Current Australian Patent Litigation

The year 2024 gave rise to a number of significant decisions shaping key aspects of Australian patent law, from the approach to obviousness to procedural rules and patent term extensions. The Full Federal Court handed down a seminal judgment in Sandoz v Bayer, clarifying the approach to inventive step in the context of the drug development process and providing valuable guidance on the question of ascertainment of prior art under the pre-Raising the Bar Patents Act.

In other decisions, the long-running dispute between Aristocrat Technologies and the Commissioner of Patents is set to be back before the High Court following the grant of special leave in August. In Vald v KangaTech, the Federal Court highlighted the pitfalls of relying on video demonstration evidence, emphasising the need for transparency with the opposing party and for adherence to procedural rules for experimental evidence. Lastly, in one of several patent term extension challenges commenced in 2024, Novartis v Pharmacor underscored the complexities of the Australian patent term extension regime.

Inherently risky business – full court finds rivaroxaban patents obvious

The Full Federal Court has weighed in on appeal to reverse a decision of Justice Rofe at first instance, and to invalidate Bayer’s patents for a formulation and dosing regimen of rivaroxaban. 

The decision confirms that inherent general risks in the routine drug development process are not sufficient, on their own, to render follow-on patents inventive. 

Rivaroxaban is in a class of factor Xa inhibitors, and is the active ingredient in Bayer’s block-buster drug XARELTO. XARELTO is used as treatment for deep vein thrombosis and pulmonary embolism. XARELTO is Bayer’s best-selling drug globally, earning around AUD140 million under the Pharmaceutical Benefits Scheme in 2024. Internationally, Bayer and Sandoz have been involved in a number of disputes regarding rivaroxaban, including in the UK where the UK High Court revoked Bayer’s patents. 

At issue were Australian Patent No 2004305226 (the 226 Patent) for a formulation and Australian Patent No 2006208613 (the 613 Patent) for a once-a-day dosing regimen. At first instance Justice Rofe found that each was not obvious in the light of the common general knowledge (CGK) together with WO 919, the compound patent which disclosed rivaroxaban as a particularly promising candidate.

In her reasoning, Justice Rofe accepted that WO 919 would be of interest to a drug development team seeking to develop a new antithrombotic drug, and that the skilled reader would likely focus on rivaroxaban when selecting lead candidates to take into further drug development work. Justice Rofe then went on to apply the “reformulated Cripps question”, finding that:

• the well-known standard series of steps of drug development were not routine steps; and
• Bayer’s drug development journey was more akin to a “voyage of discovery” than the “working towards the invention with an expectation of success”.

On appeal, the Full Court found that Justice Rofe had placed too much emphasis on “the risk of failure to gain regulatory approval which is inherent in any drug development project”, and what would have been undertaken as a matter of course following the selection of rivaroxaban as a lead candidate. 

Further, the Full Court confirmed that the “relevant expectation” should be measured against the ordinary level of expectation and risk inherent in routine work in the field. It is not necessary to know a particular outcome at the outset of the hypothetical task. Rather, the Full Court stated the question as whether a person skilled in the art with the relevant CGK would have been directly led, as a matter of course, to develop rivaroxaban in the expectation that it might produce a useful alternative (or better drug than) the existing compounds for the treatment of thromboembolic disorders.

In the absence of any evidence of any particular problem or difficulty overcome in arriving at a suitable formulation (using a standard wet granulation process) or an (obviously desirable) once-a-day dosing regimen, the Full Court found that these matters would have been arrived at in the course of conventional clinical trials. 

Bayer has applied to the High Court of Australia for special leave to appeal. 

Aristocrat special leave application

As the authors reported on in the 2024 Trends & Developments chapter in this guide, whether computer-implemented inventions are patentable subject matter (a “manner of manufacture”) remains a contentious issue under Australian law following the High Court’s decision in the ongoing litigation between Aristocrat Technologies Australia (Aristocrat) and the Commissioner of Patents. This year, the matter made its way to the High Court for a second time. 

This litigation concerns a single patent claim that the parties agreed was representative of Aristocrat’s other electronic gaming machine (EGM) claims. The invention, as claimed, was not simply to a novel feature game but to an EGM comprising physical parts (including a display, a game controller comprising a processor, and a game play mechanism comprising a plurality of buttons) and the operation of which involves the novel feature game. In 2021 the Full Court of the Federal Court of Australia in Commissioner of Patents v Aristocrat Technologies Australia [2021] FCAFC found that Aristocrat’s patent lacked patentable subject matter, but that residual issues, including the other patent claims, be remitted back to the primary judge.

Subsequently, Aristocrat obtained special leave to appeal to the High Court of Australia. In unusual circumstances, only six justices sat on the High Court and delivered an evenly split 3:3 judgment in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2022) 274 CLR 115. Kiefel CJ, Gageler and Keane JJ gave dismissing reasons, finding that the claimed invention did not produce an adaptation or alteration of, or addition to, technology and was simply the implementation of a new idea, namely a feature game, using old technology. In contrast, Gordon, Edelman and Steward JJ would have allowed the appeal, finding that the invention created an artificial state of affairs and a useful result, and considered that the general principles of patentability should not be applied differently simply because the subject matter is “computer implemented”.

As a result of the evenly split decision, the outcome of the High Court decision was that the Full Court decision was affirmed, per Section 23(2)(a) of the Judiciary Act 1903 (Cth) (Judiciary Act), and the case was remitted back to Justice Burley for consideration of the “residual issues”. In his decision on 12 April 2024, Aristocrat Technologies Australia Pty Limited v Commissioner of Patents (No 3) [2024] FCA 212, his Honour determined that the effect of Section 23(2)(a) of the Judiciary Act meant that he was bound by the Full Court’s plurality decision, and should not have regard to any of the reasoning of the High Court, despite the fact that all of the High Court Justices had expressed disagreement with aspects of the reasoning of the Full Court plurality. As a result, he found all of the remaining claims unpatentable.

Aristocrat then applied for and was granted leave to appeal the decision of Justice Burley on 30 August 2024 in Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2024] FCA 987. On appeal, Aristocrat will argue that Justice Burley erred in applying the reasoning of the Full Court plurality without considering the High Court judgment, and therefore erred in finding that the residual claims were not patentable subject matter.

Aristocrat now has the option of applying to the High Court to hear the appeal under Section 40(2) of the Judiciary Act. However, there is no guarantee the High Court will agree to hear the case, in which case the Full Court will hear the appeal. If the High Court does take on the case, it may choose to only address the proper effect of Section 23(2)(a) of the Judiciary Act, without considering the patentability of the residual claims. If it does choose to address the patentability issue, it is hoped that it will deliver some long-awaited clarity on this issue of computer-implemented inventions, following the uncertainty it left when it last considered the topic in 2022.

Video evidence in patent cases – weight matters

Video demonstration evidence is rare in patent cases in Australia. The recent decision in Vald Pty Ltd v KangaTech Pty Ltd (No 5) [2024] FCA 333 illustrates the pitfalls of preparing evidence in the form of a demonstration.

Vald Pty Ltd (Vald) sued KangaTech Pty Ltd (KangaTech) for infringement of its Australian patent relating to an apparatus for use in assessing hamstring strength while a person performs an eccentric knee flexor contraction exercise. 

Rather than adduce evidence to show that the KangaTech apparatus was being used by customers to perform the exercise, Vald relied upon expert evidence of Dr Tania Pizzari, a physiotherapist and academic. Dr Pizzari performed an inspection of the KangaTech apparatus, which was filmed by Vald’s solicitors. 

During the trial, new evidence emerged from Dr Pizzari about the circumstances surrounding her inspection of the KangaTech apparatus.  Justice Downes was critical of Dr Pizzari’s evidence and the manner in which the video evidence was prepared, in particular:

• the omission from Dr Pizzari’s evidence of the test subject’s lack of independence;
• the omission that the test subject was not representative of “most people”; and
• the fact that Dr Pizzari had never asked anyone to perform, on any other apparatus, the exercises she had asked the test subject to perform evidenced that the demonstrations were artificial and unlikely to be performed on the KangaTech apparatus.

Justice Downes held that the facts that were not revealed until trial raised questions about the veracity of the video evidence and the conclusions which could be reached based on such evidence. They also raised questions about what other information surrounding the video evidence was not before the court. As a result, her Honour assigned little weight to the video evidence and the evidence given by Dr Pizzari by reference to the demonstrations in the video.

In this case Vald had characterised the video evidence as “demonstrations”, rather than “experiments”, presumably with rule 34.50 of the Federal Court Rules 2011 (Cth) in mind. Under rule 34.50, a party cannot tender experimental proof as evidence in the Federal Court of Australia (without leave of the Court) unless it has applied for orders for the experiment to be conducted, including in the presence of the opposing party’s representatives.  The purpose of the rule is to ensure that an opposing party has an adequate opportunity to challenge the validity of an experiment, and avoid wasteful duplication by the opposing party of an experiment that can be seen to be valid. 

While compliance with rule 34.50 would not have saved Vald’s infringement case, the strictness of those requirements is indicative of the level of disclosure required by parties when seeking to rely on video demonstration evidence.

• All relevant facts on which expert evidence is based should be disclosed to the Court. For demonstrations, this may include details regarding the test subject, information given to the test subject, and details regarding testing in advance of and the design of the demonstrations.
• Parties should consider using the regime under rule 34.50 of the Federal Court Rules if they are contemplating evidence in the form of a demonstration. By engaging with the other party beforehand, agreeing a protocol for the demonstration to be carried out which will allow the other party’s solicitors and experts to be present, early attention tends to be given to the inclusion of all of the facts the Court will find relevant in its assessment of the evidence. 

Term extensions remain in the firing line

As the authors reported on in the 2024 Trends & Developments chapter in this guide, the patent term extension (PTE) regime continues to be a contentious issue in Australian litigation.

A patentee is permitted, under the Patents Act, to apply for a PTE if certain conditions are met, including that a “pharmaceutical substance per se” is “in substance disclosed” in the specification and “in substance fall[s] within the scope” of the claims.

In Novartis AG v Pharmacor Pty Limited (No 3) [2024] FCA 1307, Novartis sought a PTE in relation to goods containing, or consisting of, the pharmaceutical substance included in the ARTG as: “ENTRESTO sacubitril/valsartan (combined as a sodium salt hydrate complex)”. Novartis obtained the PTE in relation to its patent titled “Pharmaceutical compositions comprising valsartan and NEP inhibitors”, of which claim 1 is to pharmaceutical compositions comprising a NEP inhibitor, such as sacubitril, and an AT 1-antagonist, such as valsartan, and salts thereof.

Pharmacor challenged the validity of the PTE on the basis that Entreso contains TSVH, a single crystalline complex of the anionic forms of sacubitril and valsartan. Pharmacor argued that because the claims were to two separate salts of sacubitril and valsartan, TSVH was not disclosed and claimed in the patent.

Novartis responded that the two distinct molecules had not lost their identities in forming the complex, pointing to the ARTG certificate which refers to Entresto as “sacubitril/valsartan (combined as a sodium salt hydrate complex)”.

Justice Yates agreed with Pharmacor, finding that two pharmaceutical substances per se are disclosed and fall within the scope of claim 1, of which Entresto comprised neither. His Honour found that TSVH was a different compound with a unique set of physiochemical properties, and was not disclosed “or even envisaged” in the patent.

Novartis v Pharmacor is yet another decision highlighting the nuances of Australia’s PTE provisions. While the Australian regime has historically been considered a relatively patentee-friendly one, more recent Federal Court judgments have tested its limits.