On 21 November 2017, the German Federal Patent Court decided about a license fee for the HIV-Drug Isentress for which it has granted a compulsory license in 2016.

Background of the Case

In 2016, Shionogi & Company Ltd, owner of the European Patent EP 1 422 218, accused Merck & Co. of violating this patent by selling the HIV drug Isentress. The drug has been generating worldwide sales of around USD 1.5 billion annually since 2012. Shionogi filed a lawsuit with the Regional Court of Düsseldorf. Merck opposed by applying for a compulsory license with the German Federal Patent Court and also requested a provisional allowance order under section 85 of the German Patent Act. In a preliminary ruling, the German Federal Patent Court ordered Shionogi to grant a compulsory license to Merck & Co. The German Federal Patent Court based its decision on the fact that Merck & Co. had made a license offer to Shionogi for a worldwide license and that there is a substantial public interest due to the paramount importance of the drug for patients with HIV infections – please see our previous post on this decision for more information (https://www.allaboutipblog.com/2016/11/german-federal-patent-court-grants-compulsory-license-on-hiv-drug-patent/). This preliminary ruling was confirmed by the German Federal Court of Justice in July 2017.

The Ruling

The German Federal Patent Court now decided about the amount of the compulsory license fee and held that Merck & Co. has to pay a license fee of 4% on the sales of the drug Isentress. The written reasons for this decision have not yet been published.

According to reports published on 11 June 2017, the German Federal Constitutional Court has requested the Federal President of Germany to refrain from signing the law that is necessary to ratify the Agreement on a Unified Patent Court (UPC). The president has agreed to comply with this request. The president’s signing is the last step required for a law to come into force after it has already passed both legislative chambers in Germany.

Reasons for the Request

The German Federal Constitutional Court has based its request on account of two challenges to the law ratifying the UPC, namely a constitutional complaint and a parallel request for expedited proceedings filed by the same complainant. The decision to ask the president to postpone the signing, indicates that the Federal Constitutional Court might not view the challenges as outright unsuccessful. The Court has not yet announced a date when its decisions will be issued.

Background

The reasons brought forward in both challenges are unknown. Reports suggest that the challenges are based on concerns that the contemplated proceedings before the UPC might not comply with due process of law. Some voices claim that the decisions of the opposition division of the European Patent Office (EPO) would not be subject to review by state courts, and that the boards of appeal of the EPO would not be sufficiently independent from the administration of the EPO.

A Look Ahead

It is unlikely that the president will sign the law before a decision of the Federal Constitutional Court will have been handed down. Accordingly, the ratification of the UPC in Germany will likely be postponed to an unknown date.

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

German Reichstag in Berlin, GermanyThe future of the European Unified Patent Court (UPC) appears to look a bit clearer following recent ratification activities. On 16 January 2017, the Preparatory Committee for the UPC announced on its website that it is working under the assumption that the UPC can become operational in December 2017. However, the Committee stated that this timeline is conditional on a number of factors, with the most important being “the necessary ratifications of the [UPC Agreement] and accession to the Protocol on Provisional Application”. So far, twelve EU Member States have ratified the UPC Agreement, including France (14 March 2014) and Italy (10 February 2017).

The three countries with the highest number of patent applications in Europe (France, Germany and the UK) are mandatory ratifying countries of the UPC Agreement.

On 10 March 2017, the German Parliament, Bundestag, approved ratification of the UPC Agreement and related amendments to the German Patent Act. As a next step in the legislative process, the German Federal Council, Bundesrat, will need to approve the draft legislation. After approval by the Bundesrat, the resulting laws would then need to be signed by the newly elected Federal President Frank-Walter Steinmeier. The laws would take effect on the day following promulgation in the German Federal Law Gazette.

On 28 November 2016, the UK government issued a press release that, despite the UK’s planned leave from the EU, commonly known as “Brexit,” it still plans to ratify the UPC Agreement over the coming months. However, it is not clear how the ratification of the UPC agreement will play out with the UK’s heralded rejection of the supremacy of EU law and the jurisdiction of the Court of Justice of the European Union (CJEU). The UK government’s White Paper on exiting the EU specifies that “[the UK] will bring an end to the jurisdiction of the CJEU in the UK.”

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

Infection And Disease ControlOn 18 November 2016, the European Commission published a notice on the application of certain key provisions within Regulation (EC) No. 141/2000 on orphan medicinal products (the “Orphan Regulation”). Orphan medicinal products are medicinal products that are used for the diagnosis, prevention or treatment of rare diseases. An orphan designation allows a pharmaceutical company to benefit from EU incentives to develop a medicinal product, such as fee waivers for the regulatory procedures or a ten year market exclusivity.

Under Article 3 of the Orphan Regulation, an orphan designation is subject to the following two conditions:

  • The product is intended for the diagnosis, prevention or treatment of a rare condition (“prevalence criterion”), or the marketing of the product intended for the diagnosis, prevention or treatment of a life-threatening or serious condition would not generate sufficient return to cover the investment made (“financial criterion”); and
  • There is no satisfactory treatment for the condition in the EU, or if there is, the future medicinal product will be of significant benefit to patients affected by that condition (“significant benefit”).

The Notice, inter alia, specifies that a “significant benefit” may no longer be based on a possible increased availability due to shortages of existing authorized products; or a new pharmaceutical form, a new strength or a new route of administration, unless it brings a major contribution to patient care. The Notice further reiterates that treatments for communicable diseases with very low or close-to-zero prevalence in the EU, such as the Ebola and the Zika virus diseases, are also eligible for orphan designation in the EU. The eligibility is based on the risk of EU residents becoming affected by the disease.

Click here to read the full Mayer Brown Legal Update on the Commission’s Notice.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

busy Street scene with neon signs in Hong KongIntellectual Property (“IP”) rights are only as strong as the means to enforce them. Arbitration, as a private and confidential procedure, is increasingly being used to resolve disputes involving IP rights, especially when the dispute is between parties located in different jurisdictions. With the introduction of the Arbitration (Amendment) Bill 2016 (“Bill”), the Hong Kong government hopes this will give it an edge over competing arbitral seats in the region. The main effect of the Bill would be that enforcement of an award under Part 10 of the Ordinance would not be refused in Hong Kong under either the arbitrability ground or the public policy ground merely because the award involved IP rights.

The Scope of the Bill

The Bill has been in the pipeline for almost two years. It sets out a broad definition of IP rights to include, inter alia, rights to confidential information, trade secrets or know-how, rights to protect goodwill by way of passing off or similar actions against unfair competition. The bill clarifies that all disputes relating to the subsistence, scope, validity, ownership as well as infringement of IP rights are arbitrable. This includes the right to put the validity of a patent in issue in arbitral proceedings. The Bill includes a provision clarifying that an award relating to IP rights does not cover a licensee (whether or not an exclusive licensee) who is not a party to the arbitral proceedings. A licensee is, however, not prohibited from commencing arbitration proceedings without the owner of the IP being a party to the proceedings

All of the major arbitration centers, such as the International Court of Arbitration, the London Court of International Arbitration and World Intellectual Property Organization (WIPO) Arbitration and Mediation Center have adapted their arbitration rules to better suit IP disputes. As a result, the number of IP cases being heard by these centres continues to rise.

Conclusion

The international arbitration of IP disputes is on the rise, although it is still not as widely used to resolve disputes compared to other sectors (e.g., construction, energy and oil and gas). Hopefully the introduction of the Bill will reinforce the use of arbitration as a means to resolve IP disputes, as well as help consolidate Hong Kong’s position as an IP international dispute resolution centre.

Click here to read the full Mayer Brown JSM Asia IP & TMT: Quarterly Review (2016 Q4).

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

Close up on microchip catching with tweezers on circuit board.On 2 December 2016, President Obama issued an administrative order to prohibit the proposed acquisition of a controlling interest in Aixtron SE (Aixtron) by Grand Chip Investment GmbH (GCI), a German company partially owned by Fuijan Grand Chip Investment Fund LP, a Chinese partnership with some Chinese government ownership. It was only the third time in history that a US president has formally blocked a proposed foreign acquisition of a US business due to national security concerns identified during the review process by the Committee on Foreign Investment in the United States (CFIUS).

Aixtron is a German semiconductor equipment maker; its US business (Aixtron US) accounts for about 20 percent of the company’s workforce and a similar percentage of the company’s global sales in 2015. The €670 million (approximately US$720 million) transaction was to have been financed by Sino IC Leasing Co. Ltd., which belongs to the Chinese government-established and -supported China IC Industry Investment Fund.

Though CFIUS’s national security reviews are not public, it appears that the CFIUS concerns centered around Aixtron’s work to manufacture equipment for Metal-Organic Chemical Vapor Deposition (MOCVD) systems. These systems are used to produce the multilayer crystalline films necessary for semiconductor production. The US Treasury Department (Treasury), acting in its capacity as the chair of CFIUS, said in its statement regarding the decision that “[t]he national security risk posed by the transaction relates, among other things, to the military applications of the overall technical body of knowledge and experience of Aixtron […] and the contribution of Aixtron’s U.S. business to that body of knowledge and experience.”

When faced with concerns from CFIUS, most parties to a transaction under review seek to mitigate those concerns under agreements with CFIUS or choose to abandon or restructure the transaction. That was not the case here; apparently CFIUS did not believe that its concerns could be mitigated, and the parties were unwilling to abandon or unable to restructure the transaction. Consequently, the transaction was referred by CFIUS to the president, who blocked the transaction, stating, “The proposed acquisition of Aixtron US by the Purchasers is hereby prohibited, and any substantially equivalent transaction, whether effected directly or indirectly through the Purchasers’ shareholders, partners, subsidiaries, or affiliates is prohibited.” The administrative order defined the US business broadly, including any Aixtron US assets such as patents and patent applications.

Click here to read the full Mayer Brown Legal Update.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

BrexitOn 28 November 2016, the UK government issued a press release that, despite the UK’s leave from the EU, commonly known as “Brexit,” it still plans to ratify the Agreement on a Unified Patent Court (“UPC Agreement”) over the coming months. The UPC Agreement was signed by 24 out of 25 EU Member States that participate in the enhanced cooperation procedure to create a unitary patent system in the EU, including the UK.

The UK Minister of State for Intellectual Property, Baroness Neville Rolfe, said that for as long as the UK was a Member State of the EU, “the UK will continue to play a full and active role.” She added that the (long-developed) new patent system “will provide an option for businesses that need to protect their inventions across Europe.”

At present, patent protection in Europe can either be obtained through national patents, issued by the respective national offices, or European patents, granted by the European Patent Office. However, the granted European patent is only a “bundle” of individual national patents. Pursuant to article 64(3) of the European Patent Convention, any infringement of a European patent shall be dealt with by national law. Thus, despite the name European patent, there is no unitary property right with effect for all member states and no unitary judicial protection. Judicial relief can only be obtained on a national level and only applies to the territory of each respective member state.

Under the new unitary patent system, it will be possible for businesses to protect and enforce their patent rights across Europe with a single pan-European patent right and through a single unified patent court. The central division of the UPC will have its seat in Paris, with London (life sciences) and Munich (mechanical engineering) each hosting specialist seats.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

Condoms and contraceptive pills to practice safe sexOn 31 August 2016, the German Federal Patent Court issued a compulsory license under a patent that protects an HIV drug to affiliates of Merck & Co. (Case 3 LiQ 1/16). It was only the second time in the history of the court that a compulsory license has been granted and the first time that such license was granted in an emergency procedure. The Federal Patent Court’s first decision to grant a compulsory license dates back to 1991 (Case 3 Li 1/90) and did not survive appeal to the Federal Court of Justice (Case X ZR 26/92).

The Facts of the Case

The European patent EP 1 422 218, which is owned by Japanese company Shionogi & Company Ltd., protects an integrase inhibitor that is used in the treatment of HIV infections. A medicinal product that arguably makes use of the patented invention has been marketed for a couple of years now by Merck & Co. in the United States and Europe under the trade name of Isentress. The active substance in Isentress, Raltegravir, prevents the integration of the HIV genome into the host DNA and, thus, prevents the HI-Virus from multiplying. Raltegravir has shown a relatively high tolerability among patients and has proven effective against multidrug-resistant viruses.

In 2015, the German Merck & Co. subsidiary MSD Sharp & Dohme GmbH was sued for an injunction for patent infringement by Shionogi in the Regional Court of Düsseldorf (Case 4c O 48/15). In response, Merck & Co. tried to obtain a worldwide license under the patent. Shionogi rejected the offer and MSD brought an action for issuance of a compulsory license before the Federal Patent Court and, at the same time, requested a provisional allowance order under section 85 of the German Patent Act.

Pursuant to section 24 para. 1 of the German Patent Act, a compulsory license shall only be granted by the Federal Patent Court when a license seeker has unsuccessfully attempted to obtain an economically reasonable license from the patent owner, and when the public interest calls for the grant of a compulsory license.

The Ruling

On the basis of an expert opinion, the Federal Patent Court reached the conclusion that there was a significant medical need among certain HIV-infected and/or AIDS patients for Isentress, and that these patients could not resort to other currently available integrase inhibitors without severe health risks. This was in particular true for pregnant women, infants and long-time HIV patients. With an effective reduction of the viral load, the risk of infection of third persons could also be reduced. A public interest for the grant of a compulsory license was, therefore, present. The court did not follow Shionogi’s argument that Merck & Co. had not made a serious effort to obtain a license.

However, the ruling is only provisional. The main proceeding is still pending before the Federal Patent Court. Shionogi might also be able to appeal the court’s main decision to the Federal Court of Justice.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

PillsOn 14 June 2016, the German Federal Court of Justice (X ZR 29/15 “Pemetrexed”) confirmed prior decisions in which it held that patent infringement under the doctrine of equivalents can, in principle, not be assumed, if the patent discloses various ways that a certain technical result can be achieved, but only one of those possibilities has found its way into the claims.

The Court held that if the wording of the claims is narrower than what would have been necessary—considering the technical contribution of the patented invention to the prior art— competitors and other interested parties can rely on the applicant’s carefully chosen words. The patent holder is not allowed to subsequently claim protection for something that he deliberately chose not to protect. According to the Court, this rule shall even apply when a person skilled in the art realizes that the effects of the invention go beyond the technical matter for which the applicant sought protection in the claims.

Also, embodiments that are not explicitly disclosed but that can easily be identified by a person skilled in the art from the specification are, in principle, excluded from equivalent patent protection. The latter, however, ultimately depends on the reader’s perception of the patent document.

However, this principle, like every other in the field of IP law, has its limits. It shall only apply to circumstances where the patent document (explicitly or inherently) discloses more than one embodiment. An extension of this principle to embodiments that were available to a person skilled in the art only through a vague indication in the specification would, in the eyes of the Court, go too far because the availability of equivalent embodiments is a necessary precondition for a finding of infringement under the doctrine of equivalents. If these embodiments were also excluded from the scope of protection one would never be able to establish infringement by equivalence.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

Tampon versus PadOn 11 July 2016, the US Court of Appeals for the Federal Circuit issued a unanimous en banc ruling in The Medicines Company v. Hospira Inc. that a sale of manufacturing services by a contract manufacturer to an inventor to create embodiments of a patented product for the inventor does not trigger the on-sale bar of 35 U.S.C. § 102.

In US patent law, the on-sale bar is a limitation on patentability providing that an invention cannot be patented if it has been sold or offered for sale more than one year before the effective filing date of the patent application. At issue in Hospira was an old version of § 102, which stated that “[a] person shall be entitled to a patent unless,” inter alia, “the invention was […] in public use or on sale in this country, more than one year prior to the date of the application for patent.”

The Federal Circuit concluded that “to be ‘on sale’ under § 102(b), a product must be the subject of a commercial sale […] that bears the general hallmarks of a sale pursuant to Section 2-106 of the Uniform Commercial Code.” In the case at hand, however, only contract manufacturing services were sold to the inventor. Thus, the inventor maintained control over the patented product. The seller of manufacturing services was not free to use or sell the claimed products or to deliver the patented products to anyone other than the buyer. The court agreed with amici who argued that applying the on-sale bar to the type of manufacturing services presented in this case “would only make the drug development process more costly, punish efficient use of resources, and deter future investments in innovation.” Additionally, doing so would result in “penalizing a company for relying, by choice or by necessity, on the confidential services of a contract manufacturer” instead of manufacturing in-house.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.