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IP Newsletter | Summer/Fall 2016
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PATENT
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Korean Patent-Approval Linkage System – One Year Later
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Introduction
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Pursuant to the Korea-U.S. Free Trade Agreement ("KORUS FTA"), a pharmaceutical patent-regulatory approval linkage system (similar to the Hatch-Waxman system in the U.S.) was fully implemented in Korea in March 2015. Since our previous report last year concerning the initial impact of the new system,1 there have been a number of developments in the pharmaceutical drug market, as well as in the patent and judicial systems in Korea. The following summarizes some of the major developments of the last year.
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1. Status of generic patent challenges under the Korean patent linkage system
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As previously reported, a vastly increased number of cases were filed at the Korean Intellectual Property Office ("KIPO") immediately after the full system went into effect in March 2015. This increase was largely attributed to Korean "first generic exclusivity" rules, under which exclusivity may be available to the first generic to challenge a listed patent at KIPO, as well as any generic filing such a challenge within 14 days of the actual first-filed action. However, as the following table shows, the number of filings has greatly decreased since generic exclusivity became available under the Korean linkage system in March 2015:
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<KIPO actions filed involving listed patents in Korea>
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| Action types |
Jan 2013-Feb 2015 |
2015 |
2016 |
Total |
| Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sept |
Oct |
Nov |
Dec |
Jan |
Feb |
| Negative scope confirmation |
132 |
103 |
57 |
23 |
2 |
16 |
1 |
4 |
7 |
40 |
25 |
2 |
7 |
416 |
| Positive scope confirmation |
11 |
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3 |
14 |
| Patent invalidation |
181 |
515 |
563 |
22 |
1 |
1 |
1 |
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3 |
8 |
1 |
2 |
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1,298 |
| PTE invalidation |
0 |
162 |
332 |
10 |
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1 |
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505 |
| Total |
324 |
780 |
952 |
55 |
3 |
17 |
2 |
5 |
10 |
48 |
26 |
4 |
7 |
2,233 |
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Source: KIPO
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In addition, generics seem to have been filing relatively more negative scope confirmation actions (in which the generic seeks confirmation from KIPO that their planned generic is not within the scope of the challenged patent) than invalidation actions recently, compared to the initial months of the new system. These trends seem to indicate not only that generics are becoming more selective about filing challenges only where it is consistent with their business plans, but the increased use of scope confirmation actions rather than invalidation actions suggests that generics are seeing less value in the first generic exclusivity system (which in practice may not be very "exclusive"), and therefore are seeking rulings specifically carving out their particular generic product from patent enforcement rather than trying to invalidate listed patents (and thus potentially open the market to all generic competitors).
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Another potentially interesting piece of data is that positive scope confirmation actions are now being filed in connection with listed patents (where KIPO is asked to confirm that an accused product is within the scope of the patent). Since positive scope actions are rare and always filed by the patentee's side, not the potential infringer, this may indicate that in some cases patentees are starting to use positive scope actions rather than infringement litigation as the basis for requesting stays of generic product sales, perhaps due in part to the fact that an invalidation action against a patent already asserted in a co-pending infringement action is entitled to be highly expedited by KIPO.
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An indication that generics are adjusting their litigation strategy in view of their actual business plans is seen in the extremely high percentage of KIPO actions that have been terminated through withdrawal or nullification (due to failure to submit required fees or formality documents):
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<Current status of KIPO actions filed involving listed patents>
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| Action types |
Petition granted |
Petition denied
(after substantive review) |
Petition denied
(after formal review only) |
Petition withdrawn |
Petition nullified |
Petition pending |
Total |
| Negative scope confirmation |
238 |
8 |
3 |
53 |
6 |
108 |
416 |
| Positive scope confirmation |
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2* |
9* |
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3 |
14 |
| Patent invalidation |
174 |
16 |
20 |
445 |
160 |
483 |
1,298 |
| PTE invalidation |
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13 |
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159 |
114 |
219 |
505 |
| Total |
412 |
37 |
25 |
666 |
280 |
813 |
2,233 |
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Source: KIPO
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* These positive scope confirmation actions were filed from Jan 2013 to Feb 2015, before sales stays could be requested beginning in March 2015.
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As the table indicates, approximately 42% of the actions initially filed against listed patents (946 out of 2233) have now been either withdrawn or nullified. This may in part be due to the fact that many of these cases were likely filed simply to preserve generic exclusivity rights, but certain generics have lost interest in actually bringing the relevant generic products to market.
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In addition, it was generally expected after the early months of the rollout of the patent linkage system that, due to the huge number of filings, KIPO would seek to consolidate invalidation cases filed against the same patent to try to reduce their workload. However, as it became evident that a substantial number of generics were making very basic filings without detailed arguments or evidence, apparently with the hope that they would be consolidated with other more substantial petitions and thus "free-riding" on the litigation efforts of generics with an actual market interest in the relevant product, KIPO announced that cases would only be consolidated after carefully reviewing whether the arguments and evidence presented in the cases warranted consolidation. As a result, generics have been forced to consider whether their market interests really warrant the effort of litigating particular listed patents.
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2. Status of sales stays under the patent-linkage system
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On the patentee side, while there have been relatively few requests for stays of generic sales to date, they have been granted in the vast majority of cases (8 out of 10 requests so far), although several have subsequently been lifted after negative decisions in corresponding KIPO actions against the asserted patent.
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However, it has become apparent that there is a tension between pharmaceutical regulations and patent law that may discourage broader use of generic sales stays in Korea. One requirement for making a sales stay request under the relevant statutes is that the same sales stay request must be made against all of the "same generics" seeking to enter the market, or else the request will be rejected. Two generics are the "same" for drug approval purposes if they have the same type and amount of active ingredient, the same dosage form, the same usage and dosage, and the same indications. However, even if two generics are the "same" for approval purposes, it may be that only one actually infringes a listed patent (for example, if they have different crystalline forms). Under current rules of the Ministry of Food and Drug Safety ("MFDS"), a patentee seeking a stay would still be required to sue both generics for infringement to qualify for a sales stay, forcing the patentee to choose between risking antitrust scrutiny by suing both generics (for knowingly suing a non-infringing party), or losing any right to a sales stay by not suing either generic (even though one is actually infringing). Original drug manufacturers have increasingly expressed concern regarding the MFDS's interpretation of the law regarding this point, and the issue seems likely to be disputed in the future.
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3. Questions regarding first generic exclusivity
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In contrast with the U.S. system, determining which generics are entitled to generic exclusivity in Korea is relatively complicated. In particular, a generic must be the "first" to file a qualifying KIPO action against the listed patent as well as the "first" to apply for generic approval for a particular product in order to qualify for exclusivity. However, the MFDS has now clarified that the "first" generic approval application requirement means the first application for a particular generic formulation. Thus, generics filing on different dates for generic approval with respect to the same original drug may still all qualify for exclusivity as long as each generic's product is different. However, all such generics still must file a "first" qualifying KIPO action against the listed patent for the original drug.
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The larger question now being asked by some generics is whether the first generic exclusivity provisions as written actually provide any meaningful benefit to qualifying generics, given that there is theoretically no limit to the number of generics that can obtain "exclusivity" rights. Further, while multiple generics may eventually qualify for "exclusivity" under the Korean system, only one 9-month exclusivity period is granted, which begins as soon as the first generic qualifies for "exclusivity" (thus, any later-qualifying generics would only enjoy the benefit of the remainder of the exclusivity period). However, at this point, it remains to be seen whether and how generics will seek to introduce changes to the patent-linkage system to address this exclusivity issue.
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If you have any questions regarding this article, please contact:
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For more information, please visit our website: www.ip.kimchang.com
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