A new poll from Patent Strategy shows that most innovator and generic drug makers support the creation of a unitary SPC system, despite industry arguments that central revocation makes them too risky and debates over which organisation should be the granting authority.
When we asked 30 in-house counsel whether a unitary supplementary protection certificate (SPC) that would be administrated and litigated in one place and applicable to most of Europe would be desirable, only 3% (one respondent) said no and 10% said they were not sure.
Following the adoption of the Single Market Strategy in 2015, the European Commission commissioned the Max Planck Institute to review the EU SPC framework, to help decide whether to revise the existing SPC legislation and introduce a new SPC title at EU level.
The Commission published a summary of the replies to the public consultation on the matter last year. Like our research, the summary showed an overall positive response to unitary SPCs, but that respondents varied considerably on which entity they believed should grant them.
Tomos Shillingford, general counsel at Insud Pharma in Madrid, says this response from the generics sector is not surprising. Generics are likely to support a unitary SPC system, he says, because the ability to challenge patents in one place has huge cost-saving benefits.
But he adds that costs are only one part of the equation. Another is that if companies accept the need for an SPC system – as part two of this survey showed most generics seem to – and unitary patents become a reality, it makes sense to have a unitary SPC.
“Rather than split the unitary patent up in the latter years of its life as a bundle of national SPCs, it makes a lot more sense to have a unitary SPC,” he says.
Frank Landolt, chief IP counsel at Confo Therapeutics in Belgium, adds that unitary SPCs would be useful to innovators from a cost-saving perspective as well. These EU-level titles would stop businesses having to apply for SPCs in every European country and allow them instead to apply for one in all ratifying nations – significantly cutting prosecution costs.
More importantly, he says, a unitary SPC would harmonise prosecution and drastically reduce the need for attorneys to understand the legal nuances of 25 different jurisdictions.
The IP director at a UK-based innovator, however, says he is not a fan of unitary patents or unitary SPCs because of the risk of central revocation in jurisdictions with limited patent litigation expertise. He adds that the risk could be attractive to patent trolls who might be emboldened to become more active in Europe.
The vice president of IP at a UK-based biotech company adds that she is not yet convinced that Europe’s SPC system should be unitary.
“Currently, national courts can make decisions and refer questions to the Court of Justice of the EU (CJEU) as needed,” she says. “Given the complexity of the CJEU’s decisions in the SPC space, will a unitary SPC make matters clearer?”
The right authoritySurvey respondents were much less unified on the question of which organisation should be the granting authority for unitary SPCs, with the EPO getting 42% of the vote and a ‘virtual office’ 39%.
Most survey takers who selected ‘other’ (13%) also indicated that they wanted the EPO or a virtual office to be the examining body, but with a slightly different arrangement to what you might expect. One said, for example, that the EPO should be in charge of unitary SPCs but that they should be granted by a separate division run by examiners who have been delegated from national patent offices.
Sources say that the EPO is likely to be a popular choice among in-house counsel because it is an international organisation that has the money and resources to accommodate the extra responsibility of governing unitary SPCs.
“It’s a tricky question, and the natural answer to it would be the EPO,” says Imre Gonda, head of IP at Gedeon Richter in Budapest. “They have what is needed to manage the workload even if they do not yet have the expertise – although it might not make sense to give it to them when there might only be 200 applications per year.”
Christian Drescher, head of patent affairs at Midas Pharma in Germany, adds that the EPO is the best choice because it has already been proven to work well as a granting institution, whereas a virtual office is untried and untested.
“It is not set up for SPCs but it would not be a big deal to get it going because it would gain the expertise over time,” he says.
But Landolt at Confo Therapeutics says that putting the EPO in charge of unitary SPCs might not be the best way forward because, while the institution works well as a patent granting body, it often takes the position that interpreting the patents that it grants should be left to others. And this, Landolt says, is crucial when it comes to applying the SPC regulation.
He is also concerned that, unless a way can be found to tap into existing experience, installing a new group at the EPO to deal with SPCs might turn the clock back 25 years.
Other sources say that a virtual office of national patent examiners working off one another’s efforts would be a far more preferable option to the EPO because it would allow a unitary SPC system to instantly draw off national expertise and hit the ground running.
“The necessary competence already exists in member states so why establish something new?” asks Lars Kellberg, corporate vice president of patents at Novo Nordisk in Copenhagen. “A virtual office is something that could be made operational with immediate effect. In the EPO, on the other hand, you would have to build up the expertise gradually.”
Very few respondents (6%) said the EUIPO should be in charge of unitary SPCs, despite it being the only EU institution on the list. While the EUIPO primarily deals with trademarks and designs, some industry sources have argued that it might be the best choice for a unitary SPC granting authority. Like the EPO, it could build up the necessary expertise over time and there might be administrative advantages to having an EU title run by an EU institution.
Gonda says: “If the unitary SPC is purely EU law, why not have it run by an EU agency such as the EUIPO? They are in the same position as the EPO – they do not have the experience but they do have the resource.
“Again though, there will likely only be 200 or so applications per year, so perhaps a good alternative would be to have a virtual office run by the EUIPO?”
One reason that so few people may have chosen the EUIPO in this survey might be the appeal route that unitary SPC disputes might have to take. Peter Thomsen, senior litigation manager and global head of IP policy at Novartis in Switzerland, points out that appeals would have to be heard by the EU General Court and perhaps the CJEU, neither of which has the right expertise or any links to the Unified Patent Court (UPC).
This view falls in line with those revealed by the Max Planck Institute’s study on the subject, which found that stakeholders would prefer appeals to go to the UPC rather than an EU court.
European patent bundles too?There is also the question of whether a unitary SPC should be applied to bundles of European patents or only to unitary patents. Sources have previously told Patent Strategy that the ability to have a unitary SPC on patent bundles would be useful when most pharma companies are likely to hold back their blockbuster patents from the UPC system until it has been tried and tested.
Yet most survey respondents (61%) said unitary SPCs should only be applied to unitary patents, and under a third (29%) indicated that they could be attached to patent bundles too.
Sources suggest that this data does not necessarily reflect respondents’ desire to see unitary SPCs applied to bundles, but rather their view on the legal practicalities of doing so.
Shillingford at Insud Pharma says applying unitary SPCs only to unitary patents is the simplest way to align territorial rights. Applying them to bundles might be opening up a jurisdictional can of worms because the unitary patent is a creation of EU regulation, while European patents extend to non-EU member states and bundles often do not cover every EU jurisdiction.
But Kellberg at Novo Nordisk disagrees, and adds that there should not be any fundamental issues that cannot be overcome when it comes to applying unitary SPCs to patent bundles.
“There may be a need to find solutions to certain barriers, but I have a hard time seeing any problems that could not be overcome in some way,” he says.
Unitary SPCs are a bit of a mystery. Nearly everyone wants them but there are big questions about who should manage them and what they should apply to. But considering the barriers currently facing the UPC system, those questions probably won’t need to be answered for some time.
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