With the global shutdown that has occurred due to COVID-19, its presence has caused long-lasting effects in all aspects of our lives and the way businesses operate. To no surprise its presence is also interacting with exclusivity offered by IP rights.
These discussions have appeared as major drug companies rush to develop vaccines to tackle this pandemic. Last month, (WHO) announced that remdesivir, an antiviral drug originally developed by Gilead sciences to treat ebola, might be effective in curing patients from the virus. GSK and Sanofi among others are developing vaccines to stop the spread and Fujifilm’s flu drug has been reported by the Japanese government to be a potential cure.
There is no doubt that these companies will seek patent protection for their products. Gilead was granted three patents for remdesivir and already has five more pending. However researchers from the Wuhan Institute of Virology have also reportedly filed a patent application for the use of remdesivir for the treatment of Coranavirus. This move was highly criticized (which Unacom will cover soon). But essentially although Wuhan did not develop remdesivir, if it was the one that established that it can be used to treat COVID-19, then it should be able to be awarded a new medical use patent. This would be further supported if it was the one to perform all the relevant research and clinical testing.
The deputy director of China’s National Intellectual Property Administration stated that drug investment is extremely costly and requires strong patent protection. If remdesivir proves effective and is distributed to patients this will only be done while respecting the legitimate interests of the patentee. Amidst a global pandemic these statements are quite surprising and does nothing to ease the tension between private and public interests in patent law, especially when it comes to pharmaceuticals. This is shown in global attitudes where in some countries it was not until the 1990’s that pharmaceuticals were allowed to be patented.
In reflection of the global health crisis that is occurring and the disastrous effects it is having on all aspects of life, it would be beneficial to curtail exclusivity to that benefit of the common good. Actions that could be taken are those such as a government award, where there is a large cash prize for any firm that develops a successful coronavirus vaccine. If planned well, such a prize could provide adequate incentives for private firms to make the necessary investments.
Another option that could be implemented especially considering the imminent threat to public health in multiple jurisdictions would be that of a compulsory license. This is when the government allows other firms/manufacturers to produce a patented product without the consent of the patent owner. In whatever decision is made, health ministries and courts should feel no qualms in setting appropriate limits to patent exclusivity in cases where the public interest so strongly requires immediate and affordable access to a certain medicine.
Coronavirus’s impact on trademarks
As the previous paragraph showed, private interests can provide a barrier to public problems. Interestingly trademarks display a reversal of this, where the public problem can affect a trade-marks holders private interest.
The purpose of trade mark law is first and foremost to claim exclusive use of a designation to indicate the origin of certain goods or services. However as it being shown with the Coranavirus, the associated with a specific company may become a curse rather than a blessing. For example it has been reported that Corona beer has seen a sharp drop in sales as a result of negative associations with the virus.Of course, the news about the declining sales may end up helping the brand. It will be interesting to see the marketing tactics used by Corona to turn the negative attention around.
While patents are an essential component of the pharmaceutical industry in driving innovation and research, it should never outweigh actual lives of patients. When a cure/vaccine is eventually discovered, the first matter of action should be getting it to the countries suffering the worst outbreaks, not deciding the earning potential of the patentee. This further supports why a prize might be in the best solution in this case, as it would ensure the invention is fairly awarded but also fairly available.
The German Federal Constitutional Court has published its long-awaited decision on Friday (20/03/20). In this announcement, the constitutional complaint against the legislation required for Germany to ratify the Unified Patent Court (UPC) Agreement was upheld.
According to the Court , the German act by which it was to pass to the UPC, violates the Germans populace democratic rights under Article 38 Basic Law, because it was not passed with the parliamentary majority required.
Article 1 of the UPC Agreement provides that “ A Unified Patent Court for the settlement of disputes relating to European patents and European patents with unitary effect is hereby established. According to the German constitutional court, this constitutes a transfer of adjudication authorities, which implicates the constitutional rights of the German populace. Such a transfer of authority requires, according to German law, a two-thirds majority in the Bundestag.
The Hungarian constitution has also raised a similar issue and decreed that it would be unconstitutional to allow jurisdiction for resolving private legal disputes to transfer from Hungary's courts to an international institution ,the UPC, that is not established within the boundaries of the EU's founding treaties. Thus Hungary has joined the likes of Spain and Poland in refusing to sign the agreement.
As stated above, the German court upheld the constitutional complaint due to the ratification of the UPC agreement not passing through the required parliamentary majority.
William Hoyng, member of the drafting committee of the UPC’s rules of procedure stated:
“ Today's decision will set back the UPC project at least five years. Also in lights of Brexit, it will require participating states to renegotiate the UPC Agreement. That is unfortunate, but it also provides us with opportunities. For instance, it would allow filling in gaps or deciding on problems encountered by the Drafting Committee. We can also try to draft a text that would make it possible for European Economic Area countries and perhaps even other countries to join.
It is not the complete end for the UPC, with the compliant upheld so far as it concerned a formal voting requirement. However given the current crisis occurring with the COVID-19 pandemic, it is not likely that this is high on the political priority list.
The UK government announced on the 27th February as it published its approach to Brexit negotiations that the UK will not be seeking involvement in the UP/UPC system. The statement was accompanied by the reasoning that participating in a court that applies EU law is inconsistent with the UKs aim of becoming an independent self-governing nation.
This is a huge blow to the project, with the UK formally a key participant in the project with its formation framed around the UKs participation. Although the agreement has yet to be ratified by Germany, the remaining participant Member States will need to consider whether the project remains viable/lucrative without the UK.
What is the Unitary Patent Court (UPC)
The EU is planning on providing the option for businesses/inventors to apply for unitary patents. This is a means by which businesses can obtain patent protection for their inventions across multiple EU countries through a single application. The current system of the European Patent System requires patents registered at the EPO to be validated in each of the countries that businesses with the patent wish to apply to. This creates a complex process (requirements to translate patents into the native language), time consuming and costly process.
Before unitary patents can be applied, a judicial framework needs to be established to be able to handle disputes over the unitary patents. The Unitary Patent Court (UPC) has been developed to perform this function.
European patent owners will be subject to the UPC’s jurisdiction unless owners ‘opt-out’ those patents. This means where those patents are opted-out (of the UPC), disputes over their validity or infringement will be heard before national courts as is the current case.
Challenges facing the UPC
The UPC has faced legal challenges and uncertainty over Brexit. With the UK now formally announcing it will no longer participate, due to the UPC requirement to adhere to EU law and the overarching jurisdiction of the CJEU in relation to the UPC system, at odds with the UKs Brexit strategy of fierce independence.
Germany's ratification process has been held up by a legal challenge brought before the country’s Federal Constitutional Court. The complaints arise from concerns that the ratification involves the transfer of sovereign rights from Germanys judiciary to another organisation, with the transfer of patent litigation powers to the UPC. There have also been complaints regarding whether the judges if the UPC will be independent in the sense that is prescribed by the German constitution and whether the way the reforms have been structured will align with the constitutional mandate to promote Germany's integration within the EU.
What are businesses reaction to the UPC?
The recent decision by the UK will come as a ‘huge disappointment’ to the patent attorney trade and to SME’s. The UKs lack of involvement will most likely affect small businesses, with one of the main benefits for the UK would have been lowering the cost and time of patent enforcement and challenge.
Of course from the outset the UPC presents advantages of being able to simultaneously gain patent protection across all Member states by-passing complex and time-consuming requirements. However if a successful dispute is brought forward to the UPC, all rights across all member states could be lost, creating a huge risk for the industries involved. This is a particular worry for life science industries that depend heavily on their ‘blockbuster’ treatments that could face jeopardy if a successful dispute/infringement is brought forward. However the prospect of a pan-EU interim injunction against an alleged infringer may be attractive. Life sciences companies, both originator and generic, are likely to want to have some input in shaping the law and jurisprudence in this area.
Pharma companies are likely to keep a patent portfolio outside of the UPC, meaning they would continue to be able to defend their patent rights in individual proceedings in each of the EU countries in which their rights apply.
In the TMT sector there is a larger volume of patents, especially patents essential to technology standards, Standard essential patents (SEP), than for blockbuster inventions.
The high volume of these patents in the TMT sector, means that national infringement proceedings in Europe for technology patents typically seek to enforce more patents in each case than pharmaceutical patent cases. This is because there is a safety in numbers, because even if some of the patents are invalidated, the patent owner will win and obtain financial compensation provided that one patent is valid and infringed. This probability of finding often encourages alleged infringers to settle agreements and/or enter into cross-licensing agreements. Therefore patent applicants in the technology sector are much more likely to use the UPC to enforce their existing European patents. This is because a single litigation before the UPC should be more cost effective than parallel patent litigations in various European jurisdictions. If the UPC invalidates some of the patents in suit then there are others to fall back on.
The UK is not completely out of the UPC, with a European Parliament think tank of the opinion itself that UK membership post Brexit still possible, with the main barrier actually being the UKs own red line. Membership of the UPC would have been greatly beneficial for IP lawyers and patent attorneys, as London was planned to be the location of the Life Science division of the UPC, the UK would have had significant influence over the development of UPC related jurisprudence, influence that it will no longer have.
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