European Commission proposes Regulation to limit SPC protection with "export manufacturing waiver"

How the AmeriKat wanted to spend her weekend....

You may have missed it.  You may have been flinging a slab of meat on a BBQ.  You may have been gulping down your third aperol spritz.  You may have been immersed in a Netflix marathon.  Or you may have just been napping in a sunbeam.  But no matter what you were doing during yesterday's holiday, it was not what the European Commission was doing - which was "refin[ing] intellectual property rules". 

In this press release published yesterday, the European Commission stated that it is proposing to change the rules around Supplementary Protection Certificates (SPCs) to introduce a so-called "export manufacturing waiver".  This would allow EU-based companies to manufacture a generic or biosimilar version of an SPC-protected medicine during the term of the certificate, but only if done "exclusively for the purpose of exporting to a non-EU market where protection has expired or never existed".  Why do they want to do this?  So that EU-based companies can get a foothold in the global generics and biosimilar business.  According to the Commission, this will help prevent the delocalization of manufacturing outside of Europe, loss of investment and risk to innovation and job creation.  At the moment EU-based companies are currently unable to do so because during the SPC period of protection they are not permitted to manufacture a SPC-protected medicine for such purposes.   If the data is to be believed, this waiver would allow them to do so generating an expected extra growth of at least €1 billion/year in net additional export sales in the EU and creating up to 25,000 extra high-skilled jobs over 10 years.

The potential new labelling

The SPC-enthusiasts among you may rightly ask the following:  How can you police whether a generic is manufacturing an SPC-protected medicine solely to export to a non-EU market, as opposed to partially so that they can then flood the market once SPC protection expires?  How do you know what market they are going to export to to assess whether protection has expired/never existed?  Well, apparently there are safeguards.  As the Explanatory Memorandum (yes, another EM for SPCs to add to your collection!), explains:

"Businesses intending to start manufacturing for export purposes will be under an obligation to notify the competent authorities, and the information contained in that notification will be made public. They will also have to comply with due diligence requirements, chiefly to prevent goods manufactured for export from being diverted onto the Union market. Finally, any export of SPC-protected products outside the Union will be subject to compliance with specific labelling requirements, though any burden stemming from this will be outweighed by the benefits arising from the exception.

The combined effect of these safeguard measures will create transparency and prevent Intellectual Property (IP)-infringing products from entering Member State markets. It will make it easier for both SPC holders and public authorities to detect and fight such infringements, via the existing means of judicial redress offered under existing Intellectual Property Rights (IPR) enforcement legislation (notably through injunctions) or other control mechanisms such as market surveillance and customs control."

The change would come by way of an amendment to Article 4 of the SPC Regulation (see proposed Regulation here) as follows:

That's it.  The AmeriKat has not had time to fully digest this, but still the questions above remain - (i) How are you able to police this?; (ii) What are the consequences of a breach of paragraph 3 and 4?  Does the SPC holder just have to commence infringement proceedings? (iii) How can an SPC holder check what steps were taking in pursuance of paragraph 4?  Shouldn't the entity benefiting from teh waiver be forced to hand those materials over?  Hello, litigation!

Seems like quite a substantial burden of policing and enforcing this waiver falls on the SPC holder and often without recourse to disclosure in some Member States to prove breach (and thus infringement). In cases of breach, what would the SPC holder's remedy be - just the same injunction/damages in normal circumstances?    On first blush, this seems sub-optimal to the AmeriKat and hardly the "robust safeguards" referred to in the Explanatory Memo (unless she is missing something), but what do readers think?

The European Parliament and Council will have to adopt this for it to be directly applicable in all EU Member States.

The relevant materials can be found here:

Press Release
FAQ
Proposed Regulation and Explanatory Memorandum
Annex to Proposed Regulation (the label)
Executive Summary of Impact Assessment
Impact Assessment 
Public Consultation (2017)