Clarifying priority

Pharma cases are among the most complex of patent cases. Take the zoledronic acid infringement and nullity litigation for instance. No sooner than two weeks ago, I reported on a creative preliminary objection defense raised by the manufacturer Sanochemia Pharmazutika AG – which was rejected by the Paris Tribunal de grande instance (TGI), with a confirmation on appeal.

At the end of the post, I said that the case was worth watching for further developments, and that the decision reported on was just an amuse-bouche. Well, after the amuse-bouche, we now have a starter to feed on. For the main course, i.e. the judgment on the merits, we will have to wait a little bit longer.

Patent pending on an tray configured for accommodating amuse-bouche.

As always, a few words of context should be helpful.

The Novartis group owns European patent No. EP 1296689 on a further therapeutic indication of the drug zoledronic acid, for the treatment of osteoporosis. According to Novartis, their drug Aclasta® is covered by this patent. The Teva group on the one hand and Biogaran on the other hand hold marketing authorizations for a generic version of Aclasta®.

In January 2014, Novartis initiated proceedings against Teva alleging infringement of the EP’689 patent. In March 2014, Biogaran filed a nullity action in relation with this patent. Finally, in December 2014 and January 2015, Novartis initiated proceedings against Biogaran and two other companies alleging again infringement of the EP’689 patent. All of these proceedings have now been linked together in front of the TGI.

The validity of a divisional patent, EP 1591122, was later also challenged by Biogaran. Turns out this divisional patent is currently undergoing opposition proceedings at the EPO. The patent was maintained in amended form in first instance, and the outcome of the appeal should be known any time soon (more on this aspect below).

The French trial date was initially set on April 26, 2017, but the parties agreed to a postponement to Q1 2018, i.e. after the decision of the Board of appeal.

Meanwhile, motions were filed both by Teva and Biogaran in front of the judge in charge of case management. These motions gave rise to two parallel orders dated June 8, 2017, which I am reporting on today.

The issue raised by these motions is the following. The EP’689 patent, and therefore also the divisional EP’122 patent, are based on a PCT application filed on June 18, 2001, claiming priority from two U.S. applications of June 20, 2000 and February 9, 2001 respectively. It seems that the validity of the priority claims may be critical for the validity of the patent. I assume that this is because relevant prior art was published between the priority date and the filing date of the PCT.

Both priority applications were filed in the name of the inventors, as was mandatory at the time under U.S. law. But the PCT application was filed in the name of Novartis AG for all designated states except Austria, where the applicant is a local Novartis company.

In such a (common) situation, it is a frequent line of attack by nullity claimants to question the entitlement of the applicant(s) of the subsequent application to claim priority.

This line of attack is based on the wording of article 4.A.1 of the Paris Convention:

Any person who has duly filed an application for a patent, or for the registration of a utility model, or of an industrial design, or of a trademark, in one of the countries of the Union, or his successor in title, shall enjoy, for the purpose of filing in the other countries, a right of priority during the periods hereinafter fixed.

Article 87(1) EPC contains a similar provision. It is established case law that, when the applicant of the subsequent filing is not the same as the applicant of the first filing, a valid transfer of the right to claim priority to the first filing must have taken place before the date of the subsequent filing. Otherwise, the priority claim is invalid.

In the present case, Biogaran and Teva challenged that the inventors and original applicants have properly transferred the right to claim priority to the original filings to Novartis AG (the applicant for France in the PCT filing). They therefore deemed that the priority is invalid.

Novartis of course maintained that the priority was validly claimed and offered some justifications without however providing all of the underlying agreements.

As a consequence, Biogaran and Teva requested that Novartis should be ordered to supply copies of these underlying agreements. This encompasses the employment agreements of the three inventors, as well as relevant agreements between different entities of the Novartis group. The inventors themselves should be ordered to supply copies of their employment agreements to Novartis, to the extent that this would be necessary, asked Biogaran and Teva.

As could be expected, Novartis requested that the judge in charge of case management should reject these requests.

Based on the two orders issued on June 8, 2017, the judge was apparently quite sensitive to the arguments developed by the nullity claimants. At the very least, the judge noted that serious doubts have been raised regarding the entitlement of Novartis AG to claim priority to the two U.S. applications.

Let’s have a closer look at the arguments. Quoting from the Biogaran order:

For Biogaran, there is no evidence that the inventors held the rights that they allegedly assigned to Novartis on the day of the alleged assignment of May 2, 2001. 

As far as I understand from this passage, there was an alleged assignment from the inventors to Novartis AG before the filing date, but the question was whether the inventors still held the rights on the invention (and thus the right to claim priority) on that date.

The judge further explained:

Biogaran states that in many countries, and notably in the U.S., Switzerland and France, the right of the employer to claim inventions made by employees in the course of their employment agreement derives from the law or from the employment agreement. 

Regarding the Swiss inventor Trechsel who is said to reside in Switzerland, in the country of the applicant Novartis AG, Biogaran mentions that his employer is the Swiss company Novartis Pharma AG. 

They state that the employer of the inventors Richardson and Horowitz who reside in the USA was Novartis Pharmaceuticals Corporation and that therefore their employment was regulated under U.S. law and that it is necessary to determine if Horowitz and Richardson, according to the applicable U.S. law, assigned their invention (including the right to claim priority) to their employer. 

We thus have the complex picture of a multinational team of inventors having two different employers, both of which are different from the company that filed the PCT application.

Novartis, on the other hand, denied that any challenge against the entitlement to priority can be validly raised by third parties to the relevant agreements, such as Biogaran and Teva.

On the merits, Novartis’ response relied on an affidavit of a manager, who explained that there was a general policy in the Novartis group to the effect that Novartis AG was the applicant of all PCT applications, so that the rights on this invention were necessarily assigned to this company.

Here is what the judge had to say in this respect:

However, even if this affidavit makes it possible to understand that the wish of the Novartis group was that Novartis AG should own all the patents of the group, it does not provide any indication on the fate of an employee’s invention with respect to his direct employer. 

Novartis does not clearly explain the status of the three inventors and even more so does not provide the court with any information in order to make sure that at the time of filing the U.S. applications or between these U.S. applications and the assignment to Novartis AG of May 2, 2001, they indeed owned the inventions, and these had not been assigned to their respective employers due to their agreements or under U.S. or Swiss law. 

It is important for Novartis AG to take a position on this issue by supporting its argumentation on any useful communications. Therefore, the case management judge invites their counsel under article 765 of the Code de procédure civile to do this as further stated in the order below. Nevertheless, at present the judge does not have to specifically issue an order regarding the three employment agreements, the existence of which is not proven, and which at any rate are supposed to have been executed by third parties to the present litigation; nor regarding the other evidence requested by Biogaran. 

The court will rule on the merits in view of the arguments and evidence provided by the parties, on the admissibility […] of a challenge of the priorities and, if necessary, on Novartis AG’s right to claim priority in its patent application to the U.S. applications […]. 

As a result, the judge refused to issue any specific orders for the production of documents. But on the other hand she did invite Novartis to provide further information and evidence.

This looks like a mixed outcome. On the one hand, the nullity claimants (infringement defendants) did not get the specific orders that they requested. This is not very surprising as French judges are traditionally reluctant to issue such orders unless relatively strict conditions are met, especially when third parties are involved. Discovery is definitely not a part of French legal culture.

On the other hand, the patentee was explicitly invited to provide further information and evidence, which may mean that their case is currently viewed as incomplete and thus weak.

Clarifying the priority has thus been flagged a priority by the judge.

Another important step for this lawsuit was certainly the oral proceedings concerning the divisional patent which took place on September 13 and 14, 2017 in front of Board of appeal 3.3.01. That’s case T 0239/16.

If any reader has information on the outcome of these oral proceedings, you are more than welcome to post a comment. At the time I am drafting this post, there is no news on the EPO website.

The outcome of these oral proceedings will be most interesting for two reasons. First, the Board’s decision will necessarily impact the French litigation. Especially if the divisional patent is revoked.

Second, priority has also been (quite understandably) discussed in depth in front of the Board. Quite frankly I did not have the courage to really delve into the thick file wrapper. The link is here. But based on the communication issued by the Board on June 9, 2017, it seems that priority is the big topic.

According to the Board’s rapporteur, first, the validity of the priority claim has to be assessed in terms of claimed subject-matter (under G 2/98). Second, if the priority holds after this assessment, entitlement to priority must be discussed. A complex legal discussion can be expected, especially on the key and preliminary issue of whether the EPO has the power at all to decide on the legal entitlement to the right of priority. In fact, the rapporteur seems to have some sympathy with Novartis’ arguments in this connection, according to the above communication.

The issues raised in the Board’s communication are too complex to be addressed here. In fact, one of Novartis’ requests is a referral to the Enlarged Board of Appeal.

Again, I look forward to hearing about what actually happened in Munich last week.

And at any rate, this is definitely a case to keep on the watch list.


CASE REFERENCES: Tribunal de grande instance de Paris, 3ème chambre 4ème section, ordonnance du juge de la mise en état, June 8, 2017, Novartis AG et al. v. Teva BV et al., RG No. 14/01134. Tribunal de grande instance de Paris, 3ème chambre 4ème section, ordonnance du juge de la mise en état, June 8, 2017, Biogaran SAS v. Novartis AG et al., RG No. 16/10894.

5 thoughts on “Clarifying priority”

  1. Dear readers
    EP122 was revoked in full for lack of inventive step. No discussion took place on priority. Note that the Board was creative in section 3.5 of their preliminary opinion arguing the unicity character of the PCT. An idea that stem from the Board’s mind and from none of the parties.

    1. Hi

      It seems that a similar idea was already raised by the patent proprietor in opposition vs EP1406656 (reply of the patent proprietor dated 22/12/2014, annex D) and interestingly taken over by the EPO in the search opinion of EP2940044 (divisional of the previous).

  2. Independently of the fate of the patent, which seems to have been revoked, it is worth noting that a third party brought forward an opinion of Prof. Strauß, former head of the Max Plank Institut for intellectual property in Munich about the way the EPO assess the right to priority.

    https://register.epo.org/application?documentId=E0TW890L9871DSU&number=EP05012711&lng=en&npl=false

    For Prof. Strauß, challenging the priority has become an opportunistic possibility to invalidate the patent during opposition, which should not be the purpose of the right to priority.

    The interest of third parties is safeguarded by the concept of “same invention” as decided in G 2/98.

    Only a party who claims to be entitled to the right of priority should be allowed to bring an action before a national court, and certainly not before the EPO.

    In his opinion, the EPO should not decide about entitlement to priority but in analogy to Art 61, refer the matter to a national court.

    Interesting isn’t?

    As the patent has been revoked for other reasons, the question of entitlement to priority has not been discussed.

    In his annex to the summons, the Board discussed the problem of the entitlement to priority in § 3. to 3.4.8,

    In §1. the Board announced that this point would only be discussed should the other points relating to patentability, which do not need to refer to the validity of the priority, have been discussed and that the requirement of the same invention has as well been settled.

    https://register.epo.org/application?documentId=E0JCGC0N0964239&number=EP05012711&lng=en&npl=false

    One day a clarification might nevertheless be needed.

  3. The opinion of Strauss was filed after the Board’s preliminary opinion. The rapporteur develops the argument that the EPO is not competent to assess the transfer of priority in quite some depth, also seeing an analogy with Article 60(3) and going deep into the traveaux preparatoires of the EPC 1973. I think there is some merit to the argument.
    The Board was, at the time of the preliminary opinion, extended to five members. I have not studied the entire file wrapper, but it seems to have been the Board’s own argument, and it is a new argument at least for me.

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