Christopher Stothers, Arnold & Porter LLP
In 1992, the European Union introduced supplementary protection certificates (SPCs) for pharmaceutical patents (Regulation 1768/92, now Regulation 469/2009). SPCs were introduced to encourage innovation by compensating patent owners for the delays in exploiting their patents caused by the regulatory approval process (itself ensuring the safety and efficacy of pharmaceutical products). Similar SPC protection followed in 1996 for plant protection products (Regulation 1610/96).
However, recent judicial comments, particularly in England, have been scathingly critical of the Regulation, including suggestions that the SPC system is “dysfunctional” and “not fit for purpose”. This has been reflected in a slew of references from the English courts to Court of Justice of the European Union in recent years: 13 of the 17 cases decided by the CJEU since 2011 have been referred from the English courts, along with two of the five pending cases.
This article will consider eleven cases by way of recent developments: six judgments of the CJEU handed down between October and December 2013 and the pending five references. The issues in these cases fall into five general categories: (1) the concept of an “active ingredient”, (2) the extent to which it must be “protected” by the patent, (3) the extent to which multiple SPCs can be granted on a single patent, (4) the effect of non-EU marketing authorisations, and (5) whether SPCs can be asserted against parallel imports from new EU member states.
First, the CJEU has considered the concept of an “active ingredient” which can form the basis for an SPC. In Glaxosmithkline Biologicals (C-210/13), it adopted a strict approach and held that an adjuvant, even though it enhances a patient’s immune response to a vaccine, is not an “active ingredient” on the basis that it has no independent therapeutic effect. Similar issues are now before the Court in Forsgren (C-631/13) and Bayer Cropscience (C-11/13).
Second, the CJEU has reconsidered the extent to which an active ingredient must be “protected” by a basic patent. This has long been a contentious area, and the Court of Justice’s previous attempt to clarify the law in Medeva (C-322/10, 24 November 2011), by requiring that it be “specified in the wording of the claims of the patent”, was not successful. Its latest attempt in Eli Lilly (C-493/12) helpfully clarified that a functional definition can suffice, provided that the claims “relate, implicitly but necessarily and specifically, to the active ingredient in question”. However, it then muddied the water by suggesting that an SPC may not be available where “the patent holder has failed to take steps to carry out more in-depth research and identify his invention specifically”. The English court now has the unenviable task of trying to apply that judgment.
Third, the CJEU has reconsidered whether multiple SPCs can be granted on a single patent covering an active ingredient that is authorised in combination. This was driven by a throwaway line in Medeva, which was read by some (including the Dutch patent office) to overturn previous case law and permit only one SPC per patent. In Georgetown (C-484/12), the CJEU confirmed that the previous case law stands and that multiple SPCs can be granted where each active ingredient or combination is protected by the patent. However, in Actavis (C-443/12), delivered on the same day, the ECJ confused the issue by holding that where an active ingredient is authorised first on its own and then in combination, a second SPC on the combination would not be available if the other active ingredients in the combination were not separately protected by the patent. The reasoning is far from clear and a second Actavis case (C-577/13) is pending before the CJEU involving similar issues.
Fourth, the CJEU has reconsidered the implication of a product being authorised other than by a full marketing authorisation under EU rules. Although it confirmed that such a full authorisation is required before an SPC can be granted (Sumitomo, C-212/12; similar issues arise in the pending Hogan Lovells, C-477/12), in AstraZeneca (C-617/12) it also held that the maximum term of an SPC will be reduced if the product was previously authorised, for instance by an authorisation issued in Switzerland (not part of the European Economic Area) which at the time was automatically recognised in Liechtenstein (part of the EEA).
Finally, in Merck (C-539/13) the CJEU has to consider whether an SPC owner can prevent the parallel importation of its own products from newer EU member states that did not make available patent- or SPC protection for pharmaceutical products at the relevant time. In contrast to the general position under the EU’s rules on the free movement of goods, transitional legislation clearly seems to allow the SPC owner to oppose such importation. However, the English Court of Appeal was concerned that the SPC owner may lose that right if it is notified of the planned importation and fails to object immediately, and so referred various questions to the CJEU.
The first, fourth and fifth categories present policy choices that should be capable of clear resolution, although the CJEU has not demonstrated a particularly pro-innovation stance to date. However, the second and third categories have left ongoing uncertainties, which more broadly undermine the goal of encouraging innovation in the EU. The scope of patent coverage is fundamental to the SPC system, but the EU legislature and CJEU have limited experience in the field of patents. As a result, despite the best efforts of patent specialists in the national courts, this has resulted in complicated case law that ignores concepts of patent law and makes piecemeal, case-by-case judgments. This only encourages further references to the CJEU, significantly delaying the resolution of disputes.
However, it should not be forgotten that the Regulation does appear to be working as intended in the vast majority of cases, despite these weaknesses in specific areas. For instance, in the United Kingdom some 203 SPCs were granted and only 15 were rejected by the Intellectual Property Office between 2008 and 2013. The position was similar after grant: in the same period, 222 SPCs expired naturally and only 12 were invalidated (often due to lapse or revocation of the underlying patent rather than problems with the SPC itself). Given the relatively low cost of filing an SPC application, and the potentially valuable protection provided, those rates are quite remarkable.
There are rumours growing that the EU legislature is considering amending the SPC Regulation in response to the extensive criticism. Improvements to the areas identified above would be very welcome, and can be best achieved by ensuring the involvement of patent as well as regulatory specialists in framing the amendments. At the same time it is important that amendment to the Regulation does not unnecessarily damage the existing system by introducing fresh uncertainties in areas where it is now operating effectively. Achieving that balance presents a new and exciting challenge for all those involved in this field.