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Patent holder rights to bar parallel imports of their drugs from EU accession states not automatic, CJEU advisor says

Out-Law News | 24 Oct 2014 | 11:33 am | 3 min. read

Pharmaceutical companies should not be allowed to prevent drugs they put onto market in an EU accession state from being imported into a more established EU country where they hold patent rights for those medicines unless they signal their intention to rely on rules that allow them to do so, a senior EU legal advisor has said.

Advocate General Niilo Jääskinen said that the EU's highest court should rule that the 'specific mechanism' that can be applied by patent holders to prevent the distribution of their drugs from 'new' EU countries into 'old' ones should not apply until a patent holder signals their intention to rely on it.

Importers are required to be able to demonstrate to regulators that they informed patent holders at least a month prior to submitting their import application about their intention to import the patent holders' products from an accession state into an 'old' EU country where the patent holder holds patent rights.

Advocate General Niilo Jääskinen said that those notifications of intention can be filed by businesses other than the importers themselves "provided that the identity of the [potential importer and marketer] is clearly identified by the notifying entity".

He said that, to be valid, those notices must be sent to businesses that have "a legal right under national law" to enforce the patent rights for the drugs in the country in which the drugs are to be imported.

Intellectual property law specialist Emily Swithenbank of Pinsent Masons, the law firm behind Out-Law.com, said: "The specific mechanism addresses the fact that before they joined the EU, some of the accession states had lower levels of patent protection available than ‘old’ EU states. As a result, pharmaceutical companies were deterred from putting their products on the market in those accession states and the lack of patent protection contributed to lower pricing models for medicines in those countries."

"However, the correct reading of the specific mechanism must be, as the Advocate General states, that patent holders do not have an automatic right to prevent importations from those states but must first give notice of their intention to assert those rights. Otherwise, the obligation on importers to give notice to rights holders with a time within which to object would have no purpose," Swithenbank said.

Jääskinen's opinion is non-binding, but the Court of Justice of the EU (CJEU) often follows the opinions of its Advocate Generals when it issues its judgment on the cases before it.

The specific mechanism is a framework that is designed to balance patent rights with EU trade rules.

Whilst EU rules promote the free movement of goods in the EU and prevent intellectual property rights holders from controlling the sale of goods they hold rights for after they are first sold in the EU, the specific mechanism gives drugs companies the right to prevent imports of their medicines from an EU accession state, such as Poland or the Czech Republic, to a more established member state of the EU if the drugs companies hold patent rights for those products in those 'old' EU countries.

Patent holders can only prevent importers from importing drugs from accession states into a country where they hold patent rights for those products if the level of patent protection in those accession states was not equivalent to that which applied in the EU country where the patent rights apply at the date a which their patent application was filed.

The case before the CJEU stems from a legal dispute currently before the Court of Appeal in London.

The Court of Appeal in London has asked the CJEU to answer questions relating to the application of the specific mechanism so as to help it resolve a dispute between drugs company Merck Canada and importer Sigma.

The Court of Appeal has asked the CJEU to rule on whether or not patent holders can exercise their right to prevent imports from accession states under the specific mechanism without first telling importers that they intend to do so.

The Court of Appeal has also asked it to rule on what the importer must do to notify the patent holder of their intention to import their products from an accession state into a country where the patent holders' rights apply.

Merck has argued that it did not receive notice of Sigma's intention to import its drugs into an accession state. Sigma sent the notice to the company's UK operating business and Merck has argued that the notice was invalid because it was not sent to the address of the patent holder.

The CJEU has also been asked to determine whether it matters whether the importer issues the notification to the patent holder or whether the notification can be sent by the prospective parallel import licence holder.

Sigma's sister company was licence holder in the case before the Court of Appeal and notified Merck's UK subsidiary. Merck has argued that the notice is not valid because it did not come directly from Sigma.