Businesses must seize chance to influence laws on research exemptions and supplementary protection certificates, says expert

ANALYSIS: UK businesses and those operating across Europe should seize the opportunity to influence potential new EU laws on patent research exemptions and supplementary protection certificates (SPCs) by participating in a new consultation exercise opened by the European Commission.

The scope of the consultation is broad and has the potential to impact businesses across the pharmaceuticals sector, from originators to generics and developers of biosimilars, the plant protection products industry, as well as other businesses that operate in "innovative sectors whose products require pre-market regulatory authorisation" but which are not currently eligible for an SPC. 

Despite the fact that the UK is in the process of exiting the EU, UK based life sciences companies should share their views in the consultation. This is because any new EU laws on patent research exemptions and SPCs could be set prior to Brexit and apply in the UK, or replicated in UK law as part of the process enabling a smooth Brexit transition for businesses – a preserve first, reform later if appropriate, approach. In addition, any new EU legislation would impact their European operations. 

Patent research exemptions 

One of the aspects that the Commission is looking at with its consultation is the way in which patent research exemptions are applied across the EU. 

Broadly, the exemptions, provided for in EU legislation, and shaped by case law in member states, allow drug manufacturers to take the appropriate steps to prepare for marketing authorisation applications during the period in which products benefit from patents and SPCs without their research activities being deemed to infringe such rights. This is particularly relevant for generic drug manufacturers, but is also applicable to competing originators. 

Frustratingly for businesses in the life sciences sector, there are major discrepancies between the way the research exemptions such as Bolar are interpreted by courts across the various EU member states. This causes uncertainty and in some instances a lack of generic competition in some member states.

The Commission's consultation seeks to gather business' experiences in this respect, with legislative changes a possibility depending on the feedback received. 

It is therefore vital for businesses to share their views on the topic and help address what EU policy makers have clearly identified as a hindrance to innovation and competition. 

Supplementary protection certificates 

Potential reforms to EU laws on SPCs are also on the agenda. 

SPCs serve to extend the life of a patent by up to a maximum of five years in the field of medicinal and plant products. SPCs are provided for under a EU regulations which are directly applicable across the whole of the EU, although they have to be applied for separately in each EU country. 

The rationale for SPCs is to compensate patent holders for the period of patent protection during which they are prevented from commercialising their products owing to the lengthy approval process. Patent protection lasts 20 years but it often takes drugs companies around a decade to develop new medicines and gain marketing authorisation. 

According to the Commission's consultation, however, EU policy makers appear willing to consider expanding SPC protection into other areas. The Commission said it is specifically looking to hear from "innovative sectors whose products require pre-market regulatory authorisation but are not eligible for an SPC". 

The consultation, therefore, presents an opportunity for manufacturers of medical devices to make the case for SPCs to be extended into their market. Similarly, developers of digital health products might benefit from such an extension too. 

A new European SPC is also being considered. It is unclear whether this would work in a similar fashion to the potential unitary SPCs to be based on unitary patents by allowing inventors to make a single application for EU-wide protection to the European Patent Office, or whether national intellectual property offices will still need to be involved. The former would potentially require a valid marketing authorisation to be in force in every member state for which the patent is designated... 

In addition there are major discrepancies between the way SPC applications are interpreted by intellectual property offices across the various EU member states, and how the courts apply the rules. This lack of consistency which can see the same SPCs granted in one EU country, but rejected in another, or held valid by some courts while others consider them invalid.
Further changes to SPC regulations could be made to make it easier to manufacture drugs prior to their expiry in the EU. 

Currently, drug manufacturers based in the EU cannot begin their manufacturing operations while patents are in force. 

This restriction applies even in relation to exporting outside the EU to patent-free territories, which some industry experts believe puts the EU at a disadvantage to other parts of the world in terms of attracting drugs companies to base their manufacturing operations in the trading bloc. 

As such, a new SPC manufacturing waiver is being considered. 

Make your voice heard 

The Commission's consultation gives businesses the chance to air their frustrations with the way in which patent research exemptions and SPC rules apply at the moment, and make suggestions for how EU regulation might be improved. 

With the deadline for responses to the Commission's consultation 4 January 2018, it is possible that reforms could be proposed and implemented prior to the date on which the UK formally exits the EU. This raises the possibility that any new legislation would have to be applied in the UK despite Brexit. 

Even if the UK is not obliged to implement new EU laws on patent research exemptions or SPCs, there is strong potential for any EU reforms in these areas to be wholly or partially adopted by UK law makers. 

Businesses should therefore take the opportunity to have their voices heard and to help shape future legislation in the market.