EU & Competition news

Summary

The UK Intellectual Property Office held that negative term supplementary protection certificates may be granted under EC Regulation 1768/92.

Legal context

A system of supplementary protection certificates (SPCs) for medicinal products was introduced in the European Union in 1992 by EC Regulation 1768/92 to compensate the patentee for any delay in obtaining regulatory approval by providing up to 5 years of additional protection for patented medicinal products. 

Article 13 of the Regulation provides a formula for calculating the duration of the SPC. It provides that an SPC takes effect at the end of the lawful term of the basic patent for a period equal to the period that elapsed between the date on which the basic patent was filed and the date the first authorisation to place the product on the market minus five years. 

Paragraph 3 of Article 13 provides for a further single extension of six months for this supplementary protection period if a paediatric investigation plan is conducted according to the requirements of the Paediatric Regulation, EC Regulation 1901/06, which was designed to provide an incentive to companies to carry out clinical trials of drugs in paediatric populations.

Facts

Merck & Co. ("Merck") sought an SPC for sitagliptin phosphate monohydrate, which is covered by the basic European patent EP (UK) 1412357, filed on 5 July 2002 and granted on 22 July 2006. The marketing authorization was obtained on 7 March 2007 (approximately 4 years and 8½ months after filing the patent). The effective supplementary protection period would therefore have been, as calculated according to Article 13 of the SPC Regulation, had the SPC been granted, minus 3 months and 14 days. In other words, the SPC would have never taken effect as it would have expired before the expiry date of the patent term. Merck stated in a letter to the UKIPO that they applied for the SPC in order to reserve the right to make use of the provisions under the Paediatric Regulation to obtain a six month extension of the SPC. 

The UK Intellectual Property Office examiner refused to grant the SPC on the basis that it would have had a zero term. Merck considered this an appealable decision and launched an appeal to the Patent Court. The UKIPO disagreed that this was an appealable decision because it believed that there was no decision made against which the applicant could appeal: the normal course of events, wherein the applicant would have been expected to respond to the examiner's letter, and following the applicant's response the examiner would consider offering a hearing before the Comptroller on any unresolved issues, had not happened. Merck however then consented to an Office decision being prepared. 

Decision

The only objection the hearing officer had to granting an SPC was that it would be an absurdity to grant an IP right without a positive term. However, no harm would be done because third parties would not be deceived.

As there is no relevant case law regarding the grant of a zero term SPC, the hearing offer turned to reports of meetings of national experts on SPCs in 1995 and 2006 of the European Commission for guidance, which indicated that SPCs should not be granted in the case of a zero term. Especially at the time of the first meeting, the Commission could not have anticipated or taken into account the possibility of obtaining an extension to the SPC term as the paediatric extension was not yet an issue. In the second meeting, the experts commented that a paediatric extension should not be allowed if the SPC term was zero. They however stated that the prerequisite for granting a paediatric extension was a granted SPC.

The hearing officer also took the opportunity to comment on the use of the expression "zero term" SPCs in two situations: firstly where not only when the calculation of the term according to Article 13(3) gives rise to an answer of precisely zero and secondly, where the calculation comes out with a negative value. There is no basis in the Regulation for concluding that the negative value should be rounded up to zero for the purpose of calculating the term of the SPC. In fact, "the logic of such a view should be immediately apparent to anyone who has paid money into a bank account that is showing an overdrawn bank account."

As a result of this hearing at the UK IPO, the appeal at the Patent Court was settled before going to court.

Practical significance

This is the first precedent in the UK for granting a negative term SPC. Considering that a substantial amount of revenue is generated during the SPC period, it appears to be worthwhile to try to obtain an SPC even if the period between the date the first authorisation to place the product on the market and the filing date is less than five years in order to cover the possibility of getting a positive term SPC if a paediatric extension is successfully granted.