Supplementary Protection Certificates - Master Data Center, Inc v The Comptroller

Photo showing intermediate age-related macular degeneration
Author US National Eye Institute Source Wikipedia Macular Degeneration 

Jane Lambert

Patents Court (Mr Recorder Campbell) Master Data Center, Inc v Comptroller  [2020] EWHC 572 (Pat) (11 March 2020)

A supplementary protection certificate ("SPC") is an intellectual property right ("IPR") that protects the active ingredients of a pharmaceutical or plant protection product. The IPR comes into being upon the expiry of a patent for the product. SPCs are granted because new pharmaceutical and plant protection products cannot be marketed unless and until they are found to be safe by the relevant national or European authorities. Evaluating the safety of a new drug or plant protection product can take time. As the maximum term of a patent is 20 years the time waiting for such evaluation reduces the effective term of the monopoly. The purpose of an SPC, as Lord Justice Floyd explained in Teva UK Ltd and others v Gilead Sciences, Inc [2019] EWCA Civ 2272 (19 Dec 2019), is, therefore, to compensate the patentee for such lost time by protecting the active ingredient of the pharmaceutical or plant protection patent for up to 5 years (and in the case of a product used for treating children a further 6 months) after the expiry of the patent.

Applications for SPCs have to be made within 6 months of the date of marketing authorization or the grant of the patent if market authorization is given before the patent is granted, That stage can be many years before the expiry of the patent.  In the appeals before Mr Recorder Campbell QC, an application for an SPC for ranibizumab, which is the effective ingredient of  EP0973804 for anti-VEGF antibodies, had been made on 23 Feb 2007.  That date was less than a month after Genentech Inc ("Genentech"), the patentee, had received marketing authorization but over 11 years before the patent was due to expire.  Genetech would have been entitled to an SPC that would have expired on 22 Jan 2022 and possibly even later with a paediatric extension of another 6 months. For reasons that are not entirely clear, Genentech applied and paid for an SPC which will come to an end on 2 April 2020.  The application was accepted and SPC/GB07/012 was granted to Genentech.   The SPC is managed by a company called Master Data Center Inc ("MDC").

The appeals concern attempts by Genentech and MDC to extend the term of the SPC.   On 12 July 2019, MDC asked the IPO to correct what MDC called "an irregularity of procedure" connected with the payment of this fee" so that the SPC could remain in force until 23 Jan 2022.  The alleged irregularity was the IPO's practice of allowing applicants for SPC to choose a period that was shorter than the period specified in art 13 of Regulation (EC) No 469/2009. MDC argued that the practice was contrary to EU law and that it could be corrected by rule 107 (1) of the Patents Rules 2007.  In a separate application dated 24 Sept 2019, Genentech applied for a paediatric extension to the SPC and enclosed a further application form in respect of the annual fees payable for the 3rd and 4th years so as to extend the SPC to its maximum duration. On 20 Dec 2019 Genentech applied for its 2007 application to be rectified to enable it to apply and pay for a 4-year term. None of those applications was successful so MDC and Genentech appealed to the Comptroller.  

The appeals came on before Mr Ben Micklewright (see Re Genentech, Inc. and Master Data Center, IncBL O/111/20 21 Feb 2020).   The hearing officer set out the law at paras [8] to [24] of his decision. He dealt with Genentech's case first between paras [25] and [65], and then MDC's between [66] and [82].   He concluded at para [83]:

"a. Rule 116 (5) does not allow further annual fees to be paid in the situation where an application for a paediatric extension is made. 
b. A paediatric extension extends the maximum possible duration of an SPC and would not therefore extend the actual duration of SPC/GB07/012. 
c. The request to correct Form SP2 and Form FS2 so as to extend the duration of the SPC to its maximum term, made under section 117, cannot be allowed. 
d. There has been no irregularity of procedure, clerical error or mistake attributable, wholly or in part, to a default, omission or other error by the comptroller, an examiner or the Patent Office and therefore there is no basis upon which the comptroller may exercise his discretion under rule 107 to extend the period for paying further annual fees."

He, therefore, refused the request to pay further annual fees for SPC/GB07/012 and the application for a paediatric extension.

Both MDC and Genentech appealed to the Patents Court. Their appeals were heard by Mr Campbell on 4 March 2020 and judgment was delivered on 11.  MDC's grounds of appeal were as follows:
  1. First, that the Hearing Officer fell into error by interpreting the SPC Regulation as allowing an applicant for an SPC to choose a duration of their certificate for a period that is shorter than that defined in Article 13.
  2. Second, the Hearing Officer fell into error by holding that the Court of Appeal in Tulane had confirmed that the UK rules and practice did not conflict with the SPC Regulation.
  3. Third, the Hearing Officer fell into error by holding that paragraph 5 of Schedule 4A of the Patents Act 1977 envisages that a single fee must be paid before the certificate comes into effect. 
MDC submitted that those errors gave rise to procedural irregularities which could properly be corrected under rule 107.  Genentech argued that an application for a paediatric extension impliedly offered an opportunity to extend the SPC term because the words "unless an application for an extension of the duration of the certificate is made under the Medicinal Products Regulation" constituted an exception to the prohibition in rule 116 (5) of the payment of further fees to extend the duration of the SPC. Its alternative case was that it was entitled to a 6 months extension even with a term of 2 years.  Finally, Genentech argued that the Comptroller could correct the time periods sought in its 2007 application form and fees schedule under s.117  of the Patents Act 1977.

Mr Campell took MDC's appeal first. He referred to the Court of Appeal's decision in Tulane Education Fund v Comptroller [2013] Bus LR 1225, [2013] WLR(D) 315, [2013] EWCA Civ 890, [2014] RPC 10, that nothing in the UK's legislation or practice was in conflict with Reg 469/2009 because art 12 of the regulation was permissive and not mandatory.  It was therefore open to the IPO to give applicants the option of taking a certificate for a shorter period than that set by art 13 and that they could pay a fee for the period that they had requested.  There was, therefore, no "irregularity of procedure" for the Comptroller to correct under rule 107.  Accordingly, he dismissed MDC's appeal, 

Turning to Genentech's appeal, Mr Campbell adopted the hearing officer's reasoning:

"[47] ........... He considered 5 factors, namely (1) the natural and ordinary interpretation of rule 116(5); (2) the nature of the fee specified in paragraph 5 of Schedule 4A to the Act; (3) the requirements of the SPC Regulation and the Paediatric Regulation; (4) the extent to which the IPO's consultation document and concordance on the Patents Rules 2007 can be relied on to interpret rule 116(5); and (5) the teaching of Tulane. He did not place a great deal of weight on the fourth factor, but I agree with Genentech that he should have not considered this at all. It is not a statutory source, merely the UKIPO's non-binding view of the 2007 Rules.
[48] The Hearing Officer held that on the natural and ordinary meaning of the words, they were silent on the fees which might be paid: see paragraph [33]. This is clearly correct and was not criticised. Instead the main thrust of Genentech's argument was that the Hearing Officer had gone from a finding that paragraph 5 of Schedule 4A did not "envisage" further payment of prescribed fees (specifically, annual fees) after the certificate had come into effect (see [34]) to a conclusion that they were prohibited (see [38]). Furthermore Genentech submitted that by doing so the Hearing Officer had failed properly to take into account the reward granted by Article 36 of the Paediatric Regulation.
[49] I reject these criticisms. First, it seems to me (as it did to the Hearing Officer) that the natural and ordinary interpretation of rule 116(5) in this context is that when an application for extension is made, the applicant is permitted, and only permitted, to pay for the paediatric extension itself. As noted above the applicant may not know at the time of the original payment whether he is entitled to an extension, so there is no reason to require him or her to pay for the extension at that stage and every reason to allow later payment. However the same logic does not apply to the annual fees, which have nothing to do with the paediatric extension. This conclusion is supported by his reasoning on factors (2) and (3).

He, therefore, dismissed Genentech's first ground of appeal.   

As for the s.117 point, the recorder endorsed Mr Micklewright's finding that the section cannot be used to circumvent a specific mandatory legislative provision. He also dismissed Genentech's alternative argument that the company sought merely to reallocate funds in MDC account with the IPO to cover the required fee. Those funds had been held to MDC's order and nothing had actually been paid to the IPO. Mr Campbell observed that there had not actually been a mistake on Genentech's part in that Genentech had received what it had applied and paid for. He considered the position of third parties who were expecting the SPC term to end on 2 April 2020 but thought that their position could be addressed by allowing them an opportunity to object to any extension of the term.  He also noted that this was not the first time that MDC had made a mistake of this kind.  Weighing those considerations against the detriment to MDC and Genentech, the recorder concluded that even if he had discretion under s.117 he would not have exercised it to allow the correction.

On the question of whether Genentech was entitled to a paediatric extension even though its SPC was for less than the full term, Mr Recorder Campbell adopted and endorsed the reasoning of the hearing officer at para [47] of the hearing officer's decision:

 "It is apparent that the Paediatric Regulation provides a six-month extension to the maximum duration of the certificate as defined in Article 13(1) and (2) of the SPC Regulation. This has been implemented in Article 13(3) of the SPC Regulation and this is the nature of the “reward” referred to in Recital (26) of the Paediatric Regulation. I find it difficult to interpret the Regulation in any other way, and it makes sense from a policy perspective too. There is no need to provide incentives to reward an SPC holder who, for whatever reason, has not taken the certificate for its maximum duration as, for what is a comparatively small annual fee, they could have chosen to take the SPC for its maximum duration. It therefore seems to me that the SPC Regulation and the Paediatric Regulation both clearly relate to extending the duration of the certificate as defined in Article 13(1) and (2) of the SPC Regulation and do not provide for an extension to an SPC which takes effect for a duration shorter than this period. I therefore conclude that Genentech’s application for a paediatric extension cannot be allowed on this basis."

Accordingly. he rejected that argument too and dismissed Genetech's appeal.

In a further short judgment, the learned recorder capped the recoverable costs of both appeals at £25.000 and refused Genentech and MDC permission to appeal to the Court of Appeal (see Master Data Center, Inc v Comptroller (Costs) [2020] EWHC 601 (Ch) (11 March 2020).  There is an automatic right of appeal from the Comptroller to the High Court under s.97 (1) of the Patents Act 1977 but appeals to the Court of Appeal require permission.

This case underscores the importance of attending timeously to formalities with regard to fees and time limits.  According to the recorder, MDC's costs of the appeal and hearing before Mr Micklewright are expected to be around £172.000. SPCs may be an esoteric area of IP law but the value of the monopoly can be considerable.  The third point to note is the remarkable speed with which the IPO and the courts addressed the issue.  The steps from examiner's refusal to a judgment of the High Court were less than three months.  Quite remarkable when judged by normal waiting times.

Anyone wishing to discuss this case note can call me on 020 7404 5252 during normal business hours or send me a message through my contact page. I am working from home in the Pennines as usual.  I have always advised by telephone or Skype.  Most hearings in the IPO and many in IPEC and the rest of the Chancery Division have always been conducted remotely.  Business as usual.


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