Unitary SPCs must be administered by the right body say innovators

Drugs

With growing calls for SPC reform in Europe, innovator drug companies such as Confo Therapeutics, UCB and Valneva say unitary SPCs could help solve some of the problems in the system, but disagree on whether the proposed right should be given to the EPO or put elsewhere

Unitary supplementary protection certificates (SPCs) could help reduce uncertainty in the European  system by harmonising EU law so long as the proposed right were administered by the right institution, according to innovator drug company in-house counsel.

An SPC that would be litigated at the Unified Patent Court (UPC), if it is established, and be enforceable in ratifying EU member states was proposed by the Max Planck Institute last year as part of an analysis of the SPC framework in Europe.

Senior sources at UCB, Valneva and Confo Therapeutics agree with the Munich-based institute that a unitary SPC system could ease companies’ ability to get and keep SPCs by streamlining EU law, but they disagree among one another on whether the proposed right should be administered by the EPO or by a new or separate body.

The unitary SPC, of course, is just one proposal to reduce uncertainty for human therapeutics rights holders in Europe amid growing calls for reform. It is also a solution that few are certain will happen any time soon as the UPC has yet to be established and the UPC Agreement does not yet set out provisions for a unitary SPC.

“We are braced for the day when we can finally rely on unitary patents and are supportive of unitary SPCs because of the opportunities they offer to simplify procedures and further harmonise the way patent offices address SPCs,” says Elise Melon, associate director of IP policy at UCB in Brussels.

“The EPO was suggested as the right body for the job because they will be handling unitary patent protection and it looked convenient,” she adds. “But the industry preference is that a separate body should do it.”

She explains that the reasoning behind this preference is that that it would be useful to be able to rely on the existing expertise of national SPC experts in the unitary SPC-granting process.

Such an arrangement could be instituted by having several national patent offices administering unitary SPCs under a mutual recognition procedure, where each office would recognise and develop the work of the others.

“That could be a better system than one operated at the EPO because it would build upon expertise that is already in place,” says Frank Landolt, chief counsel of IP and legal at Confo Therapeutics in Belgium.

Not all pharmaceutical lawyers agrees with this line of thinking. Adrian Spillmann, head of corporate IP at the Valneva Group in Austria, says the EPO is the obvious choice to manage the proposed system.

He says that while he sees the value in a group of national patent offices creating a new body to administer these rights, such an endeavour would prove costly and time consuming. The EPO, on the other hand, is a pre-existing centralised administrative body that would be well-placed to manage the new right, should it ever come into being.

But several sources have identified problems with an EPO-implemented unitary SPC system. The Court of Justice of the EU’s (CJEU) judgment in Teva v Gilead in November 2018, for one, established a system where SPC-granting patent offices must look at the scope of patent protection.

The difficulty with that set up is that some patent offices in Europe operate a formality system where they do not have examiners and cannot interpret what is covered by a patent, and others have examiners but choose only to grant cases and not to interpret the scope of protection.

“The court has kicked matter to the patent offices, who either do not have the expertise to interpret scope or say such interpretation is not their job,” says an in-house source at an innovator drug company.

He adds that the EPO has so far said that it is not its job to interpret patent scope, and as such a new organisation that will look at scope, whether that be an amalgamation of national patent offices or a new sub-body of the EPO, would be preferable.

Melon at UCB adds that it is also not clear how the EPO, as an international body, could be fully integrated with the EU jurisdictional order so that it could deal with appeals and potentially refer cases to the CJEU.

Having unitary SPCs managed by the EPO might make the process of obtaining such a right on a bundle of national patents easier, however. Patent Strategy previously reported that many drug companies would be hesitant to transfer their patents into an untried and untested UPC system right away because of the risk of central revocation of their billion dollar registrations, opting instead to keep bundles of patents.

Should the EPO be in charge of patent bundles and unitary SPCs, that arrangement would at least help reduce the administrative friction of applying a unitary right to several national registrations.

Do we need SPC reform?

Beyond unitary SPCs, most in-house lawyers that Patent Strategy spoke to want to see some form of change to the SPC framework. Landolt at Confo points out that the uncertainty surrounding SPCs is not a new phenomenon and that something must be done to alleviate these doubts.

“I started my career in the Netherlands in the 1990s and we filed one of the first SPCs in 1993 with the Netherlands Patent Office. If you look at its decisions and the issues we were struggling with then, most of these are exactly the same as we are struggling with now,” he says.

He adds that he is aware of arguments that the regulation works well for small-molecule products, which constitute most SPC cases, but points out that combination products and biologics that have been trickier to apply effectively to SPC law represent considerable revenue streams.

Sources says that either the European Commission or the CJEU needs to take on the SPC debacle and set out a clear direction for these rights, whether by making amendments to the SPC Regulation or acknowledging whether said regulation is to be interpreted literally or teleologically .

The CJEU jumped from taking teleological interpretations of the regulation in cases such as Neurim in 2012 to more literal readings such as that used in the 2019 Abraxis decision, which tend to rule out SPCs for new formulations, manufacturing methods and indications.  

The feeling among some in the industry is that the Commission wants the CJEU to take the reins on the matter, but is reluctant to issue guidance.

But in-house counsel might prefer to see amendments to the wording of Article 3 of the regulation. The head of IP at a drug company Switzerland says that the wording in Article 3 very clearly no longer means what the words say.

“I say that with a laugh because these words are perfectly usable in most cases. But when you have a claim like that in Teva v Gilead, those words are more difficult to apply,” he says.

“It would be nice to have a more clearly defined test for what ‘protected by a basic patent’ means to give greater clarity on what patentees can and cannot get an SPC on.”

Few industry sources want to see the SPC Regulation replaced altogether for fear that a new set of rules would introduce even more problems and even reset the entire debacle to be played out all over again.

Spillmann at Valneva says that any change to the regulation would have to be introduced slowly and carefully. “It should be a step-by-step process,” he says. “A complete change of the regulation might be a little dangerous, but one could make small changes as has been done with the recent introduction of the SPC Waiver.  

“I do feel that the CJEU has failed to clarify anything over the past few years.”

While in-house counsel might be unwilling to rock the boat and fight for change in a system that works in most cases, most do want to see change.

Whether it is the considered establishment of a unitary SPC with the right organisation or a careful rewording of Article 3, change needs to happen sooner rather than later so that we are not talking about the same issues in another 30 years.