The Düsseldorf Court of Appeal recently challenged established opinion that a third-party’s supply of ingredients to a generic pharmaceutical company for marketing research purposes is not covered by the Bolar exemption. The Düsseldorf Court of Appeal submitted preliminary questions on this issue to the Court of Justice of the European Union (ECJ). The outcome could have implications for ingredient suppliers and the European pharma industry.

Introduction

The issue is whether and under what conditions a third-party’s supply of patent-protected substances to a generic pharmaceutical company, which intends to use the substance for research to obtain a marketing authorisation (MA), is covered by the Bolar exemption. Previous decisions in Germany and Poland concerning the same facts ruled that the third-party supplier is not exempted from patent infringement. In December, the Düsseldorf Court of Appeal (CoA) held that a third party should be exempted conditionally, but that this is a matter of interpretation of EU legislation. It therefore submitted questions of interpretation to the ECJ.

Bolar exemption and third parties

Under the Bolar exemption, generic companies are allowed to manufacture patent-protected substances for time-consuming studies and trials for MA purposes. Otherwise, manufacture is only permitted after the patent expires. The generic company itself is allowed to manufacture the patented substance for trials and studies. However, in practice, the substance is often obtained from a specialised third-party API (active pharmaceutical ingredient) manufacturer. The issue in this case was whether a third-party manufacturer could do this without infringing the patent; that is, whether the supply of a substance for this type of study/research falls within the Bolar exemption.

Opinion of the Düsseldorf CoA and referral to the ECJ

The Düsseldorf lower court had decided that a third-party supplier is only exempted by the Bolar provisions under the restrictive condition that the supplier is co-organiser of the tests and studies carried out by its customer. In Poland, the lower instance court also ruled that a third-party supplier is not covered by the Bolar exemption, which was recently confirmed by the Polish Supreme Court. The Düsseldorf CoA, a very well-respected patent court, is more favourable to the approach that commercial third-party acts of delivery can fall under the scope of the Bolar exemption. It considers those acts permissible under certain conditions, namely “that the delivered active substance will indeed exclusively be used for privileged trials and studies for approval”. The CoA does not follow the line “it takes two to Bolar” but seems to say instead: “it might take three to Bolar“.

However, as the Bolar exemption is EU legislation, the CoA submitted questions of interpretation to the ECJ.

Relevance

The outcome of the questions referred is important to API suppliers and the European pharma industry. If the ECJ follows the narrow approach of the lower German court and Polish courts, it will mean that the Bolar exemption will have no effect in situations involving third-party suppliers. Both generic pharmaceutical companies and European API suppliers might be forced to move to countries outside of Europe. However, if the broader interpretation of the Düsseldorf CoA is followed, studies and research carried out to obtain an MA for a generic product during the term of the patent can be continued in Europe. At the moment, the questions have been submitted to the ECJ. We will closely monitor any development in this case and inform you accordingly.