Analysing patent enforcement in the pharmaceutical industry
Felipe Mesquita and Roberto Rodrigues of Licks examine the patent enforcement system in Brazil and look at recent cases concerning injunctions
Brazil has one of the most dynamic pharmaceutical markets in the world. It has a unique position as a hub for South America. It has a concentrated market purchase power on one single entity: the government (SUS).
Patent enforcement plays a key role in this scenario. Recent cases filed by Lundbeck and a biopharmaceutical company explore different facets of the patent system, involving nuances in both the private and public market.
The Brazilian constitution establishes access to health as a pillar of the democratic state. The access to health rule is interpreted by courts as an obligation for the government to provide free public healthcare to a population of approximately 220 million. Among the government's many responsibilities when it comes to healthcare, the key one is to provide drugs and treatment for the people in the country. The cost of the drugs should not be a problem. The government will pay for the best therapy, even if it is very expensive compared to others available. The central healthcare system is called the SUS system.
The interplay between the patent system and the SUS has been growing. Recent patent cases involving preliminary injunctions and damages highlight how a system can work to provide both access to drugs to a poor population, while allowing innovative companies to recoup R&D investment.
Summary of the patent enforcement system
In Brazil, litigation has no discovery, no depositions, no cross-examination of expert witnesses and no jury trial. It is a paper-based procedure, with a series of short hearings between the attorneys and the judge and clerks. The trial judge, with no technical expertise, will appoint a technical expert to assist preparing a report about infringement or validity.
The evidence of infringement needed for obtaining preliminary injunctions consists in the analysis of at least one independent claim and information about the accused devices. Preliminary injunctions are available in Brazil upon the finding of an infringement. There are two statutory requirements for the granting of preliminary injunctions: (i) likelihood of prevailing on the merits of the case; and (ii) risk of irreparable harm. Permanent injunctions are also applicable.
Patent infringement actions are filed before state courts. Some states, such as São Paulo and Rio de Janeiro, have district courts specialised in commercial disputes, including patent litigation matters. São Paulo has specialised chambers at appellate level. Sao Paulo and Rio de Janeiro are the largest forums for patent cases in Brazil.
In view of the lack of technical background, judges hearing infringement and validity matters heavily rely on the technical report issued by the court appointed expert. The stage in which the court appointed expert prepares the report is one of the most important during the litigation, since it will likely indicate who will win the dispute. Parties can appoint technical assistants to interface and to provide technical information to the court appointed expert.
Recently, the way two leading cases were able to enforce patents, positively impacted the pharmaceutical sector in Brazil. One of the cases was filed by Lundbeck and the other one was filed by a US-based biopharmaceutical company.
a) Lundbeck v Idealfarma (vortioxetine case)
The São Paulo State Court of Appeals established on August 27 2018 that suppliers of active pharmaceutical ingredients (APIs) for compounding pharmacies are liable for patent infringement when selling wholesale for compounding pharmacies. The case was filed by Lundbeck against Idealfarma claiming infringement of patents covering vortioxetine. Idealfarma had been supplying several compounding pharmacies around Brazil.
The case discussed the applicability of the exception for patent infringement provided in Article 43, III of the Brazilian Patent Statute. The statute establishes that the preparation of a medicine – and the medicine prepared – according to a medical prescription for individual cases, made by a qualified professional is exempted from patent infringement.
Lundbeck argued that Article 43, III does not exempt suppliers of the API to those compounding pharmacies and the defendant should be ordered to stop providing products containing vortioxetine.
The court granted an ex parte preliminary injunction to order Idealfarma to refrain from "using, manufacturing, exporting, offering for sale, selling, importing, keeping in stock" the API. Three months after filing the case, the district court granted a permanent injunction and awarded damages for the acts of infringement prior to the filing of the case. The Sao Paulo State Court of Appeals confirmed the district court decision, establishing liability for suppliers of infringing APIs in Brazil.
According to the appellate court, only compounding pharmacies, and not their suppliers, are exempt from patent infringement based on Art. 43, III of the Patent Statute. Further, the rule of law established a need for (i) medical prescriptions; (ii) individual cases; and (iii) execution by a qualified professional. Thus, according to the court: "An unauthorized party may not, at once, prepare a large quantity of a patented pharmaceutical, as the preparation itself is conditioned to a specific need of an individual in possession of a prescription" and "the plaintiff presented several invoices demonstrating large scale sales from the defendant to other companies, demonstrating the complete absence of the requirements of the exemption of art. 43, III of the Patent Statute, as well as the clear intent to commercially exploit the patented substance, reason why I rule in favor of the plaintiff."
The decision enforcing the patent covering vortioxetine is a leading case in the compounding pharmacies market. Before the lawsuit, suppliers tried to use the exemption for compounding pharmacies to safeguard their business.
Genentech v Amgen (monoclonal antibody)
When Amgen Inc obtained GMP for Bevacizumab from the Brazilian FDA [ANVISA] on April 28 2017 and its Brazilian subsidiary [Amgen Brazil] filed an application for marketing approval on May 19 2017, Genentech concluded its patent PI9809387-8 covering Avastin was under imminent threat of infringement. The patent term is November 22 2026, the timeline between the request for marketing authorisation and the expiration of the term. It seemed that Amgen was considering launching the product.
Genentech decided to file a lawsuit against Amgen Brazil, the owner of the MA request, based on threat of infringement, as the patent term was November 22 2026, and Brazilian food and drug law establishes an obligation to market a product after registration.
In addition, Genentech filed a lawsuit against Amgen Inc based on the threat of indirect infringement. Genentech construed that Amgen Inc would supply its Brazilian subsidiary with the infringing product to be sold in Brazil. A subsection of Article 42 of the Brazilian Patent Statute establishes that "a patent owner is assured the right to prevent third parties from contributing so others may practise the acts referred to in this article".
Genentech was able to secure a preliminary injunction in the lawsuit against Amgen Brazil and a favourable trial court judgment against Amgen Inc.
Genentech v Amgen Brazil
The lawsuit was filed on August 29 2018 and assigned to the 1st Business Trial Court of the São Paulo State, as Amgen Brazil has headquarters in São Paulo.
Genentech claimed Amgen Brazil filed for a marketing approval for a biosimilar containing bevacizumab and, while such action does not constitute infringement, due to Article 43, Section VII of the Patent Statute (Bolar exemption), it indicates a threat of infringement due to the untimeliness of the filing. According to Genentech, taking into consideration the time the Brazilian FDA took to grant marketing approvals for previous biosimilar drugs, grant would undoubtedly occur during the patent's term, as well as the obligation to sell the product.
The trial judge of the 1st Business Court denied Genentech's request for a preliminary injunction, stating that the technical opinions presented by Genentech as prima facie evidence the patent covers bevacizumab were unilateral and the production of more evidence was necessary. The judge also stated that, as the granting of the marketing approval for the biossimilar was still pending, Genentech's request for preliminary injunction resided on a "future and uncertain event" and did not relate to an immediate act of commercialisation.
Genentech filed an interlocutory appeal against the denial of the preliminary injunction, which was assigned to the 1st Business Chamber of the São Paulo State Court of Appeals. Before the appeal is heard by a panel of three appellate judges, the reporting judge assigned to the case can render an interim decision. The reporting appellate judge, Hon. Lazzarini, did not grant the preliminary injunction either, stating that there was no urgency, as Amgen Brazil was not commercialising the infringing product, but "merely requested a marketing approval, which, as affirmed by the appellant itself, is not an infringing act".
On December 17 2018, the Appellate Court granted Genentech's preliminary injunction. The reporting appellate judge, Hon. Lazzarini, voted for the dismissal of the appeal, but the following two judges, Hon. Nishi and Hon. Barbosa sided with Genentech. According to the panel's decision, there was enough evidence that the granting of the marketing approval was imminent, which would allow Amgen Brazil to manufacture, distribute and commercialise an infringing product. The urgency arose from the food and drug statutory obligation to commercialise, which would most likely happen during the patent term. The untimeliness of such "preparatory acts" by Amgen Brazil, almost nine years before the end of the patent's term, caught the attention of the panel.
The Trial Court, however, did not agree and rendered a final judgment dismissing the lawsuit, challenging the regulatory obligation to market, as, according to the court, "a norm may not impose a sanction for non-compliance, when compliance infringes another norm", and that it was uncontroversial that Amgen's conduct so far had been compliant with the Bolar exemption, hence it would be incorrect to infer bad-faith in the future from a good-faith conduct. According to the court, "nothing prevents the defendant from simply enduring the damages from having its MA cancelled [due to non-commercialisation] in order to avoid infringing the patent".
The appellate court, however, will still have the last word, as an appeal was filed by Genentech.
Genentech v Amgen Inc
The lawsuit was filed on September 3 2019 and assigned to the 1st Business Court of the Rio de Janeiro State. As both Genentech and Amgen Inc are foreign companies without headquarters in Brazil, civil procedure rules state the lawsuit could be filed before any venue.
The preliminary injunction was granted by the trial judge, stating that "the documents attached to the complaint indicate the probability of the plaintiff's right, as they are evidence of ownership of the patent as well possible use by the defendant. There is also urgency, considering the undue commercialisation of the product infringing the patent".
As Amgen Inc also did not challenge the scope and validity of the patent, Genentech filed a motion for summary judgement, as no more evidence was needed and the matter under dispute relied solely on the interpretation of the law.
On June 6 2019, the court granted Genentech's motion, issuing a summary judgement confirming the preliminary injunction. Amgen Inc. filed an appeal, which is still pending.
Both cases represent interesting developments in the pharmaceutical industry. While the enforcement of patents is becoming increasingly efficient, the judges are considering not only the evidence, but also the possible impact on public health when granting preliminary injunctions. The Lundbeck and Genentech cases show how patent owners can enforce patents against competitors and obtain preliminary injunctions, while setting the courts at ease with the decision, demonstrating the lack of impact it will have on access to drugs by the population.
Felipe Valente Mesquita
Felipe Valente Mesquita started his career working on the legal team at a prominent Brazilian IP agency and joined Licks in 2014.
Felipe is an experienced litigator before Brazilian trial and appellate courts. He is also well versed in administrative proceedings before government agencies, such as the Brazilian FDA (ANVISA) and the Brazilian PTO (INPI).
His expertise comprises a wide range of legal matters, including patent validity, infringement, regulatory compliance and telecommunications.
Roberto’s practice focuses on complex civil matters, with an emphasis on patent litigation and trade secrets. He joined the firm in 2010. In the past years, Roberto has worked on several matters involving pharmaceutical biotechnology, and telecommunications. Additionally, he advises on issues related to cybersecurity, data privacy, and antitrust.
Roberto earned an LLM from Stanford Law School, where he was lead editor of the Stanford Technology Law Review. During 2017 and 2018, Roberto worked at Quinn Emanuel Urquhart & Sullivan, LLP in New York City. He has also published articles in technology journals around the world.