By Tim Jackson.

The Privy Council in London has given a resounding tick of approval to the New Zealand High Court and Court of Appeal judges in the first New Zealand patent case to reach the Privy Council in many years.

Ancare v Fort Dodge New Zealand Limited and another [2002] UKPC 8

A high-powered committee of five judges sat on the case. The single judgment, given by Lord Hoffmann, describes the judgments of the New Zealand High Court judge (Justice Morris) and the Court of Appeal (judgment given by Justice Gault) as "admirably clear". It endorses their conclusions, in a case which saw Ancare New Zealand Limited lose at every stage.

The case relates to a patent filed in 1991 for a combination drench for treating roundworms and tapeworms in sheep and other animals. At that time, parasitologists knew that roundworms damaged sheep, and that lambs soon develop a natural immunity to tapeworms. The established view was that treating tapeworm was of no economic benefit to farmers. Despite this, farmers had been insisting on treating lambs for tapeworms and wanted a combination drench which treated both roundworms and tapeworms.

Ancare produced a product that combined praziquantel - a tapeworm active - with levamisole - a roundworm active to meet this demand and obtained a New Zealand patent for it.

Initially Novartis and Fort Dodge New Zealand Limited (formerly American Cyanamid NZ Limited) sought to revoke the patent in the High Court on the basis that it was obvious and should never have been granted. Fort Dodge and latterly Nufarm, defended the appeals to the New Zealand Court of Appeal and the Privy Council.

Having conceded that there was nothing inventive in how the formulation was put together and that there was nothing surprising in the effects achieved on the parasites, Ancare then unsuccessfully argued in the Court of Appeal that it was entitled to its patent. Ancare's reason was that it had gone against scientific thinking and made the surprising discovery that there was an economic benefit in treating lambs for tapeworm. It appealed the decision to the Privy Council, where Lord Hoffmann pointed out that Ancare's argument suffered from "insuperable difficulties".

Deficiencies in Ancare's argument
First, there was no trace in the patent of what Ancare was now saying the invention was. The patent stated the invention lay in formulation aspects.

Second, even if it were possible to identify this in the patent as the inventive step, treating lambs for tapeworm was not new, whether or not economic benefits were achieved. At the time the patent was applied for, most farmers were treating their lambs anyway for tapeworm irrespective of what the scientists thought.

It is a fundamental principle of patent law that patents cannot be granted for something that is already known or being used (i.e. treating tapeworm in lambs) and therefore the Privy Council declined Ancare's appeal.

Comment from Counsel
Baldwin Shelston Waters partner, Tim Jackson, who, with barrister Clive Elliott, has represented Fort Dodge throughout the case, commented that from a legal point of view, their Lordships' decision is unsurprising and does not create new law. He said the decision represents a continuation of the pragmatic view taken by the New Zealand judges at both levels and an endorsement of their analysis. It was unfortunate that the case proceeded to the Privy Council, and Fort Dodge and the other companies involved deserved a lot of credit for its perseverance which will, in the end, benefit the New Zealand farming community. Other participants in the litigation at various stages were Novartis New Zealand Limited and Nufarm Limited.

This is a general summary only and should not be taken as a substitute for specific advice.

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