Sandoz AG v Bayer Intellectual Property GmbH [2024] FCAFC 135 (23 October 2024)
Background
In November 2023, Sandoz – who was the sponsor of three Australian Register of Therapeutic Goods (ARTG)-listed generic products comprising rivaroxaban – challenged validity of two patents to which Bayer was the exclusive licensee in Australia, for the protection of Xarelto® (rivaroxaban) (Sandoz AG v Bayer Intellectual Property GmbH [2023] FCA 1321). The subject patents concerned AU2006208613 (the ‘613 patent) and AU2004305226 (the ‘226 patent), which were directed to a method of treating thromboembolic disorders using a rapid-release tablet comprising rivaroxaban and to a pharmaceutical composition comprising rivaroxaban “in hydrophilized form”, respectively. It was held in the case last year that the two patents were valid, with the ‘613 patent also being found infringed. Ultimately, the construction of the term “in hydrophilized form”, to which the Judge determined should describe where the hydrophobic surface of an active compound is rendered hydrophilic by being at least partially coated with a hydrophilic excipient through a process of intensive mixing of the hydrophobic active compound with the hydrophilic excipient in a small amount of solution, saved the Sandoz rivaroxaban products from a finding of infringement of the ‘226 patent.
2024 Appeal
The present case follows on as the appeal from last year’s decision. Importantly, the Full Court unanimously overturned the decision, holding that the two patents ‘226 and ‘613 lacked an inventive step in light of common general knowledge. The finding of invalidity was significant in that it opens the door for other companies to launch generic products for rivaroxaban in Australia.
Some of the grounds raised by Sandoz that were pivotal to the appeal were Sandoz’s contention that a skilled person could be reasonably expected to have ascertained a certain international patent publication, which would therefore bring said publication into an assessment for inventive step. Following from this, it was subsequently argued that the inventions of each of the two patents lacked an inventive step in light of the international patent publication and common general knowledge.
Ascertainment of a Document by a Skilled Person
Since both were filed before 15 April 2013, both fell under the considerations of the “pre-Raising the Bar” provisions. The test for inventive step under Section 7(2) of the Patents Act 1990 (Cth) pre-Raising the Bar requires that the skilled person could be reasonably expected to have (i) ascertained the document; (ii) understood it; and (iii) regarded it as relevant information. The meaning of “ascertained” was discussed in some length by the Court, as the approach used by the primary judge was questioned by the Full Court. The Court decided that for a document to be “ascertained”, it does not require proof that the hypothetical skilled person would ascertain the document, but rather requires proof sufficient to demonstrate a reasonable expectation that the skilled person would do so, on the balance of probabilities.
The evidence established that a search of the patent database would have returned results which included the international patent publication. The primary Judge contended that it is reasonable to expect a skilled person to have reviewed the search results, particularly as one of the independent expert witnesses indicated that the international patent publication would have been identified as a “top priority” result, within a total of 190 “top priority” results, retrieved on the spreadsheet containing a total of 218 documents. However, the Court in this instance considered it was not necessary for a skilled person to “prefer, prioritise or select” the international patent publication over all other documents, nor is it necessary for the skilled person to review these documents, regardless of whether the search results would have been only part of a subset of other searches performed by the skilled person, including searches on a multitude of other databases and using a number of different search terms. What is required is that on the balance of probabilities, the international patent publication could be reasonably expected to have been ascertained by the skilled person. Thus, Sandoz succeeded on this ground of the appeal.
Routine Work Carried Out by a Skilled Person
The subsequent ground of the appeal, which as per above relied on a finding of lack of inventiveness in light of the international patent publication and common general knowledge, discussed the fact that the international publication disclosed a large class of novel oxazolidinone derivatives having a general formula, yet particular preference was given to the compound rivaroxaban. The primary judge observed that rivaroxaban was the only compound explicitly mentioned within the class of oxazolidinone derivatives in the international publication. The context in which rivaroxaban was discussed included that as a selective factor Xa inhibitor it was useful for the treatment of thromboembolic diseases because of its greater therapeutic range, when compared with conventional preparations, meaning there is a reduced risk of bleeding for the patient amongst other advantages such as a more rapid onset of action. Both the subject patents ‘226 and ‘631 contained disclosures to this effect, similar to those found in the international patent publication, in addition to further disclosures such as rivaroxaban having a low molecular weight and being orally administrable.
The process of drug development is often complex, time consuming and expensive. The developed product may not even pass the necessary safety and efficacy requirements for regulatory approval or be commercially viable. Nevertheless, the Full Court considered that the need to carry out clinical trials and other tests in order to obtain relevant data, is routine work that is expected of a skilled person and which is non-inventive in nature (Merck Sharp & Dohme Corporation v Wyeth LLC (No 3) (2020) 155 IPR 1; [2020] FCA 1477 at [822]).
In other words, it was held that the primary Judge had erred in placing too much emphasis on the risks and unknowns associated with pre-clinical and clinical tests, which would inevitably have been undertaken as a matter of routine following selection of rivaroxaban as the lead candidate compound. Thus, it is erroneous to expect that at any stage of the journey of developing a drug there may be predictability to any extent, in terms of efficacy, side effects and safety. Instead the relevant test is not knowing that steps will or may work, but merely expecting that the steps may well work is sufficient. This ground of the appeal was therefore also successful and in Sandoz’s favour.
Disclosures Contained Within an Abstract
There was also a third ground to the appeal, which the Court considered briefly, given that it was not entirely necessary to address this ground in light of the findings of the other two grounds of the appeal. This third ground of the appeal related to the primary Judge’s finding of an inventive step in the ‘613 patent, whereby a number of abstracts were referenced and considered in light of common general knowledge. Each of the abstracts noticeably referred to the compound “BAY 59-7939”. Whilst it was not common general knowledge at the time that “BAY 59-7939” was reference to rivaroxaban, there were considered more important reasons as to why a skilled person would not have considered the ‘613 patent obvious in light of the abstracts and common general knowledge. In particular, none of the abstracts disclosed the identity or structure or even the chemical class of the compound BAY 59-7939. Rather, the only disclosure made in relation to BAY 59-7939 as a compound, was that it is a direct factor Xa inhibitor. The abstracts therefore did not provide enough information to a skilled person to permit synthesis of the compound to thereby allow a skilled team to proceed with its development or experimentation. The invention of the ‘613 patent was therefore not obvious in light of the abstracts, even when combined with common general knowledge.
Key Take Aways
What is important in this present appeal case, is the recognition that the test of ascertainment “pre-Raising the Bar” only requires that there is a reasonable expectation that the skilled person would ascertain the document on the balance of probabilities, which is a much lower bar than requiring proof the skilled person would ascertain the document. Furthermore, it should be appreciated that the test of inventive step only requires that for there to be a finding of a lack of inventiveness there needs to be a mere expectation that the steps would work in light of disclosures in the prior art, which is regardless of any unknown practical risks associated with drug development that may require a skilled person to undergo trial and error to overcome.
We await to see if there are any further developments to this case, should Bayer proceed with applying for special leave to appeal to the High Court of Australia. In the meantime, the present case is significant in offering a win to generic competitors seeking to commercialise rivaroxaban products in Australia. The case also provides an encouraging outcome to those who may be considering a challenge to the validity of patents under the “pre-Raising the Bar” provisions.
In the meantime, if you have any questions in relation to pharmaceutical patents, please feel free to contact our patent attorneys at Michael Buck IP.
