Patents: Supplementary Protection Certificates 2005 developments

The ‘Liechtenstein Loophole’ concerning the effect of a marketing authorisation for a medicinal product being granted in Switzerland in connection with an application for an SPC was at last clarified by the ECJ last year.

Supplementary Protection Certificates – the Swiss position clarified

In 2005 the European Court of Justice (ECJ) was asked to determine whether a first marketing authorisation granted in Switzerland was sufficient to amount to a first marketing authorisation within the EEA, on account of a particular customs agreement between Switzerland and Liechtenstein. The importance of this referral (from the UK and Luxembourg) lay in the fact that if the Swiss authorisation was deemed to constitute the first marketing authorisation in the EEA, the extended monopolies afforded patentees pursuant to Supplementary Protection Certificates (SPCs) would, in many cases, be significantly reduced.

Pharmaceutical companies rely heavily upon effective patent protection for their products. Even after a patent has been granted, it can take many years to develop and commercialise a product. Pharmaceutical companies often find that more than half of the 20-year term of protection granted by a patent can be consumed in development and obtaining regulatory approval, leaving them only a few years in which to recoup their huge investment in a product.

This problem has been recognised in a variety of jurisdictions, and in Europe resulted in the introduction of SPCs, which extend the duration of protection for medicinal (and certain other) products for a period of up to five years. This additional period of protection is intended to compensate the patent owner for the significant investment (of time and resources) required to develop a commercial product and obtain a marketing authorisation.

In order to meet the requirements for grant of an SPC, certain conditions need to be met (in accordance with Article 3 of Council Regulation (EEC) 1768/92 (the Regulation)). In brief, the product must be protected by a basic patent in force, a valid marketing authorisation must be in place and must be the first authorisation to place the product on the market. Further, the product must not already be the subject of an SPC. The duration of an SPC is defined by reference to the “date of the first authorisation to place the product on the market in the Community” (Article 13 of the Regulation).

Although Switzerland is not an EEA member state, it has a customs union agreement with Liechtenstein (which is in the EEA) under which Swiss marketing authorisations are automatically recognised in Liechtenstein. It has previously been unclear whether a marketing authorisation in Switzerland could constitute the “first authorisation” for the purposes of calculating the term of an SPC. Given that the grant of a Swiss marketing authorisation often takes place before the rest of the EEA, if the date of the Swiss grant is considered to be the “first authorisation” within the EEA, this may result in a dramatic reduction in the duration of an SPC. At a time when the proprietor’s monopoly is about to end, sales of products are often at their highest.

This question was addressed by the ECJ in 2005 in two cases on reference from the UK and Luxembourg. In Novartis AG and others v Comptroller-General of Patents (consolidated with Ministrie de l’Economie v Millenium), Novartis had applied for an SPC for a product for which Swiss marketing authorisation had already been granted several months prior to authorisation in any EEA country. The UK Patent Office treated the Swiss authorisation, because of its applicability to Liechtenstein, as the relevant “first authorisation”, and thus granted a shorter term of SPC than would have been the case had the first EEA authorisation been considered as the first relevant authorisation. Novartis challenged this decision and the High Court made a reference to the ECJ on the interpretation of the Regulation.

The ECJ held that a Swiss marketing authorisation could constitute the first authorisation of a product within the EEA. In such circumstances the date of commencement for an SPC is to be calculated by reference to the Swiss authorisation date, as opposed to subsequent authorisation within the EEA. The ECJ stated that this interpretation was consistent with the purpose of the Regulation, which stipulates that the owner of a patent and SPC should not enjoy more than 15 years exclusivity from the time that the medicinal product obtains its first marketing authorisation within the EEA.

The potential implications of these decisions could be significant for pharmaceutical companies. In the case of Ministrie de l’Economie v Millenium the duration of the SPC was reduced by almost two and a half years. These implications may be minimised, however, as a result of subsequent legislative changes in Switzerland. In particular, as a result of these decisions the Swiss government has amended its legislation to provide that a marketing authorisation granted in Switzerland will only become effective in Liechtenstein after 12 months of the Swiss grant. It was hoped that this would bring the timing of the effect of a Swiss marketing approval in Liechtenstein into line with the granting of equivalent marketing authorisations in Member States of the EEA. Temporary holding legislation to this effect was introduced immediately following the ECJ decision. Further legislation, to the same effect, is currently proceeding through the Swiss Parliament.

This article first appeared in our UK Patents Review March 2006. To view this publication, please click here to open it as a pdf in a new window.