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7 July 2016Asia-PacificGareth Morgan

From the EU to Australia: latest SPC developments

In an article in March I highlighted that the supplementary protection certificate (SPC) regime in the EU is currently coming under scrutiny in terms of its industry sector application and the scope of the right that is granted. Recent events have progressed each of these initiatives and it is therefore necessary to update the article. The current legislative activity in the EU is also reviving discussion around similar provisions in other countries around the world.

I previously detailed the progress made on two aspects of SPC legislative development: (i) the tender for a research project that had been issued by the European Commission; and (ii) the moves afoot to dilute the SPC right through the introduction of a waiver in relation to manufacture for export during the SPC term.

On the first of those initiatives, the Commission did not get any suitable responses to its first call for tenders and presumably had to accept that the research project it was proposing could not be completed in the time and/or budget that had been proposed. The Commission then issued a revised proposal with a further call for tenders to take on a modified version of the research project. The new tender has a closing date of July 27, 2016 and the full documentation can be found on the e-tendering website used by European institutions.

Significant changes

The new tender document looks similar to the one issued in December 2015, but significant changes have been made to the text. Further, the original document did not list ‘antibiotics’ as a class of inventions/products that needed to be reviewed in relation to the fitness for purpose of the SPC system. While individuals researching and operating in the field of antibiotics will applaud this inclusion, there is no indication of why the Commission considered it needed to add this group of products to the new study when they were not included in the first one (at least expressly).

A significant section has been inserted concerning second medical use patents and the issues that are being experienced in a number of member states regarding their effective enforcement. Again, these are likely to be welcomed by patentees but there is little detail to suggest that a review of the SPC system could assist in that regard.

Patentees may, on the one hand, be relieved to see the issue of appropriate duration for the SPC right coming out of the description of the project. On the other, however, they may be disappointed that the broad remit to look at innovative products in industry sectors not currently benefiting from SPCs has also been removed (subject to medical devices remaining as a specific class of products that will be included in the project).

The evidence base for the study now also suggests the tender winner should review relevant case law that has developed at EU member state level, ie, where no reference to the Court of Justice of the European Union was made, whereas the previous tender did not include this. On the flip side there does not now appear to be a requirement to generate a comprehensive member state-specific database of, for example, the number of SPCs granted, grant of applications and time taken to grant, among other metrics, identified in the December tender.

The maximum price at which a tender is said to be disqualified has now decreased from €200,000 ($222,700) to €185,000. It has to be questioned whether the changes in specification between the December and May drafts of the tender justify a reduction in the overall price the Commission is willing to accept. This is particularly so in light of a failure to award the tender in the first offer round.

SPC export waiver

With regard to the SPC “export waiver”, the European parliament last year passed a motion in plenary approving the parliament’s committee report on the Commission’s single market strategy paper. Through this plenary vote the parliament called upon the Commission to press on and introduce an export waiver into European SPC legislation. The precise text of the parliamentary report that was approved in plenary reads:

“The European Parliament urges the Commission to introduce and implement before 2019 an SPC manufacturing waiver to boost the competitiveness of the European generics and biosimilar industry in a global environment, as well as to maintain and create additional jobs and growth in the EU, without undermining the market exclusivity granted under the SPC regime in protected markets; and believes that such provisions could have a positive impact on access to high-quality medicines in developing and least developed countries and help to avoid the outsourcing of production.”

“It is important that any Commission impact assessment also considers safeguards or other measures that would be needed to ensure the proposed measures would work as intended.”

By way of recap, the single market strategy paper identified this possible legislative amendment as being a way to encourage EU domestic manufacturing industry. The report described the amendment as a “recalibration” of both patent and SPC rights. Indeed, it would certainly be a significant divergence from the approach of the SPC Regulation, which confers the “same rights” as the underlying patent.

The purpose for this formulation of the SPC was that without such protection, the EU considered that marketing approval delays render “the period of effective protection under the patent insufficient to cover the investment put into the research.” Any consideration of such a significant divergence from the EU’s innovation incentives is likely to undergo intense scrutiny.

The possible amendment to patent law was stated to be directed at an update of the EU patent research exemption, but it is the possible amendment to SPC legislation that has caught the immediate attention. The Commission stated that it considered the creation of this waiver could create thousands of new high-tech jobs in the EU and lead to the formation of many new companies.

As previously stated, the brief case for the introduction of such a waiver is that:

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1 March 2016   The European Commission is considering whether ‘export waivers’ should be introduced in order to partly relax the rules on supplementary protection certificates. Gareth Morgan of Olswang explains more.

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1 March 2016   The European Commission is considering whether ‘export waivers’ should be introduced in order to partly relax the rules on supplementary protection certificates. Gareth Morgan of Olswang explains more.

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1 March 2016   The European Commission is considering whether ‘export waivers’ should be introduced in order to partly relax the rules on supplementary protection certificates. Gareth Morgan of Olswang explains more.