IP Cases & Articles

SPCs for NPEs? UK thinks yes but does the CJEU agree?

Non-practising entities (NPEs), patent assertion entities, patent trolls – whatever you choose to call them, their activities are hotly debated in the IP world. Although they first came to attention in the US, some have recently made the move into supplementary protection certificates (SPCs) in Europe.

In the European Union (EU), SPCs are granted to patented medicinal and plant protection products which have required marketing authorisation (regulatory approval) prior to being placed on the market.

SPCs extend the lifetime of the patent (for the approved product) for up to five years (plus another six months if paediatric studies are carried out) – their value to industry is significant, as the term of the SPC is typically when the product achieves its peak sales.

An SPC can only be granted to the holder of the basic patent. However, there is nothing in the wording of the SPC Regulation which requires the SPC applicant to be the same as, or even have any connection with, the marketing authorisation holder. Companies regularly collaborate on the development of pharmaceutical products – in this situation it is common for the basic patent and SPC holder to be the licensor and the marketing authorisation holder its licensee. However, it has long been uncertain whether the SPC Regulation permits a party completely unconnected with the development of the product, but who simply owns a basic patent covering some aspect of the product, to obtain an SPC based on another party's marketing authorisation.

The majority of patent offices in European countries generally check only that both the SPC applicant and patent holder are the same: in most cases, they do not take into consideration who is the marketing authorisation holder.

A number of pharmaceutical companies have relied on this uncertainty to obtain SPCs based on a basic patent they own which covers a competitor's product, relying on the competitor's marketing authorisation. We have recently become aware that some NPEs have done the same, and a number of such SPCs have been granted by the UKIPO.

This practice may cause some concern to the research-based pharmaceutical industry: faced with a third party SPC on their own marketed product, they must decide whether to take a licence from the third party or challenge the grant of the SPC.

However, even if the wording of the SPC regulation is silent, there may be grounds for challenging such an SPC, on the basis its grant is contrary to the purpose of the SPC regulation, which is to encourage pharmaceutical research.

Eli Lilly and Human Genome Sciences

Some preliminary guidance on this issue may be found in the decisions of the UK High Court and the CJEU in the litigation between Eli Lilly and Human Genome Sciences. In its decision (C-493/12) the CJEU opined that, if a patent holder was not the holder of the medicinal product marketing authorisation, the grant of an SPC to such a patent holder may not be allowed. This is because, in their view, if a party had not made any investment in research, the grant of such an SPC to such a party could undermine the objective of the SPC regulation.

The UK High Court took a different view from the CJEU on this point, considering this issue not relevant to the question of whether or not an SPC should be granted. However, both the UK High Court's comments on the "third party issue" and those of the CJEU are asides – no decision was reached on this issue as it was not ultimately pursued before the courts.

We will continue to monitor developments in this area and report further in future editions of our patent newsletter. For further advice please contact your usual D Young & Co patent advisor.

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