European Union: CJEU Decides On Calculation Of SPC Term

The European Court of Justice ("CJEU") has decided on a matter of great importance for applicants of pharmaceutical patents who have already obtained a supplementary protection certificate ("SPC") on the basis of a marketing authorization ("MA") or who intend to do so. The question answered by the decision in C-471/14 Seattle Genetics Inc. related to the calculation of the SPC term, and it has a direct impact on the duration of the SPC protection.

SPCs provide additional protection for pharmaceutical patents after their expiry and are intended to compensate for the long and costly authorization procedure necessary to bring a product to market. The duration of an SPC is calculated according to Art. 13 of the SPC Regulation as an interval between the patent filing and "the date of the first authorization to place the product on the market in the Community" reduced by five years. The maximum duration allowed is limited to five years. Whereas the filing date of the basic patent is unambiguous, it is unclear whether the date of the decision or the notification date should be considered. In fact, the latter results in a longer protection. Given that up to 80 percent of the revenue derived from a pharmaceutical product is achieved during the supplementary protection time, even one additional day is of great importance. Currently, different jurisdictions use different criteria. As a consequence, the duration of an SPC for the same product can deviate by several days in different European countries.

An SPC is a national right granted by the national patent offices. In Europe, however, this right is governed by EU legislation, namely by EU Regulation No. 469/2009 (the "SPC Regulation"). As a consequence, national courts refer to the CJEU if there are uncertainties in the interpretation of the law.

In the present case, Seattle Genetics appealed the decision of the Austrian Patent Office, which uses the issuance date of the MA for the SPC term calculation. The Higher Regional Court of Vienna (Oberlandesgericht Wien) referred two questions to the CJEU: (i) whether the date of the MA should be interpreted according to the national or to the European Community law, and (ii) in the latter case, whether the date is the date of the issuance of the decision or the date of notification to the MA applicant. Due to the importance of these questions, the Greek, Italian, Lithuanian, and Latvian governments, as well as the European Commission, submitted their written statements.

Prior to the final decision, the CJEU Advocate-General, Niilo Jääskinen, issued his Opinion at the request of the CJEU. The final decision essentially confirmed his point of view.

With respect to the first question, all statements except for that of the Italian government favored the position that Community law is to be applied. The Advocate-General and the CJEU came to the same conclusion after a thorough consideration of nature and purpose of the Regulation and the previous case law. In particular, the Advocate-General pointed out that regulations of the Community law, like Art. 13 of the SPC Regulation, should be interpreted uniformly if not otherwise determined in the Regulation itself. Moreover, once the legislator has chosen the instrument of the EU regulation, the aim was to create a standard system at the Community level in order to eliminate all barriers to free trade of the pharmaceutical product as well as the competitive distortions within the EU. Indeed, different expiration dates in different member states of the European Community would lead to an undesirable parallel trade within the Community between the states where the SPC has already expired and those with the valid protection. Apart from splitting the market, this situation would create a legal uncertainty for the market players.

Regarding the second question, the Greek, Lithuanian, and Latvian governments were of the opinion that the date of issuance of the MA is decisive. The Advocate-General and the CJEU however, came to the opposite conclusion. According to their determination, the wording of the Regulation does not answer this question directly, nor does the preceding case law clarify what date is precisely meant. However, considering that the purpose of supplementary protection is to extend patent protection eroded by the long-lasting authorization proceeding for pharmaceutical products, and thus to recoup costly investments into clinical trials, both legal texts and case law have always emphasized the importance of warranting an adequate protection, especially with respect to the term of such protection. A right to market a pharmaceutical product and to amortize the development costs arises first at the point where the right holder becomes aware of the decision to approve marketing of the product. It would be unacceptable if the envisaged extension of the protection is shortened by the procedure between the issuance and notification—which, moreover, cannot be influenced by the applicant.

It should also be emphasized that the European Commission systematically applies this interpretation in handling SPCs for medicinal products approved in the Community for other purposes. Also, the European Medicine Agency considers the date of notification when determining the protection period that must be considered for subsequent generic/hybrid applications.

Conclusion

This decision brings welcome news for SPC applicants. First, the duration of SPCs will be now calculated uniformly across the entire European Economic Area, improving legal certainty in the field of SPCs. Second, in those countries that have used the issuance date of the MA, the duration of SPC protection will be extended.

The open question is what effect this decision will have on previously granted SPCs. The practice of the national patent offices is not uniform. Some issue SPCs with the term and others without. Considering that the term is determined by the (directly applicable) SPC Regulation, as interpreted by the CJEU, it can be argued that any term indicated by a grant decision of a national office is only declaratory. Still, applicants may want to request updates of such decisions setting out the "wrong" term for the avoidance of any doubt.

It also remains unclear how the similar but not identical wording of Art. 7(1) of the SPC Regulation "the date on which the authorization ... is granted" should be interpreted. This article regulates the deadline for filing SPC applications. Although in Art. 7(1) the grant is explicitly indicated, it is still unclear whether the date on which the decision is granted or the date of its notification is meant.

The CJEU missed an opportunity to contribute to the clarification of this ambiguous formulation. Certainly, there will be attempts to argue the analogous application of this decision in future cases.

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