European Court rules on negative term Supplementary Protection Certificates (SPCs)

The Court of Justice of the European Union (CJEU) has now ruled on Case 125-10 which concerns negative term SPCs.  Negative term SPCs may appear to be a strange concept, however, when considered with paediatric extensions they can have commercial value.

SPCs are governed by EU Regulation No 469/2009 and are intended to compensate patentees with marketed pharmaceutical products for the patent term lost during clinical trials and the application process for marketing approval.  Patentees can get an extension to the patent term of up to 5 years with a maximum period of exclusivity from first marketing authorisation of 15 years.  Therefore, if a patentee markets its pharmaceutical within 5 years of the filing date of the patent protecting the pharmaceutical then no SPC can be granted, at least no SPC with a positive term.

In 2007, a new EU regulation No. 1901/2006 came into force giving patentees the opportunity of a further 6 month extension.  This is in return for performing clinical studies in a paediatric indication.  The 6 month extension is only available if the patentee has an SPC.  The fact that the EU paediatric extension is linked to the SPC now means that a negative term SPC with a term of between zero and less than minus six months has commercial value. 

A patent expires 20 years after the filing date.  Therefore, if marketing authorisation was obtained after 4 years and 9 months of the filing date of a relevant patent the applicable SPC term would be calculated as minus 3 months since the SPC term calculation caps the  period of exclusivity at 15 years.  If the patentee had done the required paediatric studies he would be due a paediatric extension of 6 months, which if added to the SPC term, results in a net extension of 3 months.  This may not sound much but for a pharmaceutical product this can be of significant commercial value.

National courts in Europe had already considered this issue.  The courts of some countries, like the UK, were prepared to grant negative term SPCs, whilst other courts said there could not be a negative term SPC and came to one of two views:

1. the term had to be zero which was more advantageous to the patentee or
2.  a negative or zero term SPC could not be granted and therefore no paediatric extension could be available.

After a referral from the German courts, the CJEU has now given the definitive view on this issue which will now be binding on national courts.  The Court decided it is acceptable to have a negative term SPC and further clarified that it should be a negative term SPC and not just arbitrarily set as a zero term SPC.

Philip French, Head of Biotechnology at Appleyard Lees said: ‘We feel this is the correct decision, since it rewards patentees for doing the paediatric studies which the Regulation was designed to encourage, a different view from the Court would have undermined the objectives of the paediatric extension’.