The show must go on

I have always been fascinated by the longevity of some soap operas.

As a teenager, I have memories of holidays at my grandparents’, with The Young and the Restless on TV. This show has been airing in the U.S. since 1973 and has recently reached its 12,000th episode milestone. (Un)fortunately for French viewers, the story started for them at episode 3,263 only. Anyway, sooner or later, even the oldest shows come to end. After 54 years of broadcasting, As the World Turns stopped in 2010.

As I have already mentioned a couple of times on this blog, one of the oddities of French patent litigation is that we have a few soap opera cases, which seem to go on and on for ages, fueled by a regrettable back-and-forth movement between the Cour d’appel and the Cour de cassation (i.e. the appeal court and the supreme court).

One such litigation, the numerous twists of which have given rise to many comments over the years, is the pravastatin case.

On May 21, 2021, the Paris Cour d’appel issued a batch of parallel judgments in this saga. Since they nicely and clearly summarize the main episodes of the dispute, I thought I might take this opportunity to present the updated facts to the readership.

The case revolves around SPC No. FR 92C0224 owned by the Japanese company Daiichi Sankyo Company Ltd. The SPC concerns the cholesterol-lowering drug pravastatin. It should have expired in August 2006. The SPC was filed by an IP law firm which can be referred to as L. But the renewal fees of the SPC were then paid by another IP law firm. Let’s call it W.

In 2004, the fourth renewal fee for the SPC fell due. It was duly paid by the W.  firm. However, the INPI (French IP office) made an extremely unfortunate mistake, and did not properly take the payment into account. On July 15, 2004, the INPI sent a warning communication to L., the first law firm which had filed the SPC application. The INPI received no response from the SPC proprietor or its representatives. It then issued a decision noting that the SPC had lapsed, on January 26, 2005. This decision was again sent to L., received the next day, and published in the official bulletin (BOPI) on March 25, 2005.

Nevertheless, it is apparently only a few weeks before the scheduled expiry of the SPC that the patentee realized what had happened.

On June 28, 2006, W. filed a request for cancellation of the decision of lapse on behalf of Daiichi Sankyo, explaining that the fourth renewal fee had been duly paid (as well as the following one in fact).

It took the INPI only a few days to dismiss this request for cancellation, in a decision dated July 3, 2006. The INPI’s position was that the deadline for challenging the decision had expired. Indeed, according to general rules of administrative law, an unlawful decision can only be canceled within 4 months from the date of the decision.

Daiichi Sankyo filed an appeal against both decisions (the decision of January 26, 2005 noting the lapse of the SPC, and the decision of July 3, 2006 rejecting the request to cancel this decision), in front of the Paris Cour d’appel. Teva intervened in these appeal proceedings, since they had launched their generic pravastatin drug on the French market in the meantime.

On March 14, 2007, the Paris Cour d’appel issued a first judgment, which canceled both INPI decisions, thereby reinstating the SPC.

The court reasoned that the decision of lapse was erroneous, and that it had not been properly notified to Daiichi Sankyo’s representative. Indeed, the law firm L. was only entrusted with filing the SPC application, whereas W. was in charge of handling the renewal fees.

Teva filed a cassation appeal (appeal on points of law), but the supreme court rejected it on July 1, 2008, holding that L.’s power of attorney was limited to filing the SPC application; that W. was not required to file a power of attorney with the INPI; that the communication of lapse was therefore not notified to the proprietor’s representative; and that the deadline for challenging the decision had accordingly never started running.

In April 2009, Daiichi Sankyo filed infringement actions not only against Teva, but also against a number of other generic drug companies that had similarly launched their respective pravastatin generics prior to the SPC expiry, namely Biogaran, Sandoz, EG Labo, Arrow, Mylan and Qualimed.

In an interesting turn of events, three of them, namely Sandoz, EG Labo and Biogaran, filed so-called third-party oppositions (“tierce oppositions“) to the 2007 judgment.

This is a procedure by which a person negatively affected by a judgment, although they were not a party to the proceedings leading to the judgment, may challenge this judgment.

In three parallel rulings dated February 20, 2012, the Paris Cour d’appel held that the oppositions were admissible but were not well-founded. It therefore let the 2007 ruling, which was favorable to the SPC proprietor, stand. Sandoz and Biogaran did not give up and filed respective cassation appeals.

In another stunning development, on June 25, 2013, the supreme court rejected Sandoz’ appeal but set aside the 2012 judgment involving Biogaran.

In the Biogaran ruling, the Cour de cassation reasoned that Daiichi Sankyo had not informed the INPI that the law firm W. was its representative. Therefore, the Cour d’appel should not have considered that the decision of lapse was not properly notified. In other words, a complete U-turn from the Cour de cassation’s own judgment issued five years earlier.

By the way, why did the Cour de cassation allow only Biogaran’s appeal but not Sandoz’ appeal? Simply because only Biogaran raised the winning legal argument, and the court is strictly bound by the parties’ submissions.

The Biogaran case was thus remitted back to the appeal stage.

Smelling blood in the water, three more generic companies filed their third-party oppositions to the 2007 judgment at this point, namely Mylan, Qualimed and Arrow.

Teva, who had lost the very first round, joined the proceedings (all three in fact). As a result, the Paris Cour d’appel issued three more parallel judgments on October 27, 2017.

In these new judgments, the Paris Cour d’appel (in a different composition) modified its 2007 ruling and held that the decision of lapse should stand after all (in keeping with the guidance offered by the Cour de cassation in 2013). Of course, Daiichi Sankyo filed a cassation appeal. Once again, on December 4, 2019, the cassation judges partly set aside the three 2017 judgments, but due to a mere technicality. Indeed, the 2017 judgments modified the reasoning of the 2007 ruling but failed to formally issue a new order.

And so, there we are again in front of the Paris Cour d’appel, with three brand new parallel judgments issued on May 21, 2021.

The show must go on.

In these judgments, the Cour d’appel once again reevaluated the facts.

The court focused in particular on the provision which is now known as article R. 612-2 Code de la propriété intellectuelle, per which applicants having their seat overseas must appoint a representative in order to act in front of the INPI. It is specified that “unless otherwise mentioned, the power of attorney extends to all acts and to the reception of all communications“.

The court then noted that the law firm L. was appointed as a representative by Daiichi Sankyo, without any express mention according to which L. was not empowered to receipt communications on behalf of Daiichi.

The court further stated:

The payment of the renewal fees as from 2001 by W. and not by L. cannot in itself justify a change of the representative in charge of receiving communications. Thus, the intervention of a second patent attorney, who did not have to justify their quality for the acts that they carried out, namely paying renewal fees, did not amount to informing the INPI of a change of representative, especially because the renewal fee receipts issued until May 2005 did not mention that W. was the representative. 

Therefore, only L. was properly registered as Sankyo’s representative when the warning before lapse was issued by the […] INPI […] on July 15, 2004 […]. The same applies to the notification […] of the decision of lapse issued on January 25, 2005 […]. 

Since the notification of these communications was proper, the request for cancelation of the INPI’s (unlawful) decision was filed too late. Therefore, the original 2007 judgment must be canceled, and the decision of lapse must stand.

Most importantly, the court noted the following:

The effect of the [INPI] decisions of January 26, 2005 and July 3, 2006 is that the ‘224 SPC has lapsed. This lapse can only be effective with respect to all. It cannot be divided. Indeed, an SPC cannot lapse with respect to some and remain valid with respect to all parties. Therefore, Daiichi’s auxiliary request that only the third-party opponent […] should benefit from the cancelation cannot be granted. 

End of the story? I would not bet on it, unless a general settlement takes place. First, Daiichi Sankyo may still file a cassation appeal. Second, regardless of this possibility, there may be a couple of spin-off proceedings still pending regarding other aspects of the case (such as infringement and liability of the INPI).

Anyway, these latest rulings seem to bring at least some sanity back to a crazy case.

The situation was difficult to handle for the judges from the onset, since all parties, to some extent, acted in good faith. On the one hand, the SPC should never have been declared lapsed, as the renewal fees were paid in time. On the other hand, the third parties were entitled to rely on the lapse of the SPC.

That said, the theory that, by stating ex post facto that there was a change of representative, and that a deadline never started running because the INPI communications were not properly notified to the new (unannounced) representative, was a severe blow to legal certainty. It is thus reassuring that this reasoning finally seems to have been set aside.

Furthermore, it would have been quite unfair if there had been winners and losers among the generic companies, depending on who raised which legal argument and when. It is therefore fortunate that the Cour d’appel has now clarified that the lapse of the SPC must have an erga omnes effect.

Now we just have to wait and see how this plays out next time, as the world turns its attention to the pravastatin case again – no longer young but seemingly forever restless.


CASE REFERENCE: Cour d’appel de Paris, pôle 5 chambre 2, May 21, 2021, SAS Biogaran v. Daiichi Sankyo Co. Ltd., RG No. 20/02952 & 20/04838.