On 8 December 2011, the Court of Justice of the European Union ("CJ") delivered its decision on another SPC matter that has caused disharmony in Europe: the possibility to grant zero and/or negative term SPCs. The CJ ruled that it is possible to grant a negative term SPC; it also clarified that negative term SPCs should not be rounded up to zero.
Why is a negative term SPC useful?
Supplementary Protection Certificates ("SPCs") are intended to compensate pharmaceutical companies for the loss of effective patent term caused by the delay in obtaining regulatory approval. SPCs will have a negative term if this delay is less than five years. At the time the first SPC Regulation (1768/92) came into effect, a negative term SPC was fruitless and thus not applied for. This changed with the introduction of the Paediatric Regulation (1901/2006), which provided for a six-month paediatric extension for an SPC already in place for a medicinal product, in order to promote research regarding the paediatric effects of the medical product at issue. As the grant of a paediatric extension is possible only if an SPC is in place, a six-month extension of a negative term SPC could still result in considerable benefits for the proprietor, provided the negative term is not more than six months.
Disharmony in Europe
In Merck Sharp & Dohme Corp. ("Merck") v. Deutsches Patent- und Markenamt C-125/10, Merck applied for an SPC throughout Europe for its product sitagliptin. This resulted in various decisions, including the grant of a negative term SPC in the UK and the Netherlands and a zero term SPC in Greece (because it was believed a negative term was not possible and should be rounded up to zero). In Germany the Industrial Property Office refused to grant an SPC arguing that the resulting term would be negative (minus three months and 14 days). Merck appealed this decision before the Bundespatentgericht which then referred the following question to the CJ:
"Can a supplementary protection certificate for medicinal products be granted if the period of time between the filing of the application for the basic patent and the date of first authorisation for marketing in the Community is shorter than five years?"
This question was referred in light of the possibility to obtain a paediatric extension which would result in a positive term extended protection.
Decision of the CJ
The CJ concluded that it is possible to obtain a negative or zero term SPC. It also ruled that a negative term SPC cannot be rounded up to zero and that a paediatric extension should commence on the date determined in accordance with the (negative) term calculated according to Article 13)1) (i.e. prior to patent expiry). The CJ further explained that "It is only in the case where the period between lodging the basic patent application and the date of the first marketing authorisation in the EU for the medicinal product in question is exactly five years that an SPC can have a duration equal to zero and that the starting point of the paediatric extension of six months is concurrent with the expiry date of the basic patent."
In the present case the SPC has a protection period of minus three months and 14 days. With a paediatric extension, Merck can benefit from an additional protection during the two months and 16 days following the expiry of the patent.
Pharmaceutical companies can benefit from negative SPCs combined with paediatric extensions as long as the combination could result in supplementary protection. Overall it can be said that the decision is positive for the innovative pharmaceutical industry. However, it limits the protection granted by a paediatric extension in those countries where the relevant authorities rounded up a negative SPC to zero.