Managing SPCs under the unitary patent system
In this article, we identify the key issues and provide tips to help potential users best prepare for the new system.
It can often take many years to obtain a marketing authorisation (MA) to place a new medicinal product on the market, due to the necessity of ensuring the safety and efficacy of such products. This can mean that the 20-year period of monopoly protection enabled by a patent is insufficiently long for the originator to recover the investment put into research and development.
To improve the protection of innovation in the pharmaceutical sector, EU Regulation 469/2009(SPC regulation) provides for an additional period of protection if an MA is not granted until more than 4.5 years after the ‘basic patent’ covering the product in question is filed. This period—conferred by an SPC—commences on the expiry of the ‘basic patent’.
The SPC is a standalone right, not an extension of the patent term (unlike in the US). SPCs are available for human and veterinary medicines under the SPC regulation, and also for plant protection products (pesticides) under a separate EU regulation (1610/96).
Patents may be granted either by individual national patent offices or centrally by the European Patent Office (EPO). By contrast, SPCs may be granted only by national offices, based either on a national patent or on a traditional European patent which designates the relevant member state.
There is no current plan for this to change after unitary patents become available. Instead it is anticipated that a unitary patent may be designated as the ‘basic patent’ for the purposes of national SPC applications in all EU member states which have ratified the Unified Patent Court (UPC) Agreement at the date on which unitary effect is registered. The decision on whether to request unitary effect (or, alternatively, to stick with a traditional European patent) is taken at the time of grant.
In essence, for SPC grant purposes, a unitary patent will be treated no differently from a European patent which designates all EU member states in which SPC protection is sought. This will require amendment to at least the SPC regulation if it is to be achieved. However, this is expected to be done before unitary patents begin to be granted. The European Commission is, according to its website, currently “working on the articulation of unitary patent protection and SPC legislation”.
Some stakeholders, however, believe that the system should go further. In a joint position paper, three industry associations (the European Crop Protection Association, the European Federation of Pharmaceutical Industries and Associations, and the International Federation for Animal Health Europe) propose that a unitary SPC should be created which would have pan-EU effect, like the unitary patent. A unitary SPC would be based on a unitary patent and applications would be prosecuted by a ‘virtual body’ composed of SPC experts from national patent offices.
There is some obvious merit to this proposal, not least when one considers that patents may be granted by a central authority (the EPO), as can MAs (via the centralised procedure at the European Medicines Agency). However, as things stand, SPCs may be granted only at the national level. This would also address the problem suffered by the current system of divergent practices being adopted by different national patent offices to the same patent and MA.
Nevertheless, whether unitary SPCs (like unitary patents) are in fact an attractive proposition to many prospective applicants remains a question of much debate. The same issues affecting unitary patents apply to unitary SPCs: balancing the risk of pan-European revocation in a single action versus the benefit of potential pan-European enforcement in a single action.
The opt-out
Having outlined above what the new system will/may offer, it is in the area of enforcement that many of the tactical complexities arise. A key area is the extent of the UPC’s jurisdiction and whether it is possible for SPC owners to opt out their rights from the UPC system.
It will be possible to opt out patents and SPCs during the transitional period of seven years from the UPC Agreement coming into force, although it is possible that this period may be extended by a further seven years. On October 1, a protocol to the UPC Agreement was signed by a number of participating member states which should facilitate the filing of applications to opt out even before the UPC Agreement comes into force.
Moreover, it is understood that a patent/SPC which is opted out during the transitional period will remain opted out for its whole life (unless the opt-out is withdrawn), even after the end of the transitional period. Therefore SPCs granted based on patents filed towards the end of the transitional period could be being litigated outside of the UPC system for many years after the transition has supposedly been ended. Assuming the UPC system commences in 2017, as presently anticipated, that could mean opted-out SPCs being litigated nationally as late as 2049 (or 2056 if the transitional period is extended).
Jurisdiction
The jurisdiction of the UPC depends on the identity of the ‘basic patent’.
Any SPCs which are granted based on a unitary patent will fall within the exclusive competence of the UPC (like the unitary patent itself). It will not possible to opt SPCs based on unitary patents out of the UPC system. SPCs which are granted based on a national patent will remain subject to national laws and procedural rules and are not subject to the UPC system.
The position is more complex in respect of SPCs which are granted based on a European patent. These SPCs will be litigated within the UPC system unless opted out. If opted out, litigation will be governed by national law and national procedures, as is the case now.
Importantly, the opt-out status of an SPC must be tied to the opt-out status of the relevant European patent.
“Get your chosen European patents opted out before any SPCs are granted based on them to save on administrative hassle down the line.”
Where an SPC has (or multiple SPCs have) been granted before any application has been made to opt out the European patent from the UPC system, then any opt-out application must cover the European patent and all SPCs based on that European patent. In addition, the application to opt out must be made jointly by the patent proprietor(s) and the SPC proprietor(s) (if different).
Note that this should be the actual owner(s) of the rights, not the registered owner(s) (which may be different), which may pose complications where, for instance, ownership has been assigned differently in different territories. The requirement of a joint application would appear to be the case even where the European patent itself has expired.
It is therefore essential to ensure that these requirements are met; a failure to meet them may result in the opt-out application being ineffective. The potential adverse consequence is that a potential infringer could force the SPC into the UPC system by initiating proceedings for revocation and/or a declaration of non-infringement, which renders ineffective any subsequent attempt by the SPC proprietor to opt out.
Where an SPC is granted after the relevant European patent has been opted out, the SPC is automatically opted out of the UPC system from grant.
An opt-out may be withdrawn by a joint application (to permit pan-European enforcement, for example) provided that there is no pending national court action. The application to withdraw must cover all SPCs related to a particular European patent (as well as the European patent itself). Importantly, once an opt-out has been withdrawn, it is not possible to opt the SPC and European patent back out of the UPC system again.
Matters are further complicated by jurisdictional issues. At least initially, it is unlikely that every EU member state will be participating in the unitary patent and UPC system from the outset, as the system will come into force when a minimum of 13 member states, including France, Germany and the UK, have ratified the UPC Agreement. Some countries may simply be late to the party, whereas others (specifically Spain, Poland and Croatia) are not presently participating in the system at all.
Therefore, notwithstanding the position in participating member states, SPC protection in the non-participating members states (as they stand at the relevant time) can only be achieved by filing a national SPC application in the countries in question based on a national patent or a European patent which designates the relevant country. Enforcement of such an SPC can take place only in the relevant national courts, under local law and procedures.
Navigating the uncertainty
Drawing together the points made above, there are a number of tips to take away:
- Recognise that with the benefits of unitary patent protection (albeit not, at present, unitary SPC protection) also comes downsides—particularly, for present purposes, the inability to opt out an SPC based on a unitary patent from the UPC system.
- With the assistance of your patent prosecution and litigation counsel, make an informed decision about which European patents and SPCs based on them that you are prepared to litigate in the UPC system, and which you would rather opt out in good time before the system comes into action.
- If possible, get your chosen European patents opted out before any SPCs are granted based on them to save on administrative hassle down the line.
- Don’t forget that a European patent and all of the SPCs based on it must be treated collectively for opt-out purposes.
- Be sure to have in place processes to facilitate the swift filing of a joint application to opt out (or to withdraw an opt-out) by the patent proprietor and related SPC owner, if these entities are different.
- Don’t withdraw an opt-out unless you are absolutely sure that you wish to submit disputes to the UPC system—a withdrawn opt-out cannot be reinstated.
- Make sure you know at the relevant time (when the patent is granted) which countries are in the unitary patent/UPC system and which are not, as this may have strategic importance in deciding on the desirability of unitary protection/opt-outs.
Christopher Stothers is a partner at Arnold & Porter. He can be contacted at: christopher.stothers@aporter.com
Paul Abbott is an associate at Arnold & Porter. He can be contacted at: paul.abbott@aporter.com
