IV. Patent Settlements in the EU
IV. 4. Judgements of the EU Courts in pay-for-delay cases
IV.4.3. The ECJ judgment in Paroxetine case
The UK Paroxetine case, a similar case to Servier, was referred for preliminary ruling to the ECJ by the Competition Appeal Tribunal (CAT). The questions related to the definition of potential competition, by object/by effect restraint and authorized generics. Since questions 7-10 related to Article 7-102, the parts of the judgment referring to them are not going to be discussed here, they fall out of the scope of our research.
By discussing the first two questions relating to potential competition, the ECJ highlighted – similarly to the former case law - that to decide whether an agreement has the effect of temporarily keeping an undertaking outside a market, it must be determined whether there would have existed, in the absence of that agreement, real and concrete possibilities for that undertaking to enter that market and compete with the incumbent. A merely hypothetical possibility of such entry or the mere wish or desire of the generic to enter the market is not sufficient. Conversely, neither it is required to be demonstrated with certainty that the generic will in fact enter the market concerned and, that it will be capable of retaining its place there”.863 Important part of the judgment is that the ECJ determines a real step plan to be followed by such analysis:
- The assessment must be carried out having regard to the structure of the market and the economic and legal context.864 In that respect, the ECJ emphasizes that in the case of medicines currently entering the public domain, “due account must be taken of the
861 Idem. para 982-985.
862 Idem. para 990
863 Case C-307/18 GUK and others k. CMA (Paroxetine) para 37-38
864 Idem. para 39
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regulatory constraints that are characteristic of the medicine sector”, especially rules regulating marketing authorizations.865
- As second step, “full account must be taken of the intellectual property rights and, in particular, the patents held by the manufacturers of originator medicines relating to one or more processes of manufacturing an active ingredient that is in the public domain”866 - Furthermore, “the perception of the established operator is a factor that is relevant to the
assessment of the existence of a competitive relationship between that party and an undertaking outside the market since, if the latter is perceived as a potential entrant to the market, it may, by reason merely that it exists, give rise to competitive pressure on the operator that is established in that market.” To determine whether the originator and the generics are potential competitors, it is necessary to first determine, whether at the time when that agreement was concluded, the generic had taken sufficient preparatory steps “to enable it to enter the market concerned within such a period of time as would impose competitive pressure on the manufacturer of originator medicines.”867 Therefore, subjective considerations of the parties are taken into account. In that respect, the ECJ stipulates that legal and administrative steps taken by generics to enter the market
“permit the conclusion” that the generic “has a firm intention and an inherent ability to enter the market […] even when there are process patents held by the manufacturer of originator medicines.”868 Interesting to note that the ECJ also requires that “the referring court must determine that the market entry of such a manufacturer of generic medicines does not meet barriers to entry that are insurmountable.”869 It seems like process patents held by the originator are not considered as barriers to entry by the ECJ on the pharmaceutical market, if the generic challenges them or starts the marketing authorization proceeding.870
Since this statement raises certain questions from the point of view of the presumption of patent validity, the ECJ emphasized that this presumption is an automatic consequence of the registration of the patent, and does not determine any way the outcome of any dispute related
865 Idem. para 40
866 Idem. para 41
867 Idem. para 42-43
868 Idem. para 44
869 Idem. para 45
870 Idem. para 46
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to the patent.871 If the presumption of validity of a process patent would be regarded as it precludes the holder of that patent from being in a relationship of potential competition with any party that is allegedly infringing that patent on the market of the medicine containing that active ingredient (the compound, which could be created by other, non-infringing processes),
“that would have the consequence […] that Article 101 TFEU would be deprived of all meaning and that would be liable, thereby, to frustrate EU competition law”.872
According to the ECJ’s reasoning, this does not mean that the competition authority must disregard any question relating to patent law that might influence the existence of a competitive relationship. Patents should be taken into account as part of the economic and legal context.
However, the assessment of the competition authority must not consist of a review of the strength of the patent or of the probability of the outcome of the dispute between the originator and the generic. That assessment must rather concern whether the generic has real and concrete possibilities of entering the market at the relevant time.873 In that respect the ECJ determines that “account must be taken of, inter alia, the following: that the uncertainty as to the validity of patents covering medicines is a fundamental characteristic of the pharmaceutical sector; that the presumption of validity of a patent for an originator medicine does not amount to a presumption that a generic version of that medicine properly placed on the market is illegal;
that a patent does not guarantee protection against actions seeking to contest its validity; that such actions, and, in particular, the ‘at risk’ launch of a generic medicine, and the consequent court proceedings, commonly take place in the period before or immediately after the market entry of such a generic medicine; that, to obtain an [marketing authorization] for generic medicine, there is no requirement to prove that that marketing does not infringe any originator medicine patent rights; and that, in the pharmaceutical sector, potential competition may be exerted before the expiry of a compound patent protecting an originator medicine, since the manufacturers of generic medicines want to be ready to enter the market as soon as that patent expires.”874
871 Idem. para 48
872 Idem.para 49
873 Idem. para 50
874 Idem. para 51