China has recently seen the first decision in a case initiated under its patent linkage system. Under this system, when a generic drug company files an application for marketing authorisation, it can make one of four declarations, including that there is a registered patent relating to the product but it will be declared invalid or non-infringed. If such a declaration is provided, the patent owner is notified of the application for marketing approval, and must commence proceedings within 45 days with the Beijing IP Court or before CNIPA. There is then a 9-month moratorium on marketing authorisation approval.

In this case, the plaintiff, Chugai Pharmaceutical Co., Ltd (Chugai), is the patentee of Chinese Patent No. 200580009877.6 (US family member No. 10/588,609) protecting the ED-71 preparation, and also the marketing authorization holder of the relevant patented drug, Eldecalcitol Soft Capsules. The defendant, Wenzhou Haihe Pharmaceutical Co., Ltd (Haihe), is a generic drug maker that had applied for marketing authorization, which triggered the filing of a declaratory patent infringement lawsuit before the Beijing IP court by Chugai. Chugai also defended the patent in invalidity proceedings initiated by two other parties (not Haihe). The case was recently concluded, with the patent being declared invalid although Chugai had tried to rescue it by incorporating a specific antioxidant (d1-α-tocopherol) from claim 2 to further limit the broad technical term "antioxidant" of claim 1, while the generic drug was found non-infringing against the amended claim 1 by the court.

More details were freshly provided recently by Haihe's law firm which held a public webinar to introduce this case, showing that Chugai lost the infringement case mainly because of its voluntary amendment to claim 1. In particular, Haihe had relied on both the doctrines of estoppel and contribution in its non-infringement defence. From this very limited information, we believe it is highly likely that the generic drug of Haihe contains an antioxidant that is different from the d1-α-tocopherol added into the amended claim 1 meaning the Haihe generic drug is caught by granted claim 1 but not amended claim 1. In this regard, when the different antioxidant in the Haihe generic drug is further noted in the Specification of the patent, the court may become more inclined to apply the doctrine of contribution instead of estoppel, as there leaves even less room for the plaintiff to argue.

The case demonstrates that a patentee shall normally not voluntarily amend their claims during invalidity proceedings, unless absolutely necessary. Here, it is unlikely that adding d1-α-tocopherol to further limit the term "antioxidant" in claim 1 can overcome an inventive step challenge, unless d1-α-tocopherol is largely different from other peer antioxidants and/or brings significant/unexpected technical effect (this is not easy to prove). And, even if claim 1 did survive through such amendment, it would largely restrict the application of the doctrine of equivalence ("DOE") in the infringement case, as doctrines of estoppel and contribution will become available to the defendant. On the contrary, if no voluntary amendment was made and claim 1 was declared invalid by CNIPA, as long as the infringement case is ongoing, Chugai can still assert claim 1 which only requires the broad concept of "antioxidant" and can thus cover the Haihe drug, as no estoppel can be raised here from voluntary amendment.

One possible strategy for a patentee to recover from such tough situation may be to win a judicial review of the unfavourable invalidation decision and then settle with the petitioner to peacefully end the invalidity proceeding, so as to enable the amendment to be withdrawn. There are already several precedent cases where the patentees took this strategy and were successful in being able to revert to the granted claims without amendments. However, there are also contrary cases in which the court held that the patentee's statements and amendments made during the invalidity proceeding should be deemed as effective regardless of whether an effective invalidation decision is finally made. To move forward in this way, the patentee is usually suggested to seek the support of influential legal experts.

In our experience, both tech expert opinions and legal expert opinions can have a significant impact in supporting such complex cases. In relation to key legal issues, including whether amendments already made can be withdrawn based on settlement of invalidity proceeding, it may be a good option for the patentee to invite influential legal experts and scholars to issue a legal expert opinion (may have similar effect with amicus brief under common law system) based on the specific case facts and from a more neutral perspective. In many scenarios, such legal expert opinions can have a significant influence on the court's legal findings and are warranted in high stakes / high value cases. Technical experts are also very useful when complex technical issues arise, such as in relation to assessing equivalence of technical features from a technical view.

Another suggestion to patentees is to avoid engaging two law firms to handle the invalidity and infringement proceedings separately, whenever possible. The goals are different in these two proceedings and may bring tensions between each other. For example, in the invalidity proceeding, lawyers are naturally inclined to introduce more limitations/interpretations to the claim languages to make the patent survive, but this may easily create estoppel which may become hazardous for the infringement proceeding. In many scenarios, to say/do more before CNIPA means to face more dangers on the infringement side before court, thus a veteran IP lawyer should very carefully devise strategy to find out the balance between the two proceedings. In recent years, it seems multinational patentees are becoming more and more willing to engage a single law firm to handle both invalidity and infringement proceedings to ensure all the positions are consistent.

It was reported that Chugai has filed appeals for both the invalidity and infringement proceedings. According to relevant rules, if no effective judgment is issued within the 9-month moratorium, the marketing authorisation approval proceedings for the generic drug will continue. Therefore, it will be interesting to see whether the appeals of Chugai can be concluded within this time frame and how the subsequent proceedings will run to fit in the law. We will keep following up.

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