Proceedings discussed in the Supreme Court of Israel, before Judge Alex Stein. On 5.3.23 the verdict was given.
The proceeding is a request for permission to appeal the judgment of Judge Gershon Gontovnik of the District Court in Tel Aviv, who rejected the applicant’s appeal of the patent registrar’s decision. In his decision, the Registrar of Patents rejected the applicant’s request for an extension order for patent No. 202813.
Parties: Applicant: MERCK SHARP & DOHME B.V; The respondent: the registrar of patents, trademarks and designs.
The facts: The legal question at issue in this matter concerns the method of calculation of the extension period of the patent life of the pharmaceuticals and medical devices.
The applicant has developed a medical preparation called “Keytruda” which is intended for the treatment of various types of cancer. The active ingredient in this preparation is protected by registered patent No. 202813. The validity of the basic protection of the patent is supposed to expire, after 20 years, on 13.6.28. The applicant also registered the patent in the United States, where the marketing permit was granted on September 4, 2014. The patent extension period is subject to a ceiling of 14 years from the day the marketing permit was issued, that is, until 9/4/28.
The maximum extension period in this case is 83 days from the date of expiration of the basic protection of the patent. In the United States, the applicant was entitled to 176 days of extension by virtue of the PTA order, of which it received only 83 days – up to a ceiling of 14 years of exclusivity. Therefore, the US Patent Office issued the applicant an NFD certificate, in which it was determined that the patent does meet the essential eligibility conditions for issuing a PTE order for 394 days, but the PTA period included the maximum extension period that the applicant was entitled to receive under the 14-year ceiling. Therefore, the PTE extension period was set to 0 days.
The applicant submitted an application to the Israeli Patent Authority for the extension of the validity of the basic patent on the basis of the principle eligibility for a PTE order in the United States, which was recognized by the approval of the NFD. The Deputy Commissioner of Examiners at the Patent Authority rejected the applicant’s request. Its rejection was based on the fact that the approval of the NFD does not amount to an order regarding the extension of a reference patent, the granting of which in the United States fulfills the two-state condition stipulated in Sections 64a and 64d(5) of the Patent Law.
The applicant filed an appeal against the decision of the deputy commissioner to the patent registrar. The patent registrar also determined that since the applicant was not granted an operative PTE order in the United States, it is not entitled to an extension order in Israel.
The applicant filed an appeal against the registrar’s decision to the district court. The district court rejected the appeal and emphasized in its ruling that the Patents Law clarifies unambiguously that an in-principle approval of PTE-type eligibility is not sufficient to consolidate eligibility for the extension of the basic patent in Israel. This is because this approval is not in the scope of a “approval order ordering an extension, by one or more days. The district court added that this arrangement is a negative arrangement that clearly excludes the possibility of basing on principled entitlement to an extension order withdrawn PTE as a basis for extending a basic patent in Israel. It also emphasized The district court that the legislature was aware of the American PTA-type order and consciously decided not to adopt it.
The results of the procedure: the request was rejected. The court ruled that the judgment of the district court and the decision of the patent registrar which preceded it, are correct and do not raise any question of principle worthy of entering the gates of the appeal in a third incarnation. Also, the court ruled that the applicant will bear the state’s expenses in the amount of NIS 15,000.
Key points discussed in the procedure:
Patents in the field of pharmaceuticals
The general protection period for a patent is 20 years from the date of filing the application in Israel. During this period, the law grants exclusivity to the patent holder in connection with the exploitation of his invention and allows only him to derive profits from it. As part of this exclusivity, the patent owner is entitled to exclude any person or entity that seeks to exploit his invention without his consent. Thus the patent plays an essential role in providing an economic incentive for investment in the development of scientific or technological inventions, and in this regard medical inventions, for the benefit of the entire public.
In the world of pharmaceutical patents, the basic protection period granted to a patent is usually not enough. This is because the exploitation of a pharmaceutical patent requires approvals from regulatory authorities, including the Ministry of Health in Israel, the Food and Drug Administration of the United States and its European counterpart. Obtaining these approvals is preceded by complex and lengthy procedures that impose heavy costs and burdens on the patent holder alongside the general requirements of the patent registrar. These costs and burdens reduce the profits of the patent holder, thus eroding private investment incentives in inventions in the field of medicine and pharmaceuticals.
Meanwhile, the owner of the invention has a clear and distinct incentive to submit the application for patent registration as quickly as possible, even too early, in order to block his competitors by preventing the possibility of another inventor getting ahead of the registration. As a result, while the protection period begins to run from the date the application is submitted, the owner of the pharmaceutical patent finds himself prevented from exploiting the patent by marketing the drug or medical preparation resulting from his invention under exclusive conditions, until he receives approval from the regulator. Testing procedures and clinical trials, which precede obtaining the required approval, take years. These delays shorten the protection period of the patent as the exclusive property of its owner, thus reducing its expected profits and eroding research and development incentives. Because of this, the legislator saw fit to compensate the owners of the pharmaceutical and medical patents by extending the basic protection period (20 years) by an additional period of time, as was done in several other countries.
Extension orders in the field of pharmaceuticals
An Israeli patent in the field of pharmaceuticals is called a “basic patent”. An order extending the protection period granted to the basic patent in Israel is called the “Extension Order”.
A “reference patent” is a patent granted in a country outside of Israel, specified in the first appendix to the Patents Law, which extends its protection to “the substance, the process for producing the substance or the use of the substance, or the medical preparation containing the substance, or the process for producing the medical preparation containing the substance , or on the medical equipment” claimed in the basic patent in Israel. That is, a reference patent is a parallel patent, in part or in full, to the basic Israeli patent, which is anchored in another country recognized by the Patent Law.
An order extending the protection period of the attribution patent, which is issued by the competent authority in a recognized foreign country, is called an “order to extend an attribution patent” (section 64a of the Patents Law).
An order to extend a reference patent is a confirmation order that reserves the extension of the basic protection granted to the reference patent in a recognized foreign country, for at least one day. A condition for the recognition of an order to extend a reference patent is that the patent was granted in one of the foreign countries named in the first appendix to the law – the United States, Italy, Great Britain, Germany and France.
The Israeli Patent Law recognizes only two types of orders for the extension of a reference patent Patent Term Extension (PTE) in the United States, and Supplementary Protection Certificate (SPC) in Europe.
An extension order for a basic patent is granted if the conditions stipulated in section 64d of the Patents Law are met: (1) the existence of a valid basic pharmaceutical patent; (2) If it is a patent on a medical preparation – the substance that the preparation contains must be registered in the register of medical preparations as the first registration that allows the use of that substance in Israel for medical purposes; (3) This is a first patent extension, that is, no extension order was issued before the current extension request; (4) The condition of “two countries”, according to which if marketing permits were granted for a reference patent in one of the recognized foreign countries or in several of them at the same time, an order to extend the reference patent which has not yet expired is also issued.
When an application for granting an extension order for a basic patent, which is also protected in a recognized foreign country through a reference patent, is examined, and in that country an order for the extension of a reference patent is issued, the patent registrar is required to issue an order regarding the extension of the basic patent that overlaps with the extension granted to the patent in that country. This is a unique arrangement that does not leave the registrar any substantial discretion regarding the actual extension. This arrangement directs the registrar to the extension orders issued in recognized foreign countries as a basis for granting an extension to the basic Israeli patent. In this framework, the registrar is not required to examine considerations in substance – those that support the extension of the patent in Israel, and those that deny it. All the registrar is required to check is the legal status of the patent in recognized foreign countries. This arrangement is intended to extend the patent period in accordance with the first extension granted to him in one of the recognized foreign countries, in order to allow the patent holder to enjoy exclusivity in the marketing of his pharmaceutical product in the period after receiving the regulatory approvals. At the same time, this arrangement is intended to prevent the Israeli market from being closed to competition between drug manufacturers at the end of the patent life in the recognized foreign countries that have extended its validity.
The validity of the extension order for the basic patent expired on the first date on which the order for the extension of the reference patent expired in one of the recognized foreign countries where the patent owner was granted a marketing permit. That is, the maximum extension period granted in Israel will be equal to the minimum extension period granted to the reference patent in one of the recognized foreign countries that granted a marketing permit for the reference patent. In addition, the extension period for the basic patent in Israel will not exceed five years.
Also, the total exclusivity period granted to the holder of the pharmaceutical or medical patent, consisting of the 20 years of the patent’s life and the extension granted to it according to the rules above, will end in any case 14 years after the first marketing permit is granted in one of the recognized foreign countries.
Extension order for reference patent issued in the United States
An extension order for a reference patent issued in the United States (one of the most important foreign countries for patent holders) is called a PTE (Patent Term Extension). The PTE decree establishes an extension of the basic protection granted to a reference patent due to delays in the regulatory registration process of the pharmaceutical or medical product that is the subject of the patent. American law recognizes another order that allows the protection period of a reference patent to be extended. An order known as Patent Term Adjustment (PTA) that allows the protection period of a reference patent to be extended due to bureaucratic delays in the examination procedure of the patent application or in the granting of the patent at the US Patent Office. Israeli law does not recognize PTA orders as a basis for granting a patent extension, but only PTE. That is, the Israeli Patent Law recognizes the extension granted to a reference patent in the United States due to delays related to the granting of marketing permits for the product that is the subject of the patent, and does not recognize the extension due to bureaucratic delays in the patent examination procedure at the US Patent Office. This is not a mistake or an accidental omission, since the distinction between PTE and PTA is discussed in the explanatory notes to the Patents Law (Amendment No. 13) (Extension of Protection Period), 2012, 28 792, 796.
Similar to the arrangement that applies in Israel, the validity period of approval for the extension of protection for a reference patent in the United States does not exceed 5 years, and it will end after 14 years from the date of receipt of the first marketing of that preparation or medical equipment in the United States, whether the extension of protection was granted as part of a PTE order or It was given under the PTA order.
If the patent owner is entitled to two extensions, both due to delays in the licensing procedure and due to bureaucratic delays in the examination procedure, the extension period under the PTA order will be counted first.
Within the framework of American law, given the subjection to the 14-year ceiling from the date of granting the marketing permit, the combination of the two types of orders – PTE and PTA – creates three possible arrangements regarding the duration of protection that will be granted to a reference patent in the United States:
1. Cumulative protections – the patent owner will receive both periods of protection in full, both by virtue of the PTA order and by virtue of the PTE order. This arrangement will be possible as long as the sum of the two extension periods does not cross the limit of 14 years from the day on which a license was granted for the product that is the subject of the patent.
2. Partial overlap – the patent owner will receive the full protection period under the PTA order, but the protection period under the PTE order will be partially offset. This arrangement will be possible when the period of protection granted by the PTA order is below the limit of 14 years from the day on which a marketing permit was issued for the product subject to the patent, but the combination of the protection period by virtue of the PTE order would lead to an illegal crossing of the border.
3. Full overlap – the patent owner will only receive the period of protection given in the PTA order. This arrangement will apply when the protection period under the PTA order crosses the 14-year threshold. Therefore, even if the patent owner is entitled to additional protection by virtue of the PTE order, he will not receive an actual extension of the patent life.
The American law also recognizes the approval in principle of eligibility to extend the life of the patent in circumstances that entitle the patent owner to a PTE order. This approval is called “Notice of Final Determination” (NFD). On the other hand, when the patent owner has actual entitlement to an extension order, official recognition of this entitlement will be given in a document called “Certificate of Extension of Patent Term”.
Issuance of an extension order
The court noted that this is a request for an appeal “in the third incarnation” in accordance with Rule 148A of the Civil Procedure Regulations.
On November 22, 2022, the Supreme Court issued a decision according to which the request requires an answer to only one legal question: “Is the authority to extend the validity of a patent, established in section 64a of the Patents Law, 1967-5777, applicable in cases where recognition in principle is given only for the extension of the patent by the US Patent and Trademark Office due to regulatory delays?”.
The court explained that this delimitation of the discussion was due to the fact that PTA orders, unlike PTE orders, are not recognized in the Patent Law as a basis for extending the validity of the patent. PTA orders do differ from PTE orders in that they are issued in relation to a variety of patents whose registration at the US Patent Office involved delays, and not just medical and pharmaceutical patents. However, the court commented that it has difficulty seeing an objective reason for not comparing the status of PTA orders to that of PTE orders as a basis for extending the validity of a medical or pharmaceutical patent. The court commented that it believes that the legislator would do well if he gave his opinion on the possibility of recognizing PTA orders as a basis for extending the validity of a medical or pharmaceutical patent, alongside PTE orders. But this matter is left to the perforator only, since the courts are not authorized to make changes in the wording of the law.
As for the legal question, the court ruled that the district court was right in its ruling that only a PTE type operative order can serve as a basis for extending the validity of a patent, and that it is not enough to receive recognition in principle for entitlement to PTE. Section 64a(1) of the Patent Law speaks unambiguously about operative PTE orders as a basis for extending the validity of a patent in Israel, and does not recognize any other alternative basis for extension.
The court added that in the world of patents in general, and of medical and pharmaceutical patents in particular, verbal accuracy is of great importance due to the interest of relying on third parties, such as companies that develop generic drugs, on the content of the patent and its duration.