[Guest Post]: Insights on pharmaceuticals patents and Covid-19 from an Italian perspective

COVID-19 is the topic of the days (or of the months to be more accurate), and this Kat is more than happy to post the Guest post by IPKat friends Gian Paolo Di Santo, Avv. Gabriele Girardello, Avv. Greta Cucinella in the subject.

Here is what Gian Paolo Gabriele and Greta write:

With the spread of what has now been declared a pandemic by the World Health Organization, countries all over the world are adopting emergency measures on several fronts in order to contain the spread of coronavirus and to ensure access to medical devices, diagnostic tests and medicinal products that are of essence for its treatment/diagnosis. Reference to compulsory licenses is often made as a key tool among intellectual property law provisions in this emergency period. However, taking a close look at compulsory licenses as a system, some doubts remain about their effective “universal” applicability in this situation.

Compulsory licenses are of a supranational origin (TRIPS Agreement Article 31) but are regulated in Italy by Articles 70 and following of the Industrial Property Code (“IPC”), which provide for two different types of licenses, the license due to lack of implementation and the license for dependent patents.

A license for lack of implementation, according to Art. 70 IPC can be granted provided that: (i) the invention has not been implemented or has been implemented to an extent that is seriously disproportionate to the Country’s needs; (ii) three years from the grant of the patent or four years from the filing of the patent application, have passed; (iii) the lack of or insufficient implementation isn’t due to causes out of the patent holder control; (iv) the license is non-exclusive. The clause of the Country’s needs results in a highly discretionary evaluation, which allows the administration to assess the implementation of the invention on the basis of the general interests underlying the realization of the invention. According to the most widespread opinion, the duty of implementation varies according to current demand, without going so far as to impose on the patent holder the complete satisfaction of the Country’s needs. As for the implementation of the invention, it should also be noted that this requirement could as well be met by importing into the Country goods produced in a member state of the European Union, the European Economic Area or the World Trade Organization.

Article 71 IPC, on the other hand, regulates compulsory licenses for dependent patents, i.e. when the invention protected by the patent cannot be used without infringing a previous patent. This kind of license can be granted (i) to the holder of a later dependent patent; (ii) to the extent necessary to exploit the invention and (iii) provided that the dependent patent represents an important technical progress of considerable economic importance.

The following Article 72 CPI lays down further conditions to which the grant of a compulsory licence is subject to, both when the license is due to a lack of implementation or for dependent patents. In particular, the applicant (i) must prove that he has first approached the patent holder and has not obtained a contractual license from him at reasonable terms (a requirement which may be waived under Article 31 of the TRIPS Agreement in cases of national emergency, extremely urgent circumstances or in the case of public non-commercial use); (ii) must not have infringed the patent, unless he proves good faith; (iii) must pay fair compensation and provide guarantees in relation to a satisfactory implementation of the invention; and (iv) the exploitation of the invention must be aimed primarily to the supply of the internal market.

Therefore, compulsory licenses - whether granted by the patent holder or not - must satisfy fairness requirements and, in particular, fair compensation must take into account the value of the invention.

The procedure for obtaining a compulsory license is governed by Article 199 IPC and set forth a rather complex (involving both the Ministry of Economic Development and the Italian Patent Office) and long (180 days) procedure.

It is clear, therefore, that the legal framework is extremely complex and the room for application of the provision on compulsory license is almost nil. However, leaving aside the specific complications just highlighted – which in any case can make the granting of compulsory licenses anything but automatic –, we should focus on the nature and subject matter of the patents for which the license is requested.

On the one hand, provisions on compulsory licenses might be easily applied in the case of “mechanical” inventions, to give a current example, in the case of respirators valves produced with a 3D printer. However, their application to pharmaceutical patents appears more complex. In this regard, it seems crucial to distinguish the case of patents on active ingredients as such and patents of second medical use. In the latter case, compulsory licenses due to lack of implementation might be difficult to apply.

Firstly, the license will concern the patented therapeutic indication, which, plausibly, will not be the treatment of coronavirus. As of today, in fact, there seems to be no patents on active ingredients for the treatment of this virus (“covid patents”). The only news relating to the filing of pharmaceutical patent applications for the treatment of coronavirus seems to be: (a) the one relating to the Wuhan Institute of Virology, which, at the end of January, filed a patent application concerning the antiviral drug remdesivir for the treatment of coronavirus and (b) even more recently a patent application has been filed by a pool of Italian researcher in the US that concern a new use of L-asparaginase enzyme. Needless to say we are talking about almost highly speculative patents, as otherwise the problem of covid-19 would not be still affecting us all.

Secondly, one might ask whether the redirection of the production of drugs covered by a patent for second medical use to the treatment of coronavirus, cannot result in a production shock precisely for the therapeutic indication covered by the patent, with the consequent need for compulsory licensing on such “original” indications. Even with reference to patents on active ingredients as such, Articles 141 et seq. IPC, governing the expropriation of intellectual property rights, might be simpler to apply.

These articles provide that patent rights, even during the patenting procedure, can be expropriated by the State in the interest of the military defense of the Country or for other reasons of public utility – to be read, according to some, as the supreme interests of the national community – and that the expropriation can be restricted to the right of use for the needs of the Country.

Therefore, the expropriation of a patent, can be carried out either through the compulsory transfer of ownership, or through the grant of a license. In the latter case, it is a sort of compulsory license, and the provisions set out for compulsory licenses apply mutatis mutandis. The expropriation is ordered by decree of the President of the Republic – on proposal from the relevant Minister, in consultation with the Ministries of Productive Activities and of Economy and Finance and, in the case of expropriation for reasons in the public interest, after receiving the opinion of the Board of Appeal – in which will be set the indemnity due to the patent holder, determined on the basis of the market value of the invention (yet this is not a simple calculation and even these provisions do not appear easily applicable).

95% of the pharmaceutical industry has reported being affected by Covid-19

Doubts also remain on the applicability of compulsory licenses under Article 71 CPI. This article, as mentioned, provides that a compulsory license may be granted if an invention covered by a patent cannot be used without infringing a previous patent. It seems clear, from the article that this type of license can be granted only after the grant of the dependent patent and to the holder of said patent.

Similarly to what has been said on license due to lack of implementation, the applicability to pharmaceutical patents of the provisions set out under Article 71 IPC seems arguable, since, at present, there seems to be no “covid patents”, nor dependent “covid patents”, for the use of which it may become necessary to obtain a license.

The picture that emerges is far from simple and is made even more complex by the lack of case law on the topic, a consequence of the rare application of these provisions.

In the immediate future, with respect to pharmaceutical patents, compulsory licenses may not be the most useful tool available to public and private entities to deal with the coronavirus emergency. However, they could play a key role in a second phase of the emergency, once the first “covid patents” appear. In this perspective, it might seem necessary to rethink and bring up to date compulsory licenses provisions, in view of the complex post-coronavirus future.

At the moment, the true exclusive right of “originator” drugs owners could lie in the possibility of referring to the data exclusivity legislation, pursuant to Directive 2001/83/EC and to EU Regulation 726/2004. Under this legislation, “originator” drugs owner are granted exclusivity on their clinical data for a period of eight years from the date the drug is placed on the market. During this time, competitors will not be able to use these data to build the dossier necessary to apply for a marketing authorization.

Lastly, we must not forget that the need to recall the above-mentioned provisions is often reduced, if not eliminated, by initiatives of the same patent holders, who autonomously decide not to enforce their own rights on inventions related to the coronavirus treatment. In addition, the issues related to the complex regulatory procedures that precede the use of a drug and its authorization, e.g. the regulations on compassionate use of the drug, should be taken into account.