Enforcement of patent rights in

the EU: Finding the right balance

between innovation and fair

competition

Lidia Mallo

EUROPEAN GENERIC MEDICINES ASSOCIATION

Japan, December 2012

EGA Key Fact and Figures

Ensuring a balanced patent system

• Patent Protection

• Innovation

• Free Competition

• No delays

• Free Trade

GENERIC PRODUCERS ORIGINATORS

1.Abuse of injunctions and weak patents

2.Patent linkage

3.Detention of legitimate generic

medicines at EU borders

4.TRIPs+ provisions in Free Trade Agreements

Current threats that delay

generic competition in the EU

1. Misuse of Injunctions:

Through Directive 2004/48/EC on

the Enforcement of IP Rights

6

Context: Definitions

Important to keep counterfeit separate and

distinct from patent infringement:

Copyright infringement: piracy

Trademark infringement: counterfeiting

Patent infringement: Potential infringement of

patents is a commercial practice issue with no

criminal implications for consumers’ health

NATURE OF IP RIGHTS

INFRINGEMENT

Infringement of a

Pharmaceutical Patent

in the legal supply chain

POTENTIAL IMPLICATIONS

FOR CONSUMERS

Absence of risk

FORMAL REGISTRATION &

APPROVAL PROCESS Q,S&E

–ie, REGULATED INDUSTRY

SECTOR with PRODUCT QUALITY

CONTROL

TRANSPARENCY

LEGITIMATE COMPETITION

COMPLEX COMMERCIAL

DISPUTE

eg: challenge of weak patents

The difference

A counterfeit “fake”

Louis Vuitton hand bag is

an obvious trademark/design infringement!

Patent infringements are not crystal clear: it can take up to 3 years to solve case & decisions can be different in each country

Should alleged patent infringers be confused with criminals i.e. pirates/counterfeiters?

2004/48/EC Enforcement

Directive: difficulties

IPRED1 was established to implement effective

measures against counterfeits and piracy.

IPRED1 facilitates the application of harsh

measures such as injunctions/ seizures and

delivery up many times granted on low

standards of proof

Undermines competition

Delays generic entry

European Commission Pharma Inquiry

Identifies Generic Delays

10

EC Inquiry Report 2009 (I)

Misuse of injunctions were identified in the EU pharma

inquiry report as way to create unjustifiable restraints

on generic access to the market:

Inquiry Report, par. 583

However, the grant of interim injunctions can become

particularly relevant when examined in the light of

originator companies’ overall patent and life cycle

strategies which are aimed at maximising profit and

shielding their products from competition”

Inquiry, par. 657

“in almost half of the closed cases the grant of an

interim injunction might not have been justified.”

Duration of injunctions proceedings

Table of duration of interlocutory injunction

proceedings demonstrating just how long generics

can be kept off the market:

MS Duration of PI

proceedings

(at first instance)

Duration of

revocation

proceedings (at

first instance)

France 2-3 months 18-24 months

Poland 2 weeks to 3 months Up to 4 years for

the 1st instance

decision

Finland 2-3 months 12-18 months

Belgium 2-6 months 9-12 months

Patent system: difficulties

Generic companies success rate in patent

actions on the merits is approximately 66%

There are a significant number of patents

that should never have been granted.

Case studies

Recent examples delayed generic market

entry due to interlocutory injunctions

based on ‘poor quality patents’

- Alendronate BE

Branded sales (12 months) 14.7 million Euros

Time off the market 6 months

- Perindopril UK

Branded sales (12 months) 108.8 million Euros

Time off the market 11 months

Patent system: difficulties

EU legislation

focused on piracy

andcounterfeiting

EPO

Originators:

• patent strategies

• frivolous litigation

• abuse of injunctions

• Injunctions

easy to obtain

• Granting of

weak patents

• Generic competition

disrupted

• Serious delays

• Lost savings for health

budgets

EC Inquiry Report

In the period 2000 to 2007, the European

Commission has calculated the additional

costs / lost savings caused by delayed generic

entry:

“additional savings of some €3 billion could

have been attained, had entry taken place

immediately”

Solutions proposed:

Review EU

legislation

Recommendation I: Invalidity

defense

Generic companies must be able to defend

themselves against poor quality patents: “the

asserted patent does not meet the

substantive criteria for patentability”

The Court will seriously consider the invalidity

defense

Such an invalidity defense can actually

prevent the handing down of the injunction

Recommendation II: protective

letters

Introduce a harmonized European system of

protective letters:

Filed with first instance court

Contain arguments on non infringement or

invalidity against the ex parte injunction

Arguments shall be valued by the court before

granting the injunction

System well established in Germany.

Adds a higher threshold for allowing an ex

parte interlocutory injunction.

Seizure and Delivery up

Seizure & delivery up are harsh measures,

harsher than PI.

Appropriate safeguards against abuse should

be implemented in EU legislation :

• Refuse seizures if they consider that there is

a serious chance that the invoked patent is

invalid

• Ensure that validity is not assumed just

because the IP right is granted

Compensation for injury

No guarantee or insufficient guarantee to

adequate compensation of injury caused by

unjustified measures.

Recommendations:

• Mandatory compensation if measures are

revoked/lapse or where it is found that there has

been no infringement of valid IPRs.

• Compensate not only those directly affected but

also third parties who have suffered loss as a

consequence of unjustified measures, e.g.

national health services and health insurance

companies.

2. Patent Linkage

23

What Is Patent Linkage?

By PATENT LINKAGE we understand

linking the marketing approval or any

other procedure related to price,

reimbursement and substitution for

generics to the patent status of the

reference product

24

How? and by Whom?

Pressure by

European + American originator industry

US Government/US Trade Office

EC through FTAs

Pressure on National Regulatory/Health

Authorities to

link generic medicines procedures to

patent status of reference products

become indirect ‘enforcers’ of patents

25

Two Different Areas of

Competence

Patent Offices (PO) assess patents PO have no power and competence to assess

quality, safety and efficacy of medicines or agree

on price & reimbursement

National Authorities assess quality,

safety and efficacy of medicines +

agree on price & reimbursement no power to judge validity of patents of

medicines

To delay generic competition

PATENT and SPC protection: MONOPOLY

MA Price,

Reimbursement,

generic

substitution

AT PATENT EXPIRY: LAUNCH OF

GENERIC MEDICINES

Free competition from generic medicines

PATENT and SPC protection hindering

administrative acts

DELAYED LAUNCH

Free competition DELAY: Monopoly

1. No patent linkage

2. Patent linkage

Aim of Patent Linkage

AT PATENT EXPIRY: NO LAUNCH

OF GENERIC MEDICINES

27

TRIPS Agreement

TRIPS Agreement

No reference to any obligation to link patents to registration or reimbursement of medicinal products

on the contrary

Preamble recognises that IP rights are ‘private rights’

– i.e. it is up to patent holders to enforce their rights, NOT Regulatory Authorities

28

WHO Briefing Note

Access to Medicines March 2006

‘Linkage between patent status and generic

registration would be

problematic….regulators may not have the

expertise to assess whether the patent is

valid and would be infringed. As a result, it

is likely that they will enforce all patents,

even invalid ones - and this creates additional

and unnessary hurdles for generic

competition’…….

29

WHO Contd.

‘From the perspective of access to

medicines, this is a worrying

trend; countries should be vigilant

and should not ‘trade away’ their

people’s right to have access to

medicines.’

30

Portugal example

Portuguese Medicinal Agency sued by originators

for granting MA for generics during patent period

despite Bolar

Generic companies sued for applying for a MA

RESULT: existence since several years of many

court cases (900!) blocking the approval of MA

and impeding the marketing of generic medicines

Now they have proposed an arbitration

mechanism

Real way is to stop patent linkage with an

improved and harmonized Bolar

31

Italy example

New attempt of PL in Italy in view of the recent

adoption by the Gov. of Law Decree n. 158

(13/09/2012), at the moment in discussion in

Parliament to be converted into ordinary law.

Free English Translation:… generic medicines

cannot be classified as medicines reimbursed by

the national health system before the date of

patent or SPC expiry of the originator medicine

published by the Ministry of Economic

Development.

32

We will Continue to Challenge

Patent Linkage !!!

3. Detention of generic

medicines in transit:

Review of Regulation on

Customs Enforcement of IP

rights

Netherlands: detention of medicines en route to Brazil/Colombia/Peru from India Dr Reddy’s: Losartan Potassium

Bftalactamicos S.A: Clopidogrel

Cipla: Rivastigmine/Olanzapine

Warning letters from originators asking for destruction of the goods detained based on patent infringement in the NL

In some cases samples were taken during detentions and handed to originator

Diplomatic incident EU-India/Brazil

Legitimate generic medicines detained

at EU borders and confused with

counterfeit/falsified medicines.

35

Review Customs Regulation on

Enforcement of IP Rights:

Customs authorities should, when assessing a

risk of infringement of intellectual property

rights, take account of any substantial

likelihood of diversion of these goods on to the

market of the Union. Guidelines according to

Nokia/Phillips case (ECJ Judgment 2011):

• Proof of goods sold to a customer, offered or

advertised for sale

• Destination of goods not declared

• Lack of information on identity/address of

consignor of goods/ Lack of cooperation

36

EGA aim: right to be heard

Achieve proper balance between the rights

of patent holder and product holder

Essential component of the right of defence

and, by providing additional elements of

information to the customs authorities, it

helps them in the decision making process.

Will avoid situations in which undue

detentions might take place

Ensure samples are not taken during

detentions

4. Free Trade Agreements

-FTAs-

FTAs “Trips Plus” Caution

Concerns that TRIPs Plus obligations are

“pushed” by EU into FTAs

extensive data exclusivity,

patent linkage,

patent extensions

criminalization of patent disputes

TRIPs plus can limit the market where we

are operating such as for ex. Canada

European Commission DG Trade

Pharmaceuticals Fiche (16/12/2011) stating:

‘The EU should also seek to find the correct

balance in bilateral and multilateral trade

agreements, in order that it does not

impose TRIPS+ requirements on countries

where this may have an adverse effect on

their public health or the ability of the EU

to import its own generic medicines.’

EU & US IP Systems

40

IP Elements EU USA

Data Exclusivity

(DE), Market

Exclusivity (ME)

(years) and Filing

Moratorium (FM)

Generics and

Biosimilars:

8 (DE) +2 (ME) +1

(New Indication)

• Generics: 5 years (FM), 3

years for changes to an

application supported by a

clinical study

• Biologics: 12 years (ME)

Bolar Restricted Bolar

(only since 2004)

Broad Bolar (since 1987)

Patent Linkage NO YES

First Mover

Incentive

NO YES (6 months exclusivity)

Supplementary

Protection

Certificate (SPC)

YES (up to 15 years) YES (up to 14 years)

Pediatric

Extension

YES (+ 6 months

SPC)

YES (6 months of DE)

Market Share

(volume)

50 % 80%

Differences between USA and

EU approaches to IP and DE

Mix and match of the 2 systems

A) Country signs an FTA with US and

incorporates patent linkage

B) Same country signs FTA with the EU with high

DE (8 years for ex.)

Data Exclusivity Patent Linkage

EU 8+2+1 years No, against EU

Law

US 5 years Yes

Country X 8 years (EU FTA) Yes (US FTA)

Differences between USA and

EU approaches to IP and DE

Result of excessive DE combined with PL:

•Country ends up with an IP system much

stricter than the EU and US systems.

•Ability of companies to supply affordable

medicines to population is hindered

•Serious constraints to the activities of

European generic medicines companies to

develop local markets.

Challenges following EU

IP reforms

A review of the Enforcement Directive giving the

opportunity to the companies to present invalidity

defenses and protective letters.

FTAs : end of Trips plus provisions

Prevent detentions of generic medicines at EU

borders by facilitating right to be heard

Continue fighting patent linkage

THANK YOU

www.egagenerics.com