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－How effected by decision of Supreme Court of Japan dated April 28, 2011 affirming the original decision of IP High Court which dismissed the trial decision of the JPO?－

Yasuo TAMURA
AOYAMA & PARTNERS

Abstract:
 It is an epoch-making decision to deny the current examination practice of the JPO that a patent term extension is acceptable only based on the first approval as far as the same active ingredient with the same efficacy/effect is concerned, and further that the substance to be subjected to the patent term extension shall be “active ingredient” of the approved drug, but not “approved drug”.

 While it is not specifically mentioned in said decision of Supreme Court whether the substance to be obtained the disposition provided for in Cabinet Order (i.e. the substance to be subjected to patent term extension) shall be “active ingredient” or “approved drug”, it is mentioned in the original decision of IP High Court that the trial decision is wrong in the judgment that “the substance to be obtained the disposition provided for in Cabinet Order” shall be “active ingredient”.

 The main reason to affirm the decision of IP High Court by Supreme Court is that an application for a patent term extension is acceptable even based on a subsequent (second) approval as to the same active ingredient and the same utility (efficacy/effect) as those of the drug in the preceding (first) approval, as far as the drug in the first approval is not inclusive within the scope of any one of claims of the patent of which the application for a patent term extension is filed.  This is entirely contrary to the current examination practice of the JPO.

1. Introduction
 The JPO has maintained the examination guideline for Patent Term Extension for a long period of time (about 24 years) from the beginning of the adoption of the patent term extension system on January 1, 1988, wherein it is stated that the substance to be subjected to the patent term extension (i.e. the substance to be obtained the disposition as provided for in Cabinet Order referred to in Patent Law, Article 67, Item 2) shall be “active ingredient” of the approved drug with “efficacy and effect” thus approved, and the JPO has denied to indicate “approved drug” as the substance to be subjected to the patent term extension, and further, it is limited to the first approval with respect to the same active ingredient and efficacy/effect.    

 Thus, under the current examination practice of the JPO, the substance to be subjected to the patent term extension shall be an active ingredient of the approved drug and the utility shall be the efficacy and effect thus approved under Pharmaceutical Affairs Law, Article 14, Item 1, and further, the patent term extension can be acceptable on the basis of the first approval with respect to the same active ingredient and efficacy/effect, which means that an application for a patent term extension based on the subsequent approval of a drug comprising the same active ingredient and having the same efficacy/effect as those of the previously approved drug is not acceptable, because it is not the first approval as far as the same active ingredient and efficacy/effect are concerned. 

 On the other hand, under Pharmaceutical Affairs Law, Article 14, even in a minor change of the formulation/preparation, an approval of the Ministry of Health, Labour and Welfare (corresponding to FDA in the USA) shall be newly obtained.  The JPO has correctly believed that the practice of the JPO is completely independent from the practice in the Ministry of Health, Labour and Welfare.  The current examination practice of the JPO for the patent term extension has been affirmed by various decisions of Tokyo High Court/I.P. High Court, and hence, it has been considered that the current examination practice of the JPO will be not changed even in future. 

 However, the current examination practice of the JPO was denied by a decision of I.P. High Court, Heisei-20-(Gyo-Ke)-10460, which is now affirmed by the decision of Supreme Court of Japan, Heisei-21-(Gyo-Hi)-326 decided on April 28, 2011.  In said decisions of IP High Court as well as of Supreme Court, it is admitted to file an application for a patent term extension even based on a subsequent approval as to the same active ingredient and the same efficacy/effect, as far as the drug in the previous approval is not inclusive within the scope of any one of claims of the patent of which the application for a patent term extension is filed.      

 Accordingly, it will be necessary to revise the curent exmination guideline of the JPO along with the decision of Supreme Court.  The JPO announced on May 16, 2011 that the Examination Guideline as to Patent Term Extension will be revised by coming Autumn.  Thus, we shall pay attention how to revised the examination guideline.
  
2. Decision of I.P. High Court, Heisei 20-(Gyo-Ke)-10460, decided on May 29, 2010
Appellant: Takeda Chemical Industries, Ltd.
Respondent: Commissioner, Japan Patent Office
Principle Text of Judgment:

 The trial decision of the JPO as to Trial No. 2006-20937 on October 21, 2008 is dismissed, and the costs of appeal procedure shall be borne by the respondent.

Facts and Reasons:  

 (1) Facts:
 The appellant is a patentee of Japanese Patent No. 3,134,187 granted on December 1, 2000, title of invention: sustained release preparation, filing date: March 6, 1997 with priority date: March 7,1996.
 The patentee (appellant) was filed an application for a patent term extension indicating as the substance to be obtained the disposition provided for in Cabinet Order: (a) a tradename of the approved drug “Pacif Capsule 30 mg”, (b) an active ingredient of the drug (general name) “morphine hydrochloride” and as the utility of the drug: analgesic for various cancers accompanied with middle to high pain.
 Since the application for a patent term extension was rejected by the Examiner in Examining Division, the patentee appealed to the Trial Board, JPO, and it was decided to reject the application by the following reasons. 

 The drug to be obtained the disposition “Pacif Capsule 30 mg” comprises as the active ingredient “morphine hydrochloride” with efficacy/effect of analgesic for various cancers accompanied with middle to high pain, and a marketing approval has already been given for a drug comprising the same active ingredient “morphine hydrochloride” with the same efficacy/effect of analgesic for various cancers accompanied with middle to high pain.  Accordingly, it will be not admitted that there is a necessity to obtain the disposition as provided for in the Cabinet Order referred to in Patent Law, Article 67, Item 2 (“disposition provided for in Cabinet Order”) for working the patented invention, and hence, this application shall be rejected under Patent Law, Article 67tris, Item 1, Para. 1. 
 Against the trial decision, the patentee (Takeda) appealed to IP High Court with argument as mentioned below.     

(2)  Argument of the appellant (patentee):
 The appellant pointed that the rejection reasons of the trial decision include the following errors:

(a)  Error in the interpretation of “the substance to be obtained the disposition provided for in Cabinet Order” as defined in Patent Law, Article 68bis:
 In the light of the provision of Patent Law, Article 68bis (effects of the extended patent right), the disposition provided for in Cabinet Order includes an approval of a drug by Minister of Health, Labour and Welfare under Pharmaceutical Affairs Law, Article 14, wherein it is defined that the marketing approval shall be given to the “drug” but not “active ingredient” of the drug.  

 The extended patent right as defined in Patent Law, Article 68bis is effective within the scope of being relieved from prohibition to work by obtaining the marketing approval, and hence, the substance to be obtained the disposition provided for in Cabinet Order shall be the approved drug as defined in Pharmaceutical Affairs Law, Article 14.  
Thus, the trial decision is error in limiting the substance to be obtained the disposition provided for in Cabinet Order to “active ingredient” of the approved drug.

(b)  Error in the interpretation and application of Patent Law, Article 67tris, Item 1, Para. 1: 
 It is mentioned in the trial decision that it will be not admitted that there is a necessity to obtain the disposition provided for in Cabinet Order referred to in Patent Law, Article 67, Item 2 for working the patented invention in view of existing a preceding approval as to a drug of the same active ingredient with the same efficacy/effect.  
 However, the patent term extension system has been adopted for the purpose of recovering the period of time during which the patented invention can not be worked because of necessity of obtaining the marketing approval, and in the instant case, the patented invention could not be worked until the marketing approval was obtained.  It shall also be noted that the drug in the preceding approval is not inclusive in any one of claims 1 to 22 of the present patent and on the other hand, the drug of the present marketing approval is inclusive within the scope of claims 11-14 and 16-22, and hence, in order to work the present patented invention, it was essential to obtain the marketing approval.  Accordingly, it was necessary to obtain the approval for working the present patented invention. Thus, it is error in the interpretation and application of Patent Law, Article 67tris, Item 1, Paragraph 1 by saying that there is no necessity to obtain the marketing approval for working the patented invention in view of existing a preceding approval as to a drug of the same active ingredient with the same efficacy/effect.    

(c)  Error in the interpretation of Patent Law, Article 67tris, Item 1, Para. 1 with reference to the provision of Patent Law, Article 68bis:
 An application for a patent term extension is never examined by referring to the provision of Patent Law, Article 68bis, and hence, the trial decision is also wrong in this point.   

(3)  Refutation of the respondent (Commissioner, JPO):
 With respect to the item (a), the JPO refuted that the marketing approval is required for the purpose of ensuring the effectiveness and safety of the drug under Pharmaceutical Affairs Law, and in view of said purpose, the essential of a drug shall be “active ingredient” with “efficacy and effect” indicated therein, and hence, the subject to be controlled under Pharmaceutical Affairs Law shall also be interpreted to be “active ingredient” and “efficacy and effect” as indicated in the application for the approval.  
 With respect to the item (b), it is refuted that the disposition provided in Cabinet Order shall be done for relieving from prohibition of manufacturing and selling of the product (drug) and the procedure for the first disposition will take a sufficiently long period of time for ensuring the effectiveness and safety of the drug under Pharmaceutical Affairs Law, and in the instance case, the first approval has already been granted with respect to the same “active ingredient” with the same “efficacy and effect”, and hence, it will be not necessary to obtain the present approval for working of the patented invention.  

 With respect to the item (c), it is refuted that there is no reasonable reason that the provision of Patent Law, Article 68bis shall not be taken into consideration for interpretation of the provision of Patent Law, Article 67tris, Item 1, Para. 1, since in order to understand precisely what is meant by “the disposition provided for in Cabinet Order referred to in Patent Law, Article 67, Item 2” which is mentioned in Patent Law, Article 67tris, Item 1, Para. 1, it is necessary to consider the meaning of the substance and utility as defined in Patent Law, Article 68bis. 

(4)  Judgment by IP High Court:
 The trial decision includes errors in the following two points:
“error in dealing with Patent Law, Article 67tris, Item 1, Para. 1” and “error in the interpretation of the scope to be effected by the extended patent right with respect to the preceding approval”.

   (a)  Error in dealing with Patent Law, Article 67tris, Item 1, Para. 1:
 It was decided in the trial decision that the application for a patent term extension shall be rejected under Patent Law, Article 67tris, Item 1, Para. 1 because there would be no necessity of obtaining the “disposition provided for in Cabinet Order” for working the patented invention in view of existing the preceding disposition (approval).  However, this interpretation is wrong in view of the spirit of Patent Law, Article 67tris, Item 1, Para. 1 and the spirit of adopt of patent term extension system. (These are explained in the decision in detail)    

(b)  Error in the interpretation of the scope to be effected by the extended patent right with respect to the preceding approval:
 It is wrongly judged in the trial decision that there was no necessity of obtaining a disposition provided for in Cabinet Order with respect to the substance to be subjected to the patent term extension in question with the presupposition that the effects of the patent right extended by the preceding disposition (approval) will extend to the drug in the present patent term extension comprising the same “active ingredient” and having the same “efficacy/effect (utility)” as those of the drug in the preceding disposition (approval).  This error in the trial decision will be owing to the wrong interpretation of Patent Law, Article 68bis, so that the substance to be obtained the disposition provided for in Cabinet Order shall be “active ingredient”.  
 The substance, to which the effects of the extended patent right as defined in Patent Law, Article 68bis is extended, is the substance to be obtained “the disposition provided for in Cabinet Order”.  The substance is a material defined by the components, doses, structure of the drug approved, and there is no reasonable ground to interpret that the substance shall be “active ingredient” of the approved drug.

3. Decision of Supreme Court of Japan, Heisei-21-(Gyo-Hi)-326
   Decided on April 28, 2011 (Final Appeal against the decision of IP High 
   Court, Heisei-20-(Gyo-Ke)-10460, decided on May 29, 2009)
   Appellant:    Commissioner, Japan Patent Office
   Respondent:  Takeda Chemical Industries, Ltd.

 Supreme Court dismissed the appeal by the appellant and affirmed the decision of the IP High Court to revoke the decision of the Trial Board, JPO by the following reasons. (cf. the attached full translation of Takeda case (decision of Supreme Court of Japan, Heisei-21-(Gyo-Hi)-326)   
 “Even where an approval for manufacturing and selling under the Pharmaceutical Affairs Law, Article 14 has previously been obtained with respect to a drug comprising the same active ingredient and having the same efficacies/effects as those of the drug of which the later marketing approval is obtained, when the previously approved drug is not inclusive within the scope of any of the claims of the patent for which an application for a patent term extension is filed, it can not be said that there is no necessity of obtaining the later disposition in order to work the patented invention.  

 The reason is that the patent term extension system is provided for the purpose of recovering the period of time during which the patented invention can not be worked because of necessity of obtaining the disposition under Patent Law, Article 67, Item 2.  In the instant case, even though the marketing approval has already been obtained with respect to a drug comprising the same active ingredient and having the same efficacies/effects as those of the later approved drug, it can not be said that it would be able to work the patented invention as to the later approved drug, because the previously approved drug is not inclusive within the scope of any one of claims of said patent in the present application for a patent term extension.  Besides, this conclusion shall not be changed by how to interpret the effects of the extended patent right as defined in Patent Law, Article 68bis, where the previous approved drug is not inclusive within the scope of any one of claims of the patent in the present application for a patent term extension.  
 Since the drug in the preceding approval is not inclusive within the scope of any one of claims of the patent in question, it would not be said that the present disposition was not necessary to obtain in order to work the patented invention because of the existence of the preceding disposition.” 
 Thus, it is judged by Supreme Court to affirm the original decision of IP High Court deciding that the trial decision of the JPO is illegal because it can not be denied the necessity of obtaining the later disposition merely by the reason of existing the preceding disposition with respect to the drug comprising the same active ingredient and having the same utility. 

4.  Consideration
 According to the current examination practice of the JPO for an application of a patent term extension, the substance to be subjected to the patent term extension shall be “active ingredient” and the utility shall be “efficacy and effect” as approved and further the marketing approval enjoyable the patent term extension shall be the first approval with respect to the same active ingredient and efficacy/effect, but the requirements will be drastically changed in view of the decision of Supreme Court dated April 28, 2011.  
 The JPO announced on May 16, 2011 that the current examination guideline will be revised due to the decision of Supreme Court before the coming Autumn.  It is not sure whether the substance to be obtained the disposition as provided for in Cabinet Order referred to in Patent Law, Article 67, Paragraph 3 will be limited to “approved drug” (preparation or formulation) (not “active ingredient”), or it will also be acceptable to indicate “active ingredient” and “efficacies・effects” like in the current examination practice in addition to “approved drug”. 

 It is very important whether the substance to be subjected to the patent term extension is limited only to “approved drug” (e.g. formulation/preparation) or is accepted to define optionally either “approved drug” or “active ingredient” because it is much effective to the interpretation of the effects of the extended patent right.  

 When the substance to be subjected to the patent term extension is limited only to “approved drug”, the effects of the patent right thus extended by the application of a patent term extension will extend to the acts of manufacturing and selling of the same drug as approved like generic products, but not to any acts on drugs having other formulations even though the drug comprises the same active ingredient and has the same efficacy and effect.  This will be not suitable for application of a patent term extension as to a compound patent.  With respect to a compound patent, the patentee will wish to obtain a patent term extension defining “active ingredient” as the substance to be subjected to the patent term extension because the effects of the extended patent right will extend to the acts of manufacturing and selling of any type of drugs as far as the same active ingredient and the same utility are concerned.   

 The decision of Supreme Court does not include any specific comments to the issue point on the interpretation of “the substance to be obtained the disposition provided for in Cabinet Order”, that is, whether the substance to be obtained the disposition as provided for the Cabinet Order referred to in Patent Law, Article 67, Paragraph 3 shall be “approved drug” or “active ingredient, but affirmed the decision of the IP High Court merely by the reasons that a patent term extension is admitted when the patented invention in question can not be worked unless a marketing approval is obtained, and that even though a marketing approval has previously been obtained as to a drug comprising the same active ingredient and having the same utility, when the previously approved drug is not inclusive in the technical scope of any one of claims of the patent to be subjected to the patent term extension in question, it would not be said that the present approval was not necessary to obtain in order to work the patented invention because of the existence of the preceding approval.  

 Thus, it seems to us that the decision of Supreme Court does not necessarily restrict to be interpreted so that “the substance to be obtained the disposition provided for in Cabinet Order” shall be the “approved drug” but not “active ingredient”.

  However, we are afraid that it will unlikely be accepted to define “active ingredient” and utility of the approved drug in view of the dispute in the decision of IP High Court.  In the case of appeal to IP High Court, the appellant/patentee has disputed that the substance to be obtained the disposition as provided for the Cabinet Order shall be “approved drug” (e.g. the preparation or formulation), but not “active ingredient” in view of the terminology in the Pharmaceutically Affairs Law, Article 14, wherein it is indicated as “drug”, but not “active ingredient” of the drug.  
 In the decision of IP High Court, the judges have admitted the argument of the appellant and affirmed that the substance to be obtained the disposition shall be “approved drug” but not “active ingredient”.  In the decision of Supreme Court, it is mentioned as “Though the gist of the reasons to decide in the original decision is not acceptable.”  It is unclear what is meant by this sentence, that is, it is unclear whether it is wrong or not the interpretation of the IP High court as “The substance is a material defined by the components, doses, structure of the drug approved, and there is no reasonable ground to interpret that the substance shall be “active ingredient” of the approved drug.”  However, if the interpretation of IP High Court is denied as the interpretation of the substance to be subjected to the patent term extension, that is, it is accepted to indicate the substance to be subjected to the patent term extension to be “active ingredient” instead of “approved drug”, the conclusion in the decision of Supreme Court may become nonsense (inconsistent) because if it is denied to support the reasons in the decision of IP High Court that the substance to be subjected to the patent term extension shall be “approved drug” but it is supported to be “active ingredient”, there is no possibility that the preceding approved drug (the active ingredient) does not infringe the patented invention to be extended since the active ingredient shall be contained in the claim(s) of the patent.

 Even under the current examination practice of the JPO, second or any further subsequent approvals have been accepted as the basis for obtaining a patent term extension as far as the active ingredient and/or the utility (efficacy/effect) are different.  JPO denies second or further approval only when both of the “active ingredient” and “utility  (efficacy/effect)” are the same as those of the drug of first approval.  Thus, it is interesting to know how the examination guideline will be revised, whether it is limited to indicate “approved drug” as the substance to be subjected to the patent term extension, whether it is acceptable to select optionally either “approved drug” or “active ingredient” depending on the case even in second or any subsequent approval as to the same active ingredient and the same utility (efficacy/effect), unless the preceding drug (formulation, etc.) does not infringe any claim of the patent as to the later approval.  

   Any how, an attention shall be paid to the possible revision of the examination guideline of the JPO with respect to the procedure for a patent term extension.         
In May 2011.