing product, as we explain below.
Fast forward to 2020, and we have judges staring at printer ink cartridges. Not exactly a traditional ship of Theseus moment, but no doubt the recent High Court decision of Calidad Pty Ltd v Seiko Epson Corporation  HCA 41 gives us a rare glimpse into the ship of Theseus dilemma, during which the High Court decided by slim majority, that the patent “exhaustion doctrine” should be applied instead of the “implied licence doctrine”, and that repair and modification do not create a new product.
The “exhaustion doctrine” decrees that the patentee’s exclusive rights with respect to the whole or part of a product covered by that patent are exhausted upon first sale; whereas the “implied licence doctrine” finds that an implied licence to use the product with certain implied conditions arises upon the sale of patented goods to purchaser (examples of implied conditions might be that the product cannot be sold “second hand” or that the product cannot be modified in any way for re-sale), and that the implied license continues after the first sale.
The High Court’s decision is an important one and has long-term ramifications, unless of course the Australian Parliament decides to amend the Patent Act. It is expected that the decision will set a precedent for a long time to come.
A bit on the background: Epson sells printer ink cartridges. After the ink has been used, the cartridges are discarded and replaced by a new one. Ninestar collects used cartridges and modifies them to be re-filled for re-use, and thereafter, Calidad sells the re-filled and modified cartridges. Generally, the modifications involve creating a hole in a side of a cartridge, injecting ink through the hole, sealing the hole, and modifying or replacing the memory chip of the cartridge. There are a few different versions of re-filled and modified cartridges.
In the first instance, the Primary Court found some cartridges infringed, some did not. The Court of Appeal then held that the modifications that were made were not authorised by any implied licence, and the making of the modifications amounted to a “making” of a new product or a re-making of the original. As such, all of the re-filled cartridges were held to infringe the patentee’s rights.
On further appeal to the High Court, the findings of infringement by both of the lower courts were overturned and in so doing, has changed what was previously and widely understood as the law in Australia, by creating a precedent that the “exhaustion doctrine” should apply in such circumstances.
For the time being, the question as to whether the ship of Theseus is new or not will remain a philosophical one, but that in a patent infringement case, there is a very real answer. The key take away for this High Court decision is that the “exhaustion doctrine” now applies in Australia and the repair and refurbishment industry will likely benefit, and in turn, the public will benefit as well.
A patent term extension (PTE) provides a valuable mechanism for an Australian patent holder to extend the term of a pharmaceutical patent beyond the standard 20-year term. The PTE provisions are designed to compensate a patentee for the relatively long time required to develop, test and obtain regulatory approval to commercialise a new drug.
An application for a PTE can be made when (i) the patent relates to a pharmaceutical substance or a pharmaceutical substance when produced by recombinant DNA technology, (ii) the substance is included on the Australian Register of Therapeutic Goods (ARTG) before the 20-year term of the patent expires, and (iii) at least five years have elapsed between the effective filing date of the patent application and the first inclusion of the pharmaceutical on the ARTG.
An application for a PTE must be lodged within six months from the later of (i) the date on which the patent was granted or (ii) the date of first regulatory approval of a product containing or consisting of a pharmaceutical substance covered by a claim of the patent.
In the recent case of Ono Pharmaceutical Co Ltd et al.  APO 43, the Australian Patent Office had to determine the date of first regulatory approval of a product containing or consisting of a pharmaceutical substance covered by the claims of the patent.
Ono Pharmaceutical Co., Ltd. and E. R. Squibb & Sons, L.L.C. are the owners of Australian Patent No. 2011203119 (the Ono patent) which covers monoclonal antibodies that bind to PD-1. Important cancer immunotherapy drugs Pembrolizumab (KEYTRUDA – a Merck Sharpe and Dohme product) and the Nivolumab (OPDIVO – an Ono Pharmaceutical product) are covered by the Ono patent.
ARTG approvals for KEYTRUDA and OPDIVO were obtained in Australia on 16 April 2015 and 11 January 2016, respectively. The patentee filed two separate applications for PTE, the first based on the KEYTRUDA regulatory approval date and the second based on the OPDIVO regulatory approval date. The latter PTE would provide a slightly longer extension term, and therefore the Patentee asked for this PTE request to be considered first. The KEYTRUDA-based PTE request would also require the granting of an extension of time, as the PTE request was filed more than six months after the KEYTRUDA regulatory approval date.
The OPDIVO-based PTE request was considered by a Delegate of the Commissioner who held that the KEYTRUDA pharmaceutical substance fell within the scope of the claims of the Ono patent, and the PTE request should have been filed within six months from the date of first inclusion of KEYTRUDA on the ARTG. The Patentee requested a hearing in relation to this decision and submitted at the hearing that the purpose of the extension of term provisions was to restore the time lost to patentees prior to gaining marketing approval and that a construction of the PTE provisions that would render the OPDIVO-based PTE request invalid would be manifestly absurd or unreasonable. The Delegate disagreed with the Patentee and held that the pharmaceutical substance to be considered with a PTE request does not have to belong to the patentee and that a PTE request must be based on the earliest of the approval dates that apply to the patent, irrespective of who obtained the approval. Therefore, the Delegate decided that the KEYTRUDA regulatory approval date was the earliest first regulatory approval date and the OPDIVO-based PTE request was refused.
It is important for patentees to be aware of all pharmaceutical substances that fall within the scope of the claims of their patent and their respective regulatory approval dates because a PTE request will need to be filed within six months of the earliest regulatory approval date, irrespective of whether that regulatory approval was obtained by the patentee themselves or by a third party.
It is also important for patentees to carefully consider the scope of their granted patent claims because broad claims are more likely to include pharmaceutical substances that may have regulatory approval obtained by a third party.
In summary: A patent term extension (PTE) must be requested within six months of the earliest regulatory approval date of a pharmaceutical substance covered by the claims of the patent, even when the earliest regulatory approval was not obtained by the patentee. Patentees will need to be aware of all pharmaceutical substances that fall within the scope of the claims of their patent and their respective regulatory approval dates. They should carefully consider the scope of their granted patent claims to ensure they do not cover pharmaceutical substances that may have regulatory approval obtained by a third party.
“Headstart” trade mark applications are assessed within 5-10 days. Instead of filing a standard trade mark application and then waiting 6 or 7 months to find out if there are any problems, it is possible to “test the water” by first filing an application through IP Australia’s fast-track headstart system.
Five to 10 days after filing the application (and sometimes even sooner) a Trade Mark Examiner issues a headstart report listing any objections that are likely to be raised during formal examination. The Trade Mark Applicant then has a further five days to decide their next step. The options are either to (1) formally file the application or (2) abandon the application.
Once a headstart application has been formally filed, the details of the application are made publicly available on the Australian Trade Marks Register and the application proceeds through formal examination (nb. the details of abandoned headstart applications are never made public). The objections mentioned in the headstart report are likely to be raised during formal examination, and it’s at that time that the Trade Mark Applicant has the opportunity to respond.
For more on Australian trade mark applications, you can find our information sheet here.
We’ve been working with Will and Gavin at Voxon Photonics for more than a decade, helping them to secure their IP and take their technology to the world. Voxon is responsible for developing the world’s most advanced, 3D holographic display – viewable from any angle without glasses!
At Madderns we are proud to protect great ideas. We have the experience, expertise and proven track record to provide the specialist, intellectual property services and advice needed to secure, and defend, the brands and technology underpinning the successes of your business.
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