With Australia’s innovation patent system set to end later this month, pre-grant opposition proceedings will likely play a significant role in the strategies of challengers going forward – and owners will want to be prepared. Gavin AdkinsDr Toby Thompson and Amanda Stark discuss. 

Australia’s innovation patent system is ending soon. As a result, Australia’s pre‑grant opposition proceedings will likely play a more significant role in the strategies of patentees and challengers in the future.

Innovation patents are subject to a different ‘post-grant’ opposition procedure to standard patents that is stayed by the commencement of court proceedings. As a result, divisional innovation patents are sometimes used as a litigation tool in order to, among other things, short circuit the enforcement delay associated with the pre‑grant opposition procedure for standard patents. As the innovation patent system is phased out, this tactic will fall away.

Australia’s pre-grant patent opposition procedure is long-standing but has undergone some important changes in recent years that will become critical in the future.  These changes include higher requirements for several grounds of opposition, resulting in a less pro-patentee opposition regime than was previously the case.   

Lower burden of proof

Previously, in order to succeed in opposing grant of an Australian patent it was necessary for an opponent to establish that the patent, if granted, would be clearly invalid.

Now an opponent need only satisfy the Hearing Officer on the balance of probabilities that a ground of opposition to the grant of the standard patent is made out.

Stronger grounds for opposition

In respect of standard patent applications which are filed on or after 15 April 2013, or for which examination is requested after this date, there are four substantive changes that strengthen the grounds for challenging validity:

1. Broader prior art base for inventive step (obviousness)

Firstly, the background “common general knowledge” is no longer confined to that which existed in the art in Australia. In practice, this removes the need to use local Australian experts or otherwise prepare evidence in order to establish that the relevant art is ‘international’ in nature.

Secondly, in order for prior art to be eligible for assessing inventive step it is no longer necessary to establish that it must be “information that a skilled person […] could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded as relevant”. This removes another evidentiary obligation from an opponent and broadens the prior art base substantially.

2. US utility requirement

An express utility requirement was inserted to align with the US position such that “a specific, substantial and credible use for the invention (so far as claimed) is disclosed in the complete specification”. This is in addition to the pre-existing requirement for the invention itself to be useful.

3. UK/European enablement and support requirements

The disclosure requirement for complete applications has been amended to conform substantially to the corresponding UK provision, such that the complete specification must “disclose the invention in a manner which is clear enough and complete enough for an invention to be performed by a person skilled in the relevant art”.

Further, the ‘old test’ for fair basis has been replaced with a requirement based on UK/European law that that the claims are “supported by” the description. The ‘old test’ for fair basis was essentially limited to a textual comparison between the claims and the body of the specification or priority document that did not involve any inquiry into ‘technical contribution to the art’.

4. Tighter restrictions on amendments

While not a ground for invalidity, patent applicants are not allowed to add matter that goes beyond the disclosure contained in the specification at its filing date, except to correct a clerical error or obvious mistake.

Strict time-frames for evidence

In the past, patent opposition proceedings in Australia often became protracted due to generous provisions relating to extensions of time for lodging evidence. This is no longer the case.

Evidentiary time periods are still extendable, but the regulations relating to extensions of time for evidentiary periods are now reasonably onerous and strictly applied by IP Australia. Unless a party can show that they acted promptly and diligently and made all reasonable efforts to file the evidence in time, an extension will not be granted.

The procedure from filing the Notice of Opposition to the issuance of a written decision on validity can now be completed within about 18 months, although extensions of time (where allowed), amendments and procedural disputes can extend this time-frame.

Use all available options

It is currently still possible to file new applications for innovation patents in Australia, until 25 August 2021. Even after that date, it will still be possible to file applications for innovations which are divisionals of existing applications filed before that date.  As a result, if your invention is of significant commercial value and is likely to be commercialised in the short to medium term, an 8-year term innovation patent may still be a useful option.

How we can help

Facing a pre-grant opposition in Australian is often a new experience for many patent owners, and opponents also.  Opposition practice is a specialised area of Australian patent law, particularly with regard to areas such as preparation of expert evidence, hearing preparation, dealing with procedural aspects such as amendment requests and extensions, and extending into commercial aspects such as settlement negotiations and licensing.

Griffith Hack’s experts have extensive experience in handling Australian patent oppositions. Our combined patent attorney and legal team provides integrated scientific and legal expertise, together with strategic, commercially-relevant insight, and has a proven track record in delivering results.

To discuss patent oppositions further with a member of our team, click on their profiles below. 

The Full Court of the Federal Court of Australia has now confirmed that a non-invasive diagnostic test for prenatal conditions is patentable subject matter in Australia.

The decision in Ariosa Diagnostics, Inc v Sequenom, Inc [2021] FCAFC 101 contains useful guidance for industry and is significant in that it diverges from the result before the US Court of Appeals for the Federal Circuit (the US Supreme Court declined to hear an appeal) where the majority found the counterpart US patent to be ineligible for patent protection.

Background

Sequenom surprisingly found cell free foetal DNA (cffDNA) in the blood plasma and serum of pregnant women. This discovery allowed: (a) genomic testing of a foetus without invasive testing such as inserting a needle through a mother’s abdomen or cervix (which increases the risk of miscarriage); and (b) more reliable quantitative or qualitative diagnostic testing of a foetus (improving existing methods that may give significant false positive or negative rates). On the basis of this discovery, Sequenom obtained grant of Australian Patent No. 727919 (the Patent) with claim 1 in the following terms:

“A detection method performed on a maternal serum or plasma sample from a pregnant female, which method comprises detecting the presence of a nucleic acid of foetal origin in the sample.”

Ariosa conducts a non-invasive prenatal test that analyses cell free DNA in plasma of pregnant women, to estimate the risks of foetus genetic disorders (Harmony Test). Ariosa licensed Sonic Health Ltd and Clinical Laboratories Pty Ltd to conduct the Harmony Test in Australia. Sequenom claimed this infringed it’s Patent. Arisoa cross-claimed that Sequenom’s Patent was invalid on various grounds.

Manner of Manufacture (the Australian term for “patentable subject matter”)

As part of its challenge to the validity of the Patent on the ground of lack of patentable subject matter, Ariosa submitted that:

  1. Each claim of the Patent involves the detection of what is naturally occurring; being a mere discovery of a law of nature.
  2. The leading authority of the High Court of Australia, D’Arcy v Myriad Genetics Inc [2015] HCA 35 (Myriad), required the Full Court to look at the “end result” of each claim to see if there was an artificial effect and that the end result of each claim of Sequenom’s Patent was mere information.
  3. No claim in Sequenom’s Patent was for a new method of detection (e.g. the ccfDNA was detected and extracted using well known methods) or a new method of applying the detection of ccfDNA in maternal plasma or serum (e.g. methods to analyse the ccfDNA such as genetic disorder markers, PCR, gel electrophoresis and fluorescent labelling techniques were well known).

The only new subject matter was that ccfDNA is detectable in maternal serum or plasma samples – maternal plasma was routinely thrown away by investigators researching non-invasive prenatal diagnosis.  Arisoa submitted that “detection” of the ccfDNA is no different from the discovery that cffDNA is detectable.

The tension between mere discovery vs. invention

The Full Court referred to previous judicial considerations about the difficulties finding the line between discovery and invention. The Full Court distilled three points of emphasis from the relevant authorities (at [114]) which can be summarised as follows:

First, the distinction between mere discovery and an invention lies in its practical application to a useful end.

Second, it is important that the invention is considered as a unitary concept, and not segregated into parts. The invention may still be patentable if the combined effect of an idea and its application in a well-known way is patentable subject matter.

Third, a patentable invention can be an abstract idea put to a useful end (even if the way of putting it to that useful end is obvious or well known).

Distinguishing Myriad

In Myriad, the High Court of Australia held that naturally-occurring DNA sequences, even when extracted from the native cell nucleus and isolated by human involvement, cannot be validly made the subject of patent protection in Australia (see our analysis here). In this decision, the Full Court considered that Myriad could be distinguished on the basis that the disputed patent claims in that case were directed to a product (the isolated BRCA1 gene sequences).    

The Full Court cited Gordon J’s comments in Myriad (at [136]):

“In my opinion, invention may lie in the idea, and it may lie in the way in which it is carried out, and it may lie in the combination of the two; but if there is invention in the idea plus the way of carrying it out, then it is good subject-matter for Letters Patent.”

Gordon J’s reasoning in Myriad distinguished the invalidity of claims to the isolated BRACA1 sequence themselves, and the validity of claims (such as claim 4 of the patent in Myriad) directed to a method of using specific mutations or polymorphisms to suggest a predisposition to breast cancer and ovarian cancer. In Myriad, it was not disputed that if the BRCA1 gene was isolated and found to have specified mutations which indicated malignancies, then that was patentable subject matter.

Claim 1 in Sequenom’s Patent was directed to a method involving the application of a means for identifying and discerning between maternal and foetal nucleic acid. Not unlike claim 4 in Myriad, Seqeunom’s Patent claimed a process used to convey some useful information, the Full Court holding (at [159]):

“Here, the invention as claimed carries into effect an idea that the presence of information within the naturally occurring code of a person will be useful. By a process of detection that information is yielded up. The claim construed as a whole necessarily involves an artificially created state of affairs yielding an outcome that is of economic utility.”

The correct identification of the invention

Ultimately the Full Court considered that (at [153]):

“[The invention] lies not in the mere observation that cffDNA is to be found in maternal plasma (or serum), but in the explanation as to how that knowledge may be unlocked for others to use it (that is, the explanation of how to extract the cffDNA from the plasma or serum). It is the idea coupled with a practical means of application that makes the invention.”

The invention was not, as Arisoa sought to characterise it, the mere observation of cffDNA in maternal plasma or serum. The invention ‘unlocked’ that knowledge for others to use; it was a new means by which foetal DNA may be detected, other than by dangerous invasive techniques, or using methods with poor diagnostic capability.

Infringement

Before Ariosa’s Australian licensees, Sonic and Clinical Laboratories, started conducting the Harmony Test in Australia, they would collect blood samples from pregnant women in Australia, and send them to Ariosa in the United States. Ariosa them conducted the Harmony Test and sent written test result reports back to Sonic/Clinical in Australia.

A question for the Full Court was whether this ‘send out’ model infringed Sequenom’s exclusive rights to ‘exploit’ the invention claimed in the Patent. Were the test results mere information, or a ‘product’ within the definition of ‘exploit’? The invention in Sequenom’s Patent was a ‘method’ or ‘process’, and ‘exploit’ for the purposes of the Act includes ‘doing any act […] in respect of a product resulting from [using the method or process]’. The Full Court rejected the primary judge’s characterisation that the reports were ‘products resulting from such use’ captured by the meaning of ‘exploit’.   

It was not necessary for a method or process to result in a product, provided it can be commercially exploited (at [266] and [269]):  

“In our view, a construction of the word “product” in the context of the definition of “exploit” which recognises that not all methods or processes will led [sic] to a product resulting from their use is to be preferred.”

“The fact that such information is derived from a patentable process or method cannot render the information itself patentable.”

So Sonic and Clinical did not infringe Seqeunom’s Patent by sending specimens to Ariosa in the United States for the purposes of the undertaking the Harmony Test in that jurisdiction. Sonic and Clinical did, however, infringe Seqeunom’s Patent when they undertook the Harmony Test in Australia.

Take Aways

Key take aways from this decision include:

  1. Diagnostic methods remain patent-eligible in Australia and this decision highlights the distinction between the treatment of method and product patent claims in Australia.
  2. ‘Discoveries’ of nature may be patentable in Australia, if the patent claims a process or method that uses that discovery in some new and commercially valuable way (even if the techniques involved are not themselves new or non-obvious). In other words, the combination of an ‘unknown idea’ and ‘known practical application of the idea’ can be patentable.
  3. Where an Australian patent claims a diagnostic method, it is possible that third parties could subject test samples taken from Australian patients to the patented diagnostic method in jurisdictions where there is no patent protection, and then deliver the results to Australian patients without infringing the Australian patent.

 It is still possible for Ariosa or even Sequenom to make an application for special leave to appeal the Full Court’s decision to the High Court of Australia. We will keep you updated of any further important developments. If you have any questions about how this case relates to your patent strategy for Australia, please get in touch. 

Freedom Foods Pty Ltd v Blue Diamond Growers offers important lessons and guidance for all drafters of IP licence agreements.

On 28 May 2021, the Full Federal Court of Appeal in Freedom Foods Pty Ltd v Blue Diamond Growers [2021] FCAFC 86 (Freedom Foods v Blue Diamond) delivered instructive reasons why an intellectual property licence agreement was not a franchise agreement. The decision contains useful guidance for practitioners, in-house counsel, and organisations who licence IP assets and seek to ensure IP licence agreements are not unintentionally made subject to the substantial obligations under the Franchising Code of Conduct

Background

Californian company Blue Diamond Growers (Blue Diamond) licensed Australian company Freedom Foods Pty Ltd (Freedom Foods) to manufacture and sell almond milk products under certain trade marks (Licence Agreement). A dispute arose and Blue Diamond sought to rely upon a clause in the Licence Agreement requiring arbitration of the dispute in California. Freedom Foods sought to avoid that clause on the basis that the Licence Agreement was a franchise agreement and regulated by the Franchising Code of Conduct (Code). The Code provides that a clause requiring a party to bring proceedings in any jurisdiction outside Australia “is of no effect”.

What are key implications for licensors if the Code applies?

If the Code applies, it imposes costs and administrative burdens on licensors as it is designed to protect franchisees.

For example, in addition to jurisdictional limitations, the Code sets out several obligations on licensors, including to:

  • prepare an extensive disclosure document in a prescribed form containing among other things financial and business experience information, and mandatory prescribed wording (such as warnings and cooling off notices);
  • provide information about arrangements that apply on termination of the agreement;
  • ensure dispute resolution and termination procedures align with those set out in the Code;
  • act towards the franchisee with “good faith“.

Licensors who do not comply with the Code, including inadvertently because they did not intend the licence agreement to be a franchise agreement, may be fined up to $AUD66,600.1

Why was Blue Diamond’s Licence Agreement not a franchise agreement?

The Court determined that the most distinctive feature of the definition of franchise agreement in the Code was paragraph (b) of the definition being “the grant by the agreement of a right to carry on business under a system or marketing plan that comes from the licensor” (Element B).

In line with earlier authorities, the Court found that:2

  1. Element B should be broken into three sub-elements that work together and must be met being:
    i.  the grant of the right to carry on the specified business; 
    ii. the business to be carried on under a system or marketing plan; and 
    iii. the system or marketing plan to be substantially determined, controlled or suggested by the alleged franchisor;
  2. ”substantially controlled” means the power to direct or restrain the content of the business plan on any substantial issue;
  3. the agreement can relate to a discrete part of the franchisee’s business (rather than the franchisee’s entire business);
  4. a system or marketing plan is a ”co-ordinated method or procedure, or scheme whereby goods or services are sold” or “a method of operation under which a business is to be conducted”.

The Court held:

““the three cumulative elements of [Element B] describe a distinctive aspect of a franchise agreement, namely that instead of the ongoing conduct of the business being dependent on the business acumen and skill of the grantee as the operator of the business, the system or plan for the business is substantially a matter for the grantor. ….. the grantor has the business concept and confers on the grantee the right to carry on the grantor’s business concept under the trade mark, advertising or commercial symbol of the grantor for a fee. …  [Element B] is not concerned with agreements made by a grantor with a grantee where, after the making of the agreement, the manner of the future operation of the business of the grantee is to be determined by the grantee.”

The following features of the Licence Agreement (among others) were relevant to the Court’s finding that it was not a franchise agreement:

  • the recitals indicated that Freedom Foods would continue its own business as a manufacturer and distributor of products and did not indicate Freedom Foods would be granted a right to carry on a business in a particular manner;
  • marketing plans would be developed and implemented by Blue Diamond (including by spending 5% of product sales on such activities), but reviewed by Freedom Foods. The marketing plans were not “directed to the manner in which Freedom Foods” would sell or distribute products;
  • Freedom Foods were responsible for the development and implementation of trade promotion and account specific promotional plans (with Freedom Foods to expend 5% of product sales on such activities). Blue Diamond was permitted to meet with Freedom Foods about these plans. The Court considered that these plans were to affect product sales. Distinct from the marketing plans, the promotional plans were about business activities that Freedom Foods were licensed to undertake. Blue Diamond had no mechanism of control over such promotional plans, even if they could meet with Freedom Foods about them;
  • Blue Diamond’s right to change packaging and product formulations was to protect Blue Diamond’s IP and ongoing business interest.

This meant the Court did not restrain Blue Diamond from proceeding with arbitration in California.

Five key lessons from Blue Diamond v Freedom Foods

Blue Diamond v Freedom Foods serves as a warning to drafters of IP licence agreements (that the parties do not intend are franchise agreements) that licensors should not (and should not be given rights to):

  1. direct or suggest a marketing plan or scheme for how the licensee may advertise, sell, or promote its business or the sale of products and services comprising that business;
  2. control manufacturing or distribution of products in such a way that could permit control of the licensee’s business operations and methods. However, the licensor can enforce specifications about how the products are made or packaged, provided it’s necessary to protect the licensor’s business interests in connection with the activities the licensee is permitted to undertake;
  3. require a licensee to develop its promotional and marketing systems within a system or marketing plan that is created by the licensor;
  4. control the strategy for promotional materials. However, the licensor can have rights to approve packaging or promotional materials in respect of matters that affect the reputation of the licensor (e.g. how the licensor’s trade mark is presented); or
  5. compel the licensee to do certain things that appear to give the licensor control over the licensee’s business operations. However, the licensor can have some controls over non-operational aspects to protect the licensor’s reputation or the value of the intellectual property being licensed.

The line between protecting the licensor’s reputation and intellectual property by placing obligations on the licensee to do certain things, and controlling how the licensee conducts its business, can be difficult to find.

Drafters should be mindful of this line and the other issues above, to mitigate the risk their licence agreement attracts costs, administrative burdens and potential fines under the Code.


  


Footnotes

1 The Australian Government has recently introduced laws to double these penalties and increase obligations on franchisors as of 1 July 2021.

2Rafferty v Madgwicks [2012] FCAFC 37; (2012) 203 FCR 1; Workplace Safety Australia Pty Ltd v Simple OHS Solutions Pty Ltd [2015] NSWCA 84; (2015) 89 NSWLR 594.

There have been several significant developments internationally in trade secret protections over recent years. This rise in prominence is potentially explained by many factors, including increased employee mobility and improvements in document storage technology that have arguably increased the risks of misappropriation of trade secrets.

Another contributing factor is ongoing uncertainty around the ability to protect computer-implemented technology with patents making the trade secret alternative more appealing than it has been in the past.

USA

Back in 2016, we reported President Obama signing the Defend Trade Secrets Act (DTSA) into law on 11 May 2016. The DTSA provides a federal private right of action for trade secret protection creating a uniform standard for trade secret misappropriation. Existing US state laws on trade secrets are nonetheless still in place.

As a result, trade secret case filings increased 30% between 2015 and 2017, and remained steady at that increased level between 2017 and 2019 (Lex Machina 2020 Trade Secret Litigation Report).

More recently, district courts have held that liability under the DTSA can extend to extraterritorial defendants if an act in furtherance of the misappropriation of the trade secret(s) occurred in the USA. This may mean more protection is available under the DTSA than in alternative jurisdictions as long as there is some nexus to the USA. 

European Union

About two weeks after the DTSA became law in the US, the European Council approved Directive 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. Member States of the European Union had until 9 June 2018 to implement the Directive into national law.

The Directive is a minimal harmonising legislation, which means that Member States are permitted to provide for a higher level of protection for trade secrets, so long as at least the same level of protection and minimum standards for measures, procedures and remedies are ensured for trade secret holders.

Notwithstanding Brexit, the Directive was implemented into UK law on 9 June 2018. Prior to this, trade secrets in the UK were protected by the law of confidence derived from principles of equity (as is the case in Australia). Now the two systems operate in parallel.

China

The Anti-Unfair Competition Law of the People’s Republic of China was revised with effect from January 2018 and again in April 2019.

Under the revised law a trade secret is defined as “technical information, business operation information, and other commercial information that are not known to the public and have commercial value”, whereas prior to 2018 the definition required “economic benefits and practical value”. A third party with actual or constructive knowledge of the theft of a trade secret can now also violate the law.

The penalty for violation now ranges up to RMB 5 million (approx. AU$1 million), compared to the previous limit of RMB 0.2 million (approx. AU$40,000). Also, punitive damages are available which can be one to five times the actual loss or illegal gains.

Where to for Australia?

Although the topic was essentially overlooked in The Productivity Commission report into Australia’s Intellectual Property Arrangements in 2016, it was apparent from the report that use of secrecy or confidentiality arrangements was significant in Australian innovation-active businesses relative to more formal IP rights.

While there is currently no trade secrets legislation in Australia, there is an established cause of action for breach of confidence, which includes trade secrets, similar to that in the United Kingdom. Codification of trade secret protection in Australia could potentially streamline enforcement procedures, further legitimize what is sometimes seen as an ‘informal’ IP right and would, at least, make us consistent with many of our major trading partners. However, it seems unlikely that there will be any legislative push for codification in the medium term in the absence of some external factor, such as, for example, as part of a free trade agreement.

Getting on the front foot

In any event, the enforceability of any rights in relation to a trade secret will almost always depend on how well it has been documented and protected. A documented inventory of trade secrets, along with standard protective measures which might include access control, confidentiality agreements and/or document labelling, will help prepare your business to enforce its rights if it becomes necessary. A systematic approach to these issues can also create a culture of careful management of sensitive information in your business, and hopefully prevent any future need for enforcement.

Prior to COVID-19, Australia enjoyed an enviable economic record; outperforming much of the world and avoiding recession for 29 years. 

With two quarters of consecutive GDP contraction due to coronavirus-related shutdowns, Australia is now poised to face economic challenges not experienced since 1991. The Australian federal government’s 2020-21 budget incorporates an additional $2 billion ($1.42 billion)for additional R&D incentives, in the hope that homegrown will help on the road to fiscal recovery. 

Pharmaceutical spending down under

Australia’s universal healthcare system comes at a high economic cost. Managing the national purse while providing access to new therapeutics remains a challenge. The Government performs this balancing act via the Pharmaceutical Benefits Scheme (PBS). 

The PBS is a barrier to market entry

Similar to the United States’ Food and Drug Administration (FDA), the Therapeutic Goods Administration (TGA) is Australia’s regulatory authority for therapeutic goods, including prescription pharmaceuticals. Obtaining TGA approval to market and supply pharmaceuticals is a necessary hurdle for therapeutic products new to Australia.

However, acquiring TGA approval is not always enough for many pharmaceuticals to crack the market. The government subsidises pharmaceutical costs so that vital medicines are available and affordable for patients. Typically, at least one treatment for most diseases or conditions is subsidised. Since the retail cost of pharmaceuticals can be prohibitive for some patients, if the first choice of medication is not listed on the PBS, a treating physician usually prescribes an alternative that is subsidised by the PBS. Consequently, securing a PBS listing is considered a major regulatory barrier to market entry.

Some are in, and some are out

Medicines listed on the PBS are often pharmacy-dispensed prescription medication; although some supervised administration medicines (including chemotherapy drugs for hospital use only) are also subsidised. Not all prescription medications are listed on the PBS.

The Pharmaceutical Benefits Advisory Committee (PBAC), an independent expert panel whose members include health professionals and economists, recommends medicines for listing on the PBS. In its assessment of submitted therapeutics, the PBAC considers the condition for treatment, clinical effectiveness, safety and cost-effectiveness compared with other treatments. Most medicines that receive a positive PBAC recommendation are listed on the PBS. However, this can be influenced by the state of the economy, and sometimes political pressure.

Following a PBAC green light 

A recommendation from the PBAC is only the first step in achieving a PBS listing. Once recommended, financial negotiations are undertaken with the government to determine the size of subsidy, which dictates the price at which the therapeutic can be supplied to patients. The current Liberal government claims it is committed to listing all PBAC recommended medicines, appearing progressive than the former Labor government.

In February 2011, Labor’s health minister promoted the new PBS listings at the time in a press release, but deferred listing several other medicines for which existing treatments were already available on the PBS for reconsideration when circumstances permit. 

The only instance where the government previously did not accept the PBAC’s recommendation was in respect of the attempt to list Viagra, due to cost concerns. This decision prompted a slight reform to the PBS listing process, in which drugs expected to cost more than $10 million a year in the first five years, also require Cabinet approval prior to listing.

Good news for pharmaceutical originators 

Australian patent law has one of the more liberal approaches to the patenting of therapeutics in the world. While support for the breadth of claims must be strong, products can be claimed in a variety of forms. Examples include enantiomers, salts or polymorphs, in different morphologies, formulations and compositions; and as methods of treatment, in Swiss-style claims, as second and further medical indications, and even in the form of treatment regimes.

Since taking power in 2013, today’s government has approved more than 2,450 new or amended listings on the PBS at a published spend of $11.8 billion. Their promise to list all PBAC recommended therapeutics, and indeed actions to date which support this claim, are good news for pharmaceutical innovators.

The reasonable expectation that products will reach consumers through PBS listing (including those that are improved over existing treatments, are for second and further medical indications as well as for breakthrough treatments) gives some certainty that Australia is an attractive market to enter. 

With improved market access through the PBS, in addition to a ruling government that appears to be listening to both industry and consumer advice, now is a good time to be a patentee in Australia, with exclusive rights to supply therapeutics.

Recent PBS announcements 

In the 2020 federal budget the ovarian cancer drug Lyn-parza® was announced for inclusion on the PBS. Rather than costing a patient over $140,000 for a course of the drug, it will be available for about $40 a month, or less than $10 for those with an eligible concession. As well as Lynparza®, new and amended PBS listings in this budget include medicines for liver cancer, Parkinson’s disease, eye conditions and high cholesterol at an expected cost of $376 million.

The expanded listing on the PBS of Tecentriq® and Avastin® (atezolizumab and bevacizumab) for combination use in the treatment of advanced unresectable hepatocellular carcinoma is projected to cost over $230 million and is expected to benefit more than 500 patients a year. This is the most common form of liver cancer in Australia and currently has a low survival rate.

Other recent PBS updates include expanded listings for Eylea® (aflibercept) and Apomine® (apomorphine). The anti-VEGF agent Eylea® is now subsidised for patients affected by subfoveal choroidal neovascularisation due to pathologic myopia (mCNV), where previously it was listed only for other ocular conditions, including diabetic macular oedema. The listing for Apomine® was exclusively for the treatment of Parkinson’s disease but is now approved for maintenance therapy through community pharmacies without restriction to hospital treatment. 

The PBS also includes a price disclosure policy, applicable to medicines that are not exclusive and are therefore subject to competition. The policy aims to ensure the price at which the government subsidises multiple-brand medicines reflects the prices charged in the market. As announced in the budget, two high cholesterol medications, ezetimibe and rosuvastatin, will be cheaper under this policy. Around 300,000 Australians buy subsidised rosuvastatin, which will now be $2 less per prescription.

R&D Spending 

RDTI; what and why?

Australia’s Research and Development Tax Incentive (RDTI) is designed to encourage R&D spending in Australia by local and international entities. It provides tax offsets for R&D activities undertaken in Australia by companies liable for Australian income tax, which conduct at least one “defined core R&D activity” that incurs the minimum eligible R&D expenditure. The RDTI provides cash refunds up to 43.5% of spending on eligible R&D activities. Alternatively, entities with an annual turnover more than $20 million may be eligible for a non-refundable tax offset.

The scheme is one reason why Australia has historically been considered an attractive location to conduct clinical trials. When considered in addition to other favourable market characteristics, the opportunity to secure cash refunds for R&D spending makes Australia very competitive for conducting world-class clinical trials. Recently, the (mostly) effective domestic control of COVID-19 has further positioned Australia as an at-tractive choice.

Proposed RDTI changes 

The federal treasurer used the recent budget announcement to reveal that intended changes to the RDTI would not proceed. In September, legislation had been considered by Parliament which would cut $1.8 billion from the scheme. 

The changes were pitched at improving R&D in Australia but were seen by industry as a cost-cutting exercise. One of the most criticised changes was the introduction of a $4 million cap on the amount smaller companies could receive in refunded tax offsets. Also earmarked for introduction was a complex “intensity measure” for larger companies.

The role of R&D in strengthening the economy appears to have been given greater consideration as evidenced by the government’s decision to limit drastic changes proposed to the RDTI. The scheme can greatly assist patentees seeking to bring new drugs to market through the ability to subsidise not just classic R&D spending, but also Australian clinical trials.

Confirmed RDTI changes

Many of the proposed RDTI changes have now been rolled back. The legislation implementing these changes has already passed Parliament, just days after the budget announcement. 

Pleasingly, the $4 million cap has been scrapped. The tax offset rate applicable for refunds available to smaller companies has also been increased. In other good news, the formerly proposed increase in the annual cap in R&D expenditure from $100 million to $150 million has been retained.

However, despite profound concern voiced by some sectors, the “intensity measure” remains, albeit in a simplified two-tier form. The size of tax offsets available to companies with an annual turnover of over $20 million will now be determined by a comparison between their R&D spend and total expenses. 

Modern Manufacturing Strategy

Critics of changes to the RDTI believe the new measures will damage local manufacturing. However, the budget incorporates a $1.3 billion Modern Manufacturing Strategy driven in part by logistical frailties exposed by impacts from COVID-19. The strategy aims at improving Australian self sufficiency in targeted industries, including food and beverage manufacturing and medical products. It will include a grant scheme informed by advice from Industry, Innovation and Science Australia and the Commonwealth Scientific and Industrial Research Organisation (CSIRO). 

“Australian patent law has one of the more liberal approaches to the patenting of therapeutics in the world.”

Though details are still sketchy, part of the strategy includes funding to the SME sector to support manufacturers by co-funding capital investments and associated reskilling. The intent is to assist SMEs in modernising and adopting new technologies, including investing in efficient and transformative manufacturing processes. In short, whereas in recent decades, manufacturing capability in Australia has diminished, fuelled by cheaper costs and greater skills particularly in the Asia-Pacific region, this programme aims to place renewed focus on Australian innovation. 

This will hopefully translate to more intellectual property activity – not only in areas such as freedom to operate, but also in the protection of original ideas and new technologies. Where Australian originating patents have been proportionately decreasing at IP Australia over the last period, this strategy may see a trend reversal. An Australian manufacturing capacity increase should also incentivise offshore patentees to reconsider Australia as a patent destination.

Key considerations 

In these uncertain times, it is difficult to know where to invest for good return. Typical spending on infrastructure and services feels far riskier when the usual income sources are no longer guaranteed. The government’s 2020 Budget provides some assurances however, that Australia is committed to assisting and rewarding innovators, especially in the health and medical sectors. COVID-19 has proven to be an unexpected pivot point for the medical, food and beverage manufacturing sec-tors after struggling for years to attract the government’s attention.

The commitment to listing all medications recommended by the PBAC on the PBS, should encourage the pharmaceutical sector and reduce some of the risk associated with bringing new drugs to the Australian market. The rewarding RDTI further incentivises R&D spending in Australia and continues to position the country well as an ideal location to conduct clinical trials.

It is good to see the government’s recognition of the economic rewards available by investing in innovation; not only future-proofing advanced industry sectors, but for critical economic growth in the short term as well. Very few have been untouched by COVID-19; hopefully Australia’s 2020 Budget will help repair at least some of economic damage caused this year and beyond.

* This article first appeared in MIP winter edition 2020. 

Griffith Hack is thrilled to congratulate Brisbane principal and lawyer Kellie Stonier for being recognised as a leading lawyer for the fourth consecutive year in Doyle’s Guide’s Leading Intellectual Property Lawyers for Queensland 2020. 

Kellie has been a senior lawyer at Griffith Hack for more than eight years and has a strong reputation for maintaining, protecting and enforcing clients’ IP rights in Australia and internationally.

She has particular expertise in IP portfolio management and contentious trade mark, copyright and competition and consumer law.

Kellie speaks often on behalf of the Griffith Hack firm, Legal Wise Seminars and hosts a quarterly seminar series sharing her expertise within the CPD law community. 

This recognition adds to an ever-growing tally of accolades and awards, continuing to establish Kellie as an authority within Intellectual Property Law community.

Griffith Hack is delighted to be recognised by Doyle’s Guide 2020 in both firm and individual categories.

Individual recognition 

Following on from the announcement of Kellie Stonier’s inclusion in the Doyles 2020 Leading Intellectual Property Lawyers guide for Queensland, Griffith Hack congratulates Principals Derek Baigent and Andrew Goatcher for their recognition in New South Wales’ and Victoria’s editions respectively.

Derek received a recommendation for his contentious work following another successful year leading Griffith Hack’s law team including wins in Australia’s Federal court. Andrew has been recommended for both contentious and non-contentious work; continuing to utilise his impressive understanding of Intellectual Property Law to the great benefit of his clients.

Kellie, Derek and Andrew were also listed for their Intellectual Property Law expertise in the latest edition of Best Lawyers’. Special coverage with respect to these standings can be found in The Australian Financial Review

Firm recognition 

Further to the individual accolades mentioned above, Griffith Hack is ranked by Doyle’s as a leading contentious and non-contentious Intellectual Property Law firm in both New South Wales and Queensland and a recommendation for our non-contentious work in Victoria.

Practice group director Bronwyn Pott commented, ‘‘These announcements are an exceptional result for not only Kellie, Derek and Andrew but the whole Griffith Hack law team as we continue to see them being recognised in industry rankings and awards. We truly value the work our clients entrust to us and look forward to increasing the size and scope of our offering with the integration of the Watermark team into Griffith Hack in the coming months.’’

Griffith Hack has been recognised in World Trademark Review’s 1000 guide (WTR) for trade mark prosecution and strategy.

WTR 1000 shines a spotlight on the firms and individuals deemed outstanding in the trade mark field. It remains the only standalone publication to recommend individual practitioners and their firms exclusively in the trademark field, and identifies the leading players in over 80 key jurisdictions globally. This years’ edition notes:

“A repository of expertise and professionalism, Griffith Hack understands the client’s business and advises appropriately when it grows.” Lately it has seen an uptick in opposition work particularly for domestic clients, while its online IP management platform – Amplia – has been undergoing a revamp. Adding a layer of sophistication to New Zealand filings, two senior associates – formerly trademark examiners at the IP Office of New Zealand – now call Griffith Hack home. One of them is Shannon Fati – propelled into the WTR 1000 rankings by glowing customer feedback. “The attention and care that I get from Fati shows that she is constantly looking out for my business. Her advice is not just timely, but honest, fair and respectful.”

In addition to Shannon, the 2020 guide highlights the achievements of other leading Griffith Hack personnel.

In the Trade Mark Prosecution and Strategy category, principals Anne Makrigiorgos and Nicola Scheepers are acknowledged. While for Enforcement and litigation, principal Kellie Stonier is also recognised, described by the guide as an “intelligent litigator”.

Griffith Hack is thrilled to formally announce the elevation of two high-performing team members to the position of Principal (effective as of 1 January, 2020). Lawyer Gavin Adkins and Patent Attorney Robyn Heard have been key contributors in Griffith Hack’s Melbourne and Sydney offices (respectively); Gavin joining Griffith Hack as an Associate in 2015 and Robyn as a trainee in 2003.

Executive General Manager David Madigan said the decision was an important signal for the Griffith Hack’s future. 

“Gavin and Robyn’s addition to our leadership group reinforces the firms’ commitment to delivering exceptional client service and top-tier technical expertise. It also demonstrates the genuine opportunities available to those with the skills required to meet our clients’ current and future needs. I congratulate both Gavin and Robyn on this milestone achievement”.

Robyn Heard – Patent Attorney

Robyn has specialist knowledge and experience in the patenting of technologies for Universities, and companies from start-ups and small to medium entities and large corporations in the areas of IT, software and computer system based inventions, telecommunications, electronics, data analytics, e-health and medical devices.

“While working as an engineer I met a patent attorney and thought ‘that sounds like a really interesting job’.  A few years later, at a career crossroads, I decided to take a chance and go for that interesting job. I was hired by Griffith Hack as a trainee, and learned just how interesting and challenging being a patent attorney can be – balancing IP law with commercial strategies for various technologies. It is an honour to now step up beside the attorneys who trained and mentored me over the years, to lead our Sydney Electrical & IT patent team”

Gavin Adkins – Lawyer

Gavin is most passionate about IP litigation and disputes, but also has prior experience as a patent attorney. In previous roles and during his time at Griffith Hack, Gavin has assisted clients with litigation raising issues in patents, designs, trade marks, the Australian Consumer Law, contractual disputes, domain names and copyright infringement. Gavin was recognised in Managing Intellectual Property’s IP Rising Stars list for 2018 and 2019.

“When I finished my law degree I got on a plane to Japan to work at a patent attorney firm. I didn’t even know what a patent was when I accepted the job. 13 and a half years later, I am incredibly humbled to be appointed a Principal of Griffith Hack. It’s a pleasure to work with great colleagues on interesting and challenging IP disputes for our clients”.

The recently released Legal 500 Asia Pacific Guide for 2020 reconfirms Griffith Hack’s position as Australia’s highest ranked specialist IP firm.

In addition to the overall firm ranking which highlights Griffith Hack’s expertise in contentious IP work and trademark prosecution, National Practice Group Leader Derek Baigent was recognised as a ‘Leading Individual’ within the Intellectual Property practice area.

Derek said that the outcome was indicative of a collaborative effort and that “this kind of recognition is only possible due to the contribution each team member makes’ and the trust that our valued clients place in us”.