Court-Appeal reverses decision definition offering patented product

20 December 2007

Sanna Berg, Per Svanteson

As reported in Life Sciences Update in December 2006, the District Court found that an application for registration with the Pharmaceutical Benefits Register and request for pricing was considered as an “offering” of the product, and thus constituted patent infringement. The decision of the District Court has now been reversed by the Court of Appeal which held that an act must indicate a more concrete commercial intention to be regarded as an “offering” of the product.

According to the Act on Pharmaceutical Benefits (2002:160), the government shall cover all pharmaceutical expenses for individuals over a certain amount. The Act applies to pharmaceuticals listed in the Pharmaceutical Benefits Register (the “PBR”). In order to register the pharmaceutical with the PBR, an application for registration is made to the Swedish Pharmaceutical Benefit Board (the “PBB”).

In April 2005, STADApharmAB (“STADA”) applied for registration of the product "Sertraline STADA" with the PBR, and also made a request for pricing of the product. The product was a generic version of Pfizer’s product Sertraline, for which Pfizer had a supplementary patent protection that expired in October 2005.

In May 2005 the PBB granted STADA’s application for registration and a price was set for the product. Pfizer filed a complaint with the District Court claiming that STADA’s request for pricing was to be considered as an infringement of the patent under Article 3 of the Swedish Patent Act (1967:837), which states that the patent holder has the exclusive right to “offer”, put on the market and exploit a product protected by a patent.

The District Court held that the definition of “offering” in the Patents Act must be interpreted in a broad manner and therefore must include such uses that indicate an intention to offer the infringing product for commercial purposes. STADA’s application was considered as an “offering”, and therefore constituted an infringement of Pfizer’s patent.

The decision was appealed with the Svea Court of Appeal, and the Court of Appeal decided in favor for STADA. The Court of Appeal held that an underlying commercial intention is necessary but is not by itself sufficient for an act to be considered as an “offering”. The Court further held that PBB’s decision to grant the application and to set a price for the product affects both the applicant and Apoteket, which has the exclusive right to sell pharmaceuticals in Sweden. Considering the fact that Apoteket has to comply with PBB’s decision and has no influence over PBB’s price setting, and the fact that a decision can be appealed against in an administrative court, the PBB could not be regarded as an agent or any other form of “negotiator” for Apoteket in relation to STADA.

Consequently, STADA’s application with the PBB was not addressed to a potential customer and it did not relate to any business transaction. With reference to this fact, the Court of Appeal held that STADA’s request for pricing was not to be considered as an “offering” but merely as a preliminary measure taken to facilitate a future offering.

The Svea Court of Appeal delivered its decision on 6 November 2007 (Case T 5467-06). The case has been appealed to the Supreme Court.