The European Unified Patent System and Its Impact on U.S. Businesses
• Boehmert & Boehmert
• German American Chambers of Commerce, Inc.
• German Center for Research and Innovation New York
After welcome remarks by Consul Jochen Wolter, Head of Press and Public Information for the Consulate General of the Federal Republic of Germany in New York, Dr. Christian Czychowski, attorney at law and partner at Boehmert & Boehmert, kicked off the evening by presenting his law firm to the audience and providing an introduction to the unitary patent system.
Dr. Thomas L. Bittner, European and German patent attorney and partner at Boehmert & Boehmert, continued by recounting the history of the E.U. patent package, its lengthy ratification process, and its approval by the E.U. Parliament and Council in 2012. Bittner compared the former national patent system to the current unitary patent system, offering insights into the new regulations regarding the Unified Patent Court. He discussed the advantages and disadvantages of both systems, in terms of the different application and administrative procedures as well as cost efficiency. He also described the overall uncertainty and unclear nature of this new system. This patent protection would only apply to 13 E.U. member states, excluding politically and economically significant members such as Norway, Switzerland, and Turkey. According to Bittner, the new system will simplify and harmonize the process, but it will simultaneously be complex, especially during the transitional period.
James Calkins, Associate Vice President and Global Head of Patent Support for Emerging Markets and Consumer Products at Sanofi, on the other hand, offered the pharmaceutical industry’s perspective towards the new developments. According to Calkins, the UP and UPC have the potential to enhance predictability in patent litigation, which at the moment involves a variety of states, patent examiners, and courts weighing in on decisions. Ultimately, the system’s success, as Calkins predicts, depends on its implementation, which will occur over the upcoming years. In his view, the legislation will demonstrate a substantial improvement to the E.U. patent system as the E.U. is in many ways the best environment in the world for market exclusivity in pharmaceutical drug innovation. Looking at the broader picture for the drug innovation environment, Calkins stressed the importance of three critical markets, namely the U.S., E.U., and Japan, which altogether constitute around 80% market exclusivity associated with pharmaceutical transactions. Moreover, Calkins discussed three control factors for pharmaceutical drug innovation, i.e. time of market exclusivity, pricing and a positive return on investment, and predictability. Therefore, improvement in all key markets still need to be made, including improvement of market exclusivity for small pharmaceutical drugs in the U.S., pricing for innovative drugs in the E.U. and Japan, and predictability in the legal system in the U.S. and Japan. Overall, the UP/UPC can be considered a positive development, according to Calkins; nonetheless he deems maintaining a high pricing level for a positive return on investment (ROI) as imperative in order to preserve a sustainable and viable drug innovation environment for effectively treating human diseases.
Dr. Julian Waiblinger, attorney at law and partner at Boehmert & Boehmert, then shared his perspectives on the current “significant, but complex” developments in E.U. technology transfer law. Waiblinger gave an overview of the block exemption regulations under European competition law. The European Commission has recently adopted new regulations and guidelines for the assessment of technology transfer agreements under E.U. antitrust law as a means of improving economic efficiency and reducing the duplication of research and development. This adoption is also predicted to spur incremental innovation, facilitate diffusion, and foster market competition. However, Waiblinger stressed that the regulation does not cover trademark licensing or copyrights other than software. Waiblinger then discussed three key changes pertaining to the new regulation: restrictions on passive sales (i.e. price restrictions, output restrictions, market and customer allocations), exclusive grant-backs that bare the risks of reducing the incentive to innovate, and non-challenge clauses. According to the new regulation, such provisions may only be used in exclusive licensing agreements. In all other cases, such termination rights can no longer fall under block exemption regulations. What remains to be seen is how these new legal rulings will affect technology transfer in the various industries. However, in light of stringent restrictions, it is especially advisable, in Dr. Waiblinger’s view, to assess whether current or future technology transfer agreements are in line with the modified requirements of European antitrust laws.
To conclude the evening, moderator Dr. Heinz Goddar, European and German patent attorney at Boehmert & Boehmert, spurred a lively debate by questioning whether the former patent system had unique advantages over the new system. This remark paved the way to an engaging discussion about general access to medicine for U.S. consumers, the possible effects on drug pricing in the U.S., and the universal value of the patent system.