The parallel import of patented drugs from “new” EU Member States: the ECJ explains the Specific Mechanism

(An Italian version is also published on Diritto 24 – Il Sole 24 Ore)

The European Court of Justice (“ECJ”) recently clarified the function of the “Specific Mechanism” regulating the parallel import of patented drugs within the EU, which provides an exemption to the principles of free movement of goods and the exhaustion of IP rights. The decision was issued in proceedings no. C‑539/13 commenced by Merck Canada Inc. and Merck Sharp & Dohme Ltd. (“MSD”) against Sigma Pharmaceuticals Plc. (“Sigma”).

As is known, the Mechanism applies to drugs coming from the “new” Member States that joined the EU by the 2003 Act of Accession and which, before that date, did not allow drugs to be patented: the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovenia and Slovakia. Based on such Mechanism, the holder (or their beneficiary) of a patent or supplementary protection certificate (“SPC”) in a Member State is entitled to prevent the parallel import of a medicinal product from those “new” Member States even if the product was put on the latters’ market for the first time by the holder or with their consent. The Mechanism further provides that a company intending to put in place such parallel import shall notify its intention to the holder or beneficiary of the patent/SPC at least one month before submitting its application for import with the competent authorities.

In the case from which the decision originates, Pharma XL Ltd had notified MSD (i.e. the UK licensee of a patent and SPC held by Merck Canada) of its intention to proceed to the parallel import of the relevant medicinal product from Poland to the UK. Merck did not respond. Subsequently Sigma, an affiliate of Pharma XL, started the import and marketing in question, which led Merck to initiate patent infringement proceedings against Sigma. Hence the questions of the judge hearing the case, relating to the interpretation of the rules governing the Mechanism.

The referring court firstly asked whether the Mechanism requires the holder or beneficiary of a patent/SPC to give notification of their intention to oppose the proposed importation before enforcing its opposition rights. In response, the ECJ states that “no provision in the Specific Mechanism expressly requires such a holder or beneficiary to communicate, before commencing any legal proceedings to that end, his intention to oppose a proposed importation of which he has been duly notified. However, if the holder, or beneficiary, of the patent or SPC fails to take advantage of that one-month period in order to indicate his objection, the person proposing to import the pharmaceutical product in question may legitimately apply to the competent authorities for authorisation to import the product and, where appropriate, import and market it. Nevertheless, in such a situation, the holder, or beneficiary, of the patent or SPC cannot be regarded as having forfeited the right to rely on the Specific Mechanism. Although he may not obtain compensation for the loss suffered as a result of the parallel imports which he failed to oppose in good time, such a holder or beneficiary remains, in principle, free to oppose future importation and marketing of the pharmaceutical product protected by the patent or SPC”.

The referring court also asked to whom the notification of the intention to proceed to the import must be given. The ECJ observes that “from a literal interpretation of the Specific Mechanism, the notification must be given to the holder of the patent or SPC or to any other person enjoying rights conferred by law by that patent or SPC”, in particular by virtue of a licence agreement. Contrary to Sigma’s claims, the term “beneficiary” cannot be interpreted as referring to any company which, within a group, may reasonably be regarded as acting on behalf of the patent holder (e.g. the company holding the Marketing Authorisation).

Finally, the referring court asked who must give the notification required, as Sigma contended that the Mechanism does not require the potential importer to give notification personally or require that the notification should specify precisely the identity of the potential importer. The ECJ partially granted Sigma’s claim in this respect, stating that the Mechanism “does not require the person intending to import or market the pharmaceutical product in question to give notification himself, provided that it is possible from the notification to identify that person clearly”.