EU SPC Reform – EU IPO and General Court to take centre stage

The EU Intellectual Property Office (EU IPO) has been put forward as the central authority for examining SPCs (supplementary protection certificates), creating a new division and direct line to the General Court (and CJEU). With a focus on SPCs for medicinal products, we discuss the proposals, weigh up some other options and consider some of the uncertainties and controversies.

Arguably the natural choice won out?

The EU IPO already had charge of unitary EU IP rights via brands and designs. SPCs are ‘EU IP rights’ too, even if – until these reforms at least – they have been national rights. So the EU IPO has always been at the front of any conversation about harmonising SPC examination, even more so as the proposals include both central examination and a Unitary SPC title (uSPC). So it seems the practical choice has won out, even if other options were in the frame.

What about appeals from examination?

At the moment, there is a fragmented approach across national authorities in the EU, which produces a diverse array of routes of appeal, timeframes, resources, and depth in which they examine SPCs. Notwithstanding the ensuing complexity and disharmony, this does at least present the ability for cross-over influence between member states. Accordingly, any move to a single, central authority was always going to highlight the importance of a robust appeal procedure in examination.

The European Patent Office (EPO) was granted control over the election of ‘Unitary Patents’ (UPs) from ‘European Patents’ (EPs). So with an eye on uSPCs, the EPO came into view too. But as a non-EU body without the ability to make references to the CJEU, it did not quite fit.

Europe’s new unitary patent court – the UPC – naturally swooped into the frame too once its opening became imminent (as happened in June). However, with a jurisdiction not completely aligned with the EU and the need to amend its founding UPC Agreement, this always seemed a stretch too far due to practical and political challenges.

On the subject of challenges, the idea of appointing a specialised national court also seemed even harder, from both a legal and constitutional perspective.

So that left the option of an internal, independent board of appeal within the examining authority itself – again, a model already adopted by the EU IPO (and other EU authorities like the Community Plant Variety Office, or CPVO). Indeed, this is what has won out, within the EU IPO’s current framework.

A new ‘SPC Division’

It is proposed that the EU IPO set up a new ‘SPC Division’ responsible for all of its new responsibilities, including in particular examination and appeal (as mentioned above - both for SPCs and uSPCs), as well as the new procedures for observations, oppositions and uSPC validity challenges.

Will existing SPC expertise be preserved?

The need to preserve SPC expertise and experience within national authorities was a common sentiment in almost all of the feedback preceding these reform proposals. This included calls for a potentially virtual system allowing SPC experts to participate.

For examination, this is largely what has arisen with a process allowing competent national authorities to apply to become a participating office via an administrative arrangement lasting up to 5 years. This appointment provides for the national authority to put forward examiners to make up a 3-person examination panel. It remains to be seen how this plays out, including with respect to virtual or in person hearings, albeit it appears to be a pragmatic and practical solution in principle.

However, as flagged above, appeals may be of greater importance. The underlying memoranda for the new Regulations highlight the appointment of new members to EU IPO’s Boards of Appeal. The memoranda also state that such members “may also be national examiners”. So this would appear to provide another route for preserving existing SPC expertise, albeit mutually exclusive from examination (as you cannot be both). At the same time, the memoranda contemplate that appeals will be at a “very low level”.

It remains to be seen whether the desired SPC experts will choose (and be able) to set up and manage an examination role split with their existing national authority. Or likewise, whether they may target a role in the Board of Appeal and/or a more permanent move to Alicante. This seems particularly crucial for ensuring quality at the outset, in particular versus alternatives (e.g. there does not seem to be any express reference to setting up a specialised SPC chamber within the General Court).

As well as preserving existing SPC expertise, the central authority (which is proposed to be the mandatory route for all centrally authorised medicinal products) must also examine under all of the four pillars of SPC validity (i.e. Article 3(a)-(d) – proposed to become Article 3(1)(a)-(d)). This expands from the current minimum of examining only the first two.

In the central authority, examination follows formal admissibility checks. Somewhat strangely, neither admissibility nor examination explicitly covers two of the new provisions in the proposed Regulations, i.e. (i) the prevention of ‘third party SPCs’ (i.e. based on a third party authorisation, without their consent) – now proposed in Article 6(2); and (ii) the prohibition of multiple SPCs by economically linked entities – now proposed in a new Article 3(2)).

And if anything is missed or overlooked, there is the opportunity for issues to be raised via pre-grant observations by third parties as well as pre-grant oppositions. This applies to any SPC (national or uSPCs) prosecuted via the central authority. Furthermore, there is even scope for validity actions for uSPCs, which could even traverse to address patent validity post patent expiry. We will return to these in a future article, but these may be the most controversial aspects of the reform proposals and so may now also embody the main concerns regarding quality.

How will the General Court cope with SPCs?

Related to concerns over quality, a key aspect of the EU IPO’s involvement is that the route of appeal will be via the General Court (as of right), and ultimately to the CJEU.

It is only a few years since the General Court created specialist IP chambers. This reflected its workload coming from the EU IPO (and CPVO). While the General Court’s 2022 Annual Report notes a slight decline, IP made up of 270 out of the General Court’s 904 new cases last year, and approx. 20% of its 1,474 ongoing actions.

Those specialist IP chambers seemed to be a long time coming, and there is no question that SPC specialism is different. However, there does not seem to be a suggestion of any new specialised chamber or court attached to the General Court to deal with SPCs. Indeed, there seems to be more suggestion that numbers of appeals will be low. This accords with some of the proposals in the preceding study (by Roberto Romandini), which included suggestions that there should be judicial dialogue between the General Court and the Boards of Appeal and a degree of deference on technical assessments. These raise challenges, as while it may be a case of ‘wait and see’, a low number of cases does not reduce their significance or need for SPC specialism. And history tells us that having the CJEU at the end of the tunnel does not always provide a clarificatory light.

The broader than expected scope of jurisdiction (in particular re uSPC validity), as well as the requirement to use the central procedure in certain circumstances may also produce a higher and consistent workload for the EU IPO and General Court. Along with hoping to preserve existing SPC experts, the positive outlook would be that experience and expertise should quickly build. The main questions may therefore become how long it will take, both in general and as to the duration of proceedings. And more so, will the CJEU more commonly intervene to steer the system. We look at these issues next.

Will the CJEU more commonly intervene?

‘Probably not’ is the short answer. Many blamed the UK for making the lion’s share of CJEU referrals on SPCs, but after a slight pause post-Brexit, others have now picked up the baton and more referrals have arisen. While making up a fraction of SPC applications/cases, CJEU involvement is reasonably prominent (and likely to continue even with attempts to provide clarity via new provisions and recitals).

Rather than referrals, the new system will provide a more direct route to the CJEU via appeal. But more directness does not translate to a greater likelihood. In particular, the appeal to the CJEU will not be as of right and will only be allowed for cases that raise a significant issue with respect to the unity, consistency or development of EU law. At the moment, permission to appeal is refused for the majority of ‘further appeals’ from EU IPO decisions, illustrating the high bar. Based on the CJEU 2022 Annual Report, there are also far fewer appeals compared to the referrals rulings in general (of 1,111 cases pending, 774 were requests for a preliminary ruling compared to 259 appeals).

So the CJEU may not be more involved, albeit that outcome will likely be determined by the quality of the EU IPO Boards of Appeal and General Court, as well as the potential for the quantity of cases increasing via the new procedures spanning prosecution, observations, oppositions and uSPC validity challenges.

Will it take longer?

It may challenge some perceptions of the General Court and CJEU, but the answer could, again, be ‘probably not’, or at least ‘maybe not’.

The current route to the CJEU via referrals is not a fast system. It can often lead to stays and/or re-opening of issues from examination or post-grant. It also typically arises late, during national litigation. And moreover, it is not only the time of the CJEU referral that needs to be factored in, but also the remittal to the national courts for an adjudication. The latter is often not straightforward and itself may even be further appealed.

So no one is saying the General Court and CJEU will be fast either, and delays will likely occur (again, this will be a new system). But perhaps there will not be huge differences.

The 2022 Annual Reports showed that timeframes in IP cases were on average 13.4m at the General Court and in general, that appeals to the CJEU took 11.9m (down from 15.1m in 2021). In contrast, the average duration of CJEU referrals has, in general, increased year on year, now up to 17.3m. In this sense, there could be a possibility that the direct appeal route could be shorter in itself compared to a referral, which could make sense (e.g. as the same case will have been debated by the EU IPO Board of Appeal and General Court).

And of course, we are only talking about appeals from prosecution (or now, the new opposition and uSPC validity procedures). There will be no change for the cases following the current referral routes via national courts (or the UPC).

Summary

Overall, and not without uncertainty and controversy, the EU IPO’s selection is not that surprising and could potentially achieve (or at least not hinder) the objectives sought via a harmonised, central examination procedure before grant. But uncertainty remains about quality and there is a feel of wait and see about some key issues, including the involvement of SPC experts in examination and/or appeal within the EU IPO’s new ‘SPC Division’. And the greatest controversies will likely focus on the allocation of jurisdiction to oppose and contest SPC validity, which we will turn to in a future article in this series.