Poland: Outsourcing of API manufacture is not covered by the Bolar exemption

06 February 2014

Marta Koremba, Aleksandra Karpińska

On 23 October 2013, the Polish Supreme Court rejected a cassation appeal filed by Pharmaceutical Works Polpharma S.A. ("Polpharma"), a leading Polish producer of Active Pharmaceutical Ingredients ("APIs"). The case concerned the European "Bolar" exemption, especially with respect to the admissibility of an API's manufacture by a subcontractor.

Polpharma was manufacturing and selling solifenacin succinate, the patented API, to another pharmaceutical company which used the API to manufacture sample generic products for use in clinical trials. The plaintiff, Astellas Pharma Inc. (one of the top 20 global pharmaceutical companies), sued Polpharma for infringing its patent for quinuclidin's novel derivatives, covering i.a. solifenacin succinate. Polpharma argued that all of its activities were covered by the Bolar exemption.

The Bolar exemption was implemented in Polish law by Article 69(1)(4) of the Act of 30 June 2000 on the Industrial Property Law, under which "a patent is not infringed by exploiting an invention to the extent necessary with a view to perform actions which are legally required to obtain an entry into a register or licence, being a precondition for admitting certain products into trade given their purpose, in particular medicinal products". The regulation allows pre-clinical and clinical testing of generic equivalents while the patent protecting the original medicinal product is still in force. In particular, the Article permits the production of samples of the active ingredient for stability and bioequivalence tests on the generic product. Until today, the Bolar exemption has been interpreted in such a way that an invention does not need to be exploited by the party that applies for a marketing authorisation in order to be exempted under the Bolar exemption. It has been argued in legal commentary that Article 69(1)(4) does not explicitly impose any specific limitations on the number of persons involved in the exploitation of an invention. This interpretation is consistent with the 23 June 1977 resolution issued by 7 Supreme Court judges, who indicated that a subcontractor manufacturing a patented product on the basis of a third party request does not exploit an invention. Thus, it is the commissioning party that is liable for any potential patent infringement.

In the current case, the Courts issued decisions contrary to the earlier interpretations of the Bolar exemption under Polish law, stating that the Bolar exemption does not cover any sales of the patented API, even if made for the benefit of a party developing a generic product. The Courts disregarded the fact that the purchaser intended to use the API exclusively for acts related to the registration process, and pointed out that the sale's purpose is irrelevant for assessing the infringement. The Courts emphasised that Polpharma as the seller was unable to control whether the purchaser used the purchased API solely for the purposes that the Bolar exemption covers. According to the Appeal Court the acts covered by the Bolar exemption may only be performed by the party applying for a marketing authorisation.

The Supreme Court agreed with this reasoning and decided that marketing the patented API, irrespective of its purpose, is not covered by the Bolar exemption and constitutes a patent infringement. Accordingly, the Supreme Court not only dismissed Polpharma’s cassation appeal, but also refused to refer to the Court of Justice of the European Union for a preliminary ruling regarding the interpretation of the Bolar exemption.

This judgement may have severe economic consequences for generic companies in Poland, as it forces them either to produce the API by themselves (which is an unusual practice) or to buy it directly from a patent holder. Considering that the Bolar exemption aims to facilitate production of generic drugs, the Supreme Court's interpretation may undermine the main purpose of this regulation. The judgment of the Supreme Court is final.

This article is part of the International Life Sciences Update for February 2014

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