This Article appears in the August 2005 issue of Generics Web
Revoking invalid patents
This month, I could find no legal developments of any particular significance to generic pharmaceutical companies. I am sure I have missed something, and if you know what it is, do let me know, and I may write about it another time!
So, I thought I would write about something which is of perpetual interest to generic pharma companies, namely patents, and what to do about them. I am an English lawyer, albeit one who has enjoyed working all over the globe, and of course I write from an English perspective. However, since patent law Europe-wide is based on the same European directive, there is some relevance to other jurisdictions.
It is commercially worthwhile to be the first to market a generic drug. Prices for generic products can fall quite quickly, depending on competition, and sooner or later most products reach a level at which they make little profit for the seller. Generic pharmaceutical companies tend to look closely at patent portfolios protecting a given product as the main patents protecting the drug near the end of their life. They may find other patents covering formulation, processes, and uses, some of which will clearly be irrelevant to the product they intend to manufacture, some of which may be close, and others may seem to be invalid for reasons of obviousness or lack of novelty. Given SKB v Generics 1 they cannot, in the face of patents which they consider invalid or not infringed, sit back and wait to see whether the patentee takes action when they market. They must take steps to clear patents out of the way if they know 'perfectly well [that] the issue of infringement is likely to arise'. In such circumstances, if they are to avoid the risk of injunction, they must apply for revocation of the patent, apply for a declaration of non-infringement, or invite action for infringement by the patentee. Each course of action has its own advantages and disadvantages. In March, I considered applications for declarations of non-infringement and infringement actions, and here, I want to say a little more about actions for revocation.
Sometimes, a generic company may feel that it needs to be proactive in order to get clarity in relation to certain issues or to satisfy a court that it has taken steps to clear patents out of the way. It is not clear quite what is required to discharge that obligation, short of legal action. If patentees delay, or claim that insufficient information has been given to allow them to make a decision, it may be preferable to take action, rather than risk injunction. Currently, there are cases in which generic companies have taken action against a patentee (Ranbaxy v Warner-Lambert 2 , Arrow v Warner Lambert 3, and cases in which a patentee has taken action against a generic company (Mayne v Teva 4) pending before the Patents Court.
In practise, most European pharmaceutical patents are European Patents, granted by the European Patent Office, rather than national patents, granted by national patent offices. It can take a very long time for patents to be granted by the EPO, and often relevant patents have not exhausted the opposition process by the time a generic company is considering its ability to market. Naturally, generic companies consider revocation before national courts as a quicker alternative. Revocation in one country can help in others: courts pay attention to what happens in other countries, and revocation in one country may be persuasive, for example, when a judge in another considers whether or not to injunct. For many reasons (speed, quality of judgements, reliability, specialised judges) English courts have been attractive to generic companies. Where there are parallel actions (eg an opposition before the EPO and a national revocation action) the English court will consider staying the English action. The basis on which the English court will grant a stay is described in a 1997 case by Aldous LJ, Beloit v Valmet 5 :
' the fact that there may be proceedings both in the national courts and before the EPO is inevitable as patent rights, both under the [European Patent Convention] and the [Patents Act], are national rights to be enforced by the national courts and in certain circumstances by the EPO. That overlap can mean that there are parallel proceedings in both the national courts and the EPO with the potential for conflict. It is desirable for that to be avoided. Therefore the Patents Court will stay the English proceedings, if they can be resolved quickly and a stay will not inflict injustice on a party or be against public interest. Unfortunately that is not always possible as resolution of opposition proceedings in the EPO takes from about 4-8 years.'
Last year, AstraZeneca applied to stay English revocation proceedings pending the determination of an EPO opposition 6 . Mr Justice Mann accepted that if the revocation action went ahead, AstraZeneca could be prejudiced by the more exacting approach of the English courts towards amendments, by inconsistent decisions, and would suffer wasted costs. He also felt that there had been delay. The patented product had been launched in 2000, and was immediately successful, so that it was apparent that a generic equivalent would be an attractive prospect. Notice of opposition was lodged on the last possible day, nine months after the grant of the patent, and English revocation proceedings began some eighteen months later. The judge felt a case that the English proceedings should be allowed to continue had not been made. He made it clear that he would have had more sympathy if parallel revocation proceedings had been undertaken in other major markets. This was against a background in which an abridged application for registration could not be made until 2010.
It seems to me that, in this case, the judge did not take into account the commercial background in a way which would have been appropriate in an application for a discretionary remedy (stay). The marketing of the product was not delayed by the timing of the opposition, not by the decision to delay the UK patent action. Further, markets for generic products differ greatly in different countries, and products which are attractive in one country are may not be in another. And, given that judgements in one jurisdiction may be persuasive in another it can be cost effective to take a step by step approach. However the judge was critical of actions which he felt were 'not the act of a person who is anxious to exploit a pressing commercial opportunity'.
I want to mention a recent case, Hunt Technology v Dun & Low, before considering the practical steps which a generic company might take in similar circumstances. 7 This did not involve pharmaceuticals, but in it Mr Justice Laddie considered the parallel jurisdiction of the national courts and the EPO and said 'the risk of inconsistent decisions …is probably a trivial consideration. Because of the ability to attack a granted patent in the national court, you may well end up with the EPO holding a patent to be valid and the same patent being held invalid by a national court. I do not consider that to be inconsistency. It is inherent in the co-existent jurisdictions of the EPO and national courts created n by the European Patent Convention. Differing results in different tribunals is not really inconsistency. Ordering a stay may not significantly reduce the possibility of differing decisions, unless, of course the EPO goes first and invalidates the patent in its entirety.'
Validity of a granted patent is a matter for the national courts.8 A patent which has been maintained throughout the opposition and appeal process by the EPO may still be revoked by a national court - and in that context it seems curious that the risk of inconsistency should be a reason to stay national action.
What to do?What should a generic company which wants to revoke apparently invalid patents do? There is no ideal solution. However, it should first, consider when it will come to market. What is its development time? When does data exclusivity end? Is it prepared to submit full data? If the EPO process will have been exhausted by that date, consider waiting. But be prepared to begin national proceedings if the patent continues to be maintained by the EPO. Ideally, not to lose time, you need a trial date close to the time of the EPO decision on appeal. That will mean that costs are incurred possibly to be wasted, but time is not lost. If you could come to market before the end of the EPO's evaluation, consider demonstrating that you have acted fast, and that there is urgency in your position. Show that you will be prejudiced by delay. Possibly, judgments in the Ranbaxy v Warner-Lambert, Arrow v Warner Lambert, and Mayne v Teva cases will throw light on the best course of action, and if they do, I shall let you know.
Anna McKay, August 2005
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