|Read all about
it - the AIPPI Congress News
Rosenberg was speaking on a panel about early resolution
mechanisms for patent disputes (see his
presentation slides and read about the
workshop on the AIPPI website), and in particular about the
problems that arise in Europe when companies want to launch
generic products that may infringe originator’s
As is well known, there is no Hatch-Waxman-style patent
linkage in the EU, and there is little or no likelihood of it
being introduced (see the
2009 EU Sector Inquiry). But, as Rosenberg argued,
that means that innovator companies in principle have to wait
until a generic product is near to launch before they can sue
for infringement: they often have to act without much
information about the generic product, or wait to see their
market share fall away before they can do anything. Meanwhile,
the only way that generics can find out if they are infringing
a patent pre-launch is to go to court and seek a declaration of
non-infringement or revocation (known as "
clearing the way").
The upshot, especially when you bear in mind that litigation
can often take place in several of the EU’s 28
countries, is uncertainty and costly litigation – and
arguably the only beneficiaries are lawyers (my words, not
Building on 8+2+1
Rosenberg's remedy to the problem, which he floated in
Toronto, is based on the existing 8+2+1 data exclusivity regime
in the EU. This provides originator companies with eight years
of data exclusivity following marketing approval (during which
generics cannot use clinical trial data), followed by two years
of market exclusivity (during which they can apply for
authorisation, but not market a drug). There is a further one
year of protection available in special circumstances.
His suggestion – as I understand it – is
that generics should have to publish full details of their
application at the eight-year point, at which stage the
originator can decide if it wants to sue for infringement. This
gives a two-year window before a product can be launched, which
should be plenty of time for most courts to give a
The virtues of this approach are that it provides certainty
for both sides before generic launch; the
innovator’s patent is not infringed (so there is
no damage caused); and the generic’s market entry
is not delayed (assuming there is a decision within two years).
The other argument in its favour surely is that it would be
logical once the proposed Unified Patent Court is in operation:
at the moment litigation can take place in each of the EU
member states, even where drugs are approved by the EMEA. Under
the UPC, the dispute could be streamlined.
|Will the UPC be
good or bad for pharma litigation?
Cross-undertakings and third parties
Rosenberg’s second point concerns what he
describes as the "emerging issue" of the extension of
cross-undertakings in favour of generics. This is another topic
of particular concern in the EU, where it is generally
governments (via national health providers) who pay for drugs.
It arises from the undertakings that originator companies are
often required to make when seeking a preliminary
Say, hypothetically, Big Pharma makes €100 per day on
the sale of a drug, but Plucky Generic could sell its version
and make €40 a day. If it is granted a preliminary
injunction for patent infringement but loses at trial, Big
Pharma would have to compensate Plucky Generic €40 for
every day that an injunction lasted. That’s fair
enough, and Big Pharma would normally give such an undertaking
at the PI stage. But now consider that the government has been
paying the higher price for the duration of the injunction: in
other words, €60 more than it should have been. Should the
government (or other third parties who have paid for the drugs)
also be able to claim from Big Pharma?
That’s a question I’ve heard
several IP lawyers ask. Even though it’s not been
properly addressed by the courts yet Rosenberg says it has
been raised in the UK and Australia and in the proposed Korean
patent linkage system (
presented by Young Kim of Kim & Chang at AIPPI).
Moreover, there is speculation that governments might be more
willing to seek such compensation in these times of austerity
and budget pressure.
Understandably, the pharma industry is concerned about the
"huge (and unpredictable) exposure" as Rosenberg put it
and the disincentive to seek injunctions that such a ruling
would bring, particularly when you bear in mind the size of the
market that would be covered by an injunction granted by the
UPC (once it is in operation). There’s also a
point of principle raised: why should governments get the
upside of a cross-undertaking when they do not have the
downside of paying for litigation?
I’m sure Rosenberg would concede that he
brings a particular perspective to the question of early
dispute mechanisms, and it’s one that generic
companies, for example, might not wholly share. But he seems to
have identified a couple of issues that would benefit from
further discussion and comment. We’d be interested
to know what readers have to say in response.