Federal Patent Court grants compulsory license

By Kerstin Otto, Dr. Anna Wolters


The grant of a compulsory licence for the distribution of MSD’s HIV medicament "Isentress" (generic name raltegravir) by the German Federal Patent Court following the oral hearing on 30 and 31 August 2016 constitutes a landmark decision as it is the first compulsory licence granted in preliminary proceedings in the history of the Court (reported on by Bird & Bird here). The written decision of the Federal Patent Court in these preliminary proceedings is now available and provides a thorough and detailed analysis and weighing of interests. It remains to be seen whether this preliminary decision will be upheld in the main proceedings (docket no.: 3 Li 1/16), which are currently pending. The oral hearing in the main proceedings will take place in November 2017.

Reasoning of the Court

The Court found that MSD had sufficiently substantiated all of the requirements of compulsory license proceedings pursuant to Sections 24 and 85 of the German Patent Act ('Patentgesetz – PatG').

The Court paid particular attention to the question of whether the grant of a compulsory license to Shionogi’s patent lay within the public interest (Section 24 subsect. 1 no. 2 PatG). It made clear that it upholds the rather high threshold established in the Federal Supreme Court’s Polyferon decision (cf. BGH GRUR 1996, 190), according to which there must be a public interest which outweighs the interests of the patentee. In this decision the Federal Supreme Court established the test to determine the importance of a drug to public health: the medicament must treat a serious disease which cannot be treated by a comparable product or can only be treated with considerable side effects. The Supreme Court confirmed that Polyferon was a drug to treat a serious condition: rheumatoid arthritis. However, its removal from the market would still leave the patients with Imukin, another IFN-gamma drug which was considered a valid alternative (even though it had not been approved in regulatory proceedings for the treatment of rheumatoid arthritis).

It goes without saying that HIV was a serious disease within the meaning of this case law principle. The Federal Patent Court described the situation it had to deal with as “a different dimension” to any other disease or medical condition that it had to face in earlier landmark decisions on compulsory licence and preliminary injunction proceedings.

Accordingly, the question to be answered (and on which the Court had appointed a medical expert to consult) was whether "Isentress" was a comparable or even better treatment against HIV than others available on the German market. The starting point was the three integrase inhibitors (INI) raltegravir (Isentress), dolutegravir and elvitegravir which were currently available on the market for the treatment of HIV. There was no doubt that INI were more effective than alternative treatments with protease inhibitors (PI) or non-nucleoside inhibitors (NNRTI). The Court also pointed out that raltegravir and dolutegravir were preferred due to their reduced side effects. However, it concluded that raltegravir and dolutegravir were basically identical as there was no preferential administration of either compound in clinical practice; the choice was determined pursuant to individual patient need.

Therefore, the Court (based on the expert’s statement) thoroughly set out the extent and manner to which removal of "Isentress" from the market would affect each patient group. It concluded that, for instance, babies and children under 12, as well as pregnant women and patients during post exposition prophylaxes treatment could not be offered an uncritical alternative so those groups would be deprived of an essential method of treatment. The only authorised alternative for those groups was the NNRTI nevirapin, which was critical due to its hepatotoxicity. Another crucial patient group were patients who were already being treated with raltegravir and would be forced to switch to another treatment which could have severe side effects. Another risk identified by the Court was the possibility that patients who could no longer take raltegravir could stop HIV treatment altogether. In all those patient groups the Federal Patent Court had identified a significant need for the supply of raltegravir. It stated in particular that this decision went beyond the individual patients’ need and addressed the need to decrease the viral load of individuals in order to protect the general public from new infections.

According to the press statement released by the BGH on 11 July 2017 Germany's highest Civil Court has confirmed the Federal Patent Court's assessment of this case and upheld its decision to grant a compulsory license (BGH decision of 11 July 2017, docket no.: X ZB 2/17).

Will this decision now pave the way for future compulsory licences?

The decision of the Federal Patent Court makes clear that the threshold for the grant of compulsory licences is high as is the requirement of substantiation. It has clearly defined the requirements of a compulsory licence and has differentiated this case from previous case law. It has also clarified the considerations to be taken into account in order to establish a public interest in the supply of the relevant drug: it is not only the needs of individual patients but also whether the license (or the denial of a licence) impacts the health of the general public.

In contrast to those generally high standards the Court also outlined that the requirements imposed on the licence-seeker to approach the patentee and request the grant of a licence before initiating court proceedings are rather low. In this context the Court clarified that the question of whether the licence-seeker had pursued the request for the grant of a licence with sufficient effort and seriousness, was not a question of the procedural admissibility of the compulsory license request but was instead a question of the merits of the case – at least in preliminary injunction proceedings. Referring to the Federal Supreme Court's Polyferon decision (cf. BGH GRUR 1996, 190) it confirmed that this was a procedural requirement which could be fulfilled even while the compulsory license proceedings were already ongoing.

In the context of making a serious offer to be granted a licence, the standard established by the Federal Patent Court was very licence seeker friendly. In particular, it emphasised that despite the fact that the validity of the patent at stake is presumed in the compulsory licence proceedings, any considerations regarding validity may be taken into account in calculating the royalty fee. Furthermore, the question of whether the efforts of the licence-seeker were serious must be answered from the perspective of the licence-seeker and were sufficient when – from an objective point of view – its efforts were not viewed as mere pretence.

Against this backdrop it might not take 55 years until the next grant of a compulsory licence by the Federal Patent Court, but it will most certainly not be a regular occurrence, either.