Patent and Pharma Update, August 2020

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

In this edition we cover landmark judgments from the UK and German Supreme Courts, on sufficiency in the UK and FRAND obligations in Germany. We also cover a significant decision of the CJEU in relation to SPCs in the Santen case, as well as a decision concerning the provision of sample medicine to pharmacists and the Advocate General’s Opinion regarding an appeal from a fine imposed for anticompetitive agreements and we report on an important decision of the European Patent Office regarding the patentability of plant and animal products. This edition also includes our analysis of a number of noteworthy UK High Court and Court of Appeal decisions on issues including injunctions, attempted strike-out of an infringement claim and the law on obviousness. Finally, we report on UK’s formal withdrawal from the Unified Patent Court Agreement.

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The CJEU’s decision in Santen confirms a restrictive interpretation of ‘product’ under article 1(b) and 3(d) of the SPC Regulation, and rejects the possibility of an SPC based on a Marketing Authorisation for a new use of a previously authorised product

On 9 July 2020, the Grand Chamber of the Court of Justice of the European Union (“CJEU”) handed down its decision in Santen SAS v Directeur général de l’Institut national de la propriété industrielle (C-673/18), a reference from the Paris Court of Appeal concerning the interpretation of Articles 1(b) and 3(d) of Regulation (EC) No 469/2009 of the European Parliament and of the Council of 6 May 2009 concerning the supplementary protection certificate (“SPC”) for medicinal products (“SPC Regulation“).

The CJEU considered whether the definition of ‘product’ in Article 1(b) of the SPC Regulation is tied to the therapeutic application of the active ingredient, and in particular if a new therapeutic application of a previously authorised active ingredient can be considered a distinct ‘product’, such that a further marketing authorisation (“MA”) covering that new therapeutic application would constitute the “first authorisation” under Article 3(d) of the SPC Regulation.

The CJEU held that an MA cannot be considered as the first MA within the meaning of Article 3(d) when it concerns a new therapeutic application of a known active ingredient (or combination of active ingredients) which has already been the subject matter of an MA for another therapeutic application.

This decision severely limits the availability of SPCs for second medical uses of known products and removes the ability to obtain an SPC based on a later MA for a subsequent therapeutic use of a known and previously authorised medicinal product. It will no doubt be disappointing to R&D based pharmaceutical companies that are investigating such new uses and which would wish to rely on the additional protection afforded by an SPC based on that later MA to compensate them for the loss of exclusivity caused due to regulatory delays in getting a product authorised for that new therapeutic use to the market.

Legal Background

Article 3(d) of the SPC Regulation provides that an SPC cannot be granted if there has been an earlier MA for the same ‘product’ (ie, the active ingredient or active ingredients of the medicinal product under Article 1(b) of the SPC Regulation). Despite the seemingly straightforward wording of this Article of the SPC Regulation, the issue of what constitutes a ‘product’ for the purposes of Article 3(d) has been the subject of significant debate in recent years.

The CJEU traditionally afforded a narrow interpretation to ‘product’ under Articles 3(d) and 1(b) of the SPC Regulation. In Yissum (C-202/05), which concerned a patent for a composition containing the compound ‘calcitrol’ for use in topical treatment of skin disorders, the CJEU interpreted Article 1(b) of the SPC Regulation as meaning that in a case where a basic patent protects a second medical use of an active ingredient, that use does not form an integral part of the definition of the ‘product’. As a consequence of which an SPC could not be granted on the basis of the MA for the new use if the same active ingredient had been subject to a previous MA authorised for a different use.

Similarly, in Pharmacia Italia (C-31/03), which concerned a patent covering the compound ‘cabergoline’, the CJEU held that the grant of an SPC based on an authorisation of a medicinal product for human use was precluded by a prior MA for that same product as a veterinary medicinal product. In that case, the later human medicinal product, DOSTINEX® containing the active ingredient ‘cabergoline’ was authorised in Germany, after an earlier veterinary medicinal product with that active ingredient, GALASTOP®, had been authorised in Italy.

However, in its decision in Neurim (C‑130/11), the CJEU departed from its previous case law, and instead indicated that SPCs would be available for second medical uses of known active ingredients. The Neurim case concerned a patent covering a formulation of melatonin, which was subsequently authorised and marketed as CIRCADIN® by Neurim. Neurim applied for an SPC on the basis of the CIRCADIN® MA despite there being an earlier authorisation for a veterinary product, REGULIN®, which used melatonin in regulating the seasonal breeding activity of sheep.

In considering this reference from the UK Court of Appeal, the CJEU held that the mere existence of an earlier MA obtained for a veterinary medicinal product does not preclude the grant of an SPC for a different application of the same product for which an MA has been granted, provided that the application is within the limits of the protection conferred by the basic patent relied upon for the SPC. (the “Neurim exception”). In short, the Neurim exception permits the grant of an SPC on the basis of a subsequent MA for a new therapeutic use of a known active ingredient, where the earlier MA covering the known active ingredient falls outside the scope of protection of the basic patent relied upon for that SPC.

In reaching this conclusion the Grand Chamber noted that the fundamental objective of the SPC Regulation is to ensure sufficient protection to encourage pharmaceutical research. Therefore, if a patent protects a new therapeutic application of a known active ingredient, this should enable its proprietor to obtain an SPC for the new use of that active ingredient, even if it has already been marketed as a medicinal product (for veterinary or human use) for other therapeutic indications previously.

This Neurim exception was also subsequently suggested to cover a patent relating to any new therapeutic application of a previously known active ingredient, notably in paragraph 27 of the CJEU’s decision in Actavis v. Sanofi (C-443/12), and was seen as an encouraging development for the pharmaceutical industry as it incentivised investment in researching and developing new indications for known products that improve treatments and save lives.

However, in  Abraxis Bioscience LLC v the Comptroller General of Patents (C-443/17), the CJEU returned to its old strict approach, and confirmed that SPCs cannot be obtained on the basis of MAs for new formulations of previously authorised active ingredients (see our summary here). This case concerned “nab-paclitaxel” (ABRAXANE®) which contains the previously authorised active ingredient paclitaxel, but formulated as albumin bound nanoparticles. When considering this reference form the UK High Court, the CJEU held that Article 1(b) of the SPC Regulation must be interpreted narrowly, and that adjuvants (such as albumin) are excluded from the meaning of ‘product’ even if they allow the active ingredient with which they are associated to exercise its therapeutic effect more effectively. Having made its finding that Article 1(b) must be interpreted narrowly, the CJEU recognised that the objective of the SPC Regulation would not be fulfilled by allowing an SPC based on an MA for a new formulation of a previously authorised product. The CJEU therefore expressly rejected an extension of the Neurim exception to SPCs based on MAs for new formulations of a previously authorised product, but in doing so it did not provide any further clarity on the scope of this Neurim exception insofar as it related to new therapeutic uses.

In the above context, it was hoped that such scope would finally be clarified by the CJEU when it considered the current reference in Santen.

Factual background to Santen (C-673/18)

A reference was made to the CJEU by the Paris Court of Appeal concerning Santen’s French SPC application based on European Patent No. 1 809 237 (entitled ‘Ophthalmic oil-in-water type emulsion with stable positive zeta potential’), and a centralised MA for the medicinal product IKERVIS®, containing as its active ingredient 1 mg/ml cyclosporine in the form of an emulsion, administered as an eye drop for the treatment of severe keratitis in adult patients.

Prior to the grant of the centralised MA for IKERVIS®, an MA had been granted for the medicinal product SANDIMMUN®, which contained as its active ingredient 100 mg/ml of cyclosporine in the form of an oral solution for the prevention of rejection of solid organ and bone marrow grafts, and for the treatment of endogenous uveitis (an inflammation of some or all of the uvea, which is the middle layer of the eye).

In light of the earlier authorisation for SANDIMMUN®, the French Parent office rejected Santen’s SPC application, and this rejection was appealed to the Paris Court of Appeal, which in turn referred the two questions below to the CJEU on the scope of the Neurim exception (the full procedural background to the case is available here in our previous update). The two questions referred to the CJEU were:

“Must the concept of a ‘different application’ within the meaning of the judgment of 19 July 2012, Neurim (C-130/11, EU:C:2012:489), be interpreted strictly, that is to say:

–    as limited only to the situation where an application for human use follows a veterinary application;

–    or as relating to an indication within a new therapeutic scope, in the sense of a new proprietary medical product, compared with the earlier marketing authorisation, or a medicinal product in which the active ingredient acts differently from how it acts in the medicinal product to which the first marketing authorisation related;

–    or more generally, in the light of the objectives of Regulation (EC) No 469/2009 of establishing a balanced system taking into account all the interests at stake, including those of public health, must the concept of a “new therapeutic use” be assessed according to stricter criteria than those for assessing the patentability of the invention;

–    or must it on the other hand be interpreted broadly, that is to say, as including not only different therapeutic indications and diseases, but also different formulations, posologies and/or means of administration?

Does the expression “[application] within the limits of the protection conferred by the basic patent” within the meaning of the judgment [of the Court of Justice] of 19 July 2012, Neurim (C-130/11, [EU:C:2012:489]), mean that the scope of the basic patent must be the same as that of the marketing authorisation relied upon and, therefore, be limited to the new medical use corresponding to the therapeutic indication of that marketing authorisation?” 

AG’s opinion in Santen

On 23 January 2020, AG Giovanni Pitruzzella provided his Opinion on the referred questions. A full analysis of this Opinion is available here in our previous post.

Briefly, AG Pitruzzella made two proposals to the CJEU. His favoured proposal was for the CJEU to reverse its decision in Neurim and strictly interpret the meaning of ‘product’ under Article 1(b).

His alternative proposal permits SPCs for second medical uses of known and previously authorised products in some instances by interpreting the Neurim exception as allowing an SPC if the new MA “covers a new therapeutic indication of said active ingredient or relates to a use of it in which this active ingredient exerts a new pharmacological, immunological or metabolic action of its own”.

Analysis of the Santen decision of the Grand Chamber of the CJEU

In its decision, the Grand Chamber states that in order to respond to the Paris Court of Appeal in a useful way, the question that needs to be addressed is whether Article 3(d) can be interpreted as meaning that an MA can be the first MA within the meaning of this article if it concerns a new therapeutic application of a known active ingredient (or combination of active ingredients), which has already been the subject of an MA for another therapeutic application.

In responding to this question, the Grand Chamber notes that the MA in Article 3(d) is for a given ‘product’ as defined in Article 1(b), and that the first issue was whether a ‘product’ is dependent on or tied to a therapeutic application, in particular if a new therapeutic application of a known active ingredient can be considered as a product distinct from another therapeutic application of the same active ingredient.

In this respect, the Grand Chamber concludes that, as a result of a joint reading of Article 1(b) and 4 of the SPC Regulation, ‘product’ means the active ingredient or combination of active ingredients of a medicinal product, and it is not limited to any particular therapeutic application. This is supported by the Explanatory Memorandum for the SPC Regulation, which states that the term ‘product’ is to be understood strictly as the active ingredient, and that minor changes (such as a new dosage, the use of a different salt or ester or even the form of the pharmaceutical product), are not likely to give rise to a new SPC. Consequently, the fact that an active ingredient or a combination of active ingredients can be used for a new therapeutic indication does not make it a distinct ‘product’ because of this new therapeutic use.

The second issue considered by the Grand Chamber is whether an MA granted for a new therapeutic application of a known active ingredient or combination of active ingredients can be considered as the ‘first’ MA within the meaning of Article 3(d), where this MA is the first one to fall within the scope of protection of the basic patent relied upon in the SPC application.

The Grand Chamber notes that Article 3(d) does not refer to the scope of protection of the basic patent. In this respect, the Grand Chamber restates its decision in Abraxis that the first MA for a medicinal product is simply the one incorporating the active ingredient or the combination of active ingredients, whatever the therapeutic application for this active ingredient or combination of active ingredients might be. If one were to consider the scope of protection of the basic patent in assessing Article 3(d), then this would go against this definition of ‘product’ in Article 1(b), and it would then become possible for an SPC to be granted for a new therapeutic application of a known active ingredient, when the same active ingredient is already covered by a previous MA for another therapeutic use. The Grand Chamber then stresses that the Neurim decision, which allows for this possibility, is inconsistent with the SPC Regulation in this regard, as the scope of protection of the basic patent is irrelevant when assessing Article 3(d).

The Grand Chamber goes on to state that, on the basis of its ruling in Abraxis and the Explanatory memorandum to the SPC Regulation, the SPC regulation is not intended to reward any and all research, but is rather aimed at only rewarding research leading to the first placing on the market of an active ingredient or combination of active ingredients as a medicinal product. This objective would not be achieved if Article 3(d) were interpreted as meaning that the ‘first’ MA to fall under the scope of protection of the basic patent would entitle the proprietor to an SPC based on the later authorisation. Difficulties would also result from a different interpretation of Article 3(d) that relied on concepts such as a new “therapeutic indication”. As mentioned in the Opinion of Advocate General Pitruzzella, the notion of “therapeutic indication” is not even defined by the SPC Regulation and this might lead to National Patent Offices adopting inconsistent interpretations of such an Article 3(d) test.

The decision of the Grand Chamber therefore only leaves a (small) door open for SPCs for new therapeutic uses for “known” products, namely where the “known” product has not been previously authorised.

The ruling of the Grand Chamber of the CJEU is thus as follows:

60. […] The premiss on which the referring court relies, mentioned in paragraph 34 above, must be disregarded and that an MA for a therapeutic application of a product cannot be regarded as the first MA for that product as a medicinal product, for the purpose of Article 3(d) of Regulation No 469/2009, where another MA was granted previously for a different therapeutic application of the same product. The fact that the most recent MA is the first MA to fall within the limits of the protection of the basic patent relied on in support of the SPC application cannot call that interpretation into question.

61.[…] An MA cannot be considered to be the first MA, for the purpose of [Article 3(d)], where it covers a new therapeutic application of an active ingredient, or of a combination of active ingredients, and that active ingredient or combination has already been the subject of an MA for a different therapeutic application.”

The Grand Chamber considers this to be a balanced approach between, on the one hand, ensuring that the objective of the SPC Regulation to incentivise research and compensate for the insufficient protection offered by the basic patent is met, and on the other hand taking into account all interests at stake.

This is as close to a “reversal” of the Neurim decision as we are likely to get from the CJEU. It is clear from the language adopted by the Grand Chamber, ie, that the Neurim decision is “contrary” to the SPC Regulation (paragraph 53), and that the premise arising from the Neurim decision “must be rejected” (paragraphs 34 and 60), that there is likely to be little scope to argue for the grant of an SPC based on an subsequent MA for a new therapeutic use of known and previously authorised active ingredient.

Key contacts and Authors

Frederic Chevallier
Frederic Chevallier
Partner - Paris
+33 1 53 57 13 60
Jonathan Turnbull
Jonathan Turnbull
Partner - London
+44 20 7466 2174
Priyanka Madan
Priyanka Madan
Associate - London
+44 20 7466 2986

CJEU rules that providing free samples of non-prescription drugs to pharmacists is permitted

CJEU rules that providing free samples of non-prescription drugs to pharmacists is permitted

On 11 June, the Court of Justice of the European Union (“CJEU“) ruled on the question of whether free samples to pharmacists of medicines may be supplied by pharmaceutical companies to pharmacists. The German Federal Supreme Court (Bundesgerichtshof) had referred questions regarding the German provisions which do not provide for supply to pharmacists. According to the judgement, free samples of non-prescription drugs may be supplied to pharmacists whereas prescription drugs may only be supplied to persons entitled to prescribe them.

Background

The legal dispute which led to the decision of the CJEU was an unfair competition lawsuit between two pharmaceutical companies selling non-prescription pain gel. One of the companies had supplied free samples to pharmacists “for demonstration purposes”. The other company considered this to be in violation of the German Medicines Act (“AMG“), resulting in a breach of competition law (“unfair advantage via legal violation”, “Vorsprung durch Rechtsbruch”). The action was successful in first instance and appeal. The courts concluded that Section 47 Para 3 of the AMG exhaustively listed the persons to whom free drug samples could be provided, namely specific groups, all of whom were entitled to prescribe prescription drugs. Pharmacists were not included in the list, so the courts considered the supply to them to be illegal.

Referral to the CJEU by the German Federal Supreme Court

The Federal Supreme Court had doubts whether the German provision was in line with the Community code relating to medicinal products for human use (Directive 2001/83/EC, in the following “Community Code”). The respective provision regarding the supply of free samples is Article 96 Para 1 which addresses solely the supply to prescribing persons and provides for certain conditions for such supply. However, recital 46 of the Community Code excludes the provision of free samples only to the general public and recital 51 states that “It should be possible within certain restrictive conditions to provide samples of medicinal products free of charge to persons qualified to prescribe or supply them so that they can familiarize themselves with new products and acquire experience in dealing with them.”

Based on this the Federal Supreme Court referred to the CJEU firstly the question whether Article 96 para 1 of the Community Code really exhaustively limited the provision of free samples to persons entitled to prescribe, so that any provision of free drug samples to pharmacists was illegal or whether the provision of samples labelled “for demonstration purposes” to pharmacists so that they can familiarize themselves with the product was permitted. Further, and (only) in case the CJEU found the latter to be true, the Federal Supreme Court referred a second question, namely whether a reading of the German provision which excluded the giving of samples to pharmacists was still in line with the Community Code based Article 96 para 2 which gives member states the possibility to provide for further restrictions over para 1.

Ruling of the CJEU

The CJEU concluded based on the interplay of the provisions of the Community Code that the rules of Article 96 of the Community Code related only to prescription drugs, and were exhaustive, so that the supply of prescription drugs to pharmacists is not allowed in any case. In this regard the CJEU argued that the Community Code differentiates throughout between prescription and non-prescription drugs with prescription drugs being those which due to the dangers associated with their use need to be under the control of physicians whereas this is not the case for non-prescription drugs (Articles 71 and 72 of the Community Code). Having that differentiation in mind the CJEU sees Article 96 as tailored towards the dangers of prescription drugs which requires the supply to be limited to persons entitled to prescribe.

The CJEU on the other hand reasoned that it does not follow from Article 96 of the Community Code that the provision of samples of non-prescription drugs to pharmacists is excluded. In this regard the CJEU referred specifically to the above-mentioned recitals 46 and 51. The CJEU stated that the Community Code allows the supply of free samples to pharmacists within the framework of national law under limited conditions and under safeguarding of the goals pursued by the Community Code.

The CJEU, therefore, rules (note the official English translation of the judgment is not yet available):

“Art. 96 of the Directive 2001/83/EC (…) is to be interpreted in such a way that it does not allow pharmaceutical companies to supply free samples of prescription drugs to pharmacists. On the other hand, the provision does not hinder the supply of free samples of non-prescription drugs to pharmacists.”

It should be noted that the Attorney General’s opinion did not make this differentiation between prescription and non-prescription drugs and considered that pharmacists were completely excluded from receiving free samples. It follows from the CJEU decision that the previous interpretation of Section 47 AMG by the German courts as limiting also the supply of non-prescription drugs to persons entitled to prescribe prescription drugs was not in line with the EU Community Code. The question remains what the conditions shall be for the supply of non-prescription drugs to pharmacists, e.g. whether (with the exception of the limitation to prescribing persons) the conditions as set out in Article 96 of the Community Code shall apply mutatis mutandis, e.g. including a requirement of a prior written request from the pharmacist.

Authors

Ina vom Feld
Ina vom Feld
Parner, Disputes, Dusseldorf
+49 211 975 59091

Behyad Hozuri
Behyad Hozuri
Junior Associate (Germany), Disputes, Dusseldorf
49 211 975 59097

Tech Disputes webinar series (Session 5: The growing use of injunctions to enforce across online platforms)

Webinar: The growing use of injunctions to enforce across online platforms

Wednesday 24 June, 10am – 10:45am

In today’s world, infringers increasingly use the services of online intermediaries for the purpose of their infringing activities. Due to difficulties with identifying, contacting and enforcing IP rights against online infringers themselves, it is often the intermediaries who are in the best position to help block further and ongoing infringement. It is now well-settled that copyright and trade mark owners may seek to enforce injunctions against ISPs and other intermediaries, in order to enforce their rights against infringers online.

In this webinar, we will recap on the development of the routes available for copyright owners to enforce their rights online; the expansion of this remedy to address counterfeits and trade mark infringement online, and the impact of the most recent case law in this area, including the CJEU’s recent decision in Coty v Amazon. We will also consider upcoming developments, such as the possibility for further expansion of brand owners’ rights to seek redress for infringements against online marketplace operators as primary infringers, rather than as intermediaries, in certain situations. We will cover the civil options available under the law, as well as the practical steps which IP owners can take to address infringements online.

This webinar will focus on the position under UK/ EU law.

Register here to access a recording of this webinar on-demand.

Speakers
Joel Smith
Joel Smith
Partner, Head of IP UK, London
+44 20 7466 2331
Victoria Horsey
Victoria Horsey
Senior Associate, IP, London
+44 20 7466 2701
Joanna Silver
Joanna Silver
Senior Associate, IP, London
+44 20 7466 2315

Brompton Bicycle – far from folded

CJEU follows Cofemel in allowing copyright protection where designs are not exclusively dictated by technical function

The CJEU has decided in the Brompton Bicycle case C-833/18 (11 June 2020) that to qualify for copyright, a design must be original – that is, the subject matter must reflect the personality of its author (the creator or designer), as an expression of her/his free and creative choices.  This requirement cannot be fulfilled where the design “has been dictated by technical considerations, rules or other constraints which have left no room for creative freedom or room so limited that the idea and its expression become indissociable“.  Therefore any design satisfying the condition of originality may be eligible for copyright protection, even if its creation has been dictated in part by technical considerations, provided those technical design choices have not prevented the creator from reflecting her/his personality in the design.

Summary

The case confirms that technical designs may benefit from copyright, dependent upon the extent to which creative freedom is possible. In situations where there is none and the design is solely dictated by the function, there will not be copyright protection. The CJEU left it to the local court to decide whether this was the case with the Brompton bicycle designs.  In order to establish whether the product concerned falls within the scope of copyright protection, the referring Belgian court must now decide on the facts whether, through the choice of the shape of the product, its author has expressed her/his creative ability in an original manner (by making free and creative choices) in such a way that it reflects her/his personality. The CJEU said that the question of the potential existence or not of other possible shapes which can achieve the same technical result is not decisive in assessing the factors which influenced the choice made by the creator. Likewise, the intention of the alleged infringer is irrelevant in such an assessment. Significantly, the fact that a patent over the bicycle had recently expired was held not to be a relevant consideration; the individual copyright issues were considered independently of any history of protection by other IPRs.

Comment

This decision will have an important impact in the design sector, because it has confirmed that a design can also have copyright protection if the design  reflects the personality of its creator, as an expression of their free and creative choices, even if the shape of that product is in part necessary to obtain a technical result. Where there is no creative freedom in the development of the design copyright will not apply.

Since copyright protection is one of the longest lasting IP rights, this will make it an attractive option for protection and enforcement, in particular where other rights such as registered designs or patent rights in the product have expired. Whilst the existence of such latter rights was seen by the CJEU as potentially relevant to any assessment of the creative freedom of the author and technical functionality of a design, it was not fatal to a finding that copyright could exist.

As copyright has a much longer term than other IP rights (lifetime of creator plus 70 years for UK copyright, as opposed to 3 years for EU unregistered design rights or 10-15 years for unregistered UK design rights or 20 years for a patent), the decision will be welcomed by some in the design world who seek to maintain rights over key designs.  Others who would wish to get inspiration from designs, the protection in which would otherwise have expired, will find today’s decision more challenging.  We will undoubtedly see other designers seek to rely upon copyright to protect iconic designs, even if mass produced, given the advantages of copyright protection.  Another advantage of copyright is that there are no registration requirements, unlike registered designs or patents. However, designs remain a valuable form of protection, as they do protect a wider category of industrial designs, including those that have functional elements.

We saw the CJEU in Cofemel (September, 2019) endorse the EU test for subsistence of copyright, as being the artist’s own intellectual creation (consistent with Infopaq and Levolo).  This differs from the old UK test of for originality, of sufficient skill and labour test, i.e. sweat of the brow.  However, Cofemel also suggested that the categories of copyright protection were not limited, so could include designs.  However, the Cofemel judgment suggested that the scope for cumulative protection was limited for designs under both EU copyright and design law (also established in Flos).  It rejected the notion of a requirement of aesthetic appeal for copyright protection, but equally suggested that technical considerations may preclude exclusively functional designs from being eligible for copyright protection.

In the Brompton Bicycle case, the CJEU followed Cofemel in the view that a design whose shape is dictated by technical considerations, that do not leave room for the exercise of creative freedom, is not eligible for copyright protection.  It is analogous to the reasoning given in some of the trade mark cases on protecting 3D shapes (such as Lego).  It suggests that there does need to be something creative for a work to qualify for copyright protection, not driven by purely functional concerns or perhaps the technical output from a machine.

Until the repeal of section 52 Copyright, Designs and Patents Act 1988 (CDPA), the UK law limited the use of copyright to protect industrially manufactured designs to 25 years. Since that repeal, the industrial manufacture of a design does not have a limiting effect on the copyright term in the designs for that object. However, under section 51 CDPA, where any article is made to a design embodied in a design document or model, the copyright in that design document or model recording the design cannot be enforced (unless the design or model itself was an artistic work). This section must now be likely to come under review, either by the UK courts or legislature, in light of the Brompton and Cofemel decisions.  The UK Courts have already imported the test for originality, as being the author’s own intellectual creation, as recently seen in the Response Clothing decision of His Honour Judge Hacon in January 2020. This decision recognises the tension between section 51 of the Copyright, Designs and Patents Act 1988 which limits copyright protection for designs to works of artistic craftsmanship and the judgment in Cofemel.  In Response Clothing, the Judge acknowledged the tension, but found he was not constrained by earlier English law from finding that a machine-made fabric design was a work of artistic craftsmanship and followed Cofemel to find that it was entitled to copyright protection. This latter case left English law tipping its hat towards the important EU decision in Cofemel, but not fully importing its full effect.  There is scope for divergence by the Courts in post-Brexit UK in the important area for protection of designs, which is key to many product designs.

Notwithstanding that the UK has left the EU, the Brompton Bicycle case (coming within the transition period) will bind the UK courts, unless the Supreme Court (or Parliament through legislation) decides subsequently to depart from it or Ministers make regulations under the European Union (Withdrawal Agreement) Act 2020 about the judicial treatment of the decision.   Realistically, this is extremely unlikely in the short to medium term, given that Cofemel has already been endorsed and applied by the courts in the UK in the Rapid Clothing v Edinburgh Woollen Mill case.  That does mean that the conundrum of section 51 needs resolving, through primary legislation or the courts striking it down as ultra vires.  That leaves the UK with the prospect of enhanced protection for designs through copyright, including the potential for some designs to gain retrospective protection, when protection from unregistered design rights (UK or Community) might well have expired.

Further, additional changes will also come into effect on 1 January 2021 to recognise equivalent UK rights to Community design rights (both registered and unregistered).  See our Guide to the impact of Brexit upon IP here.

 

Key contacts and authors

Joel Smith
Joel Smith
Partner, London
+44 20 7466 2331
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, IP, London
+44 20 7466 2217

HIRING OUT CARS WITH RADIOS IS NOT A “COMMUNICATION TO THE PUBLIC”

The CJEU held that the hiring out of motor vehicles equipped with radio receivers did not constitute a “communication to the public” within the meaning of Art 3(1) of the Directive 2001/29/EC (the “InfoSoc Directive“). The decision in Föreningen Svenska Tonsättares Internationella Musikbyrå u.p.a. (Stim) and Svenska artisters och musikers intresseorganisation ek. för. (SAMI) v Fleetmanager Sweden AB and Nordisk Biluthyrning AB (Case C-753/18) reinforces the distinction between providing a physical facility, which is not a “communication to the public” and actively engaging in the act of communication itself. Continue reading

SkyKick found to infringe SKY trade mark on return to High Court, in a bold decision on bad faith

Sky has succeeded in its claim of infringement by SkyKick of its SKY trade mark, though suffers some collateral damage in having parts of certain of its trade mark registrations found invalid for being filed in bad faith.   Whilst the decision shows that the English Courts are prepared to strike down parts of wide trade mark specifications years later, the “bad faith” needed to do this requires a high evidential burden and cannot be presumed on the basis of the mere finding that, at the time of filing, the applicant had no economic activity corresponding to the goods and services referred to in that application.

On the case’s return to the High Court, following the decision of the CJEU in January (Case C-371/18) on the questions he had referred, Lord Justice Arnold found SkyKick liable for trade mark infringement, whilst also giving Sky the opportunity to withdraw allegations of infringement based upon elements of its trade mark registration specification that he found to be registered in bad faith (Sky v SkyKick [2020] EWHC 990 (Ch), 29 April 2020)

A bold decision opens a new line of attack for defendants

The decision is a bold one, driven by policy, which builds upon the CJEU’s judgment (see our commentary on the CJEU decision here): parts of wide trade mark specifications will be struck down, if certain terms seek over broad protection not justified by actual use or the reasonable prospect of use at the time and not filed for legitimate business reasons.  It also opens a new line of attack for parties defending trade mark claims against brand owners, to force them to open up the history of why broad registrations were filed and seek extensive disclosure as to the trade mark proprietor’s motives at the date of filing.  This will run into uncomfortable areas for in-house teams, either seeking to preserve legally privileged communications or waive privilege to fight.

Bad faith: The CJEU had held that bad faith would only be established in the exceptional circumstances where it could be demonstrated that the applicant deliberately sought to monopolize classes of goods or services in order to block or undermine the interests of other businesses.  Bad faith could not be presumed on the basis of the mere finding that, at the time of filing, the applicant had no economic activity corresponding to the goods and services referred to in that application. The court should look at the motives of the trade mark owner when they filed their application and at whether they intended to abuse the system by blocking a competitor at that time.

This is a very high evidential burden to meet and should only rarely be found – however, today’s High Court decision has shown it is possible to succeed.

Limitation of the specification:The High Court held that certain of Sky’s trade marks were partially invalid on grounds that they were filed in bad faith.  Lord Justice Arnold had already found that certain registrations had been applied for in respect of certain goods and services for which Sky had no reasonable commercial rationale to do so. The Judge innovatively decided to cut down Sky’s registration for “computer software” to arrive at what he believed to be a fair specification, rather than rely upon Skykick’s or Sky’s submissions.  He has given Sky 7 days to withdraw that part of the infringement claim that relates to the removed part of the specification, in return for the court making no order as to the declaration of invalidity sought by SkyKick on that part of the registration.  That leaves Sky not being compelled by court order to adjust its specification.

Infringement by SkyKick: However, crucially for Sky, Skykick did not allege bad faith in relation to two elements of Sky’s registration – “telecommunication services” and “electronic mail services”.  This left the Court able to find SkyKick liable for infringement of “electronic mail services” for SkyKick’s use of email services, under Article 9(2)(b) of the Regulation/Article 10(2)(b) of the Directive.

Authors

Joel Smith
Joel Smith
Partner, Head of Intellectual Property, London
+20 7466 2331
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, IP, London
+44 20 7466 2217

Patent and Pharma Update, February 2020

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

In this issue we report on the Supreme Court decision of Shanks v Unilever on employee inventor compensation. We update on two CJEU decisions relation to public access to documents submitted to the EMA and a key competition decision on “pay-for-delay” agreements. We cover a string of patent-related UK Court of Appeal cases, including Ablynx v VHSquared on jurisdiction, Anan Kasei v Neo on insufficiency and joint tortfeasorship and L’Oreal v Liqwd on claim amendments and admission of late evidence. We provide brief updates from the EPO on the recent CRISPR priority decision, as well as its AI inventorship decision. We have bumper SPC and FRAND updates covering key Court of Appeal and CJEU decisions in respect of SPCs and a string of interesting interim decisions in the UK in the case of FRAND. We round off the issue with a link to our new IP podcast series and updates on Brexit and the UPC. Continue reading

ECJ rules for the first time on “pay-for-delay” agreements

On 30 January 2020 the European Court of Justice (“ECJ”) clarified for the first time the criteria governing whether so-called “pay-for-delay” agreements entered into between originator and generic pharmaceutical companies fall foul of EU competition law rules. Such agreements are a form of patent dispute settlement, whereby in return for a value transfer, a generic manufacturer acknowledges the patent of the originator pharmaceutical company, and agrees to refrain from marketing its generic version of the drug in question for a specified period of time. Pay-for-delay agreements have been in the spotlight of the European Commission (“EC”) and national competition authorities for over a decade.

In line with the non-binding Opinion delivered by Advocate-General Kokott on 22 January 2020, the ECJ held that such agreements may constitute “by object” infringements of the prohibition on anti-competitive agreements (such that a competition regulator is not required to prove effects on the market) or “by effect” infringements, and may also amount to an abuse of a dominant position.

The ECJ had been asked to provide guidance on this issue by the UK Competition Appeal Tribunal (“CAT”), by way of a reference for a preliminary ruling in the UK Paroxetine case. That case involves an appeal by GlaxoSmithKline (“GSK”) and five generics against a 2016 decision of the UK Competition and Markets Authority (“CMA”) imposing fines totalling £45 million on the basis that such pay-for-delay agreements infringed competition law.

Why is the ECJ’s judgment important?

The ECJ’s judgment is expected to have significant implications for both ongoing and future cases in the pharmaceutical sector:

  • The ECJ has sent a clear message to both originator and generic companies that once a generic has demonstrated a clear intention to market a rival version of an originator drug, it is likely to be considered a “potential competitor” of the originator (and thus any patent settlement between the originator and that generic involving a value transfer is likely to attract antitrust scrutiny).
  • The ECJ held that patent settlement agreements can be lawful. In particular, the existence of a value transfer (pecuniary or not) is not, by itself, sufficient to classify the agreement as a restriction of competition by object. This is because such value transfer may be justified taking into account the parties’ legitimate objectives (e.g. if it constitutes compensation for the generic’s litigation costs). However, the ECJ considered that where the value transfer by the originator to the generic cannot have any explanation other than the commercial interest of both parties not to compete on the merits, the agreement at issue will constitute a restriction of competition “by object” (i.e. it will be anticompetitive by its very nature). Therefore, although patent settlement agreements between originators and generics are not automatically anti-competitive, it appears that agreements with large value transfers from the originator to the generic(s) in exchange for a delay in market entry are highly likely to be deemed to be an “object” infringement in most cases. Pharmaceutical companies wishing to argue otherwise are likely to face an uphill struggle (although the ECJ has left the door open in very limited circumstances).
  • Further, the judgment indicates the approach the ECJ is likely to take in pending appeals against EC infringement decisions in two other pay-for-delay cases: Lundbeck (citalopram) and Servier (perindopril).
  • It also seems likely to encourage both the EC and national competition authorities to aggressively pursue more pay-for-delay cases in the future. Indeed, Commissioner Vestager commented to journalists that the judgment “looks very promising on first reading, and in that of course we feel very much encouraged because we find these cases important”. Similarly, the CMA has welcomed the judgment, noting that it “has clarified a number of important questions and will help competition authorities, including the CMA, in their work to tackle this harmful behaviour by pharmaceutical companies”.

Click here to read our full briefing.

This post was first published on our Competition Notes blog.

Contacts

Kyriakos Fountoukakos
Kyriakos Fountoukakos
Partner, Brussels
+32 2 518 1840
Dafni Katrana
Dafni Katrana
Senior Associate, Brussels
+32 2 518 1846
Ruth Allen
Ruth Allen
Professional Support Lawyer, London
+44 20 7466 2556

CJEU Decision in SkyKick offers relief to trade mark owners

The CJEU has today handed down a crucial decision as it seeks to provide clarification on important questions about the extent of the monopoly businesses can obtain legitimately through the registration of a trade mark.

The CJEU held that a registered trade mark cannot be declared wholly or partly invalid as a result of a lack of clarity and precision of the terms used to designate the goods and services covered by that registration. Further, whilst invalidity on the ground of bad faith may be triggered where an applicant registers a mark without any intention to use it in relation to specified goods and services, bad faith will only be established in exceptional circumstances. This outcome is very helpful to existing trade mark proprietors and favours the existing status quo of the trade mark system.

Background

Trade mark protection in the UK and the EU is granted in respect of the specific goods and services which the applicant has determined the mark should cover. However, there are ambiguities in the EU law relating to the relationship between trade mark specifications and the validity of trade marks. Following a reference from the High Court of Justice (England and Wales) (the ‘High Court’) to the CJEU in the case Sky v SkyKick, Case C-371/18 (Sky plc and others v SkyKick UK Limited and other) the CJEU has given judgment.

For the facts giving rise to the dispute in the main proceedings, please see our previous summary of the case in the Herbert Smith Freehills ‘Trade Mark Update for 2018’ here. We previously reported on the Opinion of the Advocate-General (‘AG’) in this case here.

The Decision

The reference to the CJEU focussed on the relationship between the specification of goods and services and the validity of trade marks.

Lack of clarity and precision as a ground of invalidity

The CJEU set out that the grounds of invalidity laid down by EU legislation are exhaustive and therefore rejected the idea that a trade mark could be attacked as a separate ground of invalidity on the basis that the specification of the goods or services lacked clarity or precision, or because such lack of clarity and precision was contrary to public policy. The only way to attack a registered mark is on the basis of revocation for non-use, after the event, if the particular goods or services were not in use after five years.

This decision favours the existing status quo of the trade mark system, where big brands often file extensively and widely, taking into account the likely areas of expansion of their use of the trade mark over time. The decision provides a clear, if unexpected, result, despite the steer from the High Court over concern at broad, undefined terms such as “computer software”.  The Court chose not to focus upon whether it was possible to claim trade mark protection for terms that do not exactly specify for what a trade mark was or was intended to be used.  This contrasts with the AG’s Opinion, which suggested that a lack of clarity in the specification could fall under the public policy absolute ground for refusal of a registration and therefore invalidity. The CJEU found no basis for an attack at all; the only question was whether the trade mark proprietor used the mark and, if not, whether part of the mark could later be revoked for non-use.

Bad faith as a ground for refusal of registration and invalidity

The CJEU confirmed that ‘bad faith’ may be triggered where an applicant registers a mark without any intention to use it in relation to the goods and services covered by that registration. However, it clarified that bad faith will only be established in the exceptional circumstances where it could be demonstrated that the applicant deliberately sought to monopolise classes of goods or services in order to block or undermine the interests of other businesses.  Bad faith cannot be presumed on the basis of the mere finding that, at the time of filing, the applicant had no economic activity corresponding to the goods and services referred to in that application. The court should look at the motives of the trade mark owner when they filed their application and at whether they intended to abuse the system by blocking a competitor at that time. This is a very high evidential burden to meet and would only rarely be found.  Even where it is, the trade mark would only be partially invalid to the extent that the scope of the goods or services had been improperly applied for.

The High Court will now need to reach a final ruling, with the benefit of the CJEU’s Judgment. At present, it had found that SkyKick had infringed Sky’s trade marks, unless it had a defence and counterclaim by way of seeking to make out that Sky’s trade marks were partially or wholly invalid.

Business Impact

This decision is very favourable to existing trade mark proprietors. Critics will say that it misses an opportunity to regulate the ever increasing thicket of broad trade mark registrations and leaves the burden on third parties to contest such marks. However, the decision effectively favours the status quo, so avoids any concerns regarding a radical new approach being thrust upon the UK at the time of Brexit. Had the CJEU followed the AG’s Opinion, all businesses with trade marks, not only big brands, risked their trade marks being found invalid across the EU if they were filed with overly wide specifications, which could have had a chilling effect on companies seeking to enforce their key trade marks in the EU through litigation. Whilst this concern has not materialised, businesses protecting new brands would still be wise to look carefully at the scope of protection that they file for and to be clearer in specifying exactly the goods or services they intend to protect.

This decision will continue to impact businesses in the UK, despite the UK leaving the EU shortly. Following this reference from the UK High Court, the UK Government made detailed submissions to the CJEU upon its interpretation of the legislation.  After the UK leaves the EU, the UK will though lose the ability to seek to influence the outcome of such cases (and will no longer have a judicial representative on the CJEU), but the likely consequence of having trade mark law that is so closely aligned with the EU is that the UK courts will nonetheless continue to apply EU case law.

Joel Smith, Head of IP UK responds to this landmark EU Court ruling here.

Authors

Joel Smith
Joel Smith
Partner, Head of Intellectual Property UK, London
+44 20 7466 2331
Joanna Silver
Joanna Silver
Senior Associate, London
+44 20 7466 2315