SPC manufacturing waiver (Part 1): You may now – yes, what actually?

As indicated in our June 2019 Synapse issue, the Regulation (EU) 2019/933 (MW-Regulation) amending the SPC Regulation EC/469/2009 to introduce a manufacturing and stockpiling waiver for EU-based generic and biosimilar manufacturers entered into force on 1 July 2019.

As much as the MW-Regulation was eagerly awaited, disillusionment is now spreading, because the text of the MW-Regulation unfortunately raises more questions than it answers in many places.

Part 1 of this series of articles addresses the manufacturing waiver deals with which activities the MW-Regulation actually privileges.

Article 1 para 2 sec. 2 MW-Regulation dealing with the privileged activities, reads as follows:

"By way of derogation from paragraph 1, the certificate referred to in paragraph 1 shall not confer protection against certain acts which would otherwise require the consent of the holder of the certificate ("the certificate holder"), if the following conditions are met:

(a) the acts comprise:

(i) the making of a product, or a medicinal product containing that product, for the purpose of export to third countries; or

(ii) any related act that is strictly necessary for the making, in the Union, referred to in point (i), or for the actual export; or

(iii) the making, no earlier than six months before the expiry of the certificate, of a product, or a medicinal product containing that product, for the purpose of storing it in the Member State of making, in order to place that product, or a medicinal product containing that product, on the market of Member States after the expiry of the corresponding certificate; or

(iv) any related act that is strictly necessary for the making, in the Union, referred to in point (iii), or for the actual storing, provided that such related act is carried out no earlier than six months before the expiry of the certificate.

It is worth noting that, by using the term "comprise" before listing the privileged activities, the MW-Regulation chooses a terminology that at least can be understood as pointing to a non-exhaustive list. Although this may be seen as an editorial error, it can be concluded that a little more care would have been desirable in drafting the core aspect of the MW-Regulation in order to prevent uncertainties and the resulting legal disputes.

More importantly, it should be emphasised that the MW-Regulation does not define as binding what are privileged "related acts". Recital 9 states in this regard:

In those specific and limited circumstances, and in order to create a level playing field between makers established in the Union and third-country makers, it is appropriate to provide for an exception to the protection conferred by a certificate so as to allow the making of a product, or a medicinal product containing that product, for the purpose of export to third countries or of storing, and any related acts in the Union strictly necessary for that making or for the actual export or the actual storing, where such acts would otherwise require the consent of a certificate holder ('related acts'). For instance, such related acts could include: possessing; offering to supply; supplying; importing; using or synthesising an active ingredient for the purpose of making a medicinal product; or temporary storing or advertising for the exclusive purpose of export to third-country destinations. That exception should also apply to related acts performed by third parties who are in a contractual relationship with the maker. (emphasis added)

"Related acts" can therefore in principle be all acts of infringement that come into consideration against a product claim. "In principle" therefore (and here in practice) most disputes might arise, because these "related acts" have to be strictly necessary for the making in the Union of a product, or a medicinal product containing that product, for the purpose of export to third countries or for the actual export. What "strictly necessary" means, however, is not mentioned in the MW-Regulation, but will, for a start, have to be developed by the national infringement courts.

Activities without which the production and storage of the corresponding product is by its very nature impossible, such as the final manufacturing process or the possession of the substances used for production, should be covered by the privileges provided by the MW-Regulation. However, under what circumstances, for example, will the offering to supply referred to in recital 9 be strictly necessary for the privileged activities?

Considering that the MW-Regulation provides for derogations from the protection provided by SPCs in order to promote the competitiveness of the Union, in our opinion at least infringement courts favouring a rather strict approach in the past as, for example, German courts will very likely interpret these exemptions rather narrowly and consider on a case-by-case basis, whether an activity in Germany is a "related act" in the sense of the MW-Regulation (ie is strictly necessary for the activities privileged by the MW-Regulation?). However, this neither will contribute to legal certainty nor will help to achieve the purpose intended by the MW-Regulation because any uncertainty of the legal situation will harm investments to be made in new manufacturing sites and processes in the European Union.

Nevertheless, it seems to be unavoidable that clarity will only be created by the national case law. Originators and manufacturers wishing to claim the privileges of the MW-Regulation will have to live through a period of legal uncertainty during the litigations to come until the national infringement courts, and presumably also the CJEU, have clarified which criteria have to be applied in order to classify a "related act" as "strictly necessary".

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