The Supreme Court answers (albeit not definitely) the vexata quaestio about whether a Defendant may challenge in the arbitration procedure the validity of patents or SPCs invoked by the Claimant by deciding that arbitral courts are incompetent to appreciate the nullity or invalidity of patents and SPCs.
In Portugal, disputes between reference medicines and generic medicines for certain infringement cases of patents and Supplementary Protection Certificates (“SPCs”) are subject to ad hoc or institutionalized mandatory arbitration, such arbitration to be launch by the patent holder, licensee or the Marketing Authorization (“MA”) holder for the reference medicine within 30 days counting from publication of application for the generic medicinal product. Arbitral awards are subject to appeal to the State Courts.
One hot topic that has dividing academy and arbitral as well as court of appeal case law is to whether a Defendant may challenge in the arbitration procedure the validity of patents or SPCs invoked by the Claimant. By judgment of 14 December 2016, the Supreme Court has taken for the first time a position on this matter .
The arguments for and against can be summarised as follows: Against the competence of an arbitral court to declare the nullity of a Patent or the invalidity of a SPC is generally argued that:
i) the decision to declaration of nullity should be erga omnes, while arbitral decisions are only binding inter partes;
(ii) Portuguese Industrial Property Code establishes an exclusive competence of the state intellectual property courts to declare the nullity or annulment of patents and SPCs ; and
(iii) the attribution of competence to arbitral courts is able to cause distortions at a competition level and contradictory awards.
In favor of the competence of an arbitral court to declare inter partes the nullity of a Patent or the invalidity of a SPC is invoked that:
(i) Article 35.º of the Industrial Property Code does not exclude the right to invoke inter partes the nullity of a patent as incidenter tantum;
(ii) the right to appeal to state courts from an arbitral award, could allow the erga omnes effect;
(iii) the law that submitted the disputes to mandatory arbitration does not exclude any means of defense admissible under civil procedure law or in the law of arbitration ; and
(iv) denying such right of defense is an infringement of due process, fair trial and effective legal protection constitutional rights.
Majority of arbitration jurisprudence tend to consider that the arbitral courts do not have competence to declare the nullity of a patent or a SPC, while jurisprudence of the Courts of Appeal was divided, with several contradictory decisions.
The Supreme Court balanced the arguments pro and against and decided that arbitral courts are incompetent to appreciate the nullity or invalidity of patents and SPCs, even as incidenter tantum. However, the Supreme Court opened the door to eventual suspension of arbitral procedures while suits for declaration of nullity of a patent or a SPC are pending at state courts. According to the Supreme Court, such suspension – to be decided in a case by case basis – could be granted when infringement of due process, fair trial and effective legal protection constitutional rights are effectively at stake.