Are you authorised? CJEU asked to rule on third party SPCs

Article 6 of the EU medicines SPC regulation states that the SPC shall be granted to the holder of the basic patent. However, unlike in some other jurisdictions, the EU SPC Regulations are silent on whether any legal relationship is required between the basic patent holder and the MA holder.

In many cases, this matter is uncontroversial: for example, it is common for the basic patent holder to be a parent company and the MA holder its local subsidiary, or for the basic patent holder to be the licensor and the MA holder its licensee. However, it has long been uncertain whether the EU SPC Regulations correctly permit a patent holder who is completely unconnected with the MA holder, but who owns a basic patent which covers some aspect of the marketed product, to obtain an SPC without the consent of the MA holder. This is of great commercial significance as, if such SPCs were allowed, the MA holder would require authorisation from the SPC holder to market its own authorised product.

The practice of most patent offices in EU countries is only to check that the SPC applicant and the basic patent holder are the same, and not to take the identity of the MA holder into account. In view of this, many such “third party” SPCs have been granted. While attempts have been made to challenge such SPCs on other grounds, the CJEU has never been asked to directly consider the “third party” issue.

The issue of “third party” SPCs was first considered by the courts in the litigation between Human Genome Sciences (HGS) and Eli Lilly on tabalumab.

HGS owned a basic patent based on early stage research which ultimately led to the product and applied for an SPC based on Lilly’s MA for this product. Lilly sought a declaration from the UK Patents Court that such an SPC would be invalid, in part, on the basis HGS was an unconnected third party.

In this case, the “third party” issue was not ultimately pursued before the higher courts, so the CJEU did not have the opportunity to consider it. However, the CJEU, in side comments, suggested that the grant of such “third party” SPCs may undermine the objectives of the SPC Regulation, if that third party had not made any investment in research relating to the aspect of the basic patent which led to the authorised product.

The current reference relates to a dispute between Genentech and Lilly in relation to Lilly’s authorised product TALTZ (ixekizumab). There is no connection between the parties on this product. Nevertheless, Genentech owns basic patents covering this product, and applied for SPCs based on them and Lilly’s MA. Lilly once again sought a declaration from the UK Patents Court that any SPC, if granted, would be invalid due to lack of a legal relationship between the two, and requested a referral to the CJEU if necessary to clarify whether or not “third party” SPCs are lawful under the SPC Regulations.

The basic patent was found invalid in a separate decision from the UK Patents Court. However, the court agreed that the law on “third party” SPCs was not clear. In view of the UK’s planned departure from the EU, the court immediately referred a question to the CJEU, as the appellate courts may not have the chance to do so.

The judge, Mr Justice Arnold, suggested that the question to be referred should be: “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?”.

The CJEU is likely to rule on this matter in 2020, and its answer may finally provide clarity on this long-running issue to the industry.