Next year could see the launch of a Unified Patent Court across Europe, with wide-reaching implications for how drug patents are granted. But there are still a lot of unknowns pharma needs to watch out for
In an intrepid and encouraging statement, the president of the European Patent Office (EPO), Benoit Battistelli, recently announced that the all-new unitary patent is ready to go and all that remains is to open the new Unified Patent Court. What does this mean for companies operating in the pharma sector and how soon will they be affected? Perhaps more importantly, what can we do to prepare?
Answers to these questions are not altogether straightforward but what is certain is that the patent litigation landscape in Europe is about to change fairly dramatically as early as 2017.
Until now, patent litigation in Europe has been a patchwork process, with European patents enforced on a state-by-state basis. Critics of the system say it creates an uncertain and messy situation – with vastly different timescales and procedures in different European states – and risks inconsistent judicial decisions on the same (or equivalent) patents, not to mention the high costs of parallel court proceedings.
Therefore, the benefits of a single unitary patent covering most of Europe – and a single Unified Patent Court (UPC) to determine disputes on a pan-European basis – are potentially enormous, a situation long recognised by those familiar with North American systems.
However, there are a number of issues that businesses should be aware of, both from a legal and commercial perspective:
Patent proprietors will have a relatively wide power to start infringement proceedings in local and/or regional divisions of the UPC. These divisions will be spread across various member states and while each ought to apply the same laws and procedures, in reality it remains to be seen whether local or regional behaviours – and potentially biases – will emerge.
The rules of procedure governing the new system allow for plenty of tactical game-playing. The good news is that patent proprietors will be able to obtain relatively speedy injunctive and interim relief, also on an ex parte basis. It is also possible for patent proprietors to deploy search and seizure tactics (well-known and used in France), for which the provision of security deposits is not necessarily always required.
Follow-on protection and secondary patents
After the expiration of a patent, originators may seek to protect their monopoly in a variety of ways, for example, patents for dosage regimes, formulations and second medical uses. For some years, both the EPO and European national courts have grappled with the complex validity issues of so-called 'follow-on' or 'secondary' patents, and their approach has not always been consistent.
National courts have also taken a slightly divergent approach to assessing infringement of second medical use patents. Although UPC judges will ultimately have to take a uniform approach, there is a risk that different divisions will not always be consistent in the early days of the new system.
Supplementary protection certificates (SPCs)
SPCs are currently obtained on a state-by-state basis in Europe through national patent offices. While some industry players had hoped this would be replaced by a centralised system, there is nothing in the draft proposals to bring about such a change, an issue that has received attention in Europe most notably from the EFPIA (see a joint position paper published on their website). The European Commission is however launching a study into the feasibility of a 'Unitary SPC'.
The Bolar exemption
In 2014, a number of European states revised their laws on the Bolar exemption and the extent to which generics and other companies can rely on this exemption as a defence to patent infringement. It remains to be seen whether European laws will be fully harmonised by the time of the arrival of the UPC.
Digital and connected health
While the UPC's Central Division – primarily the division in which invalidity decisions will be made – will be located in London, Paris and Munich, it is clear that the London section will hear most pharma cases. The Paris section will hear IT/technology cases, while mechanical cases will be heard in Munich. However, the position is not so clear for products falling within the digital and 'connected health' space, as they invariably involve complex technology in overlapping sectors.
Full European coverage
With question marks around the involvement of Spain, Croatia and Poland, the new UPC system will not offer full coverage across the whole of Europe. Switzerland is also uncertain. Consequently, companies will still need to obtain some national patents.
Patent litigation in the pharma sector invariably involves non-patent issues – whether regulatory issues (eg, paediatric extensions), contractual issues (eg, licence agreements and appropriate royalty terms) or competition law issues (eg, abuse of a monopoly position, or misleading or 'pay for delay' practices). While some of these issues will fall within the boundaries of the competence of the UPC, others will not.
The transitional period
It will be a relief to industry players that there is an extendable transitional period of seven years, during which it is possible to opt-out of the UPC system. However, companies might need to budget for this because opt-out fees may potentially be payable.
Costs and timings
The early 2017 target for implementation is ambitious; setting up a fully functional court with regional and local divisions (and sections within divisions), fully trained judges and operational IT systems takes time. That said, with a number of milestones already achieved, it does appear that the new pan-Europe system is achievable within the next 18 months.
Regarding costs, obtaining UPs – and litigating patents in the UPC – will be a relatively expensive affair. Although the fees have not been fully determined, it is notable that the system is effectively a self-funding one.
Clearly some patent portfolios within a pharmaceutical company's business will be very well suited to the new UPC regime while others will not. At this stage, pharma companies should be carrying out a comprehensive cost/benefit analysis of which patent families they will choose to opt out (and potentially budget for) and which families they will keep in the new system. In the meantime, watch this space for further announcements on fees and the likely launch date.
Huw Evans is a partner and Pam Taak a senior associate in the London office, and Clemens Ruebel is a partner and Tiffany Zilliox an associate at the Munich office, working in Patent and IP Disputes at Norton Rose Fulbright