ACCC to deny
authorisation for
pharmaceutical patent settlement
Repeal of this section came into
effect on 13 September 2019,
with the result that from that
date, competition law applies to
intellectual property rights (and
licences) in the same way that it
applies to other conduct. To date,
there have been very few examples
where the Australian Competition
and Consumer Commission (ACCC)
has been asked to provide an
authorisation of an IP licence.

Recently, the ACCC released a
draft determination in respect of
an application for authorisation of
an intellectual property settlement
and licence agreement lodged
by Juno Pharmaceuticals Pty
Ltd (Juno) and Natco Pharma
Ltd (Natco), on one hand, and
Celgene Corporation and Celgene
Pty Ltd (Celgene) on the other.

The application for authorisation
arose from the proposed settlement
of patent litigation between the
parties in relation to a number of
patents owned by Celgene that
cover Revlimid® (lenalidomide)
and Pomalyst® (pomalidomide).

On 9 November 2020, Juno/Natco
commenced proceedings against
Celgene seeking revocation of
the relevant patents. The parties
proposed a settlement of the
proceedings, which included
entering into a licence agreement
under which Celgene would
grant licences to Juno/Natco to
supply generic versions of the
patented pharmaceuticals from
a specified launch date that
obviously predated expiry of the
patents. In turn, Juno/Natco agreed
not to contest the validity of the
patents or launch their generic
products before that agreed date.

Historically, licence terms for
intellectual property have contained
clauses of this type and the parties
in this case may have expected
the ACCC to approve their request.

This would likely have been on
the basis that because a patent
rights holder has power to stop
all competitors from entering the
market prior to expiry of the patent,
any licence allowing exploitation of
the patent before expiry could be
seen as increasing competition.

Historically, licence
terms for intellectual
property have
contained clauses
of this type and the
parties in this case
may have expected
the ACCC to approve
their request.

In applying the authorisation test,
the ACCC compares the likely
future both with and without the
proposed conduct that is the
subject of the authorisation.

In the present case, the parties
submitted that the licence provided
clear and substantial benefits,
in that without the licence, entry
of generic versions of lenalidomide
and pomalidomide by Juno/Natco
would be delayed. Unfortunately,
whilst this may have been true,
the ACCC placed weight on the
effect of the licence on the potential
activities of other competitors. In
particular, the ACCC appeared to
give great weight to the impact of
the licence giving Juno/Natco “ first
mover” advantage, which was seen
as a potential deterrent to other
companies seeking to launch a
generic version of the drugs. Thus,
the licence was seen as replacing
competitive tension among current
or future generic manufacturers who
may be looking to enter the market.

Under the Competition and
Consumer Act, the ACCC has
6 months from the date of receipt of
a request for authorisation to provide
a final determination or the act will
be authorised. In the present case
the deadline for authorisation was
2 June 2022 however the act allows
for the deadline to be extended with
the consent of the applicant. In the
present case consent was granted,
and the ACCC now has until 29 July
2022 to consider the request and
the further material submitted by
the parties following the initial draft
determination discussed above.

Inspire July 2022
Historically, licences in relation to
intellectual property rights in Australia were
shielded from the full force of competition law
due to a limited exemption contained in s 51(3)
of the Competition and Consumer Act 2010.

3 Dr Neil Ireland | Principal
BSc(Hons) GDipIPLaw LLB(Hons) PhD MRACI
CChem FIPTA
neil.ireland@pof.com.au