Preparations for the UPC continue despite an “unpredictable environment”

The UPC Preparatory Committee has issued a “Status of the Unified Patent Court Project” statement and review of 2018, confirming that there are now 16 states which have ratified the UPC, and that German ratification is still awaited (dependent on the outcome of the complaint pending before the Constitutional Court in Germany) before the project can move into provisional application phase. This latter phase is allows the courts to be prepared and judges to be appointed.

 

Despite the current, somewhat unpredictable environment, the technical and operational preparations are continuing allowing for the project to move at pace in the event of a positive outcome from the German Constitutional Court“.

The press release says nothing more than was already known, but it does confirm that the status of the project is constantly being reviewed, stating that the Chairman of the UPC Preparatory Committee “continues to meet with the Executive Group and the operational team on a monthly basis” and noting that those that have applied for judicial positions in the Unified Patent Court are being contacted separately.

Author

Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, London
+44 20 7466 2217

Advocate General proposes literal interpretation of Article 3(d) SPC Regulation in Abraxis (C-443/17)

The Advocate General of the CJEU proposed a narrow interpretation of Article    3(d) in the Opinion given yesterday in Abraxis Bioscience LLC v Comptroller General of Patents 13 December 2018, one that would marginalise the effect of the CJEU’s decision in Neurim (C-130/11). If followed by the CJEU, this position would be met with disappointment by the pharmaceutical industry, which continues to make significant investments in researching and developing formulations that improve efficacy and new uses of known products.

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Italy moves the unitary patent a step closer

The Italian Government approved a draft Bill on 21 November 2018 aimed at adapting the Italian IP Code to the Unitary Patent Regulation (EU 1257/2012) and the Unified Patent Court (UPC) Agreement. The next step before the Bill is passed will be for the Italian Parliament to give its favourable opinion.

The draft Bill will essentially amend the Industrial Property Code in Italy to incorporate unitary patent protection and the jurisdiction of the UPC.

What’s new?

  • Safety net

Under the current system a European patent acquires effect in Italy once an Italian translation of the patent has been filed with the Italian Patent Office within three months of the publication of the patent grant. Once the UPC is in place, holders of European patents will be entitled to apply for their European patents to have unitary effect in all 26 Member States that have participated in the enhanced cooperation to create the unitary patent, within one month of the patent grant being published on the European Patent Bulletin.

There is a degree of uncertainty as to whether the process for applying for unitary effect will take longer than the 3 months, in which case the patentee will have lost out on the chance to validate their patent in Italy.

The draft Bill has therefore introduced a safety net mechanism whereby if an application for unitary effect is rejected or withdrawn, the 3 month term for the validation in Italy will take effect from the date when they receive the rejection or of the withdrawal. This will allow patentees to validate a patent in Italy even if their unitary application is not granted.

  • Experimental use exception

Another important amendment concerns the experimental use exemption. Under the draft Bill, the rights conferred by a patent shall not extend to acts carried out for experimental purposes relating to the subject matter of the patented invention or to the use of biological material for the purpose of breeding, or discovering and developing other plant varieties.

The previous wording of the Italian Industrial Property Code did not include a specification regarding the type of experimental use. In essence, this limitation of the experimental purposes to “the subject matter of the patented invention” could lead to a more restrictive interpretation of the scope of permitted “experimental use” (e.g. limited to experiment “on the patented invention” and not “with the patented invention” in line with Italian case law).

  • Infringement exemption for vessels/aircraft/vehicles

The draft Bill would introduce an exemption for the use of patented inventions on board vessels or in the construction or operation of aircraft or land vehicles or other means of transport of countries of the International Union for the Protection of Industrial Property (Paris Union) or members of the World Trade Organisation, when such vessels or vehicles temporarily or accidentally enter the Italian territory.

  • Transition period

The draft Bill guarantees the application of Italian law to proceedings concerning European patents until the UPC Agreement comes into force and for the duration of its transition period.

The final touches

The remainder of the draft Bill is aimed at removing any inconsistencies with existing provisions governing patents in force in Italy and their application to unitary patents where necessary. If significant changes are not required to it, the draft Bill could be approved in the near future.

The draft Bill rounds off Italy’s preparations for the unitary patent and UPC system, which had been put into motion with the amendment of the Italian Industrial Property Code to incorporate provisions on indirect infringement as required by the UPC Agreement.

 

Contacts

Sebastian Moore
Sebastian Moore
Partner
+44 20 7466 2801
Sara Balice
Sara Balice
Senior Associate
+39 0200681363
Martina Maffei
Martina Maffei
Associate
+39 0200681353

 

UK SUPREME COURT RAISES SUFFICIENCY STANDARD FOR SWISS-FORM CLAIMS AND LIMITS THE ABILITY TO ASSERT THEM AGAINST “SKINNY LABEL” PRODUCTS

Commercial impact

Yesterday’s Supreme Court decision in Warner-Lambert v Mylan is disappointing news for patentees who may have made significant investment in R&D to develop new uses for known medicines. The full judgment and press release can be found here.

The Supreme Court recognised the value of such second (and further) medical uses and the importance of their patent protection so as to reward and incentivise the patentee. In spite of this, the Supreme Court:

  1. raised the standard of sufficiency of disclosure, with the result that existing Swiss-form claims may be more vulnerable to attack and future medical use claims may be more difficult to obtain; and
  2. limited the protective effect of Swiss-form claims.

Whilst its decision concerns Swiss-form claims, the Supreme Court recognised that although EPC 2000 claims (which have superseded Swiss-form claims) may be drafted differently, they give rise to similar difficulties as those discussed in the decision. As a consequence, yesterday’s decision will have long-felt ramifications for patentees both in terms of litigation and prosecution strategy, as well as being influential in the courts of other jurisdictions.

Comment

The Supreme Court has adopted a higher standard for the assessment of the plausibility of Swiss-form claims than previously used. In doing so, the Supreme Court appears to increase the amount of information required to be disclosed in a patent’s description as well as the specificity required in claims where there are sub-categories of related indications. This may narrow the window that innovative companies have to file patent applications in advance of clinical trials and may necessitate the need for additional dependent claims covering the separate, related indications rather than relying on a category claim. The decision was by a majority view (Lord Sumption, Lord Reed and Lord Briggs).

Although obiter, the Supreme Court prefers an approach to the infringement of Swiss-form claims (which are purpose-limited process claims) in which:

  1. the ability to assert indirect infringement ends at the manufacturer’s gate; and
  2. an objective approach is taken to direct infringement by the sale of the product of the infringing process (under section 60(1)(c) of the Patents Act 1977). Under this objective approach, “skinny labels” carving out the patented indication will often be effective in avoiding infringement.

This approach to direct infringement appears to have taken its lead from the approach in Germany. However, as highlighted by Lord Briggs, the Supreme Court was not provided with any information about the particular features of the German system for prescribing and dispensing medicines or about the market conditions within which a fair balance has to be struck, all of which could have a significant impact on this balance. This would particularly be the case if, for instance, it was not possible to obtain reimbursement in Germany for the off-label prescription, but reimbursement was possible in the UK.

On the facts of the case before it, the Supreme Court held that the claims of Warner-Lambert’s patent relating to neuropathic pain were invalid for insufficiency in their entirety, and that there would have been no infringement by Actavis had the claims been held to be valid.

Contacts

Jonathan Turnbull
Jonathan Turnbull
Partner
+44 20 7466 2174
Alex Freelove
Alex Freelove
Senior Associate
+44 20 7466 7452

THE COURT OF APPEAL MAKES FRIENDS WITH SEP HOLDERS

Unwired Planet International Limited v Huawei Technologies Co. Limited [2018] EWCA Civ 2344

The Court of Appeal has endorsed the approach taken by Birss J at the first instance in relation to determining fair, reasonable, and non-discriminatory (FRAND) royalties and the rights and obligations of parties negotiating licences for standard essential patents (SEPs), dismissing Huawei’s appeal in its entirety. Continue reading

Brexit “no deal” technical notices published on Patents, Trade marks, Designs, Copyright, GIs, and Exhaustion of rights

The latest tranche of “no deal” technical notices was released yesterday afternoon by the UK Government. Amongst them are several notices that highlight the Brexit issues faced by intellectual property right owners and, in some cases, confirm the Government’s approach to resolving them. The Government also released this news story today which comments on the guidance given in the technical notices and comments on the Government’s longer term aims for IP protection.

Key announcements, in the context of no deal, are:

  • Provision of a new right to replace unregistered Community design rights, to be known as “the supplementary unregistered design right“.
  • Existing EUTMs and Community registered designs will be replaced with new, equivalent rights in the UK at the end of the implementation/transition period, “with minimal administrative burden“.
  • The SPC, compulsory licensing, pharmaceutical product testing exception and patenting of biotechnological inventions regimes will remain unchanged at least initially.
  • If the UPC comes into force the UK will replace unitary patent rights with equivalent rights if the UK needs to withdraw from the new system, although the UK “will explore whether it is possible to remain within it“. The Government’s news story states that “The UK intends to stay in the Unified Patent Court and unitary patent system after we leave the EU.”
  • UK originating sui generis database rights will no longer be enforceable in the EEA; “UK owners may want to consider relying on other forms of protection (e.g. restrictive licensing agreements or copyright where applicable) for their databases
  • The UK will set up its own GI schemewhich will be WTO TRIPS compliant“. The new rights “will broadly mirror the EU regime and be no more burdensome to producers“.  Since the UK would no longer be required to recognise EU GI status, EU producers would be able to apply for UK GI status. Those wishing to protect UK GIs in the EU will need to submit applications on a third country basis.
  • The UK will continue to accept the exhaustion of IP rights in products put on the market in the EEA by, or with the consent of, the rights holder. However, the EU will likely not consider that goods placed on the UK market are exhausted in the EEA, and thus permission may need to be sought from the rights holder to transfer goods to the EEA that have legitimately been put on the market in the UK. The Government news story says that “The UK looks forward to exploring arrangements on IP cooperation that will provide mutual benefits to UK and EU rights holders and we are ready to discuss issues the EU wishes to raise in the negotiations on our future relationship, including exhaustion of IP rights”.

Links to the notices:

  1. Patents
  2. Trade marks and designs
  3. Copyright
  4. Geographical Indications
  5. Exhaustion of IP rights

More detail on each of these is provided below. For those with an interest in Life Sciences please also see our blog post on the notices related to that sector that were released last month.

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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
+44 20 7466 2031
Laura Deacon
Laura Deacon
Of Counsel
+44 20 7466 2045
Peter FitzPatrick
Peter FitzPatrick
Associate
+44 20 7466 3711

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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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
+44 20 7466 2217

 

UK Government agrees elements of the European Commission’s proposals for post-Brexit protection of EU-wide IP rights in the UK in the latest draft of the Withdrawal Agreement

In the latest draft of the Withdrawal Agreement (19 March 2018) the UK Government and European Commission negotiators appear to have agreed text providing for the replacement of EU-wide IP rights having effect in the UK with equivalent UK rights at the end of the transition period post-Brexit (until 31 December 2020). Further, during the transition period, EU-wide rights will still apply to the UK due to the effect of Article 122 which provides that EU law will be applicable to the UK during the transition period and that it will produce the same legal effects in respect of and in the UK as those which is produces within the EU and its Member States and shall be interpreted and applied in accordance with the same methods and general principles, and that during the transition period, any reference to Member States in EU law shall be understood as including the UK.

Other IP related measures include provision for dealing with: exhaustion of rights, pending applications, international registrations designating the EU and the effect of invalidity proceedings that are “on foot” at the end of the transition period, (see Articles 50-57).  Certain provisions (highlighted in green) are now listed as agreed between negotiators, whilst others are still just proposals from the Commission (those un-highlighted) including those on GIs, SPCs and who pays the administration costs involved.

There are still unresolved issues for those who hold IP rights in the EU and those who license (in or out) EU-wide IP rights or have agreements linked to the “EU” as territory, which we discuss below.

Despite the areas of current agreement, there remains the possibility of a “no deal” scenario in relation to the whole agreement, in which case none of the areas agreed would stand (although the UK Government could make separate arrangements to create equivalent rights at the moment of Brexit). Anything agreed between the Commission and the UK under the Withdrawal Agreement needs European Council approval and then European Parliament approval. Thus, although a good start has been made on agreeing the post-Brexit fate of EU-wide IP rights currently having effect in the UK, the final arrangements are still far from certain. Indeed, if the Withdrawal Agreement is not accepted then there will be no transition period at all and a “hard” Brexit will come into effect on 30 March 2019, with all that implies for IP rights (see our comments from January 2017 here).

In summary, the proposals in the revised Withdrawal Agreement, and problems associated with them, are:

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