Royalty Pharma: welcome clarity mixed with unwelcome ambiguity
At the end of April the Court of Justice of the European Union (CJEU) delivered its judgment in Case C-650/17 Royalty Pharma Collection Trust.
The decision relates to yet another preliminary reference to the CJEU on the interpretation of article 3(a) of the Supplementary Protection Certificate (SPC) Regulation and is the second time the CJEU has been given the opportunity to clarify what the test should be for functional claims.
While the decision includes some welcome clarity, it is also mixed with several new elements of ambiguity which no doubt will keep attorneys, patent offices and courts scratching their heads for some time to come.
The facts
Royalty Pharma is the proprietor of a European patent concerning a method for lowering blood glucose levels in mammals through the administration of dipeptidyl peptidase IV (DPP-4) inhibitors in patients with diabetes mellitus.
A licensee of Royalty Pharma developed the DPP-4 inhibitor sitagliptin after the filing date of the patent. The licensee proceeded to obtain a patent covering sitagliptin and was granted an SPC for sitagliptin on the basis of this latter patent.
“Another area of ambiguity is over the term ‘independent/autonomous inventive step’ itself.”
In December 2014, Royalty Pharma applied to the German patent and trademarks office (DPMA) for an SPC for sitagliptin relying on its patent as the basic patent in force and a marketing authorisation for sitagliptin.
The DPMA rejected Royalty Pharma’s SPC application on the basis that it did not comply with article 3(a). It reasoned that, although sitagliptin satisfied the functional definition of the class of active ingredients in claim 2 of the patent as a DPP-4 inhibitor, it did not contain any specific disclosure of sitagliptin.
Royalty Pharma appealed against the decision to the German Federal Patent Court (Bundespatentgericht) maintaining that, for the purposes of satisfying the condition in article 3(a), it was not necessary for the patent to indicate the chemical name or the structure of the relevant active ingredient and that a functional definition sufficed.
Any DPP-4 inhibitors fell within the “core inventive advance” of the patent and all compounds meeting this definition were protected by the patent.
The German court understood the case law and guidance from the CJEU to be different in that an active ingredient would be “protected by the basic patent in force” only if it is described in such concrete terms in the claims that it is clear that it falls within the subject matter of the protection of the patent.
It did not consider “core inventive advance” to be relevant to the interpretation of article 3(a). However, it did accept that differences existed between member states on the interpretation of article 3(a) and, consequently, it decided to stay the proceedings and refer three questions to the CJEU for a preliminary ruling.
Express rejection
Early on in the decision, before turning to the referred questions, the CJEU expressly rejects “core inventive advance” as a concept relevant to the interpretation of article 3(a).
There is a sense that the CJEU considers this to be obvious from its ruling in Teva UK v Gilead Sciences where, despite the referring court inviting the CJEU to adopt this concept, the CJEU chose instead to conclude that the protection conferred by an SPC is limited to the technical specifications of the invention covered by the basic patent.
As in many other preliminary references, the CJEU has not systematically answered the referred questions and instead has reformulated the first two referred questions to ask whether a product is protected by a basic patent in force when it:
- Meets a general functional definition used by one of the claims of the basic patent; and
- Necessarily falls under the invention covered by this patent, without being individualised as a specific embodiment to be learned from the teaching of said patent.
Citing extensively from Teva, the CJEU has restated the essential role played by the claims for the purpose of determining whether a product is protected by a basic patent. It also refers, to the operative part of the decision in Eli Lilly v Human Genome Sciences, before turning to the expanded test (including the two cumulative limbs) in Teva.
The CJEU then expresses that, in its view, sitagliptin necessarily falls under the invention covered by the basic patent. This assessment of the first limb of the Teva test is made without reference to the skilled person and without consideration of the prior art at the filing or priority date of the basic patent.
The court then goes on to apply the second limb of the test in Teva, although it also deviates from this test. It states that the referring court needs to verify whether the subject matter of the SPC in question is within the limits of what the person skilled in the art is objectively able, on the filing or priority date, to deduce directly and unequivocally from the specification as filed.
This time, the CJEU does make the assessment by reference to the skilled person but rather than being “on the basis of the prior art at the filing date or priority date of the basic patent” as in Teva, it is “on the basis of his general knowledge in the field considered on the filing or priority date of the basic patent and the state of the art on this same date”.
At least, the CJEU does provide another nugget of clarity by confirming that it is possible for an SPC to be granted even if a product is not identified as a specific embodiment, thereby clearly rejecting the need for express disclosure of the product in the basic patent.
The last referred question concerns the situation where the product that is the subject of the SPC application is developed after the filing date of the basic patent as a result of an independent inventive step.
Here the court concludes decisively that such a product cannot be considered to fall within the subject matter of the protection conferred by that patent.
Areas of ambiguity
The CJEU has again limited the scope of its decision rather than providing a ruling of broad applicability. The judgment is, nevertheless, welcome in clarifying that “core inventive advance” is not relevant to the interpretation of article 3(a). The CJEU has also rejected the need for express disclosure of the product.
Other parts of the decision are more ambiguous. The assessment of the first limb of the Teva test is made without reference to the skilled person and without consideration of the prior art at the filing or priority date of the basic patent.
The assessment of the second limb of the Teva test is by reference to the skilled person but rather being on the basis of prior art, it is on the basis of general knowledge in the field and the state of the art.
The terms ‘prior art’ and ‘state of the art’ have specific meanings in patent law but, as the CJEU does not define any of these terms in its decision, it is unclear whether:
- It considers ‘prior art’ to be the combination of ‘general knowledge in the field’ and the ‘state of the art’;
- ‘General knowledge in the field’ is equivalent to ‘common general knowledge’, as understood in patent law; or
- Each of the terms mean something different.
When this case comes back before the national court, this author anticipates that Royalty Pharma’s appeal will be dismissed, denying it an SPC on the basis that sitagliptin was developed as a result of an independent inventive step.
With regard to the second answer provided by the CJEU, it is unclear in which circumstances an SPC may be granted for a product that is developed after the filing or priority date of the patent beyond the fact that it cannot have amounted to an independent/autonomous inventive step.
Another area of ambiguity is over the term “independent/autonomous inventive step” itself. Is inventive step in this context the same as understood in patent law? What does “independent/autonomous” add to the meaning of the term “inventive step”? What, if any, nexus can there be between the basic patent and the inventive step for it to be considered to be independent?
In practice, a lead pharmaceutical product is often not identified until well after the filing or priority date of the original patent that opened up a new field of research and innovation.
Moreover, it is not always possible for a separate patent to be granted for that lead product and, as in the Royalty Pharma case, the original patentee may differ from the subsequent patentee. All these factors exemplify the challenge for patent attorneys to draft claims and specifications that enable the broadest range of SPCs to be granted.
At the time of submitting this article, an English official version of the decision is not available. The author has relied on an unofficial English translation and a review of the official Spanish version of the decision.
Beatriz San Martin is a partner at Arnold & Porter. She can be contacted at: beatriz.sanmartin@arnoldporter.com