IP SPOTLIGHT 20 APRIL 2020

LITIGATION – AUSTRALIAN IP COURTS, ARE FIGHTING ON.

DOSAGE REGIMENS IN AUSTRALIA … STILL PATENTABLE!

While Courts around the world are closing because of COVID-19, Australian Courts are finding new ways to assist practitioners in virtual hearings. On 2 April 2020, the Federal Court of Australia published a guide to its view of virtual court proceedings and how they will operate.

Dosage regimen patent claims are very much alive in Australia, and given their potential value, they should still form part of any IP strategy for a pharmaceutical product. Patents to approved dosage regimen are a valuable method for capturing infringement, and such patents often provide valuable extended franchise life. The advantages of having a patent to the approved dosage regimen are obvious in terms of demonstrating infringement, and such patents often provide valuable extended franchise life. According to some reporting, the approach of the UK Supreme Court in Lilly v Actavis [2017] UKSC 48 (which concerned the dose of the erectile dysfunction drug CIALIS® (tadalafil)) has thrown the inventiveness of dosage regimen patents per se into doubt in the UK. Of course, that decision needs to be read in the context of the invention at issue, which was directed to one of the first approved doses. For example, in our view, the Court’s reasoning would not

encompass an invention directed to a dosage regimen developed after the initial marketed dose, such as a lower dose that showed acceptable efficacy with lower side effects, or perhaps a less frequent dosage regimen. Further, in Australia at least, the patentability of the first marketed dose will turn on the facts. The High Court in the CRESTOR® (rosuvastatin) case ( AstraZeneca v Apotex [2015] HCA 30) invalidated a dosage patent where the claimed dose was the same as other statins already on the market. However, in the Australian equivalent of the CIALIS® case mentioned above ( Apotex v ICOS (No 3) [2018] FCA 1204), dosage claims broader than those invalidated by the UK Supreme Court were found to be inventive based on evidence regarding the design of the necessary dose ranging study. Dosage regimen claims are very much alive in Australia, and given their potential value, they should still form part of any IP strategy for a pharmaceutical product.

In particular, the Courts have set up virtual hearings by sharing a video link provided by the Court through Microsoft Teams. At first, we were sceptical about this approach, but having now been part of this process, it is not hard to see that the new norm may well reshape many aspects of appearing in court. When you join a virtual hearing you will see that while the parties might be in different places, the Court process does not really change. Participants register in advance with the Judges’ Associate. and the Associate will generally test the system well in advance of the hearing. Participants are prohibited from making a record or a transcript of the hearing and are expected to dress appropriately, be in a quiet and secure location, and have good Internet. In short, it is business as usual.

GARY COX Chairman & Principal

TODD SHAND Principal

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BRANDS CAN DO MUCH MORE THAN PROMOTE THE GOODS AND SERV I CES THEY ARE ASSOCI ATED WI TH . The social distancing message that has become the new status quo has been absorbed by many of our much-loved brands, as they adapt their logos accordingly.

This is just Australia. Trade mark offices around the world are receiving many similar such applications. A pandemic like COVID-19 can bring out the best and worst in people. It remains to be seen what will happen to the various opportunistic trade mark applications filed globally, but in the meantime the efforts of consumer brands remind us that we must all do our part to “flatten that curve” (a phrase which is not the subject of trade mark application in Australia, yet … ).

Take McDonalds for example. It has taken the well-recognised “golden arches” and split them down the middle to depict two separate arches at an appropriate “social distance” (metaphorically speaking, of course).

True, one of the primary purposes of a brand is to indicate the source of goods or services, but a brand can do much more. Done properly, a brand coveys a promise to consumers about what they can expect to experience from their goods. And, when a well-recognised brand is used in an unconventional way (as it has with some of the examples discussed here), it can create an experience that both reinforces brand awareness and, contribute to society in a meaningful and positive way. But in times like these, we have also seen opportunists scurry to secure exclusive rights over what are now everyday terms like “COVID-19” and “Coronavirus”. Examples include recent Australian trade mark applications for COVID-19 covering bumper stickers, pencils and even cashmere clothing and “Corona-virus resistant” for cleaning products. The Australian trade mark office will most likely consider the term “Corona-virus resistant” to describe a quality or feature of the cleaning products and will therefore be considered too descriptive to be registrable, unless the applicant can point to a history of use of the term that demonstrates the mark has been used so extensively that consumers have come to associate the term with the applicant’s cleaning products. Without wanting to prejudge the outcome, it appears this is unlikely to be the case.

THE SOCIAL DISTANCING MESSAGE THROUGH BRANDS A pandemic like COVID-19 can bring out the best and worst in people. Household brand names like McDonalds, Volkswagen, Audi and others are all doing their part in reinforcing the social distancing message. Others just see opportunism, filing trade mark applications for COVID-19 covering bumper stickers, pencils and even for cleaning products. Trade mark offices around the world are being forced into a new frontier.

ADRIAN HUBER Special Counsel

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LET’S TALK TRADE MARKS OVER COFFEE…

In a recent decision of the Australian trade marks office involving an application for the mark for coffee and tea, in the face of prior registrations for the marks for retail services 1 , the Hearing Officer provided the following useful reminders to trade mark owners and applicants of what constitutes sufficient use in Australia: – – Use needs to have been both prior to, and continuous with, a prior similar registration in order to demonstrate a concurrent right to registration. Evidence of an isolated sale or shipment in, say, 2013, and another sale in 4 years’ time, will not generally be enough to demonstrate continuous use, although this will depend on the goods in question (eg, fast moving consumer goods which are sold regularly, versus large commissioned items); – – That said, an isolated sale or shipment to Australia of goods bearing the trade mark can be sufficient to demonstrate entitlement and ownership of a trade mark in Australia if no prior registration exists, or to maintain a trade mark registration in the face of a non-use removal action; – – Use of a trade mark on an overseas website or through social media may be considered use in Australia. However, the mere presence of a website “directed to the world at large” is not enough, nor is the mere listing of Australia as one of many countries in a drop-down menu for deliveries. However, where the website or publication is clearly directed or targeted to persons in Australia (eg, by extolling the suitability of a particular product to the Australian environment), then there is no difficulty in accepting the trade mark has been used in Australia.

Despite the temporary break in usual business operations, business owners should take time to consider how and where they are using their trade marks, and what steps are required to maintain and protect them.

MARIE WONG Principal

Trade marks are country specific property rights. Your ability to use and register your trade mark remains to be assessed on a country-by-country basis. In Australia, registration of a trade mark in the presence of a competing mark may be possible, but you need to show prior continuous use of your mark compared to a prior similar registration in order to demonstrate a concurrent right to registration. So, how do you achieve that?

As we adjust to the need for physical distancing, businesses are more than ever turning to the online environment to promote sales and innovate new ways of reaching and connecting with customers. Despite the current physical distancing and travel restrictions, the world has perhaps never felt more connected. That said, trade marks remain country specific property rights, and your ability to use and register your trade mark remains to be assessed on a country-by-country basis. In Australia, entitlement to a trade mark is based on first use – either through the act of using your trade mark in connection with the goods and services in question, or by filing a trade mark application. If seeking to extend protection for your trade mark in Australia, when will prior use be enough to overcome (or avoid infringement of) a similar mark that is already registered? What use is required to maintain a trade mark registration in Australia?

1 Coffee Republic Australia Pty Ltd v Espresso Republic, LLC [2020] ATMO 31 (28 February 2020).

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Patentees of pharmaceutical substances are frequently unable to exploit their inventions until receiving regulatory approval for their products, often many years after the commencement of the patent term. Recent decisions from IP Australia and the Australian Federal Court indicate that the Australian patent term extension system is quite favourable to patentees at the moment. Multiple patents can be extended based on the registration of a single pharmaceutical product. So, how can this system enhance the term and value of your Australian patent rights?

WHAT FACTORS MUST BE SAT I SF I ED TO OBTA I N A PTE? The following factors must be satisfied in order to obtain a PTE:

The term of a standard patent in Australia is 20 years 2 . However, provisions in the Patents Act 1990 ( Cth ) ( the Act ) provide for the term of certain patents relating to pharmaceutical substances to be extended by up to five years. Patentees of pharmaceutical substances are frequently unable to exploit their inventions until receiving regulatory approval for their products, often many years after the commencement of the patent term. Accordingly, the effective term during which the patentee is able to enjoy their monopoly may be much shorter than the full 20 year term. The rationale for patent term extensions ( PTEs ) is to partially compensate such patentees. Recent decisions from IP Australia and the Australian Federal Court indicate that the PTE system in Australia is quite favourable to patentees at the moment compared with other jurisdictions. Multiple patents can be extended based on the registration of a single pharmaceutical product. Further, the PTE system is not limited to novel active agents, and while methods of treatment and processes are not eligible for PTE, patents which cover salt forms of the active, formulations and even novel patches, dosage forms, nanoparticulates and sustained release compositions can be extended provided they meet the criteria of the Act.

– – at least one pharmaceutical substance per se, or a

pharmaceutical substances produced by a process that involves the use of recombinant DNA technology ( PSPS ), must in substance be disclosed in the specification and fall within the scope of the claims; 3 – – goods containing or consisting of the substance must be included in the Australian Register of Therapeutic Goods ( ARTG ) 4 ; – – the first regulatory approval for that pharmaceutical substance must have occurred more than 5 years after the date of the patent 5 ; and – – the application must be made within 6 months of either the date the patent was granted or the date of the first inclusion in the ARTG of goods that contain or consist of any of the PSPS, whichever is later. 6 Only one PTE can be granted per patent, 7 but multiple patents can be extended based on a single registration on the ARTG.

PHARMACEUTICAL PATENT TERM EXTENSIONS IN AUSTRALIA

2 Section 67 Patents Act 1990 (Cth). 3 Section 70(2) Patents Act 1990 (Cth). 4 Section 70(3) Patents Act 1990 (Cth). 5 Section 70(3) Patents Act 1990 (Cth). 6 Section 71(2) Patents Act 1990 (Cth). 7 Section 70(4) Patents Act 1990 (Cth).

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THE PSPS The PSPS must generally be the subject of a claim for the substance itself, rather than a substance produced by a method or process 8 or the subject of a Swiss style claim. 9 The Act provides that a pharmaceutical substance includes a mixture or compound of substances, and must be for a therapeutic use whose application involves a chemical/physico-chemical interaction with a human physiological system; or action on an infectious agent, toxin or other poison in a human body; but does not include a substance that is solely for use in in vitro diagnosis or testing. 10 individual active agents. There is some discussion in the case law about what constitutes a PSPS. For example, PTEs relying on claims to extended release formulations 11 , transdermal patches, 12 unit doses and nanoparticulates 13 have been allowed. This is in contrast to the position in other jurisdictions, such as Europe where only “basic patents” covering active pharmaceutical ingredients ( APIs ), combinations thereof, processes for obtaining APIs or application of APIs can be the subject of an extension. Therefore, the PSPS can be a mixture of substances and is not limited to

THE T IMI NG OF AN APPL I CAT ION FOR A PTE The 6-month window to make an application for a PTE is a strict requirement. The identification of the correct ARTG registration to base the PTE on is therefore important in determining the deadline for filing the PTE application in most cases. Often, whether a prior ARTG registration (earlier than the ARTG registration on which the patentee seeks to rely) covers a PSPS disclosed and claimed in patent is a contested issue. There is also some ambiguity on how this time limit will apply where there are multiple PSPSs disclosed in a patent. As each PSPS may be the subject of multiple ARTG registrations (e.g. for different dosages, indications, or formulations), the date of the “first inclusion” may refer to: – – the date on which the first ARTG registration for a product containing the particular PSPS on which the PTE application is based was made (i.e. a “first inclusion” for each PSPS disclosed and claimed in the patent) ( Interpretation A ), or – – the date on which the first ARTG registration for a product containing any of the PSPSs in the patent was made (i.e. only one date per patent based on the very first PSPS that was registered) ( Interpretation B ).

WHAT ARE THE PATENTEE’S R IGHTS DUR I NG THE EXTENDED PER IOD? A PTE extends the term of the whole patent. However, during the extended term, infringement can only occur where a person exploits the PSPS for a therapeutic use and not other forms of the invention such as methods (including methods of treatment and Swiss style claims) or processes. CONCLUS IONS The Australian PTE system allows patentees to seek a PTE based on patents which claim APIs, combinations thereof as well as other pharmaceutical substances such as formulations. Therefore, the PTE system can be a valuable way of extending patent rights for many patentees. – – monitor the ARTG for any registrations for products containing PSPSs disclosed in their patents, whether made by the patentee’s licensees, related parties or any other third party; – – seek to file an application for a PTE within 6 months of any such “first inclusion”, regardless of whether the patentee has themselves secured ARTG registration for that PSPS or is seeking to exploit that particular PSPS/product; and Patentees seeking a PTE should, as best practice:

No Australian court has considered which of the interpretations A or B is preferred. However, the Australian Patent Office has decided a number of cases in favour of Interpretation B. 14 It does not matter whether the patentee or another third party was the sponsor of the “first inclusion”. OPPOS I T IONS The application for a PTE can be opposed by any third party on the basis that the application does not satisfy one or more of the factors identified above. The Registrar’s decision at the Patent Office level can be appealed to the Federal Court of Australia. HOW I S THE LENGTH OF THE EXTENS ION CALCULATED? The length of the extension is calculated by determining the period beginning on the date of the patent and ending on the “earliest first regulatory approval date”, reduced by 5 years. However, the maximum term of the extension is 5 years. The “earliest first regulatory approval date” is the first approval date for any of the pharmaceutical substances disclosed and claimed in the patent. Even if there are many such substances disclosed in the patent, “earliest first regulatory approval date” refers to the first regulatory approval date for the first PSPS that was registered.

– – not delay the filing of a PTE application by intending to rely on a later ARTG registration for products containing other PSPSs disclosed and claimed in the patent. If you require any assistance or additional advice in relation to PTEs in Australia, please get in touch with the author of this article.

BINDHU HOLAVANAHALLI Associate

8 Except where the PSPS is produced by a process that involves the use of recombinant DNA technology 9 Boehringer Ingelheim International GmbH v Commissioner of Patents (No 2) (2001) 112 FCR 595; Prejay Holdings Ltd v Commissioner of Patents (2003) 57 IPR 424. 10 Schedule 1 Patents Act 1990 (Cth). 11 Spirit Pharmaceuticals Pty Ltd v Mundipharma Pty Ltd (2013) 216 FCR 344. 12 LTS Lohmann Therapie Systeme AG and Schwarz Pharma Ltd and Commissioner of Patents [2010] AATA 809.. 13 iCeutica Pty Ltd [2018] APO 76, 77, 78. 14 Re: G D Searle LLC (2008) 80 IPR 210; Re Celgene Corp (2011) 93 IPR 309; Re Iceutica Pty Ltd (2018) 146 IPR 342 15 Section 78 Patents Act 1990 (Cth).

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THE FRANCHISOR’S OBLIGATION TO ACT IN GOOD FAITH

Franchisors look out. For the second time in less than 12 months, a franchisor has received a multimillion-dollar penalty for breaches of the Franchising Code. Compliance with the Code is paramount, as GEOWASH P/L recently learnt when it was slugged with a total of $4.2 million in penalties against an insolvent carwash, a car detailing company, and two of its officers Sanam Ali and Charles Cameron.

In the recent case of the Australian Competition and Consumer Commission (ACCC) v Geowash Pty Ltd (No 4) 16 , the Federal Court imposed a total of $4.2 million in penalties on the insolvent carwash and detailing company Geowash, and its two officers Sanam Ali and Charles Cameron for breaches of:

– – the Franchising Code of Conduct (Franchising Code); – – the Competition and Consumer Act 2010 (CCA); and – – the Australian Consumer Law (ACL).

The penalties included individual penalties of $1.045 million and $656,000 imposed on Ms Ali and Mr Cameron respectively. In addition, Ms Ali and Mr Cameron were ordered to pay $500,000 each as partial redress to franchisees and disqualified from managing a corporation for 5 and 4 years respectively. These orders followed on from the earlier decision in the ACCC v Geowash Pty Ltd (No 3) 17 (Earlier Decision) in which the Federal Court decided that Geowash, Ms Ali and Mr Cameron (Respondents) were in breach of the Franchising Code, the ACL and the CCA. The latest Geowash case specifically dealt with the assessment of penalties to be imposed on the Respondents. The Geowash case is particularly noteworthy as it is the second case after the case of the ACCC v Ultra Tune Australia Pty Ltd 18 in which the ACCC brought legal action against a breach of the obligation to act in good faith under the Franchising Code within the same year. Ultra-Tune was ordered to pay a penalty of over $2.6 million. GOOD FA I TH OBL IGAT ION UNDER THE FRANCH I S I NG CODE Under the Franchising Code, each party to a franchise agreement must act towards another party with good faith, within the meaning of the unwritten law from time to time, in respect of any matter arising under or in relation to the agreement or the Franchising Code. The good faith obligation cannot be contracted out of by the parties and a breach of the obligation is subject to a maximum civil penalty of $63,000 for each breach. In assessing whether a party to a franchise agreement has breached the good faith obligation, the court may, among other matters, consider whether the party:

– – acted honestly and not arbitrarily; and – – co-operated to achieve the purpose of the agreement.

THE EARL I ER DECI S ION Broadly speaking, the relevant conduct of the Respondents included: – – unfair dealings with franchisees who entered into franchise agreements including:

16 [2020] FCA 23. 17 [2019] FCA 72. 18 [2019] FCA 12.

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CHINA BECOMES TOP PCT FILER

(i) engaging in misleading or deceptive conduct in breach of the ACL by misrepresenting to prospective franchisees that they would be charged in accordance with the disclosure document; and (ii) engaging in unconscionable conduct in breach of the ACL by deviating from the terms of the disclosure document in negotiating a purchase price, misrepresenting that the amount charged was solely for fit-out and set-up of a franchise, and misusing the funds to pay commissions to Ms Ali and Mr Cameron as if they were generally available funds to Geowash. In particular, the Federal Court found that the unconscionable conduct also breached the good faith obligation under the Franchising Code. – – misrepresentations on the Geowash website regarding the profitability and affiliations with other businesses in breach of provisions relating to misleading and deceptive conduct under the ACL (Website Misrepresentations), specifically that: (i) the prospective franchisees could make gross revenues of $70,216 in an average 28-day period; (ii) the prospective franchisees could make gross profits of $30,439 in an average 28-day period; and (iii) Geowash had commercial relationship or affiliation with well-known brands including Kia, Nissan, Ikea and Audi among others. THE ASSESSMENT OF PENALT I ES One notable outcome from the Geowash case is that the significant amounts of penalties imposed on the individual officers. In the Earlier Decision, the court held that Ms Ali and Mr Cameron both had the knowledge in the misrepresentations that they were making (except in Mr Cameron’s case, the court found that he was found not to be an accessory to the Website Misrepresentations). Ms Ali is the embodiment of the corporation as its sole director and was the main instigator of the conduct, the main actor in the conduct and a major beneficiary of the conduct… In the case of Mr Cameron, he was a substantial beneficiary of the conduct. The commissions paid to him (or to the family trust) represented a substantial part of the monies received by Geowash… [which] was used as a vehicle by which Ms Ali and Mr Cameron appropriated monies that ought to have been expended by Geowash on fit-out and set-up of franchises 19 In justifying the individual penalties, the court stated:

In addition, the court rejected the Respondents’ argument that the Unfair Dealings conduct was caused by one system of underlying conduct that contravened two penalty regimes (i.e. the ACL and the Franchising Code) and therefore the dealings with franchisees should be assessed as a single course of conduct where the applicable maximum penalty is for a single contravention. Instead, the court held that there were separate contraventions of the prohibition on unconscionable conduct and the good faith obligation in each of the dealings. KEY TAKEAWAYS – – As the Australian Competition and Consumer Commission’s ten compliance and enforcement priorities in 2020 include the protection of small businesses under the CCA with a focus on the Franchising Code, it is likely that there will be increased enforcement activities in relation to the good faith obligation and the Franchising Code in general. – – From the two cases, the good faith obligation requires, among others: (i) the parties to act honestly and with fidelity to the bargain concluded between the parties; (ii) a party to consider the legitimate interests of the other party although there is no requirement for the party to subordinate its legitimate interests; and (iii) not to engage in conduct that is dishonest, capricious, arbitrary or motivated by bad faith or a purpose which is antithetical to the franchise agreement or the Franchising Code. – – Franchisors’ conduct must not deviate from the content of disclosure documents without the franchisees’ knowledge and consent. – – Franchisors should establish and maintain procedures, policies and programs (and associated training and monitoring) to ensure that all representatives comply with the applicable laws including the Franchising.

In WIPOs recent 2019 report on PCT filings, China became the top filer of international patents filed with WIPO. China filed 58,990 patent applications compared to the US’s 57,840 applications. This is the first time that the US has dropped from 1st place since the PCT began operation in 1978.

In other news from WIPO, international patent applications filed via the PCT grew by 5.2% (265,800 applications) in 2019, while international trademark applications via the Madrid System for the International Registration of Marks increased by 5.7% (64,400 applications). Protection for industrial designs via the Hague System for the International Registration of Industrial Designs saw a 10.4% growth (21,807 designs), capping another record-setting year for WIPO’s global IP services.

COVID-19 CELL IMAGE Who owns the copyright?

Everyone has seen this image. It’s absolutely everywhere. Well, the image was created by the Centers for Disease Control and Prevention (CDC). As far as we can determine, the image is in the public domain and is free to download from the CDC’s image library, however, photo credit goes to Alissa Eckert and Dan Higgins of the CDC.

JAYDEN LEE Associate

19 [2020] FCA 23.

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