Nexus: SPC

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

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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.

Article 3(a) just keeps on giving: AG Opinion in SPC referrals C-650/17 and C-114/18

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The Advocate General (AG) has issued his opinion in SPC Referrals C-650/17 (Royalty Pharma) and C‑114/18 (Sandoz). Both referrals seek clarification over whether an SPC may be granted to a specific, individualised, embodiment of the product claimed by the basic patent. The referrals particularly relate to the correct interpretation of Article 3(a) of the SPC Regulation (Regulation (EC) No. 469/2009). Article 3(a) states that an SPC shall be granted for a product “protected by a basic patent in force”. C-650/17 asks how Article 3(a) should be applied to functional claims, and C‑114/18 asks how Article 3(a) should be applied to claims specifying a Markush formula. In his opinion, the AG is clear that Article 3(a) should be interpreted for these types of claims according to the test provided in the CJEU decision C-121/17 (Teva).

Clarity still needed after Teva?

Teva related to Gilead's SPC for the HIV combination therapy, Truvada. The SPC was based on the European patent EP0915894(for more on the patent disputes surrounding Truvada, see IPKat post here). The patent only mentioned one of the drugs in Truvada. The CJEU adopted a two-step test for establishing whether each of the active ingredients of a combination product covered by an SPC must be specifically mentioned in the basic patent. According to Teva, An active ingredient is covered by a basic patent according to Article 3(a) if, from the point of a view of a skilled person at the priority date of the patent:

(1) the combination of those active ingredients must necessarily, in the light of the description and drawings of that patent, fall under the invention covered by that patent, and

(2) each of those active ingredients must be specifically identifiable, in the light of all the information disclosed by that patent.

Following the CJEU ruling, the UK courts found that Truvada could not be said to embody the technical contribution of the patent, as the patent only related to one of the active ingredients of Truvada.

The referrals in C-650/17 and C‑114/18 occurred before the CJEU decision on the interpretation of Article 3(a) in Teva. However, the parties maintained their request for preliminary opinions in both referrals, maintaining that further clarification of Article 3(a) was needed. In particular, did the two-step test of Teva apply to situations other than a combination product?

Case Background of C-650/17(Functional claims)

The referral in case C-650/17 originated from a dispute before the German Court related to Royalty Pharma’s SPC application for sitagliptin, based on European Patent EP 1084705. Sitagliptin is an inhibitor of the enzyme DPIV and is authorised for use in diabetics to lower blood glucose levels. The patent broadly claims an DPIV inhibitor for lowering blood glucose levels. The dependent claims refer to specific inhibitors. Sitagliptin is covered by the patent but is not individually disclosed.

A decision by the German courts rejecting Royalty Pharma’s SPC application for sitagliptin was appealed to the German Federal Patent Court (Bundespatentgericht). The Federal Patent Court was of the opinion that the SPC could not be granted. In particular, the court considered that sitagliptin was not “protected by a basic patent” pursuant to Article 3(a) because stigliptin was not individually disclosed in the patent. However, the German Federal Patent Court noted that their interpretation of Article 3(a) was different to that of the UK Courts. In order to provide clarification, the German Federal Patent Court therefore stayed proceedings, and referred the following questions to the CJEU:

Is a product protected by a basic patent in force pursuant to Article 3(a) of Regulation (EC) No 469/2009 1 only if it forms part of the subject matter of protection defined by the claims and is thus provided to the expert as a specific embodiment?

Is it not therefore sufficient for the requirements of Article 3(a) of Regulation (EC) No 469/2009 if the product in question satisfies the general functional definition of a class of active ingredients in the claims, but is not otherwise indicated in individualised form as a specific embodiment of the method protected by the basic patent?

Is a product not protected by a basic patent in force under Article 3(a) of Regulation (EC) No 469/2009 if it is covered by the functional definition in the claims, but was developed only after the filing date of the basic patent as a result of an independent inventive step?

Case Background of C‑114/18 (Markush formula)

The referral in case C‑114/18 relates to how Article 3(a) should be applied to claims specifying a large number of compounds in the form of a Markush formula. The referral from the UK Court of Appeal related to an SPC granted to Searle for the anti-retroviral, Darunavir. Sandoz and Hexal brought revocation proceedings in the UK courts against the SPC. Darunavir is an inhibitor of the HIV reverse transcriptase and is covered by the European EP 0810 209. The patent claims compounds in the form of a Markush formula. The Markush formula enables a large class of compounds to be claimed without the necessity of writing out every single chemical entity. Sandoz and Hexal estimated that the number of compounds covered by claim 1 was somewhere between 7 x 10¹³⁵and 1 x 10³⁷⁷. Darunavir was covered by the claim but not disclosed specifically.

The Court of Appeal referred the following question to the CJEU:

Where the sole active ingredient the subject of a [SPC issued under Regulation No 469/2009] is a member of a class of compounds which fall within a Markush definition in a claim of the patent, all of which class members embody the core inventive technical advance of the patent, is it sufficient for the purposes of Article 3(a) of [Regulation No 469/2009] that the compound would, upon examination of its structure, immediately be recognised as one which falls within the class (and therefore would be protected by the patent as a matter of national patent law) or must the specific substituents necessary to form the active ingredient be amongst those which the skilled person could derive, based on their common general knowledge, from a reading of the patent claims?

Opinion of the Advocate General

The AG was of the opinion that the test established by the CJEU decision in Teva is applicable to situations other than combination therapies: “any distinction between a product consisting of a single active ingredient and a combination of active ingredients is not material for the purposes of this test and any suggested distinction between the two types of products would not be a meaningful one” (para. 49).

The AG was also of the opinion that the two-part test of Teva should be considered technologically neutral. The two-part test therefore also applies to functional claims and Markush formula claims. From this, the AG reasoned that Article 3(a) “does not preclude the grant of an SPC for an active ingredient which is covered by a functional definition or a Markush formula provided, however, that the two-part test set out in [Teva] is satisfied”.

The two-part test of Tevarequires that the product must be 1) covered by claimed invention of basic patent and 2) be ‘specifically identifiable’ from the basic patent (to a skilled person at the priority date). The AG summarised the second requirement as requiring “that it be established that a person skilled in the art would have been able, in the light of all the information contained in a patent, on the basis of the prior art at the filing date or priority date of the patent in question, to derive the product in question. This is not the case where, in the light of all the information contained in a patent, a product or constituent element of the product remains unknown to a person skilled in the art on the basis of the prior art at the filing date or priority date of the patent in question”.

The AG therefore concluded:

The two-part test applies both to products consisting of a single active ingredient and products composed of several active ingredients;

The concept of the ‘core inventive advance’ of the patent does not apply and is of no relevance in the context of Article 3(a);

Article 3(a) does not preclude the grant of a SPC for an active ingredient which is covered by a functional definition or a Markush formula provided, however, that the two-part test set out in Teva is satisfied;

The two-part test must be applied from the point of view of a person skilled in the art and on the basis of the prior art at the filing date or priority date of the basic patent;

The first part of the two-part test is not satisfied if the claims in a patent in relation to that product are not required for the solution of the technical problem disclosed by a patent;

The second part of the two-part requires that it be established that a person skilled in the art would have been able, in the light of all the information contained in a patent, on the basis of the prior art at the filing date or priority date of the patent in question, to derive the product in question.

The full text of the AG opinion can be read here.

Nexus

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

Article 3(a) just keeps on giving: AG Opinion in SPC referrals C-650/17 and C-114/18

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