Genentech applied for an SPC (SPC/GB07/012) in February 2007 to cover the compound Ranibizumab. Ranibizumab is a key constituent of the drug Lucentis which treats “wet” macular degeneration - an eye condition, which causes age-related vision loss.
Provided that the relevant SPC annual fees had all been paid in advance (a requirement for SPCs in the UK), it would have been expected that the SPC would extend the protection for Ranibizumab until 23 January 2022, with the potential for an additional 6 months through the grant of a paediatric extension.
Genentech outsourced the payment of these annual fees to Master Data Center, Inc (“MDC”). When the time came to pay the relevant annual fees, MDC mistakenly made an underpayment, representing the fees for only two of the maximum four years (more specifically, 3 years 9 months and 21 days) available for SPC in question.
APPEALS BEFORE THE UKIPO
Both Genentech and MDC had made a number of procedural applications to the UKIPO with a view to obtaining a remedy allowing the SPC in question to continue in full force for its maximum duration. In its 21 February 2020 decision, the UKIPO rejected those applications, resulting in the lapse of Genentech’s SPC on 2 April 2020.
APPEAL BEFORE THE HIGH COURT - CAN YOU ELECT FOR A SHORTER SPC TERM?
Both parties appealed to the High Court on 4 March 2020. The focal point of MDC’s argument was that for various reasons the Comptroller had made an error in permitting an SPC to be granted for a period less than the maximum term available, contrary to Article 13 of Regulation (EC) No. 469/2009 (SPC Regulation).
MDC contended that the error by the Comptroller to permit this shorter term could be corrected under Rule 107 of the Patents Rules 2007 (Patents Rules), whereby the Comptroller, if he thinks fit, can correct the error where the error was wholly or in part due to an error by the Patent Office.
The High Court dismissed these grounds, agreeing with the UKIPO’s earlier decision; it was considered possible to elect a shorter SPC duration than the maximum available in the UK, by underpayment of annual fees, without breaching the SPC Regulation. The Court placed particular stress on the wording of Article 14 of the SPC Regulation, which must have envisaged that a shorter term could be elected.
Genentech’s case on the other hand was summarised as consisting of three key questions:
- Does Rule 116(5) of the Patents Rules allow further annual fees to be paid if an application for a paediatric extension is made under Regulation (EC) No. 1901/2006 (Paediatric Regulation)?
- Can the SP2 form be corrected under s.117 of the Patents Act 1977?
- If an SPC is for a term shorter than the maximum available, can a paediatric extension nevertheless be granted to extend that term?
Regarding the first question, the High Court deemed the natural and ordinary meaning of Rule 116(5) to mean that when a paediatric extension is applied for, the only fees which can be paid are those which relate to the paediatric extension. Otherwise, Genentech would be in a “uniquely privileged” position, if it were permitted to make up any shortfall in annual fees.
For Genentech’s second argument, the High Court had to grapple with a key issue in law – even if s.117 allowed the correction of the SP2 form, it did not cure the actual underpayment of fees by MDC. The Court confirmed that this provision could not be used to circumvent Rule 116(5).
Finally, regarding the third point, the Court noted the “justice” of Genentech’s submission at paras 72-73; if Genentech had invested in the research necessary to obtain a paediatric extension, then surely they should be able to obtain one? However, the Court concluded that the grant of a paediatric extension for an SPC which is not for the maximum length available would be “irreconcilable” with Art 13 of the SPC Regulation.
APPEAL BEFORE COURT OF APPEAL
On 31 March 2020, the Court of Appeal heard arguments from both parties.
MDC focussed their appeal on Rule 107 of the Patents Rules that the comptroller had somehow made an error in permitting the shorter SPC term, and therefore should be able to correct that error. The Court of Appeal was unconvinced, concluding there was no mistake by the Comptroller in allowing this shorter term, and hence, Rule 107 could not be engaged. In the judgment, the Court characterises payment of renewal fees for UK SPCs as:
- The prescribed fee is the total of specified annual fees, albeit payable in one go and in advance.
- By paying a prescribed fee appropriate to something less than the full term, the applicant "may elect to take the certificate for a shorter period".
- The applicant is not permitted to pay top-up annual fees, or annual fees as if they fell due year by year.
- If the applicant chooses a shorter period than the maximum, the SPC lapses at the end of the chosen period.
Genentech’s appeal concerned the same three questions which were put to the High Court. The Court of Appeal agreed with the High Court and in turn dismissed both appeals. The SPC for Ranibizumab therefore expired on 2 April 2020.
IMPLICATIONS
Patentees should take note – if you handle SPC administration and fees internally, make sure your systems are robust to the point where an erroneous underpayment could not reasonably take place. If you plan to outsource these functions (as Genentech did in this case), complete relevant due diligence on the company to which you outsource the responsibility, and carefully review the terms on which they are instructed. Mistakes such as this one could well result in greater financial damage to your business and IP portfolio than your outsourcer is able to account for, even if they provide you with an indemnity.
