Royalty Pharma: Welcome Clarity Mixed With Unwelcome Ambiguity - Was That the Best the CJEU Could Come up With?
The Court of Justice of the European Union (CJEU) has provided welcome clarity in confirming that:
- core inventive advance is not relevant to the interpretation of Article 3(a) of the SPC Regulation; and
- express disclosure as a specific embodiment is not necessary to satisfy the condition in Article 3(a).
Although the CJEU has applied the Teva test to functional claims, it has included some ambiguous tweaks:
- it is unclear whether the first limb of the test is to be assessed by reference to the skilled person on the basis of the prior art at the priority or filing date of the basic patent;
- although the second limb of the test is by reference to the skilled person, it is unclear whether what the CJEU understands by the terms 'general knowledge in the field' and 'state of the art', as contrasted with the term 'prior art'; and
- the scope of the concept 'independent or autonomous inventive step' as applied to the interpretation of Article 3(a) is unclear.
The end of April, in the middle of lockdown restrictions as a result of COVID-19, saw the CJEU deliver its judgment in Case C-650/17 Royalty Pharma Collection Trust1. The decision relates to yet another preliminary reference to the CJEU on the interpretation of Article 3(a)2 of the Supplementary Protection Certificate (SPC) Regulation3 and is the second time the CJEU has been given the opportunity to clarify what the test should be for functional claims. Whilst the decision includes some welcome clarity, it is also mixed with several new elements of ambiguity which no doubt will keep attorneys, patent offices and courts scratching their heads for some time to come.
The facts in Royalty Pharma
Royalty Pharma is the proprietor of European Patent EP 1 084 705 (the Patent) which lapsed in April 2017. The patent concerns a method for lowering blood glucose levels in mammals through the administration of dipeptidyl peptidase IV (DPP-4) inhibitors in patients with diabetes mellitus (more commonly referred to as type I diabetes).
A licensee of Royalty Pharma developed the DPP-4 inhibitor sitagliptin after the filing date of the Patent. The licensee proceeded to obtain a patent covering sitagliptin and was granted an SPC for sitagliptin on the basis of this latter patent.
On 17 December 2014, Royalty Pharma applied to the German Patent and Trade Marks Office (Deutsches Patent- und Markenamt, the DPMA) for an SPC for sitagliptin relying on the Patent as the basic patent in force and on the Januvia marketing authorisation (MA) issued by the European Medicines Agency (EMA) on 21 March 2007; Januvia being a brand name for sitagliptin.
The DPMA rejected Royalty Pharma's SPC application on the basis that it did not comply with Article 3(a) of the SPC Regulation. It reasoned that, although sitagliptin satisfied the functional definition of the class of active ingredients in claim 2 of the Patent as a DPP-4 inhibitor, it did not contain any specific disclosure of sitagliptin. Consequently, the subject matter of protection of the Patent did not correspond to the subsequently developed medicinal product for which an MA had been granted (i.e. Januvia).
Royalty Pharma appealed to the German Federal Patent Court (Bundespatentgericht). It maintained that, for the purposes of satisfying the condition in Article 3(a), it was not necessary for the basic patent to indicate the chemical name or the structure of the relevant active ingredient and a functional definition sufficed. Any DPP-4 inhibitors fell within the "core inventive advance"4 of the Patent and all compounds meeting this definition were protected by the Patent. In this respect, Royalty Pharma highlighted how the UK courts had interpreted the CJEU case law on Article 3(a) to apply the "core inventive advance" test, although it accepted that Member States were not applying the test consistently, something which was likely to persist if the CJEU did not provide clarification on this point.
The German Federal Patent Court understood the case law and guidance from the CJEU to be different in that an active ingredient would be "protected by the basic patent in force" only if it is described in such concrete terms in the claims that it is clear that it falls within the subject matter of the protection of the patent. It did not consider the "core inventive advance" test to be relevant to the interpretation of Article 3(a). However, it did accept that differences existed between Member States on the interpretation of Article 3(a) and, consequently, it decided to stay the proceedings and refer the following questions to the CJEU for a preliminary ruling:
- Is a product protected by a basic patent in force pursuant to Article 3(a) only if it forms part of the subject matter of protection defined by the claims and is thus provided to the expert as a specific embodiment?
- Is it not therefore sufficient for the requirements of Article 3(a) if the product in question satisfies the general functional definition of a class of active ingredients in the claims, but is not otherwise indicated in individualised form as a specific embodiment of the method protected by the basic patent?
- Is a product not protected by a basic patent in force under Article 3(a) if it is covered by the functional definition in the claims, but was developed only after the filing date of the basic patent as a result of an independent inventive step?
Relevant CJEU case law
It is instructive to provide a recap on CJEU case law on the interpretation of Article 3(a) before analysing the decision of the CJEU in Royalty Pharma. The first preliminary reference to the CJEU was that of Case C-392/97 Farmitalia5, a decision dating back to September 1999.
In Farmitalia, the claims of the basic patent covered chemical compositions of idarubicin. Farmitalia obtained an MA in which the active ingredient was idarubicin hydrochloride. It sought an SPC for "idarubicin and salts thereof including idarubicin hydrochloride." The German Patent Office refused this application and, instead, granted an SPC limited to idarubicin hydrochloride. Farmitalia appealed this decision to the German Federal Patent Court which decided to refer questions to the CJEU for a preliminary ruling. On the issue of the interpretation of Article 3(a), the Court noted that patents had yet to be made the subject of harmonisation at European Union level. In the absence of such harmonisation, the extent of patent protection could be determined only in light of the non-EU rules which govern patents. Moreover, the protection conferred by the SPC could not exceed the scope of protection conferred by the basic patent. More than 20 years have passed since the Farmitalia decision but the position on harmonisation of patent law for the purposes of the interpretation of Article 3(a) remains the same.
Then came the preliminary reference in Case C-322/10 Medeva6. In Medeva, the claims of the basic patent covered the combination of two antigens, pertactin and filamentous haemagglutinin, used in the production of a vaccine against Bordella pertussis (which causes whooping cough). Medeva obtained four MAs in respect of vaccines, each of which was for immunisation against a number of diseases in addition to pertussis, and which contained between 8 and 11 different antigens. Medeva then filed five applications for SPCs in respect of the medicinal products that had been the subject of the MAs.
Before the CJEU delivered its judgment on the Medeva case, three further references were made in Case C-518/10 Yeda7, Case C-630/10 University of Queensland8 and Case C-6/11 Daiichi9. Like Medeva, all of these cases concerned a mismatch between the active ingredients in the SPC application and the active ingredients in the claims of the basic patent being relied upon.
Advocate General (AG) Trstenjak in Medeva concluded that a product was "protected" by a basic patent within the meaning of Article 3(a) if it formed the subject-matter of the patent in that it fell within the scope of protection of the patent.10 The CJEU in Medeva did not follow this approach and, instead, held in the operative part of the decision that Article 3(a) has to be interpreted as precluding the grant of an SPC if the active ingredients "are not specified in the wording of the claims of the basic patent."
Yeda, University of Queensland and Daiichi were dealt with by reasoned order as the CJEU considered all of the referred questions to be, for all essential purposes, similar to those referred in Medeva. The Court effectively restated the same test as in Medeva, although in Queensland and Daichii it chose to replace the word "specified" with "identified." However, no guidance was provided in Medeva or in the reasoned orders as to what might be meant by "specified" or "identified."
The next case to consider Article 3(a) was Case C-493/12 Eli Lilly11. HGS was the proprietor of a patent which claimed, amongst other things, antibodies that bound specifically to Neutrokine-α. Lilly had developed an antibody LY2127399 (also known as Tabalumab) that bound specifically to Neutrokine-α. Lilly sought declaratory relief from the UK courts that any SPC relying for its legal basis on HGS' patent and based on any MA for a medicinal product containing LY2127399 would be invalid because the claims were too broadly drafted for it to be possible for that antibody to be regarded as "specified" for the purpose of the test set out in Medeva. In contrast to Medeva, the relevant claims in Eli Lilly concerned functional claims rather than combinations of active ingredients. In particular, claim 13 claimed "an isolated antibody…that binds specifically to full length Neutrokine-α…"
The CJEU held in the operative part of the decision that "it is not necessary for the active ingredient to be identified in the claims by a structural formula. Where the active ingredient is covered by a functionalformula, Article 3(a) does not, in principle, preclude the grant of an SPC for that active ingredient, on condition that it is possible to reach the conclusion on the basisof those claims, interpreted inter alia in the light of the description of theinvention, as required by Article 69 of the European Patent Convention and the Protocol on theinterpretation of that provision, that the claims relate, implicitly but necessarilyand specifically, to the active ingredient in question."
This decision led to a lot of head-scratching. Although the CJEU confirmed (i) that an SPC could be granted on the basis of a functional claim, and (ii) that Article 69 of the European Patent Convention (EPC) (as supplemented by the Protocol on the interpretation of that Article (the Protocol)) was relevant in determining the extent of protection of the claims, the Court did not explain what it meant by "relate, implicitly but necessarily and specifically" to the active ingredient in question. It, therefore, remained unclear in which circumstances functional claims could be relied upon as the basis of SPC applications. The decision also led to much speculation as to whether the test in Eli Lilly should apply to other types of claims.
Then came Case C-577/13 Actavis v Boehringer12. In August 1999, Boehringer obtained an SPC for telmisartan used to treat hypertension and to reduce cardiovascular morbidity on the basis of patent claims that expressly disclosed telmisartan. In 2002, Boehringer filed a further SPC application for the combination of telmisartan and hydrochlorothiazide relying on the same patent as the basic patent. Boehringer ended up amending its patent claims to expressly include the combination of telmisartan and hydrochlorothiazide (the so-called combo SPC) and, eventually, the UK IPO granted a second SPC with a latter expiry date than the SPC for telmisartan alone (the so-called mono SPC). Actavis sought to invalidate the combo SPC before the UK courts. Proceedings were stayed to refer a number of questions to the CJEU for preliminary ruling. In its decision, the CJEU referred for the first time to the concept "subject-matter of the invention" in the context of the interpretation of "protected by the basic patent" in Article 3(a). It ruled in the operative part of the decision as follows: "Article 3(a) and (c) … must be interpreted as meaning that, where a basic patent includes a claim to a product comprising an active ingredient which constitutes the sole subject-matter of the invention, for which the holder of that patent has already obtained a supplementary protection certificate, as well as a subsequent claim to a product comprising a combination of that active ingredient and another substance, that provision precludes the holder from obtaining a second supplementary protection certificate for that combination."
The final case is that of Case C-121/17 Teva v Gilead13, another combination SPC case. The CJEU delivered its judgment in Teva in July 2018, after the Royalty Pharma reference of November 2017 had already been made. Gilead marketed the antiretroviral medicinal product Truvada containing two active ingredients: tenofovir disoproxil (TD) and emtricitabine. Gilead obtained an SPC for the combination of TD and emtricitabine. Claim 25 of the basic patent expressly mentioned TD as one of the claimed compounds and claim 27 claimed "A pharmaceutical composition comprising a compound according to any one of claims 1-25 together with a pharmaceutically acceptable carrier and optionally other therapeutic ingredients."
At the priority date of the basic patent (July 1996), there was no evidence that emtricitabine was an effective agent known to the person skilled in the art for the treatment of HIV in humans. Indeed, the EMA did not approve emtricitabine until 2003. Although there had been a number of combination SPC cases referred to the CJEU on the interpretation of Article 3(a), when the case came before the UK Patents Court, Mr. Justice Arnold considered the issue to remain unclear and referred the same question that he had previously asked in Actavis v Sanofi14 but which had not been answered in that case, namely: "What are the criteria for deciding whether 'the product is protected by a basic patent in force' in Article 3(a) of the SPC Regulation?"
Mr. Justice Arnold considered two sets of rules that might be relevant to the interpretation of Article 3(a):
- The "Extent of Protection Rules"- the national laws that implement Article 69 EPC which provides that "the extent of protection conferred by a European patent…shall be determined by the claims. Nevertheless, the description and drawings shall be used to interpret the claims", as supplemented by the Protocol; and
- The "Infringing Act Rules" - the national laws which define which acts amount to an infringement of a patent.
He concluded that the "Extent of Protection Rules" were relevant for the interpretation of Article 3(a) but that more was required than merely falling within the scope of protection of the basic patent. It was this requirement for "more" that was unclear. In his view, the additional requirement was for the product to infringe because it contains an active ingredient, or a combination of active ingredients, which embodies the inventive advance (or technical contribution) of the basic patent.
AG Wathelet in his Opinion in Teva15 referred extensively to the observations from various Members States and the European Commission on whether the "core inventive advance" was relevant to interpreting the meaning of Article 3(a), concluding that it was not. Regrettably, the CJEU in Teva did not address this point directly, instead referring extensively to its decision in Eli Lilly. It also referred to its Actavis v Boehringer decision and concluded that the "subject matter of the protection conferred by an SPC must be restricted to the technical specifications of the invention covered by the basic patent." Additionally, the CJEU did, finally, expressly confirm that the rules governing infringement proceedings were not relevant to the interpretation of Article 3(a).
As for the operative part of the decision in Teva, the first half of the ruling applied a test similar to that in Eli Lilly by stating that Article 3(a) "must be interpreted as meaning that a product composed of several active ingredients with a combined effect is 'protected by a basic patent in force' within the meaning of that provision where, even if the combination of active ingredients of which that product is composed is not expressly mentioned in the claims of the basic patent, those claims relate necessarily and specifically to that combination." The CJEU then proceeded to attempt to clarify what it meant by this by setting out a two-limbed test: "For that purpose, from the point of view of a person skilled in the art and on the basis of the prior art at the filing date or priority date of the basic patent:
- the combination of those active ingredients must necessarily, in the light of the description and drawings of that patent, fall under the invention covered by that patent, and
- each of those active ingredients must be specifically identifiable, in the light of all the information disclosed by that patent."
The AG Opinion16
Although the Royalty Pharma AG Opinion was joined with that of Case C-114/18 Sandoz v Searle17, by an order dated 11 December 2019, the referring Court withdrew its request for a preliminary ruling in this latter case.
AG Hogan concluded that core inventive advance of the patent is of no relevance to the interpretation of Article 3(a). Instead, the two-limbed test in Teva applies to both mono and combo products. The first-limb would not be satisfied if "from the point of view of a person skilled in the art and on the basis of the prior art at the filing date or priority date of the basic patent, the claims in a patent in relation to that product are not required for the solution of the technical problem disclosed by a patent." The second limb required (emphasis added) "that it be established that a person skilled in the art would have been able, in the light of all the information contained in a patent, on the basis of the prior art at the filing date or priority date of the patent in question, to derive the product in question. This is not the case where, in the light of all the information contained in a patent, a product or constituent element of the product remains unknown to a person skilled in the art on the basis of the prior art at the filing date or priority date of the patent in question."
The CJEU decision
Since the lock-down caused by the COVID-19 pandemic, judicial activities at the CJEU have been continuing but priority has been given to those cases that are particularly urgent. Nevertheless, a lapse of over seven months from the date of the AG Opinion for the CJEU to deliver its judgment is longer than might be typically expected. The delay is, at least in part, explained by the fact that Royalty Pharma sought to reopen the oral procedure after the Opinion was delivered on the basis that the AG had based his conclusions on an erroneous statement of facts and because he had also departed from CJEU case law, in particular Teva.
The CJEU rejected this request. The factual errors were not such as to have a decisive influence on the decision of the Court to justify reopening the oral phase of the procedure. As regards the AG's interpretation of Teva, the CJEU noted that what Royalty Pharma was trying to do was to raise additional counter points to the conclusions of the AG but the CJEU procedure does not allow for such observations to be submitted.
Before turning to the questions referred by the German Federal Patent Court, the CJEU expressly rejects "core inventive advance" as a concept relevant to the interpretation of Article 3(a). There is a sense that the CJEU considers this to be obvious from its ruling in Teva where, despite the referring Court inviting the CJEU to adopt this concept, the CJEU chose instead to conclude that the protection conferred by an SPC is limited to the technical specifications of the invention covered by the basic patent.
As in many other preliminary references, the CJEU has not systematically answered the referred questions. In this particular case, it has reformulated the first two questions as asking whether a product is protected by a basic patent in force when it:
- meets a general functional definition used by one of the claims of the basic patent; and
- necessarily falls under the invention covered by this patent, without being individualised as a specific embodiment to be learned from the teaching of said patent.
Citing extensively from Teva, the CJEU restates the essential role played by the claims for the purpose of determining whether a product is protected by a basic patent. It also refers, once again, to the "Extent of Protection Rules" (Article 69 EPC and the Protocol) and the operative part of the decision in Eli Lilly, before turning to the expanded test (including the two cumulative limbs) in Teva.
Although the CJEU does not have jurisdiction to interpret the facts, it does provide its view that the Patent satisfies the first limb in Teva - indeed that is also implied from its reformulation of the first two referred questions. As apparent from the order for reference, it states that although sitagliptin is not explicitly mentioned in the claims, it does meet the functional definition used by one of the claims. The CJEU then expresses its view (subject to verification from the referring Court), that sitagliptin (as a DP-4 inhibitor) necessarily falls under the invention covered by the basic patent. This assessment of the first limb of the test is made without reference to the skilled person and without consideration of the prior art at the filing or priority date of the basic patent.
The CJEU goes on to apply the second limb of the test in Teva , although it also deviates from this test. The CJEU states that the referring Court needs to verify whether the subject matter of the SPC in question is within the limits of what the person skilled in the art is objectively able, on the filing or priority date, to deduce directly and unequivocally from the specification as filed, based on his general knowledge and in the light of the state of the art at the filing or priority date. This time, the CJEU does make the assessment by reference to the skilled person but rather than being "on the basis of the prior art at the filing date or priority date of the basic patent" as in Teva , it is "on the basis of his general knowledge in the field considered on the filing or priority date of the basic patent and the state of the art on this same date."
At least, the CJEU does provide another nugget of clarity by confirming that it is possible for an SPC to be granted even if a product is not identified as a specific embodiment in the basic patent, thereby clearly rejecting the need for express disclosure of the product in the basic patent.
In the operative part of the decision, the CJEU does not restate the Teva test, nor does it clearly distinguish between the two cumulative limbs of Teva . This could be because, in reformulating the first two referred questions, the CJEU effectively assumes that the first limb is satisfied. Thus, the Court confirms that where a product "meets a general functional definition used by one of the claims of the basic patent and necessarily relates to the invention covered by this patent, without being individualised as a concrete embodiment to be drawn from the teaching of said patent", the condition in Article 3(a) is satisfied "as soon as it is specifically identifiable, in the light of all of the elements disclosed by the same patent, by a person skilled in the art, on the basis of his general knowledge in the field considered at the filing or priority date of the basic patent and the state of the art on this same date."
The last referred question concerns the situation where the product that is the subject of the SPC application is developed after the filing date of the basic patent as a result of an independent inventive step.18
After highlighting that the purpose of the protection conferred by the basic patent must be determined on the filing or priority date of the patent and that results of research after the filing or priority date cannot be taken into account, the Court emphasises that the purpose of an SPC is not to extend the scope of protection beyond the invention covered by the basic patent as this would be contrary to the objective of the SPC Regulation. Consequently, the Court concludes that a product developed after the filing or priority date of the basic patent, at the end of an autonomous/independent inventive step, cannot be considered to fall within the subject matter of the protection conferred by that patent.
In the operative part of the decision the CJE confirms that "Article 3(a) …must be interpreted as meaning that a product is not protected by a basic patent in force within the meaning of that provision where, although falling under the functional definition given in the claims of this patent, it was developed after the filing date of the application for the basic patent, at the end of an autonomous inventive step."
The judgment is welcome in clarifying a number of previously unanswered points. We now know that the concept "core inventive advance" is not relevant to the interpretation of Article 3(a). The CJEU has also rejected the need for express disclosure of the product as we know that, even where a product is not identified as a specific embodiment from the teaching of the basic patent, the granting of an SPC is not necessarily excluded.
Other parts of the decision are more ambiguous. The CJEU appears not to have taken heed of the views of AG Hogan in his Opinion when he states that Teva lays down a definitive test for the interpretation of Article 3(a) and any minor or inadvertent departure from the wording of the judgment could be construed as a new or different test. Thus, although the CJEU refers to the test in Teva, it has reformulated the two cumulative limbs.
The assessment of the first limb of the test is made without reference to the skilled person and without consideration of the prior art at the filing or priority date of the basic patent. The assessment of the second limb of the test is by reference to the skilled person but rather being on the basis of prior art as in Teva, it is on the basis of general knowledge in the field and the state of the art. The terms 'prior art' and 'state of the art' have specific meanings in patent law but, as the CJEU does not define any of these terms in its decision, it is unclear whether:
- it considers 'prior art' to be the combination of 'general knowledge in the field' and the 'state of the art';
- 'general knowledge in the field' is equivalent to 'common general knowledge', as understood in patent law; or
- each of the terms mean something different.
The CJEU also seems to confirm that the skilled person must be able to objectively make this assessment on the filing or priority date. It is unclear whether this means that the skilled person my be able "to derive the product in question" (in the words of AG Hogan) without advance knowledge of the identity of the product in question.
As regards the second answer provided by the CJEU, it is unclear in which circumstances an SPC may be granted for a product that is developed after the filing or priority date of the patent beyond the fact that it cannot have amounted to an independent/autonomous inventive step. Another area of ambiguity is over the term "independent/autonomous inventive step" itself. Is inventive step in this context the same as understood in patent law? What does "independent/autonomous" add to the meaning of the term "inventive step?" What, if any, nexus can there be between the basic patent and the inventive step for it to be considered to be independent?
As we have seen in previous references, the CJEU has limited the scope of its decision rather than provide a ruling of broad applicability. Whilst AG Hogan proposed a test that would apply equally to functional and Markush claims (the subject matter of the withdrawn Sandoz v Searle reference), the CJEU decision makes no reference to Markush claims and the Court limits its decision to functional claims.
When this case come back before the German Federal Patent Court, this author anticipates that the referring Court will dismiss Royalty Pharma's appeal denying it an SPC for sitagliptin. The fact that the development of sitagliptin was sufficiently inventive to merit a subsequent patent filed by the licensee is likely to deemed by the German Federal Patent Court as an independent inventive step and therefore sitagliptin cannot be protected by Royalty Pharma's patent.
In practice, a lead pharma product is often not identified until well after the filing or priority date of the original patent that opened up a new field of research and innovation. Moreover, it is not always possible for a separate patent to be granted for that lead product once identified and, as in the Royalty Pharma case, the original patentee may differ from the subsequent patentee. All of these factors exemplify the challenge patent attorneys face when drafting claims and specifications so as to enable the broadest range of SPCs to be granted when a lead pharma product has yet to be identified.
© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.
At the time of submitting this article for publication, an English official version of the decision is not available. The author has relied on an unofficial English translation and a review of the official Spanish version of the decision.
Council Regulation (EEC) No 1768/92 of 18 June 1992 concerning the creation of a supplementary protection certificate for medicinal products, now replaced by Regulation 469/2009 of the European Parliament and of the Council of 6 May 2009 concerning the supplementary protection certificate for medicinal products.
The unofficial English translation of Royalty Pharma refers to "the heart of the inventive step." The Advocate General in the Royalty Pharma Opinion interchangeably refers to "the core of the inventive conception", the "core inventive advance" and "core inventive concept." The author understands all of these terms to mean the same thing and, for the purposes of the article adopts the term "core inventive advance."
The Order for reference refers to "independent inventive step" whereas the unofficial translation into English of the Royalty Pharma decision refers to "autonomous inventive step." Both terms are understood as interchangeable by this author.