The purpose of the patent system is to encourage and protect the use of inventions in ways that facilitate industry development. However, for patents involving pharmaceuticals, agrichemicals or their manufacturing processes, approval from the central authority is necessary for the utilisation of such invention patents in order to ensure their safety and effectiveness. As a result, there is often a significant gap between the time from which the patent is approved to the time that the product is launched for sale. To compensate patent owners for time spent on acquiring such approvals, during which they are unable to utilise or manipulate their inventions, an extension system was introduced under the Patent Act 1994. The IP Court later gave clear explanations on "the period of time patent owners spend on acquiring approval, during which they are unable to make use of their inventions" in Judgments 102-Min-Zhuan-Su-43 (November 18 2015) and 102-Min-Zhuan-Su-42 (December 31 2015).
In these cases, the plaintiff was a pharmaceutical patent owner that sued a generic drug producer and its distributors for infringement of its patent. The plaintiff claimed for an injunction to prevent the defendants from exploiting the disputed patent and claimed compensation for infringement and associated damages. The defendants argued that the administrative decision made by the Ministry of Economic Affairs of the Taiwan Intellectual Property Office (TIPO) on June 26 2003 to extend the disputed patent violated the Patent Act and the invalidity arguments. In other words, the defendants argued that the disputed patent should have expired and requested that the court dismiss the plaintiff's claim for injunction.
According to TIPO's administrative decision, the extension granted for the disputed patent included the time for:
- conducting the domestic clinical trial;
- applying for a Taiwan registration of the drug;
- conducting the clinical trials in the country of manufacture (Australia); and
- applying for registration in Australia.
Domestic clinical trial
With regard to conducting the domestic clinical trial, both the plaintiff and TIPO opined that the time required for the trial should begin "from the day the plaintiff submitted its clinical trial program to the Taiwan Food and Drug Administration (TFDA)" until "the day TFDA approved the clinical trial report, as shown on the approval letter". After reviewing the relevant facts and the context of the Regulations for Ratifying Extension of Patent Term and the Guidelines for Reviewing Extension of Patent Term, the court held that the period for conducting the domestic clinical trial should begin "from the commencement date of the domestic clinical trial" until the day that the TFDA approves the clinical trial report, as shown on the approval letter. This period should not include the time spent on administrative procedures (ie, the application for the TFDA's consent). Hence, the period for "conducting the domestic clinical trial" that TIPO had previously recognised should have been reduced.
Taiwan registration of drug
With regard to applying for a Taiwan registration of the drug, both parties agreed that the period required for the application should begin "from the day the application is submitted" until "the day the registration is actually awarded".
Clinical trials in Australia
With regard to conducting the clinical trials in the country of manufacture (Australia), the plaintiff argued that the time required for the trials should begin "from the day the clinical trial is proposed" until "the day TFDA approved the clinical trial report". However, the court held that, being an exceptional rule, the extension should be interpreted on a more stringent basis. According to the Regulations for Ratifying Extension of Patent Term, the court opined that this period should begin from the actual commencement date of the clinical trial until its completion date. Neither the application period for the clinical trial nor the period for reporting the trial result to the TFDA should be included. Hence, the period for "conducting the clinical trials in the manufacturing country" previously recognised by TIPO should have been reduced. In addition, the disputed patent actually underwent two separate stages of clinical trial in Australia, and the court held that, as far as patent extension is concerned, "only clinical trials that are critical to licensing at the manufacturing country should be taken into consideration". The second stage began after the launch of the drug in Australia, and thus the extension for such a period should not be granted.
Application for registration in Australia
With regard to applying for the registration in Australia, the court considered that the time required is entirely inadmissible for extension purposes, because the Regulations for Ratifying Extension of Patent Term do not consider "the period for applying for registration in a foreign country" as grounds for extension.
The court recognised only "a reduced period for conducting the domestic clinical trial", a "period for applying for Taiwan registration of the drug" and "a reduced period for conducting the clinical trials in the manufacturing country" as grounds for extension. After removing overlaps, the extension of the disputed patent was recalculated to expire on May 13 2014, and thus the court dismissed the plaintiff's claim for injunction.
The IP Court adopted a more stringent approach when recognising "the period for conducting the clinical trial in a foreign country". Although this interpretation was consistent with the existing Guidelines for Reviewing Extension of Patent Term, it contradicted the practices that TIPO was accustomed to at the time when the disputed patent was extended. It remains to be seen whether these judgments will affect future judicial reviews on patent extensions approved before the existing laws came into effect.