May 2022
Jane Tsai and Tina Lee
To promote Taiwan’s accession to the Comprehensive and Progress Agreement for Trans-Pacific Partnership (CPTPP), relevant legal amendments have been successively pursued in recent years to meet the regulatory standards of the CPTPP. In particular, intellectual property rights have been selected as a prioritized area of legal amendments.
At the beginning of 2022, the Executive Yuan has successively proposed draft amendments to the Copyright Law, the Trademark Law, and the Patent Law (see the Newsletter of Lee & Tsai and Partners, articles titled Taiwan Intends to Amend the Trademark Law to Enhance Trademark Protection and Introduction of the Draft Amendments of the Executive Yuan to the Taiwan Copyright Act of 2022 for further details ). In particular, to improve the “patent linkage” system and create a specific basis of claims for relevant litigation under the Patent Law, it is planned to add Article 60-1 to specifically provide that the patentee of a new drug may file a lawsuit in the examination procedure of a generic drug. If the patentee does not file a lawsuit, the generic drug license applicant can also file a declaratory suit to clarify if there is any infringement dispute as soon as possible. The draft cleared through three readings at the Legislative Yuan on April 15, 2022, and was promulgated by the President via the President-Hua-Zhong-One-Jing-11100037451 Directive of May 4, 2022 with the effective date to be announced by the Executive Yuan.
A brief introduction of the current patent linkage system of Taiwan and the highlights of the Patent Law amendment are provided below:
I. The current patent linkage system in Taiwan
The patent linkage system links the ability of a generic drug to obtain a drug license to the existence of its infringement upon new drug patents and grants a specific period to allow new drug and generic drug operators to clarify patent disputes. And then the central health authority approves or rejects the drug license application of the generic drug manufacturer on such a basis in the hope that patent infringement disputes are resolved first before a generic drug is put on the market, while the drug use and public sanitation are not affected.
Since Article 18.53 of the CPTPP provides that before a drug license is granted, the patent linkage system should be provided to timely resolve disputes about the validity or infringement of drug patents, a dedicated chapter concerning “the patent linkage of drugs” was added to the Pharmaceutical Affairs Law in 2018 and came into effect on August 20, 2019 with relevant highlights provided below:
1. If the new drug license holder believes it is necessary to report the patent information about the drug patent, it is required to submit relevant documents and materials to the central health authority for registration within 45 days after the drug license is received. The drug patent so reported is limited to inventions of “substances,” “compositions or formulations,” and “medical applications.” (Article 48-3 of the Pharmaceutical Affairs Law)
2. A generic drug license applicant shall declare the following to the central health authority with respect to the registered patents on the approved new drug of the new drug license holder: (1) the corresponding patents on the new drug should be revoked, or (2) the generic drug for which the drug license application is made does not infringe the corresponding patents on the new drug. In addition, a written notice should be delivered to the patentee of the new drug and the central health authority within the statutory period (Article 48-9, Subparagraph 4 and Article 48-12, Paragraph 1 of the Pharmaceutical Affairs Law).
3. If the patentee of a new drug files an infringement lawsuit against a generic drug license applicant within 45 days upon receipt of the notification, except when the exceptional requirements are met, the central health authority will suspend the issuance of the generic drug license for 12 months, provided that the issuance suspension period does not affect the drug license examination and national health insurance pricing assessment procedures (Article 48-13, Paragraphs 1 and 2 and Article 48-15 of the Pharmaceutical Affairs Law).
II. Impact of the addition of Article 60-1 to the Patent Law
1. The basis of claims in infringement litigation for the patentees of new drugs is clarified (Article 60-1, Paragraph 1)
Under the current patent linkage system, whether a new drug patentee can directly apply the anterior of Article 96, Paragraph 1 of the Patent Law to file a lawsuit against the generic drug license applicant to stop or prevent infringement is open to question, since the patent linkage system stage merely clarifies potential infringement disputes in advance while no actual damage has occurred.
To ensure the operation of the framework of the patent linkage system and avoid the above-mentioned disputes, Article 60-1 is added to the Patent Law to specifically provide that “if a drug license applicant has made the declaration concerning the registered patents on the approved new drug of the new drug license holder pursuant to Article 48-9, Subparagraph 4 of the Pharmaceutical Affairs Law, the patentee may request the elimination or prevention of infringement pursuant to Article 96, Paragraph 1 upon receipt of the notification.” In this fashion, the basis of claims for the patent infringement lawsuit filed by the patentee of a new drug is clarified.
2. The basis of claims in the declaratory suit filed by a generic drug license applicant is clarified (Article 60-1, Paragraph 2)
Under the patent linkage system established pursuant to the current Pharmaceutical Affairs Law, if the patentee of a new drug becomes aware of a generic drug license application where the applicant asserts that the patents on the new drug should be revoked or that the generic drug does not constitute an infringement of the patents on the new drug, the new drug patentee is required to file a lawsuit within 45 days upon notification to suspend the issuance of the generic drug license to clarify patent disputes in advance. However, if the patentee of the new drug fails to file a lawsuit within the above-mentioned period, although the procedure for issuing the drug license for the generic drug is not put on hold, still when generic drug manufacturer subsequently engages in acts such as sales or offers for sale, the new drug patentee may file an infringement lawsuit against such patent practice in accordance with Article 96, Paragraphs 1 and 2 of the Patent Law.
If acts of manufacture and sale of the generic drug are prohibited and damages liabilities are imposed under such circumstances, not only is the investment wasted but also the rights and interests of the public regarding the use of the drug are affected. Therefore, to carry out the patent linkage system and clarify potential patent disputes as early as possible, the amendment took into account the provisions of the U.S. Patent Act and specifically provide that if the patentee of a new drug fails to file a lawsuit within 45 days after receipt of the notification, the generic drug license applicant may file a declaratory suit to clarify if the drug for which a generic drug license is applied would constitute an infringement upon the patent.
3. The subject matter of an infringement and declaratory suit is not limited to the registered patent
In view of the provisions of the Pharmaceutical Affairs Law, the scope that may be registered by the patentee of a new drug only covers invention patents on substances, compositions, formulations, or medical applications, not including the “manufacturing method” of the drug. Since the manufacturing method of the drug may also be patented, the patent disputes a generic drug in reality may potentially involve cover not only registered patents but also unregistered patents. In order to resolve the disputes over a generic drug once and for all before it is marketed, there is no reason why the patents asserted by the new drug patentee should not also include the patents registered pursuant to the Pharmaceutical Affairs Law and those not registered pursuant to the same law in order to resolve potential infringement disputes between a new drug and a generic drug in the same litigation procedure to save the cost of the parties and judicial resources.
Conversely, if the patentee of a new drug only files an infringement lawsuit for part of the patents registered in the new drug license, the generic drug license applicant may also concurrently file a declaratory suit concerning other patents that have been registered but not asserted and those unregistered to confirm if there is any infringement.
Article 60-1 is added to the Patent Law based on the “patent linkage system” under the Pharmaceutical Affairs Law to clarify the basis of claims in relevant lawsuits. This is favorable to eliminate practical implementation disputes and barriers, and the subsequent operation and developments in practice merit the continued attention of the patentees of new drugs and generic drug license applicants.