Saturday, 24 December 2011

Portugal redefines scope of patent infringement, dispute resolution with new medicines law

The following information concerning the new Portuguese law on the settlement of disputes involving reference medicines and generic medicines comes from a fellow blogger, the excellent Pedro Malaquias (PLMJ, Portugal), who prefaces it with two disclaimers. First, he is a trainee lawyer whose firm represents several generic companies in litigation procedures against originators. Secondly, the views he expresses are his own and do not necessarily represent the views of any other people or organizations.
"On 12 December 2011, Portuguese Law 62/2011 was finally published. Approved by Parliament without any vote against (the leading opposition MP group abstained in the final vote), the law clarifies that an industrial property right cannot be infringed by acts that grant Market Authorisations (MA), establish Recommended Sale Prices (RSP) or Reimbursement values. It also creates a system for settlement of disputes relating to industrial property rights when reference medicines and generic medicines are at issue.

This article analyses the implications of the new law. For an analysis on the established legal regime, please refer to this PLMJ information note.

Non-infringement of industrial property rights by the grant of MAs, RSPs or reimbursements 
The new Law seeks to draw a line under the controversy that has been raging in the academic community and in the courts for many years. 
For the past few years, further to the regular infringement procedures initiated in the Commercial Courts, Originators have filled injunctions and main actions against INFARMED (the Portuguese Medicine Authority) and DGAE (the Directorate General for Economic Activities) in the administrative courts, in order to obtain the suspension or revocation of the MAs, RSPs and reimbursement acts (generic companies were part of the judicial procedures as interested parties). 
Although we consider that there was no legal basis for such requests (these acts are “paper acts” ,incapable of infringing any right, and the grant of MAs should only depend of an analysis regarding the quality, safety and efficacy of a medicine), the fact is that the administrative courts (with a special focus on the 2nd instance courts) have frequently suspended or revoked the MAs, RSPs and reimbursements. 
As a result, and despite the European Commission's recommendations over this matter, patent linkage was a serious issue in Portugal and originations frequently managed to extend
artificially the duration of the patents or SPCs, since the completion of the administrative procedures to introduce a medicine in the market took at last two years and could only be initiated after the expiry of the right.
The new law clarifies that the acts of granting the MA, RSP or reimbursement of the price of the medicine are not contrary to the rights relating to the patents or supplementary certificates and, as a result, an application for an MA, an RSP and reimbursement of the price of the medicine cannot be rejected on the grounds of the possible existence of industrial property rights and cannot be used as a basis to alter, suspend or revoke the grant, authorisation or registration of MAs, RSPs or reimbursements. As a result, generic medicines will be able to be launched in the market in the first day after the expiry of the patent or SPC. 
In our view, this is a very positive development that prevents further recourse to administrative courts; however, APIFARMA (the body that represent several pharmaceutical companies) has already claimed that this solution violates the Portuguese Constitution, since it violates the property right of the patent owners, a solution that we strongly oppose.
We have no information regarding any new litigation procedure initiated after the entry into force of the law, but we would not be surprised if this argument is to be used by originators. If that is the case, all depends on the court interpretation of the conformity of the law with the Portuguese Constitution, but we do consider that no constitutional problems arise from this solution.

Creation of a compulsory arbitration system 
Further to the positive solution described above, the Law provides that conflicts arising from disputes over innovation in industrial property rights, including interim injunctions, related to reference medicines and generic medicines, are subject to compulsory arbitration, whether institutionalised or not. As a result, the Commercial Court (Tribunal de Comércio) no longer has jurisdiction to hear disputes over industrial property rights related to reference medicines and generic medicines, and the parties are obliged to settle any disputes through arbitration.
The strangest question in this solution is that no one asked for it. In fact, once it was announced, it faced strong criticism from all the sectors evolved in the current litigation procedures.

First, there is no tradition of arbitration in intellectual property in Portugal (Arbitrare, the Portuguese institutionalized arbitration center in industrial property is far from a success) and a clear lack of arbitrators exists. As a result, criticism over (at least, the initial) awards resulting from this system is expected.

This solution seems to be in conflict with the previously announced creation of the Intellectual Property Court (regarding this matter, see my posts in the MARQUES Class 46 blog here and hereinstallation of the court is currently on hold and no new developments have occurred), which would be the most capable place for the analysis of these processes and that will see one of the most pressing problems of Property industrial outside its jurisdiction. In our opinion, the compulsory arbitration regime should be clearly reanalyzed once the IP court is installed: as APIFARMA has proposed, it seems that this should be no more than a transitory solution, until installation is finalized.

In any case, despite these problems, a positive point may be noted: celerity. A final decision in a main action regarding infringement and validity of patents in the Commercial Court usually takes more than three years to be issued. Such delays result in useless decisions taken after the expiry of the right: meanwhile, time and money are wasted.

With the new solution, timely decisions are expected; if quality is allied to celerity, the new regime might yet be praised. However, all depends on its practical application and on the behaviour of all the involved parties".

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