TRADE SECRETS: NEW EU RULES IN FORCE IN ITALY

Italian Legislative Decree 63 – 11 May 2018, implementing Directive (EU) 2016/943 on trade secrets, entered into force on 22 June 2018.

The Italian legal system was already at the forefront of trade secret protection, affording twenty years’ protection to both commercial and manufacturing and industrial-technical trade secrets, in full compliance with the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). This meant that the Italian legislator did not need to make major changes to the existing legislative framework. There are however some interesting changes to report.

New Definition of “Trade Secrets” 

The Italian Industrial Property Code (IPC) already provided for the protection of business information and technical-industrial experience as long as:

a) they were secret, meaning they were not generally known or not easily accessible to experts or sector operators;
b) they had commercial value because they were secret;
c) they had been subject to reasonable steps to keep them secret.

Although the Directive has not impacted scope of protection, such know-how is however now captured by the term “trade secrets”.

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Intellectual Property and Cyber Security issues considered in UK Government White Paper on the future UK-EU relationship

The UK Government’s White Paper detailing its proposal for the future relationship between the UK and the EU (published on 12 July 2018) includes a limited number of proposals relating to intellectual property and cyber security as follows:

  • The UK intends to explore staying in the Unified Patent Court (UPC) and Unitary Patent system post-Brexit. The UK will work with the member states that have signed up to the UPC Agreement to ensure that the UPC Agreement can continue on a firm legal basis;
  • Arrangements on future co-operation on intellectual property are recognised as important to provide confidence and security to rights holders operating in and between the UK and the EU;
  • The UK and EU will need to continue to co-operate on cyber security to counter cyber threats;
  • The UK will establish its own Geographical Indications (GIs) scheme to provide continuous protection for UK GIs in the UK and protection for new GIs applied for by UK and non-UK applicants

UPC and Unitary Patent

Opinions vary on the likelihood of whether the UK could continue as part of the UPC and Unitary patent system post-Brexit. The Foreword to the White Paper by the Prime Minister states that the proposals in the White Paper would end the jurisdiction of the European Court of Justice in the UK. It is not clear whether the UK would nevertheless accept the role of the European Court of Justice in respect of references from the UPC on matters of European law.

Future Co-operation on intellectual property

The draft withdrawal agreement of 19 March 2018 (as supplemented by the joint statement on 19 June 2018) sets out the text (highlighted in green in the draft) agreed between the Commission and UK at negotiator level, in relation to the replacement of EU-wide rights with equivalent UK rights, which may indicate that there will be substantive future co-operation.

Cyber Security

It is proposed that here will be close collaboration between the UK and the Network and Information Security (NIS) Cooperation Group, Computer Security Incident Response Team (CSIRT) Network (created under the NIS directive) and the European Union Agency for Network and Information Security (ENISA). While the UK’s desire to remain involved in the EU cyber security apparatus is welcome, no details of the legal mechanisms by which this will be achieved are provided at this stage.

Geographic Indications

The provisions in the draft withdrawal agreement relating to GIs have not yet been agreed at negotiator level. However, the White Paper states that the UK wants equivalence arrangements on a broad range of food policy rules, including GIs, noting that GIs provide legal protection against imitation and misrepresentations about quality or geographical origin for agri-food products that have a strong traditional or cultural connection to a particular geographical area. The UK will establish its own GI scheme consistent with (and going beyond) the provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). The new scheme is to provide a clear and simple set of rules on GIs and continuous protection in the UK for UK GIs notwithstanding exit from the EU. The scheme will be open to new applications from both UK and non-UK applicants.

For further analysis of the impact of Brexit on IP rights and how to moderate this, see the IP section of the HSF Brexit Legal Guide in the Brexit hub of our website (https://www.herbertsmithfreehills.com/latest-thinking/hubs/brexit).

Authors

Mark Shillito
Mark Shillito
Partner
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Laura Deacon
Laura Deacon
Of Counsel
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Peter FitzPatrick
Peter FitzPatrick
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PATENT AND PHARMA UPDATE – July 2018

Key recent developments in the United Kingdom and Europe relating to patents and the pharmaceutical sector

English courts begin to consider the new Doctrine of Equivalents as applied by the Supreme Court in Actavis v Lilly, and continue to accept jurisdiction in complex, cross-border patent disputes concerning infringement issues relating to non-UK patent designations. Looking further afield, following the AG’s opinion in Teva v Gilead, the CJEU’s decisions on various Art 3(a) and 3(d) references are anticipated. Although the UK has finally ratified the UPC Agreement, Brexit negotiations on various IP-related issues continue and much depends on whether there will be a Withdrawal Agreement and what form it will take.

Developments in the Doctrine of Equivalents

Recent court decisions have suggested applying the Doctrine of Equivalents to determine claim scope only after construing the claims purposively, and have queried the possibility of claim anticipation by “equivalents” (in spite of Arnold J’s views in Generics v Yeda). Further guidance is necessary in order to predict the impact of this Doctrine upon patent infringement, and equally, upon patent validity. 

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SPC update

The CJEU’s decision on the proper interpretation of Art 3(a) of the SPC Regulations is keenly awaited, as the AG’s opinion in the Teva v Gilead reference considers whether a product is specifically and precisely identifiable in the patent claims, rather than whether it embodies the “core inventive advance” of the basic patent in order to be protected by it. Other SPC-related developments are also reported.

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Do the English Courts have jurisdiction to hear applications for a DNI for non-UK designations of a patent?

The recent decisions in Eli Lilly v Genentech indicate that English courts will generally accept jurisdiction to decide questions of infringement regarding non-UK designations of a European patent as long as the validity of the patent does not come into issue.

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Damages v account of profits and carved-out preliminary injunction – Edwards Lifesciences v Boston

Following a trial on infringement, the court in Edwards Lifesciences v Boston has confirmed that the patentee has to choose between damages and seeking an account of profits as remedies against an infringer and cannot seek them in the alternative. On the other hand, the court’s final order on injunction, where it exempted a certain class of patients from the injunction, shows that it can be equally considerate of patients’ treatment needs and overall public policy.

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The Court rejects jurisdictional challenge to determine a global FRAND licence

Carr J has rejected Huawei’s and ZTE’s jurisdictional challenge to Conversant’s claim seeking a determination of FRAND terms for its global portfolio of standard-essential patents, thereby underscoring the English court’s willingness to accept jurisdiction relating to disputes involving non-UK patent designations, so long as their validities are not in issue.

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Unified Patent Court – where are we?

On 26 April 2018 (World IP Day), the UK ratified the UPC Agreement, whereas ratification by Germany is held up by a constitutional challenge. Following German ratification, the new European unitary patent is expected to be available in the participating states and enforceable through the UPC.

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Brexit and IP

According to the latest draft of the Withdrawal Agreement, EU-wide IP rights are expected to continue to have effect in the UK during the transition period following Brexit till 31 December 2020. Whilst there is some agreement on IP-related measures between British and EU negotiators, there are still unresolved issues and in the event of a “no deal” scenario, even the areas already agreed upon would fall through.

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Table of Recent UK Court Decisions on patents

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Contacts

Jonathan Turnbull
Jonathan Turnbull
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Monika Klajn
Monika Klajn
Associate
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Krishna Kakkaiyadi
Krishna Kakkaiyadi
Associate
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Rachel Montagnon
Rachel Montagnon
Professional Support Consultant
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Trade Secrets – added protection in force

The Trade Secrets (Enforcement, etc.) Regulations 2018 (the “Regulations”) came into force on 9 June 2018 and transpose Directive (EU) 2016/943 (the “Directive”) into UK law.

Summary:

  • The aim of the Directive is to create a level playing field by harmonising this area of law across the EU.
  • The UK already has well-developed legal protection for trade secrets governed by common law breach of confidence and by contract law.
  • A trade secret holder may now apply for remedies under breach of confidence in addition to or as an alternative to remedies under the Regulations.
  • Changes mainly concern limitation periods, procedural issues for the courts when hearing cases in relation to trade secrets and certain remedies.

Business Impact:

Businesses should continue to take steps to ensure that trade secrets are kept confidential and with limited access. This should be reflected in company policies, procedures and contractual provisions.

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Changes to the SPC regime? The EU Commission proposal

The European Commission issued a proposal on 28 May 2018 to change the rules around Supplementary Protection Certificates (Regulation (EC) 469/2009), which if approved will substantially impact patent rights in the pharmaceutical sector.

Before being launched on a European market, a product must first undergo lengthy testing and clinical trials on efficacy and safety before being granted marketing authorisation by the competent authorities. For patented innovator products, which require substantial investment in terms of research & development, the process effectively shortens the duration of a patent’s protection to the extent it no longer reflects or justifies the heavy R&D investment required.  This is where an SPC comes into play. An SPC extends patent protection for medicinal products by recouping the time needed from the date of the marketing authorisation application to the actual MA grant. SPCs take effect immediately after the patent expires and can last for up to five years, so are an important incentive for research and development in the pharmaceutical sector.

According to the Commission, although SPCs encourage investment in innovation and safeguard intellectual property rights, the current regime creates a significant disadvantage for EU-based manufactures of generics and biosimilars. This is because EU-based generics and biosimilars manufacturers are prohibited from manufacturing and stockpiling their products for the duration of the relevant SPC, even for exportation to non-EU countries where SPC protection does not exist or has expired. The end result is that the EU-based manufacturers use operations based in countries where there is no SPC protection, such as China, India and Brazil, or where SPC protection is less stringent or shorter.

SPC export manufacturing waiver

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Filed under EU, Italy, Patents, Pharma, SPCs, UK

UKSC judgment in Cartier – who pays for website blocking orders?

In a blow for rights-holders, the UK Supreme Court (UKSC) has today decided that ISPs should not bear the implementation costs for website blocking orders in Cartier International AG and others v British Telecommunications Plc and another [2018] UKSC 28.   Whilst the UKSC has endorsed the availability of blocking orders for rights-holders, it has reversed the costs position, finding that rights-holders should indemnify the ISPs for the reasonable costs of implementing the orders.

This is a very important case in relation to the ability of brand owners and others to obtain blocking injunctions against intermediaries, such as ISPs to prevent third party website operators offering infringing or counterfeit branded products. The UKSC decided the pivotal question of who should bear the cost of implementing blocking orders, in terms of deploying monitoring, filtering and web blocking technology – the ISP or the brand owner?

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THE ENGLISH COURT GRANTS CARVE-OUT PRELIMINARY INJUNCTION WHERE NO ALTERNATIVE TREATMENT AVAILABLE

Arnold J’s judgment in Edwards Lifesciences LLC v Boston Scientific SCIMED, Inc and others [2018] EWHC 1256 (Pat) handed down on 24 May 2018 demonstrates the English Court’s willingness to adopt a flexible and tailored approach to final relief by allowing both a stay and exception to a final injunction so that it accounted for the public interest in ensuring patients could continue to receive appropriate treatment.

At first instance ([2017] EWHC 755 (Pat)), Hacon HHJ granted an injunction but stayed it pending appeal. In doing so, Hacon HHJ indicated in his judgment that, in the absence of a stay pending appeal, he would have granted a “carve-out” injunction excluding from its scope a group of patients whose lives or health would potentially be put at risk by the injunction. Arnold J’s judgment followed the Court of Appeal’s decision ([2018] EWCA Civ 673) confirming that Edwards’ transcatheter heart valve, Sapien 3, infringed a patent held by Boston.

Arnold J’s starting point when considering the appropriate final injunction was that even on terms in which Boston receives a financial remedy for future sales of Sapien 3, any stay or qualification to a final injunction would deprive Boston of remedy to which it would ordinarily be entitled.  As a consequence, Arnold J highlighted that the length of any stay or qualification must be proportionate in balancing that interest (even though Boston was not exploiting its patent in the UK) against the public interest in ensuring that patients receive appropriate treatment.  Save for where it is aligned with public interest, Edward’s interest was not a relevant consideration.

Arnold J considered the evidence before him from which he concluded that:

  1. for a limited but growing group of patients the only available treatment required Sapien 3;
  2. there was a large body of clinical opinion, but little hard data, suggesting that for a larger group of patients Sapien 3 was superior to the alternatives available on the market; and
  3. the clinicians currently using the infringing device would need re-training if the injunction was granted.

In light of this, he granted an initial stay of the injunction for a 12 month period to allow enough time for all relevant clinicians to be retrained to use alternative devices, with permission to apply for an extension if required. With regard to those patients for whom no alternative to Sapien 3 was available, he granted an exception to the injunction requiring that the responsible clinicians for those patients provide declarations certifying that each patient falls within this exception. Although this exception was not time-limited, Arnold J gave Boston permission to apply to terminate the exception should alternative treatments become available.

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Jonathan Turnbull
Jonathan Turnbull
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Monika Klajn
Monika Klajn
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ADVOCATE GENERAL PROVIDES OPINION ON THE INTERPRETATION OF ARTICLE 3(A) SPC REGULATION

Advocate General Wathelet (the “AG”) has provided his opinion to the Court of Justice of the European Union (the “CJEU”) on the interpretation of Article 3(a) SPC Regulation (Case C-121/17 Teva v Gilead). In doing so, the AG rejected the suggestion of the English referring court that the concept of the “core inventive advance” was a relevant consideration in determining whether a basic patent protects an active ingredient within the meaning of Article 3(a).

In his view, the means of determining whether a basic patent protects an active ingredient within the meaning of Article 3(a) is to be found only in the wording, or interpretation of the wording, of the claims of the granted patent, and nowhere else. A product is protected by a patent in accordance with Article 3(a) of the SPC Regulation if, on the priority date of the patent, it would have been obvious to a person skilled in the art that the active ingredient in question was specifically and precisely identifiable in the wording of the claims of the basic patent. In the case of a combination of active ingredients, each active ingredient in that combination must be specifically, precisely and individually identifiable in the wording of the claims of the basic patent.

1. Business Impact

  • This non-binding opinion is of interest to all stakeholders in the pharmaceutical industry. It is the latest in a line of pronouncements from the CJEU in which the interpretation of Article 3(a) of the SPC Regulation has been discussed.
  • This opinion is of interest in that it rejects the “core inventive advance” test that has previously been proposed by the English Courts.
  • Whilst the opinion is non-binding on the CJEU, if the CJEU were to follow the reasoning of the opinion in its decision, the validity of an SPC in subsequent national proceedings would depend on the facts before the national court as to whether it would have been obvious to a person skilled in the art that the active ingredient in question was specifically and precisely identifiable in the wording of the claims of the basic patent.
  • The CJEU’s decision is expected in the coming months and it will be interesting to see if that decision will be broad enough to dispose of two other pending references on the interpretation of Article 3(a) that have been referred by the English Court of Appeal and German Federal Patent Court.

2. Background

Gilead’s UK SPC covers pharmaceutical compositions comprising the combination of tenofovir disoproxil and emtricitabine, a preferred “backbone” of active ingredients for the treatment of HIV. Such products include Gilead’s blockbuster anti-HIV treatments TRUVADA® and ATRIPLA®.

In 2016, Teva, Generics UK (t/a Mylan), Accord and Lupin commenced proceedings against Gilead in the High Court of England and Wales. They sought to revoke the SPC on the basis that the product the subject of the SPC is not protected by the basic patent.

Mr Justice Arnold delivered his judgment in January 2017. He found he was unable to decide on validity of the SPC on the basis of the existing CJEU case law and he therefore referred a single question to the CJEU: “What are the criteria for deciding whether ‘the product is protected by a basic patent in force’ in Article 3(a) of the SPC Regulation?” (Case C-121/17).

The case was heard before 15 judges of the Grand Chamber of the CJEU on 20 February 2018, reflecting the importance of the question.

3. The AG’s Opinion

Advocate General Wathelet delivered his opinion on 25 April 2018. The AG considered the line of CJEU cases dealing with Article 3(a) SPC Regulation since the key 2011 decision in Medeva.

As part of his considerations, the AG rejected the suggestion of the referring court that the concept of the “core inventive advance” was a relevant consideration in determining whether a basic patent protects an active ingredient within the meaning of Article 3(a).

In his view, determining whether a basic patent protects an active ingredient within the meaning of Article 3(a) is to be found only in the wording, or interpretation of the wording, of the claims of the granted patent, and nowhere else. A necessary starting point for determining this is whether a substance or combination of substances falls within the scope of protection of a patent, in particular under Article 69 of the EPC and the Protocol on its interpretation and the provisions of relevant national law.

The AG’s conclusion was that a product is protected by a patent in accordance with Article 3(a) of the SPC Regulation if, on the priority date of the patent, it would have been obvious to a person skilled in the art that the active ingredient in question was specifically and precisely identifiable in the wording of the claims of the basic patent.

The AG’s opinion is not binding on the CJEU and it is not certain that the CJEU will follow the same reasoning when it decides the case in the coming months. However, if the CJEU does adopt the AG’s opinion, it will be for the national courts to determine the validity of the SPC at issue, based on the facts before them as to whether it would have been obvious to a person skilled in the art that the active ingredient in question was specifically and precisely identifiable in the wording of the claims of the basic patent.

It will be interesting to see if the CJEU’s decision will be broad enough to dispose of the two other pending references on the interpretation of Article 3(a): one referred by the English Court of Appeal (Case C-650/17 Sandoz v Searle), and the other referred by the German Federal Patent Court (Case C-650/17 Royalty Pharma/Sitagliptin).

Author

Sebastian Moore
Sebastian Moore
Partner
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Alex Freelove
Alex Freelove
Senior Associate
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Julian Gauld
Julian Gauld
Senior Associate
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The UK ratifies the Unified Patent Court Agreement on World IP Day

The UK has ratified the UPC Agreement today, 26 April 2018, which also happens to be World IP Day.

The UK IP Minister announced the ratification at a World IP Day event at the House of Commons this afternoon. It seems that the UK Government has listened to the many representative groups in the Patent arena who suggested that being part of the new system prior to Brexit was preferable to trying to join it post-Brexit.  Now we need to wait to see if the German constitutional challenges can be resolved before the end of March next year.

The UK, along with France and Germany, is one of three signatory states which must ratify before the Agreement can come into force. France ratified long ago (2014), so German ratification is all that is now needed. Ratification by Germany has been held up by challenges to the legislation which was passed to allow Germany to ratify in both the Bundestag and the German Constitutional Court. Neither has yet been resolved.

15 other countries have already ratified the UPC Agreement. Once Germany ratifies, the Agreement will come into force on the first day of the fourth month after the month of that last required ratification. Assuming the constitutional challenges fail, German ratification will likely be timed to coordinate with the new Unitary Patent Court being ready to operate. Once in effect, the UPC court will operate across all current EU states except Croatia, Poland and Spain which have not signed up to the Agreement. A European patent with unitary effect (otherwise known as a unitary patent) will be available, covering all the participating states, once the UPC is established. Unitary patents will be enforced through the UPC which will also have jurisdiction over European patents which have not been opted out of the new system.

For more on the UPC Agreement including the other states which have ratified already see the UPC Agreement section of our UPC hub (www.hsf.com/upc).

Authors

Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, London
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CONSULTATION ON THE DRAFT TRADE SECRETS (ENFORCEMENT, ETC) REGULATIONS 2018

The Trade Secrets (Enforcement, etc.) Regulations 2018 (the “Regulations”) are intended to be in force by 9 June 2018 to transpose Directive (EU) 2016/943 (the “Directive”) into UK law. The UK IPO is in the process of consulting on the proposed Regulations.

Summary:

  • The UK already has well-developed legal protection for trade secrets (either in common law, statute or by means of court rules), therefore the Directive does not require substantial changes to be made to UK law.
  • Changes mainly concern limitation periods, procedural issues for the courts when hearing cases on breach of confidence in relation to trade secrets and certain remedies.
  • Although the EU has largely adopted UK law concepts the changes will be more radical in some other EU jurisdictions. The aim of the Directive is to create a level playing field for enforcement by harmonising this area of law.
  • Certain provisions of the language proposed for the Regulations differ from that used in the Directive.  In addition, it is proposed that some parts of the Directive will not be transposed and it is not clear why this is the case.  If this approach is adopted, it may lead to a lack of clarity in the UK law on trade secrets.

Business Impact:

  • Greater protection for a business trade secrets and a common approach to enforcement is to be welcomed across the EU.  Trade secrets are increasingly important in protecting valuable information and technology, especially where the other forms of IP protection like patents may not be available or appropriate.

Read more on the proposed regulations on trade secrets.

 

Authors

Joel Smith
Joel Smith
Head of IP - UK
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Clare Blendis
Clare Blendis
Senior Associate, London
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