SPCs And The European Jurisprudence On Patent Term Extensions

Keywords: SPCs, patent term extensions, patent litigation

1. Importance of SPCs

   Patent extensions are vitally important in the life sciences industry. They are highly valuable, as they extend the period of exclusivity in which the patentee can market a medicinal product beyond the expiry of the term of the patent for that product at the point in time where profitability is typically at its highest.

   Patents in the life sciences sector can protect products that can generate billions of dollars a year. Compared to the normal 20-year life of a patent the maximum patent extension in Europe of 5 years and 6 months (with paediatric extension) may appear unexceptional, but nonetheless in the life sciences sector this can be commercially very significant.

   The exclusivity conferred by a Supplementary Protection Certificate (SPC) operates after the end of the patent's life. This is typically the most valuable period from a patentee's perspective, as the market and reference prices for that product will have been well-established, the product-profit cycle is at its peak, and the patentee can reap the benefit of all the efforts that have already been made to establish the product in the market.

   Patent extensions have now been made easier to obtain following a recent series of judgments of the Court of Justice of the European Union. The following is a strategic overview of the key issues arising from this jurisprudence — the prime focus in any SPC litigation is whether they can be unpicked and how.

2. SPCs and the SPC Regulation

   The European SPC is a sui generis intellectual property right created to compensate life sciences companies for the loss of commercially exploitable patent term caused by the delays inherent in the regulatory approval system. It achieves that by extending the term of the corresponding patent by up to 5 years.1

   The general rule with patents is that once a patent has been applied for the patentee can immediately start exploiting the invention on the market. This is not the case for patents for medicinal products, where the patentee cannot commence exploiting the invention on the market until an appropriate marketing authorisation (MA) has been granted.

   The average time to market for a medicinal product is around 12 years. Because the necessary supporting clinical trials for the MA — and the MA process itself — can take this long, patentees of medicinal products face the potential loss of a substantial period of the exclusivity conferred by the patent before they can market their products; and broadly, the more significant the invention the longer this process takes.

   The SPC system is therefore intended to compensate patentees for this regulatory burden given that the length of patentees' effective patent monopolies can be significantly eroded by this regulatory process.

   The SPC Regulation2 is the result of the interaction between the laws and practices of the patent system and of the medical regulation system. The former is a question of national law for member states — no pan-EU system yet being in force — and the latter is the result of the harmonised EU system. The SPC Regulation therefore operates at the interface between what is meant by patent protection of "products" and by authorisation to market "medicinal products".

   The practical difficulties encountered with SPCs largely mirror those encountered by life sciences companies when navigating the routes to patent enforcement across Europe — many of the same strategic and tactical considerations that are engaged in developing litigations strategies will apply.3 Because SPCs are granted by national patent offices (i.e. country by country) the result has been that the SPC Regulation has been applied differently across Europe. Fortunately, the recent series of CJEU judgments will go a long way to redressing this.

3. Legal Issues Surrounding SPCs

   The circumstances in which an SPC may be granted — and can therefore be attacked — and the commercial significance this has (especially when faced with multiple generic or competitor entry) is potentially profound. For exactly the same reasons that an SPC is potentially of such significant commercial value to patentees, breaking them to gain access to a valuable market will be of particular interest to competitors and generics. They will therefore be focusing their attack on the validity of the SPC. If it is declared invalid, the market can be prised open.

   Under SPC Regulation, Article 5 the grant of an SPC confers the same rights, and is subject to the same limitations and the same obligations as the basic patent. The SPC does not therefore affect the extent of protection conferred by the patent, which is still governed by national law in each applicable country.

   The effect of an SPC is not formally to extend the duration of a patent. Instead, protection is given under Article 4 only in relation to the product covered by the MA and for any use of the product as a medicinal product that has been authorised before the expiry of the SPC. But subject to that, the SPC confers the same rights as the basic patent.

   The following points will be of crucial significance.

4. SPC Duration

   (a) SPC and Paediatric Extension Standard Terms

   The SPC Regulation provides that an SPC shall not be granted for more than 5 years.4

   The SPC's term is calculated by deducting 5 years from the period that elapses between the patent's filing date and the date of grant of the MA, with the SPC taking effect at "the end of the lawful term of the basic patent".

   The term (T) of an SPC can be calculated as follows, where A is the date of first MA in the European Union and B is the application date of the basic patent:

   T = (A – B) – 5 years

   ...