6 things to watch in pharma and biotech patent litigation in 2023

1 – Who will be litigating first in the UPC?

The UPC is going to start as of June 1, 2023 and the sunrise period for opting out patents will already start on March 1, 2023. The recently amended timeline comes after reports on difficulties in accessing the UPC case management system, which had called the initial start of the sunrise period on January 1, 2023, and the entry into force of the UPC on April 1, 2023, into question.

We all know that pharma and biotech companies are said to be reluctant to leave their patents in the new system by opting all “crown jewels” out. See our article on the strategies of staying in vs. opting out here.

The question remains however if this will rather turn out to be a bluff. If the patent’s validity is thought to be robust, patent owners would miss the chance of strong and quick enforcement of their patent in the UPC: The deadlines for filing briefs are really short, in particular for defendants who are faced with an action out of the blue. Further, the chances of getting preliminary injunctions granted seem higher in the UPC than in many national courts. And last but not least: the patent owner will get an UPC-wide injunction!

2 – How will disproportionality of injunctive relief and compulsory licensing situations interplay in German pharma and biotech patent litigations?

One of unclear issues after the most recent modernization of the German Patent Act is the finding of injunctive belief being disproportionate in pharmaceutical and biotech patent cases where patients need to be treated with the medicament that is subject to the patent in suit.

While one opinion argued that disproportionality under Sec. 139 (1) 3 German Patent Act (GPA) is an aliud to the situation in which a compulsory license could be requested under Sec. 24 GPA, the Düsseldorf District Court decided the other way around: It did not find merit in a defendant’s proportionality defence based on Sec. 139 (1), 3rd sentence German Patent Act (GPA). The provision was added to the GPA approximately a year ago and codifies previous case law according to which a claim for injunctive relief is barred if it would result in disproportionate and unjustified hardship for the infringer or a third party. In the past, the Dusseldorf courts had quashed disproportionality arguments raised by defendants in pharmaceutical cases if they had not also requested a compulsory license. The same standard has now been applied in assessing the now-codified proportionality defence. In the present case, the defendant (Gilead) had filed a parallel request for a compulsory licence, but not until a year after the infringement action had been filed. Further, it chose not to request a provisional compulsory license, i.e. expedited proceedings. The Dusseldorf District Court did not find this to warrant the defence that an injunction against Gilead would be disproportionate. We have in detail reported about this first instance decision here. It remains to be seen whether the Court of Appeal will follow this finding and how other German infringement court will decide similar situations in 2023.

3 – What is new on preliminary injunction proceedings in pharma and biotech cases in Germany – and would it be different under the UPC?

2022 has brought many new developments in preliminary injunction proceedings in pharmaceutical and biotech cases in Germany. Be it the question whether a preliminary injunction could be granted based on a mere patent application – current answer: a clear No! – or the question whether the bar for the validity of patents needs to be lowered in Germany following the CJEU decision Phoenix Contact/Harting, C-44/21. So far, the Düsseldorf District Court has not followed the opinion that a presumption of validity should apply to granted patents. The court has held that even if the CJEU’s ruling was to be interpreted as a legal presumption of validity – an interpretation the Düsseldorf District Court calls into question –, such presumption can be rebutted by a negative decision in opposition or nullity proceedings (judgment of 21 September 2022, case no. 4b O 23/22 – Katheter-Umstellung) or by an opposition filed against the asserted divisional patent based on a nullity attack which has resulted in (partial) revocation of the parent patent (judgment of 22 September 2022, case no. 4b O 54/22 – MS-Therapie III). By contrast, the Munich District Court assumes that a presumption of validity applies to granted European patents (judgment of 29 September 2022, case no. 7 O 4716/22 – Fingolimod). This puts the onus on the alleged infringer to rebut the presumption. According to the Munich District Court, rebuttal can for example occur based on a negative (preliminary) opinion on validity in a parallel nullity attack against the asserted patent, or in foreign or domestic invalidity proceedings claiming the same priority date as the asserted patent. The question on how German courts will rule on the issue in future cases is immediately followed by speculations how the UPC will handle cases where doubt is cast on the validity of the patent in suit. Our view can be found here. What is more than certain is that 2023 will again bring new and surprising PI cases!

4 – What will be the scope of Art. 3c SPC Regulation?

2023 will hopefully bring more guidance on the interpretation of Art. 3 (c) of the SPC Regulation by the CJEU as well as by the German Federal Court of Justice in 2023:

MSD’s German SPC covering its diabetes drug Janumet was invalidated by the German Federal Patent Court (“FPC”) on 23 June 2021 (case nos. 3 Ni 2/20, 3 Ni 24/20, 3 Ni 3/21). The judgment is one of many in the field of SPCs for the combination of active ingredients and takes into account the prior rulings in the FPC’s Ezetimib and the CJEU’s Actavis and Teva/Gilead cases. As MSD has appealed the judgment, the German Federal Court of Justice (“FCJ”) will soon have to finally decide the case (case no. X ZR 64/21). We have reported on the first instance revocation in detail here.

In parallel, regardless of the (German) Federal Patent Court’s refusal to refer the case to the CJEU, the CJEU is tasked with questions on the interpretation of SPC Reg. Art. 3(c) in the context of the Janumet SPC due to a referral by the Finnish Market court. It referred several questions on the interpretation of the SPC Regulation with a view to MSD’s Finnish Janumet SPC to the Court of Justice of the European Union (“CJEU”). The Finnish decision was handed down on 17 February 2022 (file no. 7/2022). In addition to a further referral from the Irish Supreme Court in another SPC matter (Case C-149/22), the CJEU is again tasked with answering a number of relevant questions on the interpretation of the SPC Regulation (Case C-119/22). We have summarized the referral here.

5 – Will there be unitary SPCs?

While there is a strong need in the industry to join the unitary patent with unitary SPC and the UPC going to open its doors in a few months, there still is no unitary SPC. The questions to be resolved in this regard range from the granting body, the way of legal recourse, its territorial scope and the question which kind of MA will be suitable to get a unitary SPC We have already reported on all the issues that still need to be resolved in order to get to a unitary SPC here. The answer of the European Commission on its call of last spring is eagerly awaited and will hopefully follow soon.

6 – The SPC Manufacturing and Stockpiling Waiver – how will the Courts decide?

The transitional period of the SPC Manufacturing and Stockpiling Waiver ended and it fully came into force last July. Given the large amount of uncertainties and ambiguities in the Regulation that we have explained in our series of articles that you can find here, here and here, Courts will soon have to decide about where exact border between allowed use under the SPC Manufacturing and Stockpiling waiver on the one hand and patent infringement on the other hand will be. In any case, it is already sure that it will be very fine line.