I. Introduction
In contrast to the antitrust claim aimed at a granting a license based on standard-essential patents, a compulsory license under Sec. 24(1) of the German Patent Act (PatG) still leads a shadowy existence. The dispute over Raltegravir with the decision of the Federal Court of Justice in 2017 (X ZB 2/17, GRUR 2017, 1017) has, however, raised public awareness of the compulsory license, in particular, for the health care sector. The Raltegravir decision shows that compulsory licenses under Sec. 24(1) PatG are not only theoretical concept. It represents a relevant consideration aspect when it comes to assessing the defense possibilities.
Nevertheless, the requirements imposed for a compulsory licence under Sec. 24 (1) PatG are very high. The latter is illustrated by a recent decision of the Federal Court of Justice of 4 June 2019 (X ZB 2/19, known under the catchword “Alirocumab”). In this decision, the Federal Court of Justice confirms a first instance decision of the Federal Patent Court, which rejected an interim application for a compulsory licence.
§ Sec. 24(1) PatG requires that
“1. a licence seeker has, within a reasonable period of time, unsuccessfully attempted to obtain permission from the proprietor of the patent to use the invention on reasonable commercial terms and conditions, and
2. the public interest calls for the grant of a compulsory licence.”
According to Sec. 85 PatG, the use of a patented invention may be permitted even by an interim injunction in the course of pending compulsory licence proceedings if the applicant is in the position to substantiate that the requirements of Sec. 24 PatG for the grant of a compulsory licence are fulfilled and that the grant of a compulsory licence is urgently required in the public interest. So far, only one licence seeker has succeeded in doing this, namely in the case of Raltegravir.
II. Backgrounds of Alirocumab Case
Sanofi and Regeneron jointly marketed in Germany the drug Praluent, which contains the active ingredient Alirocumab. It reduces the LDL cholesterol level in the blood. Amgen is the holder of European patent 2 215 124 concerning antigen-binding proteins against the protein PCSK9, which thus also covers the active ingredient Alirocumab. At least this is the assumption of the Düsseldorf Regional Court. Amgen markets a drug with similar properties under the name Repatha.
For some time, the companies are in dispute over patent EP 2 215 124. In first instance after opposition, the European Patent Office (EPO) maintained the patent in an amended form; the appeal filed against this decision has not yet been decided. In parallel, Amgen filed a claim for injunctive relief against Sanofi and Regeneron before the Düsseldorf Regional Court, which recently ruled on the case. According to the ruling of 11 July 2019 (4c O 39/16), Sanofi and Regeneron may no longer offer the drug Praluent in Germany. Sanofi and Regeneron have therefore withdrawn Praluent from the market.
To avoid this result, Sanofi and Regeneron earlier, i.e. in July 2018 brought an action before the Federal Patent Court, by way of an interim injunction under Sec. 85 Patent Law, claiming the grant of a compulsory license under Sec. 24 PatG in view of getting a temporary permission to use the invention by selling the drug Praluent in four specific forms. The Federal Patent Court however rejected this application. The Federal Court of Justice has now confirmed this rejection.
III. Compulsory Licence Proceedings
III.1 Unsuccessful Efforts to Obtain a Licence
According to the Federal Court of Justice, the efforts required under Sec. 24 (1) No. 1 PatG and the period over which they must extend is a question of the individual case. In the present case, the facts did not show sufficient efforts undertaken by the license seeker: Sanofi and Regeneron applied for a licence shortly before the compulsory licence proceedings were initiated. This was at a time when the injunction risk in the parallel infringement proceedings at the Düsseldorf Regional Court was imminent. Also, only a low license rate of 2% was offered. Sanofi and Regeneron tried to justify the moderate license rate with lack of validity of the patent in dispute and their own development efforts independent of the patent in dispute. The behavior of the license seekers did not, according to the courts, suggest that a swift agreement with the patent owner was intended. The Federal Supreme Court also criticized that the license seekers did not respond in time to a reply of the patent owner. In that reply Amgen did not explicitly refuse to grant a license. The licence inquiry was therefore considered to be an offer “at the last minute.” According to the court, this was not a sufficient effort under Sec. 24 (1) No. 1 PatG. Sanofi’s and Regeneron’s last argument that there had already been contacts in 2015/2016 from which they concluded that Amgen was unwilling to grant a license, was also considered unfounded.
Comment: The requirements for a sufficient effort under Sec. 24 (1) No. 1 PatG must be taken seriously by the licence seeker. The licence seeker may not rely on an impression that the patentee is unwilling to grant a licence. Rather, he must proactively have tried in vain, with sufficient commitment, to amicably obtain a licence in return for an appropriate remuneration. The fulfillment of this requirement depends on the will of the licence seeker. In that respect the Federal Court of Justice explicitly states the following:
“To what extent and over what period of time the license seeker must seek a reasonable license under usual conditions also depends on the reaction of the patent holder. As a rule, no further efforts are required if the patentee refuses to consent to the use of the invention as such. For this it is not sufficient if the patent proprietor declares that the granting of a license is considered only in exceptional circumstances.”
III.2 Public interest
The notion of public interest under Sec. 24 (1) No. 2 PatG represents an undetermined legal concept. This notion must be “filled” by the court in taking into account the circumstances and interests relevant to the individual case. The logic of the notion consists in that the public interest can only be affected if special circumstances exist which exceptionally rescind the exclusive right of the patentee. It can be inferred from previous case-law that the public interest can in principle be affirmed if a medical product for the treatment of serious diseases has therapeutic properties which products available on the market do not possess or do not possess to the same extent, or if the it can avoid undesirable side effects in comparison to available products. The granting of a compulsory licence is generally unjustified if essentially equivalent alternatives are available on the market. It is incumbent on the licence seeker to make credible and, in main proceedings, to prove that such added value actually exists in comparison to drugs available on the market. Since reliable data for this proof may likely only be gathered in drug approval proceedings, it is advisable to generate such data proving the added value in advance in view of existing patents and in case of later compulsory licence proceedings.
In both instances in Alirocumab, a public interest required for the granting of a compulsory licence was denied. In fact, Sanofi and Regeneron could not demonstrate that Praluent had tangible therapeutic advantages over Amgen’s Repatha. Both, Praluent and Repatha provide the same effect, namely favoring the reduction of cholesterol. This is, Sanofi and Regeneron could not successfully show that the administration of Praluent lowers the mortality rate of hypercholesterolemia patients, even though clinical studies seemed to show that fewer patients in the Praluent group suffered from coronary heart death or died from cardiovascular disease than patients from the control group. However, in compliance with recognized bio-statistical principles a statistical significance of these results could not be shown.
Even if Praluent had possessed the argued property, namely to reduce the mortality rate of hypercholesterolemia patients, it would have been necessary to prove in addition that Repatha of Amgen did not have this property. This is a difficult proof to be provided by the licence seeker. Usually, such data is not available to the licence seeker. For Sanofi and Regeneron, the case thus ultimately failed because they were unable to show any credible evidence that Praluent actually reduces the mortality rate of hypercholesterolemia patients and that is could not achieved by Repatha. In that respect the Federal Court of Justice explicitly states the following:
“A public interest requiring the grant of a compulsory licence for a medicinal product may be affirmed where significant results of a clinical trial, based on recognised bio-statistical principles, demonstrate that the active substance of the medicinal product in the treatment of serious diseases possesses therapeutic properties which are not, or not to the same extent, established for other products available on the market, in particular where the treatment reduces the patient’s risk of dying as a result of the disease, or where such superior properties are otherwise demonstrated.”
IV. Outlook
The decision of the Federal Court of Justice “Alirocumab” is of importance also for the current discussion as to whether there is a need to reform the German Patent Act (PatG), in particular the “automatic injunction.” Some voices, in particular from the automotive industry, criticize the fact that the German Patent Act provides for an automatic injunction which basically does not allow considering interests of the accused patent infringer. Indeed, if a patent infringement is given, the courts, in principle, also grant an injunction. The external circumstances do not actually play a role here, such as the interests with which the injunction claim is asserted. It is basically irrelevant if the patentee does not market own products within the scope of protection.
Apart from the compulsory license under antitrust law and the compulsory license under Sec. 24(1) PatG, only general principles such as good faith under Sec. 242 BGB are available to balance out relevant interests of the accused infringer under German law. In the light of the recent case law, however, the latter is not promising from the point of view of the patent infringer. In the decision Wärmetauscher (judgment of 10.05.2016 – X ZR 114/13), the Federal Supreme Court very narrowly drew the boundaries of an objection under § 242 BGB and did not even allow a use-up period for already produced cars. According to the Federal Court of Justice, the objection can generally only be considered if the party obliged to refrain from selling a product would suffer disproportionate disadvantages due to the injunction. In most cases this will not help the user of the patent.
The question therefore arises whether the compulsory license under Sec. 24(1) Patent Law could be further extended. There is actually nothing to prevent this, since the concept of “public interest” as an indeterminate legal concept can be filled in by case law in order to achieve an adequate balance of interests. Cases outside the health sector in which the public interest could be affirmed, such as job security, the prevention of redundancies on a large scale, are conceivable.
