The recent interlocutory decision of Justice Beach in Juno Pharmaceuticals Pty Ltd v Celgene Corporation [2021] FCA 236 is a case study of numerous emerging trends in Australian pharmaceutical patent litigation.

First, it shows the Federal Court’s increasing willingness to grant expedited trials in pharmaceutical patent cases at the urging of generic and biosimilar companies. Second, it illustrates the Court’s reluctance to prevent a patentee from bringing an infringement case even where the product in question has not obtained regulatory approval. Third, it highlights the increasing appetite of generic and biosimilar companies to attack patents for failure to comply with Australia’s idiosyncratic and onerous requirement to disclose the ‘best method’.

Overview of dispute

Juno Pharmaceuticals Pty Ltd (Juno), with Natco Pharma Ltd, are seeking to ‘clear the way’ for the launch of their generic lenalidomide products, by challenging the validity of three claims of a compound patent owned by Celgene Corporation (Celgene). Juno has not yet obtained regulatory approval for its generic lenalidomide products.

Lenalidomide is the active ingredient in Celgene’s cancer treatment ‘Revlimid’, which is approved for use in multiple myeloma (MM), transfusion-dependent anaemia due to a certain myelodysplastic syndrome (MDS) and mantle cell lymphoma (MCL).

Celgene cross-claimed for infringement of the compound patent and seven method of treatment (MOT) patents for the use of immunomodulatory compounds for the treatment and management of myelodysplastic syndromes, cancers and other diseases.

The decision relates to numerous interlocutory applications. Relevantly:

  • Juno’s application for an expedited trial of its invalidity challenge to the compound patent;
  • Juno’s application to strike out Celgene’s cross-claim for infringement of the MOT patents; and
  • Celgene’s application to summarily dismiss Juno’s lack of best method challenge to the validity of the compound patent.

Juno obtains an expedited trial for its challenge to the compound patent

Expedition is an emerging trend in Australian pharmaceutical patent litigation due to the Court’s strong and understandable desire to avoid having to determine interlocutory or preliminary injunctions. The ‘cleanest’ approach for all concerned (including the Court) is to determine all issues of infringement and validity before the proposed launch date of the generic or biosimilar product in question.

The Court’s desire to case manage to avoid interlocutory injunction disputes is driven by:

  • the efficiency of deciding the matter at one level rather than two; and, more importantly
  • the desire to avoid having to determine complex claims for compensation by wrongly restrained defendants or damages claims where a launch of an infringing product was unrestrained.

We have previously discussed the Court’s changing approach to granting interlocutory injunctions here.

In this case, Celgene opposed expedition on the basis that there was unlikely to be any time or cost savings in an early hearing on the validity of the compound patent, as the remaining seven patents would still prevent Juno’s market entry, and the proposal would result in duplicate proceedings. Juno argued that the compound patent raised distinct and separate issues from the other seven patents, meaning that there was no substantive prospect for legal or forensic overlap (including, for example, in relation to the evidence required for lack of inventive step).

Justice Beach granted expedition even though an expedited trial on the compound patent would not ‘completely clear the way’ of all patents identified by Celgene. His Honour considered that Juno should be allowed to have the expedited hearing to test their position on the compound patent prior to expiry, to put them:

“in a position to decide whether they commercialise a product with a risk of infringement of one or more of the other seven patents…[1]

In this case, the trial on the compound patent will take place five months from the date of the interlocutory decision. This contrasts with a more typical timeline for pharmaceutical patent litigation, where final hearings often occur 12 to 18 months (or longer) after commencement.

For the reasons given by Celgene, this case was not the perfect vehicle for expedition. The Court may well still need to hear a contested interlocutory injunction application and, should it make what turns out to be the wrong decision, endure a complex claim under the usual undertaking or damages claim.

This decision shows the Court’s willingness to grant expedition, even if it is only to assist a generic / biosimilar company in deciding whether to launch at risk of infringing other patents. Generic and biosimilar companies that are seeking to truly ‘clear the way’ ahead of a proposed launch (avoiding the need for an interlocutory injunction dispute altogether) should expect that they will be pushing on an open door if they seek expedition.

We have already seen the Court adopt that course in 2019 when granting expedition to Teva Pharmaceuticals in the dispute against Boehringer concerning tiotropium bromide, an anticholinergic bronchodilator used in the treatment of chronic obstructive pulmonary disease and asthma. Justice Moshinsky expedited the proceedings in circumstances where the timeline of the launch of Teva’s generic product was not clear.

Awaiting regulatory approval is insufficient to stave off an infringement action

Juno brought a strike out application contending that Celgene’s cross-claim for infringement of the seven MOT patents was premature and brought in circumstances where there was no justiciable dispute because it has not yet obtained regulatory approval. The strike out attempt failed.

His Honour considered that Celgene’s infringement claim was ‘not sufficiently hypothetical’ to warrant strike-out or summary disposition.[2] Although Juno was yet to include its intended indications for the product in its application for regulatory approval (i.e. the conditions for which the product is approved), Justice Beach found that it was clear that Juno had a relevant intention to do so when obtaining regulatory approval.[3]

The Court’s refusal to strike out the infringement claim shows the reluctance of the Court to prevent a patentee from bringing an infringement case forward, even where the product (including relevant features) has not passed regulatory approval. This is unsurprising as, ordinarily, the Court will seek to determine issues of infringement and validity together (i.e. in a single case).

Best method – an idiosyncratic and onerous Australian patent validity requirement that is gaining prominence

Failure to disclose the best method known to the patentee of performing the invention can be a powerful ground of attack – if successful, it is capable of rendering all claims of the patent invalid. There has been a resurgence in lack of best method validity attacks since Apotex’s success in revoking Servier’s patent for perindopril arginine on that ground.[4] There is a growing appreciation that the requirement is more onerous than previously understood. Establishing failure to disclose best method usually turns on the patentee’s knowledge and making out the ground is often reliant on discovery.

In the present case, Celgene sought summary judgment in relation to, or the strike out of, Juno’s lack of best method pleadings. No doubt it did so to avoid Juno seeking discovery. Ultimately, Celgene’s attempt failed as his Honour (although critical of how the lack of best method argument was framed) could not conclude that the ground had no reasonable prospects of success.

Key takeaways

Innovators (patentees) and generic / biosimilar companies should be alive to the following three key trends and consider the implications for their litigation strategies.

  1. Generic / biosimilar companies who provide notice prior to a proposed launch and seek expedition to ‘clear the way’ of patents ahead of that launch are likely to find that the Court is open to facilitating that outcome (in the interests of avoiding an interlocutory injunction dispute). This may well become more common when the Therapeutic Goods Administration’s (TGA’s) early notice scheme for patentees is implemented (see our earlier article here). Under the new scheme, the first applicant for a biosimilar (or generic) product will need to notify the patentee when their application passes preliminary assessment by the TGA. Given the risk of being forced into expedited proceedings, innovators will need to consider making the investment in preparing early to enforce their patents in Australia. Generics / biosimilars should consider taking advantage of the Court’s willingness to assist them if they are willing to act early to ‘clear the way’.
  2. The Court is unlikely to be receptive to attempts by generic / biosimilar companies to stave off infringement claims on the basis that their product has not yet passed regulatory approval. Understandably, the Court will wish to ensure that infringement and validity cases are brought and heard together.
  3. The case highlights an increasing tendency by those seeking to revoke patents to rely on Australia’s idiosyncratic and onerous best method requirement. It also shows that the threshold for pleading that ground is relatively low and can provide a basis for discovery. Patentees will need to consider whether their patents satisfy this Australian requirement and whether any concerns can be addressed by amendment or otherwise. We note that amendments adding disclosure is only permitted for patents to which the law before the 2013 Raising the Bar reforms applies. Generic / biosimilar companies should carefully consider whether the failure to disclose the best method can be pleaded (including with a view to obtaining discovery).