The Impact Of European Intellectual Property Law Developments On The U.S. Biotechnology And Pharmaceutical Industry

Saturday, March 1, 2008 - 00:00

This time last year, in the face of concerns about the effectiveness of the EU as a marketplace for innovation, we reported on the recommendations of the UK government contained in the Gowers Review of Intellectual Property and how foreseen changes were anticipated to impact on U.S. businesses operating in the EU.1

IP developments are of particular concern to the biotechnology and pharmaceutical industry. This article highlights some recent European and UK IP developments and explains how businesses operating in Europe can adjust to this changing legal landscape.

Patent Protection

Novelty and Inventiveness - Second Medical Uses

One area of current interest in the EU is the scope of patentability of second medical use claims. These are claims for previously unrecognised and different effects or uses of pharmaceutical substances and compositions which have already been patented for one previously known use.

The European Patent Office (EPO) has allowed registration of second medical uses where claims are directed to the use of a substance or composition for a new and inventive therapeutic application.2Previously these had to be phrased as "Swiss-type" claims - use of compound X in the manufacture of a medicament for the treatment of disease Y . Under the European Patent Convention 2000 (EPC 2000) which came into force on 13 December 2007 more straightforward claims can be made - compound X for use in the treatment of disease Y . There may still be some life though in "Swiss-type" claims until it is finally confirmed judicially that there is no real difference in the scope of protection offered by the two formats.

In the Genentech 3case, the EPC specifically disapproved of the previous English Bristol-Myers Squibb decision,4and included novel and inventive dosing regimens within the scope of patentability. In contrast, the English Patents Court has continued to follow the disapproved English decision, revoking a patent for the second medical use of the drug finasteride to treat androgenic alopecia5on the basis that the lower dosage regimen was not patentable as the claims were not novel.

Although the English decision is open to appeal, the English approach is clearly at odds with that of the EPO. Unfortunately, this may affect the motivation of companies to invest in research into improved methods of administration of drugs.

Obviousness

Arguably the most challenging aspect to any invalidity action is establishing whether the inventive concept contained in a patent was obvious. The English Court of Appeal in Pozzoli6 has been reconsidering the test for obviousness established in the Windsurfing case.7In the reformulated test the first step is to identify the person skilled in the art and their knowledge. Only then do you identify or construe the inventive concept contained in the claims. By comparing the differences between the prior art and the inventive concept, one can decide if these differences are those which would have been obvious to a person skilled in the art but without knowledge of the invention .

The practical effect of the decision is to reaffirm current English practice when examining obviousness which is significantly different from that in the U.S. It is also important to consider that in England secondary evidence of the commercial circumstances surrounding the invention is much less persuasive than in the U.S.

The English High Court in Arrow Generics 8also held that a declaration can be sought to state that a granted patent was obvious at the priority date of the patent application. This may allow generic drug companies to establish an early route to market by eliminating the need to wait for the patent to be granted to file invalidity proceedings.

EPO Applications

One of the major issues in relation to the obtaining of patents across Europe has been the cost of translations. Under EPC 2000 an application may now be filed in any language to gain a priority date and then within two months translated into one of the three official EPO languages - English, French or German.

A further piece of help in relation to translations is contained in the London Agreement adopted at the second intergovernmental conference of the European Patent Organisation in 2000.

Currently for EPO applications, on grant the full patent specification must be translated into every national language of the designated states where patent protection is sought. The EPO has estimated that this can cost up to 30,000, but in practice there are no standard fees and costs can be much higher for complex specifications.

Once the London Agreement comes into force, only claims will need to be translated into the national languages of the designated states on grant. The Agreement was signed by eight EPC countries in 2000, but required ratification by the UK, France and Germany. France has finally ratified the Agreement so that it will come into force on 1 May 2008. Where applicants have the option we can see them delaying in pressing patents through to grant to save on those translation costs.

Parties alleging infringement however will still need to provide a translation of the patent specification into the national language of the alleged infringer. In addition the burden of due diligence will be increased as those investigating the scope of prior art have to obtain translations themselves.

Counterfeiting

Counterfeiting continues to rise in Europe. Counterfeit medicines from countries such as China and India have resulted in numerous product recalls during 2007 including by pharmaceutical giants Eli Lilly, Sanofi-Aventis and AstraZeneca. The threat to patient health is a serious concern.

The European Generic medicines Association (EGA) launched a supply chain integrity pact in September 2007, aimed at securing the pharmaceutical supply chain. The EGA has proposed a working party composed of pact members to look at what possible actions may be needed to tighten licensing systems.

The EU Directive on criminal measures aimed at ensuring the enforcement of intellectual property rights9provides for considerable criminal sanctions for counterfeiting and piracy. It continues to be the subject of protracted negotiations between EU Member States, and the first reading by the EU Council is pending. In addition, the Council of Europe has proposed European conventions on counterfeit medicines and other forms of pharmaceutical crime.10It looks at pharmaceutical crime as a violation of intellectual property rights and wider economic interests, and as a public health problem.

These initiatives show that Europe is listening and taking action to reduce counterfeiting, however concrete results are as yet to be seen.

Parallel Importation

Parallel importation of trademarked goods within the EU has been highly publicised and much debated. Essentially, a trademark owner may prevent importation of goods bearing its trademark into the EU in certain circumstances. However, once the trademarked goods have been put on the market within the EU by or with the consent of the trademark owner, the right to control the movement of those goods is lost.

To be able to sell pharmaceuticals from one country, such as Greece, in another, such as the UK, the product has to be labelled and have a patient information leaflet in the language of the country in which it is sold. The European Court of Justice (ECJ) has again examined the limits of permitted repackaging by parallel importers.11It has held that repackaging, irrespective of how it is done, is legitimate where parallel importers can show that:

• it is necessary in order to market the product in the destination country;

• it cannot affect the original condition of the product;

• it clearly states who repackaged the product and the name of the manufacturer;

• it does not damage the reputation of the trademark or its owner, and

• notice has been given to the trademark owner.

The trademark owner has to demonstrate any damage to the product by repackaging, or to the reputation of the trademark or its owner.

Uncertainty still exists as to when repackaging is necessary to market a product, as opposed to being commercially beneficial. Although examples of repackaging which may be damaging have been given, such as defective, poor quality, untidy, or inappropriate repackaging or relabelling, no specific guidance has been issued by the ECJ. In addition, no penalty for failure to give the required notice to the trademark owner has been set. National courts will need to determine what penalty is reasonable. Further reference to the ECJ may be necessary to get clarity on these points.

The issue of whether CE marking of goods sold outside the EU constitutes consent to parallel importation into the EU has also been addressed by the English Court of Appeal.12The court held that the use of the CE mark on the packaging of their product did not indicate consent to parallel importation so as to exhaust its trademark rights. The CE mark only showed the EU regulatory authorities' confirmation of regulatory compliance.

Conclusion

Many initiatives are still in the pipeline, and the implementation of IP reforms within Europe can often be slow as Member States debate the detail. However, it is certainly encouraging that numerous issues of concern for biotechnology and pharmaceutical companies are being actively addressed and resolved.

The legal framework is constantly changing within Europe. Whilst Europe continues to respond to the changing needs of the sector, it remains an attractive location for U.S. biotechnology or pharmaceutical companies to locate and do business.

1Promoting Innovation and Protecting Rightsholders - The Impact Of The Gowers Review Of The UK IP System On U.S. Business , Patrick Gardiner, Eversheds LLP (Metropolitan Corporate Counsel, February 2007, 20).

2EISAI/Second Medical Indication ([1985] OJEPO 64).

3 T1020/03 Method of administration of IGF-1/Genentech (October 24 2004).

4Bristol-Myers Squibb v. Baker Norton ([2007] EWHC 1311).

5Actavis UK v. Merck Co, Inc ([2007] EWHC 1311).

6Pozzoli SpA v. BDMO SA and Moulage Industriel de Perseigne SA ([2007] EWCA Civ 588).

7Windsurfing International Inc v. Tabur Marine ([1985] RPC 59).

8Arrow Generics Ltd v. Merck & Co, Inc ([2007] EWHC 1900).

9 COD/2005/0127 - COM (2006) 168 final.

10 Feasibility Study for a Council of Europe Convention on Counterfeit Medicines / Pharmaceutical Crime - CDPC-BU (2007) 01.

11Case C-348/04 Boehringer Ingelheim and others v. Swingward Ltd and Dowelhurst Ltd (27 April 2007).

12Roche Products Ltd (1) Roche Diagnostics GmbH (2) v Kent PharmaceuticalsLtd - December 2006.

Janet Knowles is a Partner in Eversheds' BioPharma team and has a wide range of experience with commercial deals and their intellectual property implications, from technology licensing and materials transfer to IP spin-outs. She undertakes a substantial amount of work in the R&D sector, both with European and U.S. clients. Joanne Flack is a trainee solicitor in Eversheds' IP team.

Please email the authors at janetknowles@eversheds.com or at joanneflack@eversheds.com with questions about this article.