Master Data Center, Inc v The Comptroller General Of Patents

This is another case about Supplementary Protection Certificates, or SPCs, granted pursuant to Regulation (EC) No. 469/2009 (“the SPC Regulation”).

More specifically these appeals concern SPC/GB07/012 in the name of Genentech, Inc. (“Genentech”). This SPC protects a product known as ranibizumab, sold under the brand name “Lucentis®” for the treatment of various eye diseases. By a decision dated 21 February 2020 Mr Ben Micklewright, on behalf of the Comptroller, held that this SPC will lapse on 2 April 2020 on the grounds that

Both Master Data and Genentech appeal from that decision. Whilst they adopt each other’s arguments generally, Master Data’s principal argument is that the SPC should extend to 23 January 2022 (the actual duration of the SPC being just over 3 years and 9 months, rather than a precise 4 years). Genentech’s principal argument is that the SPC should extend to 23 July 2022. This is on the basis that such date includes a 6-month paediatric extension pursuant to Regulation (EC) No. 1901/2006

Master Data also relies on rule 107 of the Patents Rules 2007 (as amended) which relates to the correction of irregularities generally. Similarly Genentech relies on s. 117 of the Patents Act 1977, which provides for correction of errors and mistakes in certain documents, and upon one further ground of appeal.

The above is merely a brief summary intended to orient the reader. I will begin by setting out the relevant law before considering each appeal in more detail.

The most relevant provisions of the SPC Regulation for present purposes are as follows:

In relation to Article 19, the UK has enacted special procedural provisions for SPCs. These are to be found in the Patents Act 1977, the Patents Rules 2007 (as amended) and the Patents (Fees) Rules 2007 (as amended).

The most important part of the Act is paragraph 5 of Schedule 4A, as referred to in s. 128B. Paragraph 5 states as follows:

Rule 116 of the Patents Rules 2007 (as amended) provides as follows, so far as presently relevant:

The prescribed fee is defined in the Patents (Fees) Rules 2007 (as amended) at rule 6:

Rule 107 of the Patents Rules 2007 (as amended) provides as follows:

Rule 116(2), ie the prescribed period for payment of the prescribed fee, is listed in Part 1 of Schedule 4, hence it is one of the periods of time which may be extended under rule 107.

These provisions need to be read carefully but the upshot is as follows.

The essential facts were not in dispute and are as follows.

The SPC was applied for in February 2007 and was granted to Genentech on 17 July 2007. The actual certificate states as follows:

“In accordance with Article 10(1) of the [SPC] Regulation,

Supplementary Protection Certificate No SPC/GB07/12 is hereby granted to Genentech Inc. in respect of the product ‘ranibizumab’ protected by basic patent No EP0973804 entitled ‘Anti-VEGF Antibodies.

“This certificate will take effect (subject to the payment of the prescribed fees) at the end of the lawful term of the basic patent and its maximum period of duration in accordance with Article 13 will expire on 23 January

2022 subject to the provisions of Articles 14 and 15.”

As the Comptroller submitted, without objection by Master Data or Genentech, this certificate complies precisely with the requirements of Article 13(1) of the SPC Regulation. It states that the maximum period of duration of the SPC will be until 23 January 2022. This is subject to the payment of the appropriate fees, which are permitted by Article 12 to be levied.

The UKIPO sent a letter to Genentech’s patent agents on 5 January 2018, which is Annex 1 to this judgment. Master Data accept that this letter complies with rule 116(4)(a), (c), and (d) but do not accept that it complies with 116(4(b), ie as regards the prescribed fee. In particular Master Data complain of the following paragraph:

“The maximum period of duration of the certificate in accordance with Article 13 will expire on 23 January 2022, therefore the period is made up of 4 effective years as defined by Fees Rule 6(2), for which the prescribed fees are:

-

for first year or part thereof £600

-

for second year or part thereof £700

-

for third year or part thereof £800

-

for fourth year or part thereof £900

-

for fifth year or part thereof £1000”

Master Data submit that this letter does not actually identify the prescribed fee. Specifically Master Data submit that the letter should have said, for example, “the prescribed fee is £3000”, that being the correct figure for 4 effective years. Master Data also said it was wrong to mention any figures other than £3000, on the grounds that it was not permissible for the UKIPO to offer, or for the applicant to pay, any fee other than that corresponding to 4 effective years.

Genentech adduced evidence from Ms Nihan Coracki, Global Head of IP Data

Master Data filed patents form SP2 in relation to the SPC on 26 March 2018. Despite Genentech’s instructions, this form stated in handwriting that the applicant wanted the period to be effective for “2 years” and that the amount of annual fee was “£1300”.

Master Data adduced evidence from Ms Stacey Nalepka, a Data Integrity

Ms Nalepka added that if the UKIPO had sent a reminder under rule 116, Master Data would have paid any additional fees due. Indeed Ms Nalepka gave evidence that there had been “several instances in the past” whereby the UKIPO had notified Master Data of underpayments. She gave “two such examples”, one from March 2015 and another in July 2015. In both instances Master Data had originally paid for a shorter term than the maximum; the UKIPO had noticed this and expressly drawn it to Master Data’s attention; and Master Data had then gone on to pay the shortfall.

Ms Nalepka explained that only 3 other states in Europe require SPC fees to be paid in a single lump sum prior to the coming into force of the SPC: Spain, Switzerland and Bulgaria. Furthermore, none of these countries allows an SPC applicant to select a duration shorter than the maximum. This was not disputed.

I now turn to the Hearing Officer’s decision in detail. He summarised the issues before him at paragraphs [3]-[4] as follows:

The Hearing Officer set out the law at paragraphs [8]-[24]. He dealt with

I will deal with Master Data’s appeal first.

Master Data have essentially 3 grounds of appeal, which I summarise as follows.

First, that the Hearing Officer fell into error by interpreting the SPC Regulation as allowing an applicant for an SPC to choose a duration of their certificate for a period that is shorter than that defined in Article 13.

Second, the Hearing Officer fell into error by holding that the Court of Appeal in Tulane had confirmed that the UK rules and practice did not conflict with the SPC Regulation.

Third, the Hearing Officer fell into error by holding that paragraph 5 of Schedule 4A of the Patents Act 1977 envisages that a single fee must be paid before the certificate comes into effect.

The UKIPO submitted that Master Data’s arguments all raised the same point. I agree, save as regard the third ground of appeal, but would put Master Data’s key argument as follows: it is whether there can be only one “prescribed fee”, which is for the duration set by Article 13. The third ground of appeal is not the same argument, but nothing turned on it since it was accepted by the UKIPO that a payment can be made after the date when the certificate takes effect, contrary to what was held by the Hearing Officer at [34] and [62]. See rule 116(2), discussed above.

In considering Master Data’s key argument I accept the UKIPO’s submission that it is important to distinguish between the duration of the certificate (which is governed by Article 13 of the Regulation) and its expiry (which is governed by Article 14).

There can only be one duration for any given certificate, which is calculated according to the formula set out in Article 13. Article 13 also provides that the certificate “shall take effect” at the time specified in Article 13 “for a period equal to” the calculated duration. There is no discretion. However Article 14 provides that the certificate “shall lapse” in any of the circumstances set out therein, including surrender and “if the annual fee laid down in accordance with Article 12 is not paid in time”. Hence there is no discretion about this either. Furthermore these provisions have the same effect in all Member States. None of this was disputed.

Master Data submitted that the Hearing Officer did not properly consider their arguments under Article 13. I reject that. The Hearing Officer set out all of the above points, including that on Article 13, at [66]-[71] and considered those on Article 13 at [75]-[80].

Master Data submitted that the Hearing Officer was not always precise about his use of the word “duration”, citing for example paragraph [75] where he referred to applicants for SPCs choosing a duration for an SPC “which is shorter than the maximum duration”; see also paragraph [77]. I accept this, although in each case it is clear that the Hearing Officer meant applicants choosing to let their SPCs expire through non-payment of fees pursuant to Article 14(c).

Master Data’s real point was that it was not open to the UKIPO to give applicants this option. Master Data argued that if an applicant wanted to let its SPC expire early, it could always surrender the SPC under Article 14(b) instead. They also drew my attention to the UKIPO practice whereby, if an applicant wanted to surrender its SPC, the UKIPO refunded the portion of the fee originally paid which corresponded to the unused term.

The Hearing Officer disagreed with Master Data for the reasons given at [75][80] of his decision. In short he saw nothing wrong with the UKIPO practice whereby applicants were given this option, even if surrender provided another means to the same end result: see [75]-[78]. An important part of his reasoning is based on the decision of the Court of Appeal in Tulane Education Fund v Comptroller [2013] EWCA Civ 890, which is mentioned in Master Data’s second ground of appeal and to which I now come.

It was not disputed that the specific issue before the Court of Appeal in Tulane was different to the issue before me. In Tulane the argument was whether the single upfront fee charged by the UKIPO was an annual fee at all. That argument did not require the Court of Appeal to consider whether it was lawful to charge anything other than a single fee, namely that for the duration specified in Article 13. Nevertheless Kitchin LJ (with whom Underhill LJ and the Chancellor agreed) held as follows, my emphasis:

“47.

I believe the starting point for a consideration of these submissions must be Article 12 itself and I would make two general points at the outset. First, the provision is permissive; there has never been a requirement that Member States must implement an annual fee regime. Second, save that any fees must be

“annual”, no restriction or limitation has ever been imposed upon Member States as to the level of the fees or when or how they must be paid. All of these matters have been left to Member States to decide for themselves and Article 18 of the 1992 Regulation (now Article 19 of the 2009 Regulation) permitted them to lay down special procedural provisions to give effect to those decisions.

48.

That brings me to paragraph 5 of Schedule 4A, rule 116 of the Patents Rules and rule 6 of the Patents (Fees) Rules. These all relate to matters arising under the provisions of the 1992 Regulation and, as such, plainly fall within the scope of s.2(2) of the European Communities Act 1972, subject to the overriding requirement that they must of course impose a regime for the payment of annual fees.

49.

In considering the crucial issue whether they impose a regime for the payment of annual fees, I think it important to have in mind that, for the reasons I have explained, an SPC may be granted some time before it is due to take effect. Further, the maximum term of each SPC will vary from certificate to certificate and depend upon the date on which the application for the basic patent was filed and the date of the first authorisation to place the product on the market in the EU, subject to the requirement that the duration of the certificate may not exceed five years from the date on which it takes effect.

50.

Turning now to the fee structure set out in rule 6 of the Patents (Fees) Rules, it can be seen that as the number of years for which the certificate is to have effect increases, so also does the fee. Further and importantly, an applicant is not required to take a certificate for the whole period permitted by the Regulation. He may elect to take the certificate for a shorter period and, if he does so, he will only pay a fee in respect of those years for which he has elected. Thus far, as it seems to me, the prescribed fee may properly be described as an annual fee. It is calculated by reference to the number of years for which a certificate is to have effect.

51.

I come then to consider the impact on this analysis of the requirement imposed by rule 116 of the Patents Rules that the fee must be paid before the SPC takes effect. Here I believe that Mr Johnson’s submissions confuse the nature of the fee and the date upon which the liability to pay it arises. I do not believe that the fee ceases to be an annual fee because the rules impose an obligation to pay it in advance. Nor does the fee cease to be an annual fee because the rules impose an obligation to pay it all at once. Further, I do not consider that these rules are in conflict with Article 13. Provided the fee is paid within the prescribed period, the certificate will automatically take effect on the day after expiry of the basic patent.”

There was considerable debate before me as to whether the underlined sentence in paragraph [50] was obiter dicta or part of the ratio decidendi; and if it was part of the ratio, what consequences followed for the present case which raises a different point. Master Data submitted that this sentence of paragraph [50] was not part of the ratio whereas all the other sentences in the same paragraph were. Conversely the UKIPO said it was part of the ratio, and was binding upon me as a matter of law even though the point in the present case is different.

I consider that the underlined sentence is part of the ratio of Tulane and it is not open to me to treat it as mere obiter dicta. I also accept that as part of the ratio, it is binding upon me as a statement of the law. As the UKIPO submitted, Kitchin LJ (as he then was) makes it clear that the fees set out in rule 6 are annual fees payable upfront. This is reinforced by the wording underlined in paragraph [51] where

Various consequences follow from this. If the fees prescribed by UK legislation are annual fees, then it must be open to a patentee to elect to pay only for the period he desires. Provided the relevant fee is paid, the certificate shall take effect on the date determined by Article 13. At the end of the period for which the relevant fee has been paid, the certificate shall expire in accordance with Article 14(c). Thus when Article 13 says that the certificate “shall take effect”, this is merely a reference to when the certificate starts. It does not override Article 14(c).

It follows that I reject Master Data’s key argument. It is and was properly open to the UKIPO to give applicants the option of taking a certificate for a shorter period than that set by Article 13, such that applicants can thereby only pay a fee in respect of those years for which they have elected.

I would add that the fact that surrender under Article 14(b) provides an alternative is neither here nor there. Nor does it matter that the UK’s approach to annual fees is apparently unique, given Articles 12 and 19. The national provisions for payment of annual fees have nothing to do with Article 13, since they are left to member states under Articles 12 and 19.

I have therefore reached the same conclusion as the Hearing Officer for essentially the same reasons. It follows that there was no irregularity which was attributable, wholly or in part, to any default, omission or other error by the UKIPO for purposes of rule 107. I dismiss Master Data’s appeal.

Genentech pursued largely the same arguments on appeal as it did before the Hearing Officer. I will deal with them in turn.

This appeal requires me to consider the specific statutory provisions relating to paediatric extensions more closely.

Genentech drew my attention to recitals 1-6 and 26-28, and Article 36 of the Paediatric Regulation. The policy objective is to facilitate the development and accessibility of medicinal products in the paediatric population, and to reward work done in this respect by way of a 6-month extension to an SPC: see eg recital 26 and Article 36. Part of the thinking was that whilst medicinal products will generally have undergone extensive testing prior to launch, these studies may have focussed on adults more than children: see eg recitals 1-4. Genentech submitted that the paediatric work which is being rewarded might therefore have been done relatively late in the life of the patent.

There is no dispute that if Article 36 of the Paediatric Regulation applies then the period laid down for the duration of the SPC in paragraphs 1 and 2 of Article 13 of the SPC Regulation “shall be extended by six months”, once: see Article 13(3). Nor is it disputed that Genentech satisfied the requirements of Article 36 of the Paediatric Regulation in this case.

I have already set out rule 116(5) above. There is no dispute that when an application for a paediatric extension is made, the applicant must be allowed to pay a fee for the paediatric extension itself, which is specified by the Patents (Fees) Rules to be £200. Indeed the entitlement to a paediatric extension may only became clear after the SPC has come into effect. The dispute is as to whether the applicant is also allowed to pay for more annual fees than he or she originally paid for when filing form SP2.

The Hearing Officer dealt with this argument at paragraphs [31]-[43] of his decision. He considered 5 factors, namely (1) the natural and ordinary interpretation of rule 116(5); (2) the nature of the fee specified in paragraph 5 of Schedule 4A to the Act; (3) the requirements of the SPC Regulation and the Paediatric Regulation; (4) the extent to which the IPO’s consultation document and concordance on the Patents Rules 2007 can be relied on to interpret rule 116(5); and (5) the teaching of Tulane. He did not place a great deal of weight on the fourth factor, but I agree with Genentech that he should have not considered this at all. It is not a statutory source, merely the UKIPO’s non-binding view of the 2007 Rules.

The Hearing Officer held that on the natural and ordinary meaning of the words, they were silent on the fees which might be paid: see paragraph [33]. This is clearly correct and was not criticised. Instead the main thrust of Genentech’s argument was that the Hearing Officer had gone from a finding that paragraph 5 of Schedule 4A did not “envisage” further payment of prescribed fees (specifically, annual fees) after the certificate had come into effect (see [34]) to a conclusion that they were prohibited (see [38]). Furthermore Genentech submitted that by doing so the Hearing Officer had failed properly to take into account the reward granted by Article 36 of the Paediatric Regulation.

I reject these criticisms. First, it seems to me (as it did to the Hearing Officer) that the natural and ordinary interpretation of rule 116(5) in this context is that when an application for extension is made, the applicant is permitted, and only permitted, to pay for the paediatric extension itself. As noted above the applicant may not know at the time of the original payment whether he is entitled to an extension, so there is no reason to require him or her to pay for the extension at that stage and every reason to allow later payment. However the same logic does not apply to the annual fees, which have nothing to do with the paediatric extension. This conclusion is supported by his reasoning on factors (2) and (3).

I also accept the UKIPO’s submission that there is no reason why SPC holders who are entitled to a paediatric extension should be uniquely privileged in relation to unpaid annual fees as compared to those who are not so entitled. Everyone else has to put their money where their mouth is. Genentech had no answer to this anomaly, other than that they believed it was part of the reward granted under Article 36. The Hearing Officer provided the answer to that at paragraph [38], where he pointed out that “the reward envisaged by Article 36 of the Paediatric Regulation is an extension to the maximum duration of the certificate as defined in Article 13(1) and (2) of the SPC Regulation”. There is no logical reason why the reward should go further than that.

Genentech suggested that this result was “startling”. I do not agree. As the UKIPO pointed out, patentees who allow their patents to lapse for non-payment of annual fees are not entitled to an SPC. This is merely the same logic being applied to paediatric extensions.

It does not seem to me that Tulane bears directly on the correct approach to interpreting rule 116(5) since neither that rule nor the proviso contained therein was in issue in Tulane. The furthest it can go for this purpose is to confirm the limited role of the SPC Regulation in relation to matters of fees, a point made by the Hearing Officer at [43]. However this much is apparent from the legislative provisions themselves.

Finally I accept that in many cases (but not all), the work done to justify the paediatric extension will be done late in the life of the relevant patent but I cannot see that this makes any difference to the legal principles. The policy is to incentivise paediatric work, not late work.

For these reasons I dismiss Genentech’s first ground of appeal.

Genentech’s second ground of appeal was to say that the form could be corrected under s. 117 of the Act. Genentech did not rely on s. 32(2)(d).

Section 117 of the Act is headed “Correction of errors in patents and applications”. In fact its scope is wider than that since it provides as follows, my emphasis:

“(1)

The Comptroller may, subject to any provision of rules, correct any error of translation or transcription, clerical error or mistake in any specification of a patent or application for a patent or any document filed in connection with a patent or such an application.”

Rule 105(3) draws an important distinction between requests to correct a specification of a patent or application, and other requests. It provides as follows

“(3)

Where the request is to correct a specification of a patent or application, the request shall not be granted unless the correction is obvious (meaning that it is immediately evident that nothing else could have been intended in the original specification).”

There was a debate about the extent to which this provision could be used to overcome, or “circumvent”, the provisions of rule 116(5). Prima facie one might have thought that s 117 will generally come into play where the applicant has failed to comply with some mandatory provision or other, since otherwise it would not be necessary to rely upon it. The Hearing Officer dealt with this argument as follows:

Genentech argued that the above approach was wrong in law. However this argument was not developed in any detail and I reject it. On the contrary, I consider that the Hearing Officer’s analysis of the existing case law is correct. There is no equivalent of, eg, s. 15(8) of the Act in the present context.

Genentech’s alternative argument was that it was not seeking to circumvent rule 116(5) at all, but merely to reallocate the funds in Master Data’s deposit account which at all material times contained sufficient fees to cover the entire correct fee of £3000. The Hearing Officer dealt with this alternative argument at paragraphs [60][61]. He rejected it on the grounds that the fee was not actually paid until it was allocated to a fee-bearing action. I agree. That money was held to Master Data’s order and could have been withdrawn by Master Data at any time. It was not available to the UKIPO save on Master Data’s instruction.

It follows that I dismiss Genentech’s second ground of appeal. I should however say a little more about two further points which were argued. One was about the potential effect on third parties of allowing a correction, and the other is whether it would be a proper exercise of discretion to allow the correction.

The Hearing Officer addressed the effect on third parties at paragraph [64]. He held that that allowing the correction would nearly double the life of the SPC (which is correct) and that it could potentially have a very significant impact on third parties. It is true that it could have such an impact, but I accept Genentech’s submission that this would be sufficiently addressed by advertising it and providing an opportunity for third parties to object under rule 117(2): see also paragraph [56] of the decision.

Furthermore Mr David Knight, a partner in Master Data’s law firm, served a witness statement indicating that companies currently developing potentially competing products did not plan to launch in the EEA until 2022 at the earliest. The Hearing Officer mentions this briefly at [82]. It was not suggested that Mr Knight’s evidence was misleading or incomplete, and in my view it reinforces the suggestion that advertising the correction would have provided sufficient protection for third parties.

The Hearing Officer did not deal with this under s. 117, nor for that matter under rule 107 although he did make some brief comments in the latter context (see [81]-[82]). The UKIPO submitted there were 3 reasons to refuse to exercise the discretion to allow correction.

First, the UKIPO submitted that there was either no mistake at all or that it had been inadequately explained. For instance it was submitted that there may have been some systematic failure by Master Data to process UK payments for SPCs, and/or a malicious employee might have been at work. I agree that the evidence is not clear and that Ms Nalepka’s paragraph [18] appears to be merely a statement of her opinion rather than an explanation as to how the relevant handwritten form came to be filled in. As against that, the Hearing Officer does appear to have accepted there was a mistake (see [50]-[55] of the decision) and there is no respondent’s notice challenging this. In these circumstances I do not consider it is fair on Genentech to place any weight on this.

The second was said to be the effect on third parties of allowing the correction. I have already addressed that above. I do not consider this is a reason to refuse to exercise the discretion either.

The third reason was that this was the third time Master Data had made the same mistake. In particular Master Data kept on making the same mistake despite the UKIPO “going the extra mile” to point out the mistake the first two times. I agree there is real force in this. I also note that Master Data itself relied on this evidence as showing a UKIPO “practice” to write to parties who had paid for less than the duration provided by Article 13. I am not sure that two examples prove a practice, although I agree with Master Data that it may do if the situation is a rare one. More importantly it seems to me that if this evidence does establish any practice then it shows a practice of repeated mistake by Master Data. I accept that this was the mistake of Genentech’s agent rather than Genentech itself but nothing turns on that since Genentech had appointed Master Data as its agent for this purpose.

Against that Genentech relied on the “very significant detriment” to it if a valuable right was lost: see [68]. Master Data went into more detail about this and 2 other points: see its skeleton at [89]-[92].

I agree that Genentech could potentially suffer prejudice if the SPC expired ahead of its prescribed duration. Master Data then added that Genentech might seek an indemnity from Master Data. I am sure that is also true. However both aspects of this point are merely stating the consequences of the mistake. It was not suggested that Master Data would be unable to indemnify Genentech. Furthermore I bear in mind Mr Knight’s evidence referred to in paragraph [63].

Master Data’s second point was that neither Genentech nor MDC intended for the SPC to have a shorter duration than under Article 13. This does not seem to add anything to the Hearing Officer’s finding of mistake. The third was to say there would be no prejudice to third parties if correction were allowed, citing Mr Knight’s evidence again. As stated above I agree that in the circumstances advertising the correction would have provided sufficient protection for third parties.

When I consider all of these factors, it seems to me that much the most important factor is that identified in paragraph [67] above and that it outweighs those identified in paragraph [68]-[70]. For this reason I would have refused to exercise the discretion to allow the correction. This therefore is an additional reason to dismiss Genentech’s second ground of appeal.

Genentech’s third ground of appeal was its argument that the paediatric extension could still extend the existing term of the SPC by 6 months. It accepted that this was not the period set out in Article 13 but submitted that such an extension would accord with the purpose of the Paediatric Regulation. The Hearing Officer dealt with this at [45]-[47] of his decision.

I appreciate the justice of the submission, since Genentech has done the relevant research and ought to be entitled to a reward for it. The problem is that pointed out by the Hearing Officer, namely that it is impossible to reconcile with the wording of Article 13(3). That wording makes it clear that the only possible paediatric extension is one which extends the period set out in Articles 13(1) and 13(2), not some other period. Indeed Genentech itself accepted this elsewhere in its argument: see its skeleton argument at [15], [32]. I therefore dismiss Genentech’s third ground of appeal.

For the reasons set out above, I dismiss both appeals.