Beecham Group Plc
| Jurisdiction | Ireland |
| Judge | Mr. Justice Barron |
| Judgment Date | 08 July 1994 |
| Neutral Citation | 1995 WJSC-HC 209 |
| Court | High Court |
| Date | 08 July 1994 |
| Docket Number | No. 13961P/1990 |
1995 WJSC-HC 209
THE HIGH COURT
Synopsis:
PATENTS
Term
Extension - Patentee - Application - Grounds - Remuneration - Inadequacy - Pharmaceutical drug - Very beneficial invention - Preservation of effect of penicillin family of drugs - Petition granted - Patents Act, 1964, s. 27 - (1990/13961 P - Barron J. - 8/7/94)
|Petition of Beecham Group Plc.|
Citations:
PATENTS ACT 1964 S27
PATENTS ACT 1964 S27(1)
PATENTS ACT 1992
FISONS PHARMACEUTICALS LTD & PATENTS ACT, IN RE 1983 IR 129
This application is made pursuant to the provisions of Section 27 of the Patents Act,1964.Subsection (1) entitles a patentee to bring such an application. For the purpose of this application the relevant provisions of the section are as follows:-
"(5) The Court or the Controller, in making a decision, should have regard to the nature and merits of the invention in relation to the public, to the profits made by the patentee as such, and to all the circumstances of the case.
(6) If it appears to the Court or the Controller that the patentee has been inadequately remunerated by his patent, the Court or the Controller, as the case may be, may by Order extend the term of the patent for a further term not exceeding five years or, in exceptional cases, ten years, or may order the grant of a new patent for such term as may be specified in the Order and containing any restriction, conditions, and provisions the Court or the Controller, as the case may be, may think fit".
The product covered by the patent is clavulanic acid. It is sold under a number of trade names, but mostly as Augmentin. Research which discovered clavulanic acid set out to find a way to restore the effectiveness of Penicillin and similar antibiotics. The bacteria were creating antibodies which made them resistant to these remedies. The purpose of the research was to find a substance to inhibit the creation of these antibodies. The substance found was clavulanic acid. It was found in 1973 and received patent protection as from 8th April, 1975. This patent expired on the 7th April, 1991.
Research continued as to the best way to market clavulanic acid. This resulted in two further patents, one number 47450 which does not expire until October, 1998; and the other number 50047 which does not expire until August 2000. The first of these additional patents relates to the particular salt of clavulanic acid which is used. The latter patent relates to part of the process of manufacture. In the course of the hearing reference was made to these latter patents as in effect giving the Applicant the protection being sought. Whether or not such patents will give a longer practical protection is immaterial. If this application does not succeed, the protection for clavulanic acid will be lost.
The application is opposed by Clonmel Chemicals Company Limited, which is a manufacturer of generic pharmaceutical products. It originally opposed the application upon three grounds: that the invention was not one of more than ordinary utility; that the Applicant has been adequately remunerated; and, if not, the reason for this is the fault of the Applicant. At the hearing, only the question of adequate remuneration was pursued.
In my view the opponents were right to limit their opposition in the manner in which they did. The invention was a particularly beneficial one. In my view it was as beneficial as Penicillin in that effectively it restored the potency of the family of drugs represented by Penicillin. This was also the view expressed by the Managing Director of the opponent company who referred to it in evidence as "a tremendous invention".
Submissions were also made in writing by the Controller. These did not raise any matters not raised by the opponent. The main tenor of the submissions was that if the Court did determine to grant an extension, it should be limited to four years to bring the overall protection in line with that afforded in other countries within the European Union and granted by the Patents Act,1992.
In support of its application that it has received inadequate remuneration for its patent the Applicant has furnished various statistics. It has sought to show that a notional royalty income would not have produced a sufficient remuneration. The notional royalty is assessed as being the royalty which a licensee would have agreed as appropriate for the entire life of the patent upon the basis that the development costs would be borne by the licensee. On this basis it is said that the notional royalty income which would have been attributable to the patentee as such was £[undisclosed] As against this the research and development expenditure and patent costs attributable to the patentee as such were £[undisclosed]. This left the profits of the patentee as such at £[undisclosed] which it is said was inadequate. To arrive at these figures for this jurisdiction the Applicant gave its world-wide figures which were for notional royalty income £[undisclosed] and for research and development expenditure £[undisclosed] giving it a world-wide profit of £[undisclosed] profit. Figures were also produced to show the breakdown of both the notional royalty income and the research and development expenditure. These in turn were adjusted for inflation to give their 1991 values.
These figures for the profits of the patentee as such are in 1991 figures.
In addition to these figures the Applicant has also provided figures showing netty trading results in respect of Irish sales of the ranges of patented products up to the 7th of April, 1991. These figures in historical figures show that there were decreasing losses until 1986 in which year £[undisclosed] was lost followed by increasing profits which started at £[undisclosed] in 1987 and continued upwards to a figure of £[undisclosed] in 1991. These figures were arrived at after deducting the notional royalties attributable to the Applicant as patentee and notional royalties attributable to the additional patents. The purpose of this table of figures was to show that the profits of the Applicant in relation to its manufacturing and sales activities were normal for the industry and that accordingly its figures based upon notional royalties were reasonably accurate. In my view little can be read into these latter figures. The greater the level of sales the greater the profit margins will be. Unless it can be established that the greater volume of sales is solely attributable to the patent protection, it seems to me that all that can be deduced from the figures is that there were increasing sales and therefore increasing profits.
Figures have also been given in respect of notional royalties on actual sales up to October, 1993 and projected notional royalties thereafter up to 7th of April, 1996. These show that the trend of sales was still rising or is thought will be still rising on the 7th of April, 1996, though not by the sort of margin that existed between 1983 and 1991. The effect of these figures would be to increase the profits of the patentee as such up to the end of the patent period of £[undisclosed] to the sum of £[undisclosed] five years later. It seems to me that it is against these figures, to which I have referred, that I have to determine whether or not the remuneration has or has not been adequate.
The notional royalty rate is said to be the royalty which a patentee would negotiate with a licensee upon the basis that the licensee would promote the product in the market place. Such licence would be for the term of the patent and based, inter alia, upon anticipated sales during such period. The Applicant then indicates what return would have been received, if such licence had been in force and the...
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