Merial has succeeded in its patent opposition appeal to the Federal Court against the grant of Intervet's Australian Patent Application for a soft chew formulation for administering a pharmaceutical to animals. Justice Moshinsky of the Federal Court found that Intervet was not entitled to the grant of the patent as it did not derive title to the patent from a third-party contractor who was a named inventor. The decision is a timely reminder to innovators to obtain and correctly document an assignment of all intellectual property rights when engaging third-party contractors.

In July 2010, following unsuccessful opposition proceedings by Merial, the Delegate ordered that Intervet's standard patent application titled “Compositions and process for delivering an additive” (Patent Application) proceed to grant.

Merial appealed the Delegate's decision to the Federal Court. As appeals of this nature are heard de novo, Merial was free to argue the ground of lack of entitlement which was not argued at the opposition level. Merial also argued that the alleged invention was obvious.

The claims of the Patent Application were directed to a soft chew formulation for administering pharmaceuticals to animals.

Based on the facts of the case, as described below (including the lack of evidence in relation to any assignment) Justice Moshinsky held that Intervet was not entitled to the grant of the Patent as it did not derive title to the patent from a third-party contractor (Mark Pieloch) who was a named inventor.

Although it was unnecessary for him to decide due to his finding on entitlement, his Honour also found that Claim 1, and its dependent claims, were invalid for lack of inventive step.

Background to the “soft-chew” formulations

Since at least the early 1990s, Pharma Chemie had developed expertise in formulations that facilitated the delivery of pharmaceuticals to animals, including in relation to "soft-chew" formulations. Pharma Chemie was owned and controlled by Mark Pieloch.

In 2002 Intervet decided that it wished to market a product for dogs and horses that was a palatable soft chew formulation containing the anti parasitic active ingredient ivermectin (Ivermectin Soft Chew). Intervet approached Pharma Chemie to develop the Ivermectin Soft Chew.

In 2002, Intervet allegedly entered into a Manufacturing and Supply Agreement with Pharma Chemie in relation to the Ivermectin Soft Chew (Agreement).

Following the successful development of the Ivermectin Soft Chew, Intervet sought to obtain patent protection for the soft chew formulation per se. The Patent Application names Mark Pieloch, Sebastien Huron and Susan Cady as the inventors.

Intervet not entitled to the grant of the Patent

Under section 15 of the Patents Act 1990 (Cth), an invention may only be granted to a person who (a) is the inventor; (b) is entitled to have the patent assigned to them; or (c) derives title to the invention from the inventor or a person mentioned in (b).

Intervet argued that it was entitled to the patent based on the terms of the Agreement. However, despite extensive searches a copy of the Agreement was not able to be found. The only evidence of the terms of the Agreement was an excerpt included in a letter from Pharma Chemie's lawyers in 2003, sent in response to a request to Mr Pieloch to sign an inventor's declaration (which Mr Pieloch had refused to sign).

In the alternative, Intervet argued that the Court should imply an assignment into the Agreement based on either the conduct of the parties, or the "hired-to-invent" doctrine in US law.

Justice Moshinsky found that Pharma Chemie was not engaged by Intervet to develop a soft chew dosage form; it was engaged to incorporate Intervet’s active ingredients into a formulation using Pharma Chemie’s soft chew technology.

Based on this finding, the absence of a copy of the Agreement and Mr Pieloch's uncontradicted evidence that he did not execute any such assignment, his Honour rejected Intervet's argument that the rights to the soft chew technology had been assigned to it, either expressly in the Agreement or by implication.

Final Orders

In Merial, Inc. v Intervet International BV (No 4) [2017] FCA 223 his Honour delivered his reasons on the final form of orders, including allowing Merial's opposition.

Intervet had sought 60 days to amend the Patent Application on the basis that Mr Pieloch may be prepared to become a co-applicant with Intervet or that Intervet may be able to obtain an express assignment of the invention from him. His Honour did not accept Intervet’s submission and made an order that the Patent Application not proceed to grant.

Lessons for innovators

  • When engaging third-party contractors secure an assignment of the rights in the technology relevant to your invention.
  • While a written agreement is not required to effectively assign an invention from the inventor, it is the best way to prove the existence of an assignment.
  • Ensure that appropriate records are kept of any assignment or other agreement entered into in relation to intellectual property rights.