On 18 March 2020, the European Commission published its draft text of the Agreement on the New Partnership with the United Kingdom, detailing the EU’s proposal for the post-Brexit trade agreement. The draft touches on a wide range of topics, including intellectual property rights. This post draws out three key takeaways for the life sciences industry on the future relationship, as envisaged by the European Commission: supplementary protection certificates, data exclusivity and parallel trade.
1. Supplementary protection certificates (SPCs)
The draft agreement requires that the UK patent regime continues to allow for supplementary protection for authorised medicinal and plant protection products which are protected by a patent. This additional protection must (as now) not exceed five years, save for the possibility of a further extension in respect of paediatric medicinal products.
As currently drafted, this section of the agreement allows for a significant degree of flexibility and discretion in the implementation of a UK SPC regime. For example, it does not:
- provide more detailed requirements on when medicinal and plant protection products would be eligible for this supplementary protection; or
- set out the procedural requirements for obtaining supplementary protection.
The system created by EU legislation on supplementary protection certificates is currently intended to be imported into UK law through the Patents (Amendment) (EU Exit) Regulations 2019 – the new UK-SPCs would sit alongside EU SPCs. However, the EU’s current draft agreement would leave the door open to amendments to that UK regime in the future.
2. Data exclusivity
The EU’s draft agreement requires that the UK’s marketing authorisation regime continues to allow patent holders of medicinal, active substance, plant protection and biocidal products who have obtained marketing authorisation to have a right of data exclusivity for a limited period of time. During that period, generic products cannot obtain marketing authorisation on the basis of pre-clinical tests and clinical trials / tests and study reports submitted by the patent holder unless they provide consent.
However as with the requirement for an SPC regime, this section of the draft agreement allows for a significant degree of flexibility and discretion in the implementation of a UK data exclusivity regime. For example, the draft agreement does not specify how long this exclusivity period must be, and this is stated to be “a period determined under [the UK’s] domestic law”.
As explained in a government-published explanatory memorandum to the Human Medicines (Amendment etc.) (EU Exit) Regulations 2019, after the end of the transition period the present position is that “there will not be any changes as a result of EU exit to the data and marketing exclusivity periods enjoyed by the holders of UK national MAs or converted EU Mas”. However, the EU’s current draft agreement again leaves the door open to amendments to the UK regime in the future.
3. Parallel trade after Brexit – regional status quo regime?
Exhaustion rules prevent IP owners from using their IP rights to restrict the sale of goods that have been put on the market with their consent. Currently “the market” means anywhere in the EEA, but Brexit could mean a change in the UK.
As explained in our previous blog post Parallel trade after Brexit – UK IPO yet to exhaust policy options, after the end of the transition period (presently scheduled to end on 31 December 2020), there are three main exhaustion options available:
- national exhaustion, under which a rightsholder can stop imports and sales into the UK of genuine goods which it previously sold outside the UK (under this regime, rightsholder consent would be needed to import goods from the EEA to the UK, and vice versa);
- regional exhaustion, such as the current EEA regional exhaustion regime, which continues to apply until the end of the transition period (under this regime, IP rightsholder cannot oppose the resale in the UK of a product which was first put on the market in the EEA by it or with its consent, and vice versa); or
- international exhaustion, under which a rightsholder is unable to stop the import and resale of goods first placed with its consent anywhere in the world (not just in the EEA).
The post-transition position has, to date, remained unclear.
The EU’s draft trade agreement clarifies the EU’s position: the European Commission’s proposal prevents the UK from opting for an international exhaustion regime, but would permit the UK to adopt a regional or national exhaustion regime.
What long-term option would be most favourable to UK businesses?
In a feasibility study commissioned by the UK Intellectual Property Office, which was published in 2019, stakeholders interviewed indicated that, in the case of national exhaustion, consumer choice would be narrowed and pharmaceutical distributors raised the risk of medicine shortages should imports from outside the UK be restricted. Continuation of the regional “status quo” regime appeared to be the option favoured by the stakeholders interviewed.
In order for that regime to continue on a symmetrical basis, the trade agreement would need to be amended or supplemented.
The European Commission’s draft trade agreement seeks to provide for the continuation of certain key existing IP regimes which are relevant for the life sciences industry, while also allowing the UK a significant degree of freedom in crafting the details of its own rules and regulations. The ball is now in the UK government’s court, which has chosen for now not to make its own proposals public.