That Merck Opinion: a handy note

The official English text of Advocate General Bot's Opinion in Case C-125/10 (briefly noted here by The SPC Blog) only become available this week, as our readers will know, and the Dutch duo of Tjibbe Douma and Gertjan Kuipers (De Brauw Blackstone Westbroek N.V.) were swift to pounce on it. Their explanation, entitled "AG's opinion in Merck C-125/10: zero/negative term: SPC may be granted in light of possibility to obtain a paediatric extension", goes like this:

"Advocate General Bot has delivered his opinion on a matter that has caused disharmony in Europe: zero/negative term SPCs. The Advocate General concluded in his opinion that a negative term SPC should indeed be granted. He further addressed an equally interesting point on the commencement date of the paediatric extension.

Why do pharmaceutical companies request a negative term SPC? 

Supplementary Protection Certificates ("SPCs") are intended to compensate pharmaceutical companies for the loss of effective patent term caused by the delay in getting regulatory approval. SPCs have a negative term if this delay is less than five years. At the time the first SPC Regulation (1768/92) came in effect, a negative term SPC was fruitless and thus not applied for.

The Paediatric Regulation (1901/2006) introduced a six-month paediatric extension of the SPC. The rationale being - among others - to promote research in the paediatric population. To obtain a paediatric extension an SPC already granted is required. After the introduction of the Paediatric Regulation, requests for SPCs were filed by pharmaceutical companies in the understanding that a negative or zero term SPC might prove useful if a paediatric extension could be obtained. The reason for this is that every day of supplementary protection after the expiry of the patent can be highly beneficial for its proprietor.

Current disharmony in Europe 

In the Merck sitagliptin case, Merck applied for an SPC throughout Europe. This resulted in different decisions, including the grant of a negative term SPC in the UK and the Netherlands. In Greece Merck was granted a zero term SPC because it was believed a negative term was not possible and should be rounded up to zero. In Germany the SPC was refused as it would have a negative term. Merck appealed this decision to the Bundespatentgericht which then referred a question to the Court of Justice of the European Union ("CJEU").

Question referred to CJEU 

In the Merck Sharp & Dohme Corp. v. Deutsches Patent- und Markenamt C-125/10 case, the CJEU has to answer the question whether an SPC can be granted if it would not result in a positive term. This question was referred in light of the possibility to obtain a paediatric extension which would result in effective supplementary protection. Further, the Bundespatentgericht addressed the issue of the duration of such an SPC: should it be a negative term or rounded up to zero. However, this particular question was not referred to the CJEU.

Advocate General Bot rendered his opinion on 9 June 2011. Although not binding, such opinion is more often than not followed by the CJEU.

Why are negative or zero term SPCs allowed in the opinion of the AG 

The Advocate General concluded that it should be possible to obtain a negative or zero term SPC because – in short – (i) the SPC Regulation and the Paediatric Regulation do not require a positive term SPC, (ii) not allowing it could result in attempts to delay the marketing authorisation process which delay could harm public health, (iii) SPCs which, when extended, result in a positive term serve a useful purpose, and (iv) it would serve the objective of the Paediatric Regulation.

When should the paediatric extension commence? 

Further, the Advocate General took the view that it should also be specified when the six-month paediatric extension would commence, even though a question in this respect was not specifically referred to the CJEU. The issue was if the extension should start on (i) the date determined on the basis of the negative term of the SPC, or (ii) the date on which the patent expires (and thus rounding up the negative term of the SPC to zero).

The effect of a decision in this respect is as significant as the question actually referred to the CJEU. In the first case only an SPC with a negative term up to six months could benefit from a paediatric extension as the resulting term would be positive. In the second case, however, every proprietor of a patent with an SPC could benefit from a six-month paediatric extension, regardless of the time it took to obtain the marketing authorisation.

The Advocate General stated that on the basis of the SPC Regulation and the Paediatric Regulation, the maximum period of marketing exclusivity is 15 years and six months. Allowing a commencement date on the date of expiry of the patent could result in a total period of protection that would exceed that maximum. This would, according to the Advocate General, not be in conformity with the SCP Regulation. Therefore, he concluded that the negative term SPC should not be rounded up and thus a paediatric extension should commence on the date determined in accordance with the negative term SPC (i.e. prior to patent expiry). Specific to the Merck case: the SPC would have a protection period of minus three months and 14 days, adding the paediatric extension would result in a protection period of two months and 16 days following the expiry of the patent protection.

Practical significance 

This opinion could have far-reaching consequences if it were to be followed by the CJEU. Innovative pharmaceutical companies can benefit from paediatric extensions of their SPCs even when the SPC itself is not beneficial.

Further, it is currently unclear if the CJEU will limit its decision to the question referred by the Bundespatentgericht, or render a decision on the issue of the commencement date of the paediatric extension. If the CJEU does not decide on the issue, we will probably see a disharmonious European legal landscape or a new question referred to the CJEU.

If the CJEU does decide on the issue, it could go even further than the AG's opinion by concluding that the paediatric extension should commence on the date of expiry of the patent protection. An argument in favour of that position would be that this would best serve the objective of the Paediatric Regulation. The SPC is granted to compensate for delay in obtaining a marketing authorisation. A paediatric extension is, however, among others granted to serve as an incentive to do research on the paediatric population. Because of the different rationale and to meet the objective of the Paediatric Regulation, it could be argued that the commencement date of the paediatric extension is separate from the term of the SPC.

Overall it can be said that the AG's opinion is positive for both the innovative pharmaceutical industry and the paediatric population. Pharmaceutical companies should file for SPCs and apply for paediatric extensions as long as the combination could result in supplementary protection".