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12 May 2016Big PharmaTrevor Cook

Squatters’ rights: the problem with third party SPCs

Late in December 2015 the European Commission issued an invitation to tender inviting proposals for a study on the supplementary protection certificate (SPC) regulations, by which de facto patent term extension of up to five years can be secured in the EU for medicinal products and plant protection products once these receive a marketing authorisation (MA). The tender closed in February 2016 but it has been reported that the tender will be relaunched as none of the bids that were received met its requirements.

Assuming more success after the relaunch of the tender this will be the first formal review that the Commission has undertaken of either the medicinal products SPC regulation, which entered into force in 1993, or the plant protection products SPC regulation, which entered into force in 1997. Despite their age, neither regulation has ever been amended in any material respect except to take account of EU enlargement, and on only one occasion substantively, by the somewhat curious legislative technique of stating in a recital to the latter regulation that some of its provisions had the effect of amending certain aspects of the earlier one.

This legislative vacuum has left it to the Court of Justice of the European Union (CJEU) to interpret, in numerous references to it from national courts, the many obscurities found in the two regulations, and its judgments have in turn raised many more questions of their own.

One commonly encountered issue that the court has influenced and commented on but never had directly to address, and on which the Commission’s invitation to tender is also silent, is that of third party SPCs (otherwise known as “SPC squatting” or “SPC piggybacking”). This is the situation of a patentee securing de facto extension of its patent through an SPC obtained on the basis of an MA granted to an unconnected entity, without the consent of such entity, thereby giving such a patentee what might be seen as the windfall of a much longer term in which to assert its de facto extended patent against the product subject to the MA.

This situation has the consequence for a prospective MA owner whose product might fall within the scope of a third party patent of either (i) risking that the patentee use such an MA, once granted, to secure an SPC which it can then assert against the product subject to the MA; or (ii) requiring that it seek to ‘clear the path’ of such a patent, by challenging its validity or seeking a declaration of non-infringement of it before it secures a MA, so that there is no patent on which an SPC can be based; or (iii) encouraging it to wait to secure an MA until the expiry of such a patent, so that by the time an SPC could have been secured, the patent has already expired. This last course can be the safest and most secure option if the patent of concern has only a relatively short period still to run, but is a rather unexpected consequence of a measure that was intended to incentivise research into medicines.

This situation can arise because the SPC regulations do not require the express consent of the MA owner to the use of its MA by a patentee to secure an SPC, it having not apparently been envisaged when the regulations were first drafted that the interests of the MA owner and the patentee, where these were not one and the same, might differ.

This was recognised by Advocate-General Fennelly in his opinion in case C-181/95, Biogen v SmithKline Beecham Biologicals: “43. The regulation is silent on the relationship between the holder of a basic patent and the holder of a related marketing authorisation for the member state in question, due again, I imagine, to the implicit assumption on the part of the draughtsman that they would be concentrated in the hands of a single undertaking. It is, in effect, the legislative failure to advert to the possible divergent ownership of patents and marketing authorisations that creates the problem in the present case.”

Despite this ‘legislative failure’, the medicinal products SPC regulation as it was originally drafted and applied did in practice provide the MA owner with some element of control over the ability of a patentee to seek an SPC on the basis of such MA, since article 8 of the regulation, setting out the information which a patentee must file with a national patent office in order to secure an SPC, requires, at articles 8(1)(b) and (c), that it submit:

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