RATIFICATION OF THE UPC AGREEMENT IN SIGHT? GERMAN CONSTITUTIONAL DECISION LIKELY EARLY IN 2020

As those with an interest in patents will be aware, the Unified Patent Court is still not a reality. The final ratification of the Unified Patent Court Agreement (“UPCA”) required for the agreement to come into effect, is that of Germany (over 13 states having ratified including the UK and France, which, along with Germany, were the three states which were required to have ratified along with at least ten more, before the UPCA could come into force – see here for ratification details). Without the UPC established to enforce them, unitary patents cannot be granted.  Germany’s ratification has yet to be received.

The outcome is still awaited of the constitutional case objecting to a ratification of the UPCA by Germany, which was listed to be decided in 2019.  In a recent interview, Judge Huber of the German Federal Constitutional Court (which is the court due to decide the case) denied that the delay had anything to do with Brexit, rather that other important cases were also waiting to be decided and took precedence. He suggested that the case might be decided in the early part of 2020.

It is generally thought that the German court is likely to reject the objector’s case, but only once this is determined can the German government make a decision on whether to ratify the UPCA. Indications are that all administrative preparation to ratify had been made in readiness, however the issue of Brexit is also key, in governmental terms at least. In July 2019, in a response to a Brief Enquiry, the Federal Government stated that the consequences of Brexit were as yet unknown (and by implication were delaying ratification), but also reasserted the current Federal Government’s commitment to the unitary patent and UPC project.

For more on the Unified Patent Court (UPC) and unitary patent (UP) system, see our UPC hub here: www.hsf.com/upc

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

CJEU refuses UK High Court’s request for preliminary ruling on SPC applications based on third-party MAs, on account of referred question being “hypothetical” (C-239/19 Eli Lilly v Genentech)

On 5 September 2019, the Ninth Chamber of the CJEU refused a request for referral in relation to the interpretation of Article 3(b) of Regulation (EC) No 469/2009 of the European Parliament and of the Council of 6 May 2009 concerning the supplementary protection certificate for medicinal products (‘SPC Regulation‘).

Business impact

In its order, the CJEU held that this request for a preliminary ruling was manifestly inadmissible a under Article 52(3) of the Rules of Procedure of the Court of Justice, as the question referred was hypothetical for the purposes of the dispute in the main proceedings.

The referral request was made by High Court of Justice (England and Wales) in proceedings [2019] EWHC 388 (Pat) between Eli Lilly and Genentech. The referral was concerned with whether the SPC regulation should preclude SPC applications based on third-party marketing authorisations (‘MAs‘), which is where a patent holder seeks to obtain an SPC for a product without the consent of the unrelated third party that has developed that product and obtained the necessary a MA for it.

This issue is not a new one, and was previously referred to in Eli Lilly v HGS (C-493/12). Although it was not being pursued as a standalone ground, the CJEU decision observed in this case that if an SPC were granted to the patent holder, even though he was not the holder of the MA granted for the medicinal product developed from the specifications of the patent, and had therefore not made any investment in research relating to that aspect of his original invention, that would undermine the objective of the SPC Regulation. In a similar vein, in Gilead v Teva (C-121/17; a case that did not concern grant of SPCs based on third-party MAs) the CJEU held in paragraph 50 of its decision that when applying Article 3(a) of the SPC Regulation no account should be taken of research which took place after the filing date or priority date of the basic patent, as this would enable the SPC holder to unduly to enjoy protection for those unknown results.

The refusal of the reference means that disappointingly, the rather important question of SPC applications based on third-party MAs remains unanswered. Nevertheless, it is likely that there will be a further reference on this issue in the future, perhaps from one of the other national courts where the dispute between Eli Lilly and Genentech remains live, or from the Court of Appeal in the UK (should this happen before Brexit).

Background

The referral request was made by the UK High Court in proceedings which related to Genentech’s patent EP (UK) 1 641 822, entitled ‘IL 17A/F heterologous peptides and therapeutic uses thereof’ (the ‘Basic Patent’) and Eli Lilly’s MA for their product ‘ixekizumab’ marketed under the brand name ‘Taltz’.

Genentech contended that the formulation for ixekizumab fell within the scope of the Basic Patent, and applied for an SPC on the basis of the Basic Patent and Eli Lilly’s MA for ixekizumab.

Eli Lilly in turn contended that two grounds precluded the grant of the SPC: 1) the SPC application at issue did not comply with Article 3(a) of the SPC regulation, since the formulation for ixekizumab was not protected by the Basic Patent; and 2) the application did not comply with either Article 2 or Article 3(b) and (d) of the SPC Regulation, because the MA for ixekizumab is not a relevant MA, since it is owned by a third party and was relied upon without that party’s consent.

By the time the referring decision as handed down, the Basic Patent had already been held to be invalid in parallel proceedings. Nevertheless, Mr Justice Arnold considered it necessary to make a referral to the CJEU on whether the SPC Regulation should preclude SPC applications based on third-party MAs. Various factors played a role in making the referral:

  1. Even though the Basic Patent had been held to be invalid in parallel proceedings, it may be maintained on appeal;
  2. Because of Brexit, it is highly probable that the Court of Appeal will cease to have jurisdiction to refer a question for a preliminary ruling to the Court of Justice, so it was considered necessary that the High Court refer such a question now;
  3. As of the date of the reference decision, Eli Lilly and Genentech were in dispute on this issue not only in the United Kingdom but also in other Member States;
  4. This issue had arisen in other previous cases.

Keeping the above in mind, Mr Justice Arnold referred the following question to the CJEU:

Does [the SPC Regulation] preclude the grant of an SPC to the proprietor of a basic patent in respect of a product which is the subject of a marketing authorisation held by a third party without that party’s consent? 

Analysis

The CJEU’s order clarifies that the role of the CJEU is to aid with interpretation of such EU law as is necessary for national courts to give judgment in cases upon which they are called to adjudicate. A reference for a preliminary ruling made by a national court is to be rejected where it is obvious that the interpretation of EU law that is sought is unrelated to the actual facts of the main action or its object, or where the problem is hypothetical.

In considering whether the clarification or interpretation of EU law sought in the referral is necessary, the CJEU held that it is not sufficient to say that there may be an appeal down the line which may render the hypothetical scenario true. Neither is it of relevance that the same issue exists in proceedings in other jurisdictions, or may have been raised in previous proceedings – the existence of disputes in other Member States of the European Union or of previous disputes does not support the conclusion that the interpretation of EU law that is sought is necessary for the resolution of the dispute which the referring court is called upon to resolve.

The CJEU also clarified that the referring court could not pre-emptively request a reference pending Brexit, on the basis that the appeal court might subsequently lose its jurisdiction to refer the same question because of withdrawal from the European Union pursuant to Article 50 of the TFEU, and while EU law continues in full force in the UK.

Conclusion

Although the refusal of the CJEU to decide on the referral is disappointing, it is hoped that the question of SPC applications based on third-party MAs will not remained unanswered much longer, and that there will be a decision that clarifies this issue in the foreseeable future. Meanwhile, the CJEU’s order sheds light on some important issues like the CJEU’s approach to references in light of Brexit, which will no doubt inform litigation strategy in the coming months.

Sebastian Moore
Sebastian Moore
Partner
+44 20 7466 2801
Martina Maffei
Martina Maffei
Associate
+39 02 0068 1353
Priyanka Madan
Priyanka Madan
Associate
+44 20 7466 2986

 

Data Assets – Protecting and Driving Value in a Digital Age

Faced with the exponential rise of data as an asset class in its own right, organisations are now taking a fresh look at the data that are available or accessible to them and the ways in which the value of those data can be safeguarded, unlocked and maximised. Data have become a strategic and valuable asset for many organisations but protecting and exploiting that asset is not always simple.

Our feature article, published in May’s edition of PLC Magazine and linked in this post, considers data as an asset, how intellectual property rights can be employed to protect data, how data can be used effectively and how to minimise associated legal risks.

The article explores key legal considerations for organisations looking to develop or refine a data commercialisation strategy, including in respect of:

  • the concept of so-called data “ownership”;
  • intellectual property rights;
  • contractual rights;
  • information governance;
  • competition law; and
  • corporate transactions.

For the full article please click below:

 

This article was first published in PLC Magazine, May 2019

Edward Du Boulay
Edward Du Boulay
Senior Associate, Digital TMT & Data, London
+44 20 7466 2384
Miriam Everett
Miriam Everett
Partner, Head of Data Protection & Privacy, London
+44 20 7466 2378
Kyriakos Fountoukakos
Kyriakos Fountoukakos
Partner, Competition and Trade, Brussels
+32 2 518 1840
Andrew Moir
Andrew Moir
Partner, Head of Cybersecurity, London
+44 20 7466 2773
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, Intellectual Property, London
+44 20 7466 2217
Joel Smith
Joel Smith
Partner, Head of Intellectual Property, London
+44 20 7466 2331
Manish Soni
Manish Soni
Senior Associate, London
+44 20 7466 2016

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.

Continue reading

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.

Continue reading

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