/ Chile: patent supplementary protection and its effects on free competition.

A study carried out by the National Economic Prosecutor (FNE, by its acronym in Spanish), in collaboration with the National Institute of Industrial Property (CLPTO), on the patent supplementary protection and its effects on free competition, was released on February 2, 2016.

This study has already sparked a relevant, ongoing controversy throughout the Chilean legal system. So far, the Intellectual Property Court (IP Court) has declined to comment on this study “that concerns to other State organ, in order to maintain the autonomy and independence of the court”.

To download the FNE study, click here

The study begins with a comparative review of the Patent Term Adjustment (PTA) and Patent Term Extension (PTE) rules available in the United States of America (US) and the European Union’s (EU) Regulation (EC) No. 469/2009 to argue that there is a bias against free competition in the Chilean pharmaceutical market. The study suggests that this bias is caused by an apparent “incorrect” interpretation of the spirit and scope of article 53 bis of the Chilean IP Law, as it was reformed in 2007 to be consistent with engagements derived from the free trade agreements (FTAs) signed with the US and the EU. The FNE argues that this incorrect interpretation of article 53 bis has led to the improper extension of the enforceable term of certain Chilean patents.

Article 53 bis provides for a supplementary protection request, which is a legal remedy against unjustified administrative delays which occur while processing a patent application at the CLPTO (pertaining to any technical field), or a sanitary registration at the Public Health Institute (ISP). A successful supplementary protection request results in a patent term adjustment equivalent to the period proved as lost due to unjustified administrative delays.

The request has to be filed at the Industrial Property Court (IP Court) in a single instance and sole effect procedure. A supplementary protection request ruling is based on formal reports requested by the IP Court to the CLPTO/ISP, and these reports allow the IP Court to understand the origin and duration of the delays, thereby allowing them to determine an appropriate extension of the patent protection term based on the period proved as unjustified administrative delays by the corresponding State organ.

The FNE argues that an incorrect interpretation of article 53 bis has led to the improper extension of the enforceable term of certain Chilean patents. It is very striking that the study does not propose any further recommendations as to how the CLPTO might reduce their administrative delays when processing patent cases. The FNE also fails to suggest any other compensation for the rightholders who have faced such significant prosecution delays.

In Chile, when the supplementary protection request is granted in connection with a patent which experienced delays during its prosecution at the CLPTO, the protection is extended to the patent right as a whole, regardless the products covered by the patent. On the other hand, when the supplementary protection is based on administrative delays experienced in the prosecution of a sanitary authorization, then the extension of the patent term is only given to that specific part of the patent that applies to the concerned pharmaceutical product.

To determine the propriety of the current interpretation of article 53 bis, the FNE selected a sample of twelve (12) supplementary protection cases which were exclusively focused on patents granted under the provisions of the former IP Law – in which the patent term is 15 years counted from the granting date – and only pertaining to the pharmaceutical area.

The FNE indicated that this selection was made with the aim of showing the commercial name of the drugs and active ingredients involved in the treatment of sensitive diseases, such as cancer, diabetes and other chronic diseases, so as to demonstrate what the FNE believes is a way “to somehow quantify the harmful effect of this practice” of requesting supplementary protections for patents which already have “15 years of effective protection guaranteed”, and avoiding the improper lengthening of barriers to competitors, such as pharmaceutical generic laboratories.

The FNE suggests that their intent was, at least in part, to confront this practice with the need of expediting the release of lower price drugs in the Chilean market.

The FNE argues that the supplementary protections were given to these twelve patents “in violation of law”, caused by a wrong interpretation of the “authentic” meaning and scope of article 53 bis by the IP Court and that the supplementary protection seems “to be meant” to only compensate the rightholders of patents filed under the provisions of the current IP Law, which establishes a patent term of 20 years of protection counted from the filing date of the application, and not those patents filed under the provisions of the former version of the law.

The study concludes with recommendations to try to reverse this circumstance, including:

i) Amending the law to establish that this special protection is only applicable to patents subject to the provisions of the current version of the law;
ii) Applying an extensive and somewhat tortuous interpretation of the patent nullity action, and
iii) Adding a provision to the law which expressly allows third parties to intervene in the process.

Notwithstanding the above, it is very striking that the study does not propose any further recommendations as to how the CLPTO might reduce their administrative delays when processing patent cases, as those showed in the same sample, which took an average of 11 years of prosecution (with a minimum of 6 and a maximum of 14 years). The FNE also fails to suggest any other compensation for the rightholders who have faced such significant prosecution delays.

Francesca Rodríguez

Alessandri