This will only be a very short post, but one important new development on the borderline of patent law and antitrust law shall not be left unnoticed on this blog. The European Commission has fined Teva a whopping €462.6 million for abusing its dominant position to delay competition to its blockbuster medicine for the treatment of multiple sclerosis, Copaxone (API: Glatiramer acetate). According to this Press Release, the Commission found that Teva artificially extended the patent protection of Copaxone and systematically spread misleading information about a competing product to hinder its market entry and uptake.
The “artificial extension” of the patent protection was said to have resulted from
misusing the European Patent Office’s (“EPO”) rules and procedures on divisional patents. Divisional patents derive from an earlier ‘parent’ patent application and share similar content, but may focus on different aspects of the invention and are treated independently when it comes to assessing their validity. In this specific case, Teva filed multiple divisional patent applications in a staggered way, creating a web of secondary patents around Copaxone focusing on the manufacturing process and the dosing regimen of glatiramer acetate. Rivals challenged these patents to clear the way to the market. Pending review by the EPO, Teva started enforcing these patents against competitors to obtain interim injunctions. When the patents seemed likely to be revoked, Teva strategically withdrew them, to avoid a formal invalidity ruling, which would have set a precedent threating other divisional patents to fall like dominos. By doing so, Teva forced competitors to repeatedly start new lengthy legal challenges. This tactic allowed Teva to artificially prolong legal uncertainty over its patents and, potentially, hinder the entry of competing glatiramer acetate medicines. All Teva’s divisional patents have now been annulled.
This decision by the Commission, which is certainly appealable to the CJEU and not yet final, seems to be the first wherein “Playing The Divisionals Game” has been held to be an abuse of a dominant market position under Art 102 TFEU.
However, it should be noted that Teva was fined for two reasons, i.e. “playing the divisional game” and a “disparagement campaign”. Thus, it remains unclear to me – at least from the press release – whether playing this “Divisional Game” alone would also have triggered such a fine. The Commission does also not criticize the filing of divisional applications and their occasional abandonment as such. Nonetheless, I would certainly take their decision as a warning sign that divisional applications should at least be properly pursued and defended, if a decision is made to enforce them. Otherwise, as Teva has learned, the commercial risk can be significant.
Freder73, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons
Of practical interest could also be the fact that the Commission seems to have conducted a dawn raid into several of Teva’s premises and “also relied on documents from Teva’s in-house lawyers who were involved in the design of its abusive strategy to protect Copaxone. In-house lawyer communications are not privileged under EU law.”
Nice weekend, everyone!
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The EC apparently does not master the EPC language, as shown by the statement “All Teva’s divisional patents have now been annulled.” What do they mean by “annuled” ? Revoked ? Withdrawn ? Refused ? A combination of these three EPC options ? If you are not familiar with the EPC and/or the EPO’s workflow, do not write about it, unless you wish to appear incompetent….
I would not see the situation as badly as you see it. What matters here is not a question of language. The language used may be unfortunate, but it is a question of abuse of the divisional application system. When one sees on top that no divisional has survived then, the abusive intention is manifest.
Another pharmaceutical company has also recently been fined as it paid generics manufacturers not to enter the market, so that it could continue to reap profit from an expired patent or from a patent about to expire.
After all patents are monopolies and they could negatively influence the market. independently of the language used in the press release, the reaction of the EC in those cases is justified.
Why do you think that there exists no less than 4 draft conventions on a Community or later EU Patent? The idea behind it was very simple: avoid fragmentation of the common market. With its famous decision on the extinction of patent rights, the ECJ has also contributed to avoiding the fragmentation of the market.
Those 4 drafts have never seen the beginning of any realisation, as some member states at the time, were against the idea as it could have a negative effect on their national jurisdictions. The 4 drafts laid the foundation of the European Patent system and of the EPO as we know it.
The difference is that the EPO is not competent to decide on infringement and the Draft Luxembourg convention on a EC/EU patent was dead-borne. Its avatar, the UPC has not been set up for the benefit of EU industry and EU SMEs, but this is another story. In any case, to act before the UPC you need deep pockets, whether as claimant or as defendant.
Der Thorsten,
The present decision of the Commission shows that the former lady President of the EPO had a point when she considered that divisional applications could be misused in leaving third party in the dark about the actual scope of protection. It would be surprising if no appeal would be filed at the ECJ.
The problem was that the rule which was then concocted by the legal department was so complicated and abstruse that it had to be given up. The number of cases in which misuse was manifest is relatively low, even if it can make a world of difference for competitors.
When one looks at blockbuster drugs, it is not infrequent to see not only series of divisional applications, but also further filings with different dosages or different ways of administration. This could also call the Commission into action.
The extra fee for further divisional generations is by no way a deterrent. It is peanuts compared to the cost of uncertainty for competitors. I had once a case where, after 17 years from filing, we were at the fourth divisional. There as well, a lot of money was at stake.
In the context of patent disputes between innovative and generic pharma producers, I wonder, what does it take to reverse the presumption of validity of an asserted patent. I mean, when the patent owner pulls each asserted patent just before it is declared invalid, and then asserts instead a divisional, does there not come a point where the court declines to give the owner preliminary injunctive relief, on the basis that the patent owner by its behaviour has itself forfeited the usual presumption of validity?
Otherwise, what is stopping the accused infringer from asking the court for an Arrow Declaration covering all the not yet granted divisional applications.
Dear Max Drei,
To request an Arrow Declaration is a nice idea, but it seems that such declarations are mainly known in England and Wales and somehow in The Netherlands.
The idea is interesting, and EU wide Arrow decisions could be a job for the EUCJ. The question should be brought to the EUCJ by a national court, rather than before for the UPC as the EU has greater radius of action than the UPC.
In a comment published today in my blog, the LD Munich of the UPC refused a PI based on a divisional application/patent which was manifestly invalid.
The UPC CFI did however come to the conclusion that the competitor’s product were infringing in view of an interpretation of the claim quite different from that of a TBA for the parent. The error was in the parent and in the divisional. The UPC virtually corrected the patent in a way which was refused by the TBA.
I remember looking at that family’s prosecution files a couple of years ago when the Commission investigation became public. At least six divisionals, and hardly room for a cigarette paper between the technical content of the claims (though some were in Swiss form and some EPC 2000). One of them was revoked in the UK in 2017 – Arnold J refused an Arrow declaration on the pending divisionals saying it wasn’t necessary.
The Commission’s comment on lack of privilege is a bit undignified, but hints that they will quote some e-mails they think are smoking guns once they get round to redacting and publishing the full decision. More likely that they are irrelevant but entertaining, and probably not actually legal advice. Was there an unfortunate code name for the project? How often did someone say, “Let’s not discuss this in writing”?
I agree that we, applicants/representatives, tend to abuse of divisional applications, the EPO could introduce the concept of res iudicata and this would make it more difficult to file or repeat the same subject-matter, in the sense that you take the rejected subject-matter as not allowable also in the child application from the beginning to the end of the parent procedure, and a same set of claims as the ones originally filed or refused (or granted) should not be accepted by the EPO
Also, the EPO and UK courts have appreciated that divisionals can be an abuse of procedure:
1. EPO decision T635/21 was about whether withdrawal of an appeal be an abuse of procedure if you are avoiding a bad decision for divisionals
2. The UK Courts might also see the filing of a divisional as an abuse of procedure – see Eli Lilly and Company v Genentech Inc [2020] EWHC 261 (Pat).
The EU Commission is now likely to pressurise the EPO and national EP patent offices to be aware of abuse of procedure by divisional filings
I hope that the EU Commission will never put pressure on the EPO or national patent offices, since a divisional in itself is never “abusive”.
Only its enforcement might become an abuse of procedure, under certain circumstances, but this is not for the EPO or national patent offices to decide.
We already had a bad experience about the (mis-)treatment of divisionals by the EPO…