The team is joined by Guest Kats Rosie Burbidge, Stephen Jones, Mathilde Pavis, and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Hayleigh Bosher, Tian Lu and Cecilia Sbrolli.

Monday, 10 April 2017

Fujifilm v AbbVie: practice, procedure and policy analysis

This GuestKat had a fascinating Thursday evening attending AIPPI's rapid response seminar on the Fujifilm v AbbVie case ([2017] EWHC 395 (Pat)) at Allen & Overy's offices in Spitalfields.  A number of complex issues were debated, including the following:
  • Should Arrow declarations be available as a form of relief?
  • Is the EPO system of divisional applications open to misuse?
  • Could strategic use of the EPO procedure for filing cascading divisionals potentially incur liability under Art 102 TFEU?
The event was introduced by Dominic Adair, with presentations from Michael Silverleaf QC, Ravi Srinivasan and Mark Brealey QC. 

By way of reminder, the case itself concerned AbbVie's Humira (adalimumab) product - the biggest selling prescription pharmaceutical in the world, with global sales in excess of $12.5 billion. The various twists and turns in the saga have been covered extensively by the IPKat. Further background can be found in previous posts including an interim decision from the Court of Appeal here, the first instance decision of Carr J handed down last month here, and various other interim hearings here, here and here

Why do we need Arrow declarations?

Up first was Michael Silverleaf QC (11 South Square), to analyse the case from a patent litigation perspective.  Michael explained that an Arrow declaration is a declaration that a product that is proposed to be sold lacks novelty or is obvious at a certain date.  It has its origins in the Gillette defence. 

Michael Silverleaf QC
The EPC regime is rather relaxed in that it allows the filing of divisional patent applications for as long as an application is pending.  This can lead to cascading divisionals, which can go on for years - potentially even for the life of the patent.  The situation can be exacerbated further by formulation and dosage regime patents, which are typically granted some years after the compound patent.  The result of cascading divisionals is that the precise scope of patent protection remains obscure, leading to long term commercial uncertainty.  The practical effect of this is that it inhibits generic or biosimilar manufacturers from entering the market place, give that the commercial risk of an 'at risk' launch is too great.  Michael observed that such effects are not in the public interest. 

The potential difficulty with Court intervention in this area is that there is a statutory regime for establishing whether a product is 'patent-free' - namely the right to seek revocation.  However, there is no statutory remedy available to clear the way before the patent has been granted.  The difficulty for generic or biosimilar manufacturers is that the Court requires them to clear the path before their product launch - and a mechanism is needed for doing so.  What is the English Court's solution to this conundrum? Granting a negative declaration - see Arrow v Merck [2007] EWHC 1900 (Pat) (in the context of an application for strike out). 

In Fujifilm v AbbVie, the Court of Appeal considered very carefully whether the statutory regime was a bar to the grant of an Arrow declaration under the Barraclough principle, but reached the conclusion that it was permissible because such relief did not concern the validity of a granted patent.  At trial, Carr J concluded that AbbVie's conduct was sufficiently extreme to justify the grant of a negative declaration.  A negative declaration would serve a useful purpose, particularly given that it would give certainty to suppliers of Fujifilm in other EU jurisdictions - otherwise, there was a continuing threat that a patent subsequently granted elsewhere in the EU could affect the UK biosimilars market for Humira. 
In summary, the problem in the present case is that AbbVie had 'deliberately and repeatedly' walked up to the point of grant and then withdrew its application to avoid scrutiny.  In such situations, it is right that the English Court steps in to provide a remedy. 

EPO practice and procedure

Ravi Srinivasan (J A Kemp) was up next, with a fascinating insight from a patent attorney perspective as to why a system has arisen which facilitates cascading divisionals - potentially for the duration of the patent.  Ravi noted that the particular problems presented by the Fujifilm v AbbVie case are specific to the EPO, and do not apply to the UK IPO.  Although the UK IPO allows patentees to file cascading divisionals, all applications are time limited (4 years and 6 months from priority date of parent patent to grant - see s20(1) of Patents Act 1977 and rule 30 of Patent Rules).  In Ravi's experience, the UK IPO works exceptionally hard to get its work done within these deadlines.  Ravi noted that some other jurisdictions do not allow the filing of divisionals at all. 
Ravi Srinivasan

Old EPO rule 36 was much more restricted than the present version, because it had a 2 year time limit.  This was unworkable because the EPO was unable to cope with the volume of applications and a backlog developed. New rule 36 (Implementing Regulations to EPC) was introduced which is very liberal in allow the filing of divisionals.  Filing fees were increased in an apparent attempt to deter applicants from delaying the filing of divisionals, but the sliding scale of EUR 210 (for a second generation divisional) to EUR850 (for a fifth + generation divisional - see fees table here) is hardly an effective sanction.  
Ravi accepted that it is very easy to file divisional applications at the EPO to maintain pendency throughout the full patent term.  However, he pointed out that not all cascading divisionals represent an abuse of the system.  For example, applicants may face excessive formality hurdles when seeking to amend under Art 123(2)/(3) of the EPC.  The amendment process and outcome is not always predictable, and in some circumstances, it may be legitimate for an applicant to have a divisional application in its back pocket to try again using a different form of amendment if your first attempt is unsuccessful.  Nevertheless, Ravi accepted that the current system is open to abuse, and this is exacerbated by the fact that an applicant can unilaterally terminate proceedings with immediate effect, thereby avoiding scrutiny.

Can such conduct amount to an abuse of dominant position under Art 102 TFEU?


To place the issues in context, Mark Brealey QC (Brick Court) began by examining Carr J's findings of fact in the present case.  The Court found that "AbbVie has abandoned all relevant UK patent protection in order to avoid scrutiny by the UK Court, and to prolong commercial uncertainty as to the validity of those patents" (para 349).  Further, AbbVie's "intention and the objective effect is to shield its patent portfolio from examination of validity whilst continuing to file further divisionals and to threaten infringement proceedings against biosimilars, wherever they may be launched" (para 388). 

Mark then cantered through the case law on abuse of dominant position in the context of IP rights, noting that an abuse of dominant position had been found in many IP contexts, including: free movement of goods, refusals to licence, excessive pricing, abusive litigation, and abuse in a settlement context (e.g. Lundbeck).  The Court in Fujifilm v AbbVie had as a matter of fact, found that AbbVie's  conduct had had the objective effect of withholding its patents from scrutiny, and that it had intended to do so.  In Mark's opinion, the test for an abuse of dominant position is a straight objective test (unlike an abusive litigation context which requires a subjective element), and so intention is not a necessary criteria.  In conclusion,  Mark believes that this sort of conduct is capable of amounting to an abuse of a dominant position under Art 102 TFEU. 

Audience Q & A

1. Analogy with Arrow case unhelpful given factual differences between the case
Michael agreed that there are key differences between the facts of Arrow v Merck and the present case - an observation also made by Carr J in his judgment when he sounded a note of caution on the use of the term "Arrow" declarations.  First, in Arrow, the EPO had taken around 8 years to decide on a patent application - that case did not concern alleged abusive behaviour by the applicant.  Secondly, the generic manufacturer was already on the market (at significant risk), with no commercial certainty in sight. 

2. What is the exposure of a patent attorney advising a client to file another cascading divisional? Could they be liable for abusive conduct under Art 102 TFEU?
There was collective sigh of relief in certain sections of the room as Mark explained that it is the undertaking (patentee) who is liable for the an infringement of the TFEU, not their patent attorneys or legal advisers.

3. If a similar declaration was granted by a Court in another EU jurisdiction, would it be accepted as res judicata by the Court here?
There was agreement that this is a highly complex issue which would require further consideration.  The decision appears to be a binding inter-partes decision.  There is an argument that it should be res judicata under the Brussels Regulation, although this conclusion may be counter-intuitive.  One observer noted that it was difficult to see how Courts of different member states would follow this (controversial) relief when Courts from different member states can and do reach different conclusions on validity of different designations of the same EP patent.     

4. Could a third party 'piggy-back' off the decision to clear the way for itself?
Although any decision is fact specific and tied to the claimants' specific biosimilar products, the declaration sought (which refers to a dosage regime) would likely be applicable to other biosimilar products.  The circumstances were ripe for a third party biosimilars manufacturer to make a summary judgment application to clear the way for its product.

5.  Is there a timing issue on Art 102 infringement? An undertaking may not be in a dominant position at the time its filing strategy is implemented, but may become so subsequently. 
Mark confirmed that there is a potential timing issue on the question of an Art 102 infringement.  The provision under the TFEU is abuse by an undertaking 'in a dominant position' - it does not cover future dominance.  However, if there was continuing conduct which runs into the period in which an undertaking becomes dominant, the undertaking could still potentially be liable for an Art 102 infringement.

8 comments:

Kant said...

Did you mean to write that some jurisdictions do not allow the **voluntary** filing of divisional applications?

Anonymous said...

"the sliding scale of EUR 210 (for a divisional filed within 2 years) to EUR850 (for a divisional filed at 5 years +) is hardly an effective sanction."

This statement is not in line with the RRFE of the EPO. In fact, it is not the time the divisional application is filed but its generation (divisional of divisional) which determines the applicable official fee.

Eibhlin Vardy said...

Anonymous at 17.10 - thank you for this. I have checked the position and you are absolutely spot on (my misunderstanding as a solicitor, not being familiar with the detail of EPO practice). Corrected above, with a note to the source.

MaxDrei said...

In my experience, mechanical engineering cases, what does deter those new to the notion of cascading divisionals at the EPO is the accumulated annuity fee payment on filing, especially if the new div is going to be filed relatively late on in the 20 year base term. They find it outrageous of the EPO. They are somewhat mollified when I point out how much annuities cost, after the EPO grants a patent. Wouldn't you rather keep all your cases pending at the EPO, I ask them, at least until you sniff infringement on the horizon?

The EPO is often accused of keeping cases pending forever, in order to bump up its own annuity "take". But isn't it the Applicant community (its customer base) that the EPO is doing its best to serve, when it is routinely tardy in granting cases?

ex-examiner said...

It is not just the filing fee, you also have to pay all the accumulated renewal fees that were paid on the original parent application. My understanding is that a divisional is a completely independent patent, and so you cannot rely on the date of publication of the parent when it comes to seeking damages for infringement: you can only rely on the date of publication of the divisional itself.

Charley said...

"Nevertheless, Ravi accepted that the current system is open to abuse"

In my view it is not any "abuse" to simply do what is allowed within the legal framework provided by the legislator. It is merely "use".

As already pointed out above, the accumulated annuities quickly become unmanageable for many applicants and there is no guaranteed way to make applications run slowly. So keeping a divisional (or a cascade of divisionals) pending over the lifetime of a patent must anyway be a rare event.

Counter said...

I know of a case kept pending at the EPO for 25 years, just in case an SPC was needed.

AZ said...

It must be remembered that big pharma can get into a lot of trouble over abusing a dominant position and therefore needs to tread carefully in their patent behaviour. That is a good thing because the deterrent of paying lots of renewals on cascading divisionals would not apply to them given the resources they have.

See for example the AstraZeneca case:
https://www.twobirds.com/en/news/articles/2012/court-of-justice-upholds-astrazeneca-abuse-dominance-decision0113

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