Center for Advanced Study & Research on Intellectual Property

 

CASRIP Newsletter - Winter/Spring 1999, Volume 5, Issue 4

The Supreme Court of Japan Rules on the Experimental Use Exception to the Use of Patented Drugs for Clinical Testing by Generic Makers Seeking Government Approval

Judgment of the Supreme Court, April 16, 1999

On April 16, the Supreme Court affirmed the Osaka High Court's application of the experimental use exception to a generic drug maker's use for obtaining data to be submitted to the Ministry of Health with an application for marketing approval. This decision resolves long-standing debates between new and generic drug makers. The Supreme Court followed the German example and broadly interpreted the phrase "exploitation of patent invention for the purpose of experiment or study" in Article 69 to cover not only testing for the purpose of further developments but also testing for the purpose of obtaining data for an approval application. Although the court made it clear that acts unrelated to obtaining data for an approval and acts with intent to manufacture before the expiration of patent constitute an infringement, the current system does not provide any remedy, like that 35 U.S.C. Section 271 (e), for ensuring that generic makers' activity remains within the permitted scope. Accordingly, unlike the U.S. system but more like the German system, new drug makers cannot stop, at the time of an approval application, a generic manufacturer's attempt to conduct commercial manufacturing before expiration of the patent. They have to wait until the generic maker begins commercial manufacturing to file for injunction and damages. Here is a translation of the decision:

infringement, the current system does not provide any remedy, like that 35 U.S.C. Section 271 (e), for ensuring that generic makers' activity remains within the permitted scope. Accordingly, unlike the U.S. system but more like the German system, new drug makers cannot stop, at the time of an approval application, a generic manufacturer's attempt to conduct commercial manufacturing before expiration of the patent. They have to wait until the generic maker begins commercial manufacturing to file for injunction and damages. Here is a translation of the decision:

Holding

Dismissal of joukoku appeal. Joukoku appellant must pay all official fees.

Reasons

Regarding the reasons for joukoku appeal of appellant's attorneys Keizou Takahashi, Youichiro Kasumi, Hanroku Karasumaru, Yasuaki Iwamoto, Hirofumi Ada, and Youichi Tanabe:

1. On this appeal, joukoku appellant, a patentee who owns a patent right on a chemical compound and a pharmaceutical product containing that compound as the main pharmaceutical ingredient, contends that appellee has infringed the patent by making and using during the patent period the accused pharmaceutical product, in which the pharmaceutically-effective ingredient, quantity, use, prescription, function, and effect are identical to those of the patented invention (hereunder, "the accused product"), to conduct clinical testing for obtaining data to accompany an application for approval of manufacturing under Article 14 of the Drug Regulation Act. Appellant thus claims injunction and recovery of damages resulting from the infringement. The appellee argues, inter alia, that its acts do not constitute infringement because they fall within "exploitation of patent invention for the purpose of experiment or study" under Article 69, Paragraph 1.

2. Where a patentee owns a patent on a chemical compound and a pharmaceutical product containing the compound as the main pharmaceutical ingredient, a third party's making and using, during the protection term of the patent, a chemical compound or pharmaceutical product which falls within the technical scope of the patent to conduct clinical testing for the purpose of obtaining data to accompany an application for approval under the Drug Regulation Act with the intent to manufacture and sell a pharmaceutical product with pharmaceutically-effective ingredient and other characteristics identical to those of the patented invention (hereunder, generic drug) after the expiration of the patent, falls within "exploitation of patent invention for the purpose of experiment or study" under Article 69, Paragraph 1, and thus does not constitute an infringement of the patent. Reasons for this interpretation are as follows:

(a) The patent system encourages creation of inventions by rewarding persons who disclose inventions to the public with an exclusive right for a limited time, and contributes to the development of industry by giving third parties opportunities to exploit the disclosed invention. One of the fundamental purposes of the patent system is to benefit society as a whole by allowing persons to freely exploit an invention once its patent term expires.

(b)The Drug Regulation Act requires, as a means of ensuring drug safety, approval from the Ministry of Health prior to manufacturing a new drug. The statute requires an applicant to conduct several types of clinical testing and attach resulting data to its application. With respect to a generic drug, the application requirements are the same as for a new drug in that an applicant must conduct the specified testing over a significant period of time. In conducting the testing, an applicant must produce and use a chemical compound or pharmaceutical product that falls within the technical scope of the patentee's patented invention. If the Court were to find that said testing is not an "experiment" under Article 69, Paragraph 1 of the Patent Act, thereby preventing an applicant from engaging in said production and use, third parties would not be able to freely exploit the invention for a significant time after the expiration of a patent. This result conflicts with the fundamental purpose of the patent system stated in the above paragraph.

(c) On the other hand, if a third party exploits the invention beyond the scope required to apply for approval under the Drug Regulation Act, and produces a patented generic drug or produces and uses a patented chemical compound with intent to assign them after the expiration of the patent, such exploitation constitutes an infringement and is not permissible. This interpretation guarantees patentees exclusive exploitation of their patented invention during the protection term. If, on the other hand, patentees are given the right to prevent third parties from engaging in said production and use of the patented invention for testing necessary to apply for manufacturing approval, this would result in a significant extension of the patent protection term. This result exceeds the benefit to patentees intended under the Patent Act.

3. For the above reasons, and on the basis of the facts properly found by the lower court, appellee's acts constitute an "exploitation of patent invention for the purpose of experiment or study" under Article 69, Paragraph 1 of the Patent Act, and thus do not infringe appellant's patent. The conclusion of the lower court was proper. Appellant's arguments criticizing the lower court's decision are based on its own views, and are not accepted by this court.

Accordingly, the justices unanimously agreed to decide as indicated in the holding section.

Last updated 4/27/2012