The real reason why the "451-page dossier" should concern you: US seeks to put UK "deviation from the EPC" on the table in future US/UK trade negotiations

This Kat was probably not alone in being slightly bemused by the recent media reporting on the leaked “451-page dossier” describing US/UK talks on future trade arrangements. The BBC reportsthe dossier as showing that the US is interested in "extending patents” in the UK. How strange. Is the US government proposing some novel form of patent term extension currently unavailable to patentees in the UK? Fear not, IPKat is here to provide some clarity!

It turns out that, contrary to media reporting, the dossier does not mention anything radical with respect to patent term extension. However, there are some interesting insights to be gained from the dossier on the potential battleground for IP rights in future US/UK trade negotiations. Most notable is the US government's position on grace periods for disclosure before patent application filings, which are not permitted under the European Patent Convention (EPC).

What does the dossier actually say about IP?

The dossier is a readout of the UK-US Trade & Investment Working Group, that took place in 2017-2018. The dossier describes a series of meetings between the US and UK on “Innovative Pharmaceutical Protections”. In these meetings, representatives from the UKIPO and USPTO discussed the potential battleground for US/UK trade negotiations. As noted by the report’s authors, in trade negotiations the US typically seeks provisions for grace periods, data exclusivity and patent term extension. 

Grace period and UK exit from the EPC

What is really "on the table"?

One topic that is likely to play a significant part in any US/UK trade negotiations, is the US preference for a 12-month grace period for patent application filings after the first disclosure of an invention. If the US insists on the UK adopting such a grace period, there are concerns that the UK would be forced to leave the EPC, which does not permit grace periods. [Merpel: surely the UK would never do something so self-destructive? Then again…] 

The report itself notes that the USPTO “pushed hard” on grace periods in the meetings. The US asked if it would be "possible that the UK could diverge from the convention to, for example, adopt a grace period" (Doc 4, page 123). The UK responded that the EPC is clear that patents need substantial alignment and that they took their "standing in the EPO seriously". At stake is not only legal compatibility with EPC “but also of political signalling as the UK are a leading delegation at the EPC” (Doc 4, page 120). To put it another way, UK exit from the EPC would be a disaster. However, the US proposed a meeting with UK stakeholders that had positive views of grace periods.

The dossier therefore confirms the rumours that the US would like a 12-month grace period for patent application filings to be "on the table" in future US/UK trade negotiations.

Clarification on the UK's position on the UPC?

The US delegation was also interested to hear the UK government plans with respect to the UPC. [Merpel: wouldn’t we all?] The US expressed surprise that the UK government had ratified the UPC agreement before the UK’s exit. The US mentioned that US stakeholders were strongly in favour of the UK participating in the UPC. The UK replied that “we intend to stay part of the agreement through the implementation period…Beyond this is subject to negotiation”. This position was also described in the subsequently published FEB white paper. The dossier thus does not make us any the wiser with regards to the UK's intended negotiating position in post-Brexit negotiations with the US. Whether the UK will be able to be a member of the UPC after Brexit was discussed in a recent report from the European Parliament think-tank (IPKat: Can the UK become and stay a member of the UPC?)

Patent term extensions

The US, UK and EU currently all have provisions for extending the term of a patent relating to a medicinal product for a maximum of 5 years (the UK SPC term can also be extended a further 6 months based on a paediatric use). In the meetings, the UK commented that it would be useful for the US and UK “to look at each other’s systems and learn from them”. They also noted that the EU is currently looking at the existing SPC regime. There were also some discussions on patent term adjustment (PTA), which is available in the US but not the UK. PTA is the process by which the USPTO adjusts the term of a patent by a number of days to take account of delays in prosecution (35 U.S.C. 154(b)). The UK argued that PTA is not as relevant in the UK because accelerated examination is available for applicants. 

Despite the media uproar on the US seeking to extend patent terms in the UK, there was not in fact anything dramatic in these pleasantries. The overall conclusion from the discussion was that the US and UK systems were very similar, "e.g. one per product and maximum extension of 5 years" (Doc 4, page 125). This Kat muses that perhaps the biggest different between the US PTE and EU/UK SPC systems are that the US PTE system is less complex to navigate than the SPC regulation. 

It also seems that the main area of discussion with regards to generics access in the talks was not patent term extension but the term of data exclusivity awarded to biologics in the US and UK following marketing authorisation (MA).

Data exclusivity

The US and UK both provide innovators with a period of data exclusivity following market approval for a drug. Data exclusivity is unrelated to patent protection but is based on FDA or EMA marketing authorisation for a drug. One difference between the UK/EU and US systems of data exclusivity is that the US provides a longer period of exclusivity to biologics than small molecules. In the US, biologics benefit from 12 years protection (8 years data protection plus four years market protection), whilst chemicals are awarded 5 years protection. The longer data exclusivity protection for biologics means that it is often data exclusivity, and not patent term, that determines when a biosimilar may enter the market. The EU and the UK, in contrast to the US, provide 8+2 years protection for all pharmaceuticals.

The dossier reports a question from the UK to the US, asking why the US had different data exclusivity periods for chemicals and biologics. The US replied that “there are patent vulnerabilities as Biosimilars are not replicas of small molecules, therefore there is more need to have a longer-term protection for Biologic products”. Furthermore, the manufacture of biologics is more complex, "biologics are therefore defined by how they are made, rather than their chemical structure". Consequently, the US argued, enforcing a patent for a biologic against biosimilars is more difficult. Do readers have a view of this? 

The UK also asked a question about pricing. Did the longer protection not mean that prices were higher for longer? The USPTO responded that “pricing plays out domestically”. Furthermore “there is a lot of conversation on drug prices…and this is causing angst”.

The outcome of the final meeting on data exclusivity appeared to be that the US would seek reassurance from the UK that the data exclusivity provisions would remain unchanged following Brexit (Doc 4, summary point 5, page 120). 

Conclusion

The dossier therefore does provide some tip-bits of interesting information regarding US/UK thinking on IP protection and its relation to drug pricing. Reassuringly, despite the media reporting, there does not appear to be anything radical "on the table" with respect to patent term or data exclusivity. The US position on grace periods is the most concerning of all the issues under discussion. It would be an extraordinary act of self-harm for the UK to withdraw from the EPC, and this would have significant disadvantages not only for the UK but also for the US and third parties such as China and Japan. However, the dossier highlights throughout many areas that still need clarification. Final negotiating positions between the US and UK will also be highly dependent on the UK's negotiating position with the EU following Brexit.