New steps towards the activation of the Unified Patent Court

December 2, 2022

authentication, Case Management System, central revocation, certificates, CMS, CMS testing period, Court of Appeal, Court of First Instance, data exchange, divisional applications, electronic signature, EPO, EPO’s official languages, European patent, European Patent Office, Florence Butin, infringement, Klaus Grabinski, login, market protection, official languages, opportunities, opt-out period, patent litigation, Patent Mediation and Arbitration Centre, pharmaceutical sector, renewal fees, revocation, risks, SPC, strong authentication, Sunrise period, Supplementary Protection Certificates, Unified Patent Court, Unified Patent Court Agreement, unitary patent, UPC, UPC-EPO agreement, UPC’s judges, UPC’s Registry, UPCA, Zack Mummery

by Giuliana Miglierini

The date of 1 April 2023 may mark an important step in the procedures to defend or challenge intellectual property rights. According to the current roadmap, since that date the Unified Patent Court Agreement (UPCA) will entry into force and the Unified Patent Court (UPC) will officially be able to receive the first cases.

Seventeen EU member states ratified up to now the UPC Agreement; for other seven, ratification is still pending. The new specialised body will decide on patent litigations (both infringement and revocation), with respect to both unitary patents and European patents validated in the adhering countries.

The organisation of the UPC

The Unified Patent Court is comprehensive of a Court of First Instance and a Court of Appeal. The Court of First Instance has its central division located in Paris and a section in Munich, plus local or regional divisions in adhering member states.

The Court of Appeal will be based in Luxembourg and will be responsible for decisions on appeals against decisions of the Court of First Instance. Its president is the legal representative of the UPC.

The UPC will also include a Patent Mediation and Arbitration Centre and a Registry located at the Court of Appeal (with sub-registries at every division of the Court of First Instance). The Registry shall be responsible for the organisation of all administrative and procedural tasks for the Court.

Preparatory activities to the activation of the Unified Patent Court included in 2022 the selection of judges. A total of 85 judges have been appointed, of which 34 are legally qualified judges and 51 technically qualified judges. They all have to assume their duties by the date of the entry into force of the UPC Agreement. Mr Klaus Grabinski (DE) has been designated as President of the Court of Appeal, Ms Florence Butin (FR) will be the President of the Court of First Instance. The Presidium of the UPC is also comprehensive of other two judges from the Court of Appeal and three judges from the Court of First Instance. The full list of the appointed judges is available at the UPC website.

Proceedings at the Court of First Instance will be held in the official language of the member state hosting the local or regional division. Member states can also designate one or more of the three official languages used by the European Patent Office (English, French or German) as the language of proceedings of their local/regional division. Proceedings discussed before the central division, or where the parties so agree, may refer to the language in which the patent was granted (English, French or German). Proceedings before the Court of Appeal shall usually refer to the same language used before the Court of First Instance.

Activation of the CMS Sunrise functionalities

According to the current roadmap, the expected date for the start of Sunrise period is 1 January 2023. From this date, the Case Management System (CMS) functionalities of the UPC should be activated.

Access to the CMS will require strong authentication; the Court published a document to clarify requirements for the two certificates needed to access the CMS system. Both of them can be obtained by a Qualified Trust Service Provider, according to the eIDAS regulation (regulation EU 910/2014 on digital identity).

The first certificate must be compulsory used for authentication to the system and login; the second one can be used to electronically sign the documents before uploading them into the CMS. The authentication certificate must be stored in a physical device (smart card or USB stick); this requirement is optional for signature certificates.

In view of the activation of the CMS Sunrise period, the UPC has planned a testing period for external users from 28 November until 16 December 2022. The available CMS test environment is a copy of the CMS production environment. Testing will allow to validate the CMS with respect to real world environment and to confirm the functionality of all system components and their compliance with legal and business requirements.

As for the interoperability of data, the Unified Patent Court has signed an agreement with the European Patent Office to provide the legal basis for the exchange of data between the EPO’s European Patent Register and the UPC’s Register. The entry into force of this agreement will coincide with that of the UPC Agreement.

The impact for the pharmaceutical sector

The entry into force of the new unitary patent system (i.e. the unitary patent and the Unified Patent Court) may have a significant impact on the pharmaceutical sector, where patent litigation are a quite common event along the lifecycle of a medicinal product.

The opportunities and risks offered to pharmaceutical companies by the new system have been discussed in an article by Zack Mummery published in the blog of UK’s law firm Reddie & Grose.

The possibility to have just one intellectual property right valid in seventeen different countries is one of the main advantages, as it avoids the need to validate European patents at the national level. Costs shall thus decrease both with respect to validation and renewal fees. On the other hand, the choice of a unitary patent obliges the company to pay renewal fees for the entire life of the patent, or to dismiss it entirely. It would be no longer possible to select the territories of interest where to maintain the patent active, as it currently occurs for the European patent.

A grey area of uncertainty highlighted by Zack Mummery is the possibility for supplementary protection certificates (SPC) to be based on a unitary patent. SPCs are currently governed by laws at the national level, but the EU Commission is discussing the possibility to activate a single SPC right valid across Europe.

Should a litigation occur for patent infringement, for example, a positive outcome for the originator company before the UPC would reinforce protection in many European countries. On the contrary, should the judgement be in favour of the other party, the originator may lose in a while protection over a great part of the European market. Another risk mentioned in the article is the possibility of a central revocation of the patent.

Major pharmaceutical companies may prefer to continue defending their intellectual property right through many different actions at the national level. Despite the higher costs, this approach is considered more flexible and it may lead to different outcomes in different countries, thus ensuring better protection of the interested markets.

According to Mr. Mummery, this sort of consideration should be kept in mind for important patent rights, for which the costs of validating a European patent individually in EU member states “will present a lower risk than validating as a unitary patent”. Exactly the contrary may apply to smaller pharmaceutical companies and start-ups, for which the lower costs of a unitary patent may result in more appealing.

The UPC can also decide on European patents validated in adhering member states, leading to the same risks for the protected markets seen above. During the transition period of seven years, the opt-out option will allow to choose among the UPC or national courts to judge on infringement and revocation of existing and new European patents. Furthermore, the Sunrise period allows interested companies to opt-out for up to three months before the activation of the new system. “However, given the potential value of some patents in this sector, the uncertainty of how judges will decide matters of infringement and validity, and the added flexibility of being able to launch separate actions in different European countries, opting patents and applications out of the UPC will be very attractive for many organisations”, writes Zack Mummery. Attention should be paid also to divisional applications during the transition period, as it may lead to the contemporary presence of both European and unitary patents rights.

What happens after IP loss of protection

November 11, 2022

biological molecule, biosimilar, Central and Eastern Europe countries, competition, competitors, costs reduction, data exclusivity, data protection, entry on the market, EU4 markets, generics, intellectual property protection, IP rights, IQVIA, length of protection, loss of exclusivity, lost of protection, market access, market exclusivity, open competition, originator, orphan drug exclusivity, paediatric drug exclusivity, patent protection, period of exclusivity, Pharmaceuticals, prices of medicines, RDP, Regulatory, return on investment, small molecules, SPC, Supplementary Protection Certificate, supply chain sustainability, therapeutic areas, volumes growth

by Giuliana Miglierini

What does it happen under a competitiveness perspective once intellectual property (IP) protection for medicinal products expired? And what is the impact of the new entries on generics and biosimilars already in the market?

The role of competitor entry on the market has been analysed in a report by IQVIA.

The document focuses on loss of protection (LOP), thus including in the analysis all products that are free from any form of IP rights (patent protection, SPCs, RDP, market exclusivity/loss of exclusivity, data exclusivity, orphan/paediatric drug exclusivity). According to the report, there are many elements to be considered while assessing the impact of IP rights, among which are regulatory issues, prices policies, competitiveness landscapes. Finally, all the previously mentioned issues are today facing a higher pressure due to the incumbent global situation, characterised a generalised economic crisis especially in Europe. One of the main goals of the EU Commission is to increase the attractiveness of the internal market as a key innovative region for investment in the pharmaceutical sector.

The main trends of the past six years

The IQVIA’s report takes into consideration the group of medicines that have lost protection across the past six years (2016–2021), for a total of 118 molecules; it also analysed the impact of the alignment of the regulatory data protection (RDP) rules in Europe occurred in late 2005, as well as the entry of new countries in the EU occurred in 2004 (Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovakia and Slovenia). EU’s enlargement also included Romania (2007), Bulgaria (2007), and Croatia (2013). Many of the products considered in the analysis were innovative medicines, representing approx. 13% of the total European pharmaceutical expenditure at their peak.

According to IQVIA’s data, the total European pharmaceutical market at list prices valued € 1 trillion in 2016-2021. Over the same period, all protected products counted for 37% of total expenditure on pharmaceuticals (€ 377 billion). Medicinal products that lost protection represented roughly 10% of the total EU market value (€103 billion).

Forms of IP protection

Just more than a half (51%) of products that lost protection in years 2016-2021 were subject to a Supplementary Protection Certificate (SPC), while the RDP mainly refers to older cardiovascular, or combination medicines. Eleven years is the current average length of protection in Europe (-4.2 years; it was 15.2 years for authorisations granted in 1999-2005); the decrease can be attributed to the entry into force of the European centralised system, that diminished the impact of delays to LOP. Market exclusivity also depends on the specific form of IP protection chosen, as it may vary the calculation from different starting dates for IP filing.

IQVIA’s data show that SPC represents 32% of the final form of protection; this sums to 19% of SPC followed by paediatric extension. SPC provides a maximum of 15 years of protection, with an average of 14.4 years. Medicines under regulatory data protection are 31% of total (8 years data exclusivity + 2 years market exclusivity +1 year for a significant new indication), the patented ones 11%. Smaller fractions are covered by orphan drug exclusivity (5%) or orphan drug extension followed by paediatric extension (2%). Considering sales values, the preferred constraining form of protection for small molecules is SPC (93%), followed by RDP (83%); SPC plus paediatric extension occurs in 50% of cases for biologics. Small molecules are also often subject (80%) to patent plus other forms of exclusivity (orphan/paediatric extension). According to IQVIA, the undergoing discussion on the review of the European IP legislation may lead to an alignment of the RDP duration to the US standard (5 years for small molecules, 12 years for biologics).

The impact of the different legislation governing patent litigation in the EU vs the US should also be taken into consideration.

Access and competition

Access of new generic and biosimilar medicines in the European market is a long debated issue, as historically it often proved difficult to determine the precise date of patent expiry and to find an alignment between different countries on this fundamental issue.

According to IQVIA’s report, in the years 2016-2021 the duration of access to major EU markets was 36 days. Competition for small molecules has reduced the cost by approx. 41%, with a volume growth of ~27%; the overall savings for the payer was -8% CAGR for the years 2016-2021. Biologics also increased their volumes year-on-year (23%). Less evident are savings for payers (8% increase in 2016-2021), but many biologics benefit of confidential discounts for hospital supplies.

Competition is very peculiar to the European market landscape, with 92% of molecules having competitors recorded by sales value. A very small niche (2%) of small, low value products proved to be less attractive; the remaining 6% refers to products under development. The biosimilar sector is particularly challenging, as only the largest molecules are attractive from the competition point of view; about 30% of products without a competitor in development are biologics.

Central and Eastern Europe countries are still the preferred ones for early access to competitors, compared to the EU4 markets (Germany, France, Italy, Spain), due to dates for LOP that are in many cases still subject to some variation. On the contrary, EU4 markets account for 89% of sales of available molecules; many countries have no recorded sales for 25% of the available originator molecules.

Data by IQVIA indicates that, at a macro-level, the system has reduced the cost of medicines open to competition by 28%, while the volume of treatment increased 27%. Despite this encouraging trend, treatment paradigms shifting were also observed before LOP.

As for therapeutic areas, RDP protected medicines that underwent LOP were mainly referring to anti-hypertensive (73%) and combination products (61%). The higher proportion of SPC protected products was found in systemic anti-fungals (60%), oncology medicines and HIV/anti-virals (45% each). Immunology and lipid regulators are often protected using SPC plus paediatric extension (60% and 50%, respectively)

The importance of intellectual property rights

Estimates of investments in pharmaceutical R&D are approx. €39 billion/year, according to the report. Return on investment relies heavily on IP rights, a theme that is central also to the ongoing review of the EU’s pharmaceutical and IP legislations. Many new treatments are on their way towards approval, especially in the field of advanced therapies; according to IQVIA, more than 60% are first-in-class therapeutics.

Two core concepts support the current European framework for intellectual property rights: a period of exclusivity applying to new compounds (patent protection + SPC), followed by open competition once all IP expired. At this stage, competitors can access open data and manufacturing formulations. Prices are often regulated at the national level to incentivise competition and to positively impact on treatment opportunities available to patients.

The current fragility of supply chains for pharmaceutical productions may pose many challenges to originator companies which remain the sole provider of a medicine after loss of protection. A risk highlighted by IQVIA’s report is a too pronounced decrease of prices to support competition, and thus the sustainability of the market.

Access to innovative medicines is another challenge identified, referring to countries where the originator did not launch its product, and neither the competitors did. Furthermore, competitor entry often refers to low-value medicines. This despite future loss of protection for the years 2026-2030 should refer mainly (55%) to biologic molecules, compared to 43% for the period 2021-2025.

Steps towards the final approval of the IP action plan

December 10, 2021

Artificial Intelligence, biosimilar medicines, blockchain, Bolar exemption, clinical trials, divisional patent applications, EFPIA, EPO’s mandate, European Commission, European IP Information Centre, European Parliament, fragmentation, Free Trade Agreements, FTA, generic medicines, guidelines, innovator industry, intellectual property, intellectual property rights, IP Action Plan, IP coordinator, IP index, IP protection, IP Scan, IP vouchers, IPR, IPR-intensive industry, knowledge-intensive industry, licensing, market entry, marketing authorisation, open technology standards, patent linkage, patent validation, pharmaceutical patents, pharmaceutical spending, R&D intensive industry, recovery and resilience capacity, shortages, SPC, SPC manufacturing waiver, Supplementary Protection Certificates, supply chain, traceability, transparency, Unified Patent Court, Unitary Patent Protection, UPP

By Giuliana Miglierini

The end of 2021 may see the final approval of many pieces of the new legislative framework announced in November 2020 by the European Commission. An important piece of this puzzle is represented by the IP Action Plan, governing the protection of intellectual property (IP); a step forward in this direction is represented by the resolution of 11 November 2021 on the Own-initiative report of the European Parliament.

The final text licensed in single reading is the result of the examination of the initial draft report – issued in May 2020 by the Committee for Legal Affairs, rapporteur Marion Walsmann – by several other Committees (IMCO, DEVE, CULT, AGRI).

The main points of the resolution

The resolution recognises the importance for the European economy of a balanced protection and enforcement of intellectual property rights (IPR). In years 2012-2016, the knowledge-intensive industries generated almost 30% of all jobs and almost 45% of total economic activity (in terms of Gross Domestic Product, GDP) in the EU; the IPR-intensive industries account for 93% of total EU exports of goods.

Europe’s recovery and resilience capacity is also highly impacted, as demonstrated by the pandemic when shortages of certain medicinal products and vaccines occurred. The EU Parliament acknowledges the role played by intellectual property in increasing the overall value of companies,especially the small-and-medium size ones (SMEs).

A current limitation to IP protection in Europe is represented by the still fragmented situation across different member states, which often leads to parallel national validation procedures and litigation for European patents. To this instance, the Parliament suggests the establishment of an IP coordinator at European level, to harmonise the approach to EU IP policy and enhance cooperation between the different bodies involved in the process (i.e. national IP authorities, Commission Directorates-General, EPO, EUIPO, WIPO, etc).

The Parliament also recognised the role IP plays in the pharmaceutical sector, where the availability of incentives greatly favours the development of new and innovative treatments. The resolution asks the Commission to support the innovative potential of European companies “on the basis of a comprehensive IP regime”, so to guarantee effective protection for R&D investments and favour fair returns through licensing. The availability of open technology standards has been valued as an important competitive element on the wider, global scenario.

Many different types of incentives are suggested by the Parliament’s resolution as useful to support micro-enterprises and SMEs in filing and managing their intellectual property, including IP vouchers, IP Scan and other Commission and EUIPO initiatives to support simple registration procedures and low administrative fees. The newly created European IP Information Centre may represents a fundamental reference point to increase knowledge in the field. The Parliament also suggests to introducing an EU-level utility model protection, not yet available, as a possible fast and low-cost protection tool to protect technical inventions.

Unitary patents and improved market competition

Still missing members states are urged to adhere to the enhanced cooperation scheme for the creation of a Unitary Patent Protection (UPP) and to ratify the Protocol to the Agreement on a Unified Patent Court on provisional application (PPA). The activation of this unique Court in charge of the examination of litigations would allow for a more efficient process and for lowering legal costs and improving legal certainty.

Fragmentation remains an issue also with respect to Supplementary Protection Certificates (SPCs): to this instance, the resolution asks the Commission to issue guidelines for member states and to provide a legislative proposal based on an exhaustive impact assessment. A major criticality to be solved is represented by the unitary patent not providing a unique SPC title valid across the EU; the own-initiative report also suggests the extension of the EPO’s mandate, so that examination of SPC applications could be carried out on the basis of unified rules.

Other important points needing attention to improve the presence of generic and biosimilar medicines in the EU are the abuse of divisional patent applications and patent linkage, which should also see an intervention by the Commission. The Parliament also opened the possibility of a revision of the Bolar exemption, which allows clinical trials on patented products needed to reach marketing authorisation of a generic or biosimilar version not to be regarded as infringements of patent rights or SPCs. This may also support the immediate market entry after the expiration of patent rights and SPCs. The Commission is called also to ensure the effectiveness and better coordination of compulsory licensing in order to provide access to medicines needed in case of health emergencies.

The resolution also addresses the theme of standard essential patents, which currently often leads to litigations, and it calls for the revision of the 20-years old system for design protection. Transparency on results obtained from publicly funded R&D is also recommended. The Parliament suggests artificial intelligence (AI) and blockchain technologies may play an important role in tackling counterfeiting practices and guarantee traceability of goods, as they may contribute to a better enforcement of intellectual property rights along the whole supply chain. The Commission should also work to establish clearer criteria for the protection of inventions created by the AI, without human intervention.

Comments from the industry

“The European Parliament has clearly voted for a strong and fair IP system by underlining the importance of timely generic and biosimilar medicine competition. The misuse of divisional patents, the need to enlarge the scope of bolar to include API and all regulatory and administrative steps, and the long overdue ban anti-competitive patent linkage are well known problems that the Commission should address in the IP Action Plan. The Parliament has voted; the Commission must act.”, said Adrian van den Hoven, Director General at Medicines for Europe.

A major point in the implementation of the new European policies is represented by the review the Commission is going to conduct in 2024 to assess the effective achievement of goals of the SPC manufacturing waiver, which entered into force in July 2019 and is expected to start producing effects in the second half of 2022.

Many of the themes discussed in the Parliament’s resolution were debated during a webinar organized by Medicines for Europe, with the participation of representatives from the European Commission and the European Patent Office.

EFPIA, representing the innovator pharmaceutical industry, focused its attention on the impact of past EU Free Trade Agreements (FTAs) on drug spending, timing of countries’ access to new medicines after global launch, investments overall and in pharmaceuticals, and clinical trial participation. A report by IQVIA published in the Federation’s website addresses the impact of IP protection on these elements. Results confirm the central role of the pharmaceutical sector as the most R&D intensive industry in the world, with R&D spending averaging over 15% of revenue. A strong IP protection framework available at the level of EU FTAs favours the attractiveness for investments in the EU and its FTA partner countries. According to the report, an expanded IP protection appears not to be linked to the generation of a higher pharmaceutical spending; drugs’ share of healthcare spending is claimed to stay flat or fall after an FTA, and prices for medicines to rise more slowly than the level of inflation. A stronger IP index, adds IQVIA, is also correlated with increased clinical trial activity in a country, bringing both clinical and economic benefits.

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What happens after IP loss of protection

Steps towards the final approval of the IP action plan

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