Impact of proposed Patent Act amendments on the pharmaceutical industry

The Taiwan Intellectual Property Office (TIPO) has proposed a wide range of amendments to the Patent Act, which has been effective since 1st July 2004. During February and March 2009 TIPO held a series of public hearings in which patent practitioners and interested groups participated. The proposed amendments include extensive issues of patentability, re-examination and TIPO procedures, public health, compulsory licences, contributory infringements, patent licensing, the calculation of monetary damages and design patents. Only 10 of the 138 existing articles would remain unchanged. This article focuses on the proposed amendments to the provisions on pharmaceuticals.

Extension of patent terms
In regard to pharmaceuticals and agrichemicals (and related processes) for which the government approval process takes more than two years from publication of the patent, the Patent Act allows the patentee to apply for an extension of the patent term of between two and five years. Such extension may be granted only once and the extended patent term shall not exceed the length of time required to obtain approval from the government, and in any event cannot exceed five years.

The amendment stipulates that the patentee’s right to extend the patent term can be based only on the first government approval. Like the current law, the amendment allows the extension of the patent term only once, with a maximum length of five years. The "first government approval” is determined by the effective ingredient plus its use (eg, the indication). In other words, a new indication granted for an identical effective ingredient still constitutes a first government approval and qualifies for an extension of the patent term. However, if multiple first government approvals evolve from the same patent application, the patentee should choose the approval on which to base the application for extension, since it can apply only once.

Moreover, the amendment eliminates the current minimum threshold of two years with respect to the time taken to obtain government approval. This change is in response to criticism that patentees lose out even if government approval takes less than two years, meaning that the minimum threshold cannot be justified.

In addition, the amendment clarifies certain issues in order to harmonise the act with existing TIPO practice. It provides that: 

• the term "pharmaceuticals" does not include drugs used on animals;
• in the event that a request for exemption is granted after the expiration date of the patent, the term of that patent is deemed to be extended from the expiry date; and 
• the scope of the patent right of the extended patent term is limited to the effective ingredients and use identified in the approval certificate.

Exemption for experimental use
The Patent Act sets down an exemption from patent infringement for putting an invention into practice for the purposes of research, education or experiment only, with no profit-seeking acts involved therein. In order to encourage the development of generic drugs and promote public health, the new amendment stipulates a new exemption from patent infringement for the necessary practice of putting the invention into practice for the purpose of research and experiments in order to obtain a marketing registration in accordance with the Pharmaceutical Affairs Act. This exemption also applies to research and experiments for marketing approval in foreign countries.

Although similar provisions already exist in the Pharmaceutical Affairs Act, TIPO has decided to include the exemption specifically in the Patent Act in order to harmonise the application of such exemption. TIPO’s legislative reasons clearly state that the exemption applies to pre-clinical trials and clinical trials for the purpose of obtaining marketing registration for drugs, as well as all practices such as manufacture, sale, offering for sale, importation and use. However, the exemption does not apply to testing procedures used in hospitals for the procurement of drugs.

Compulsory licence for providing drugs to developing countries
As a member of the World Trade Organisation, Taiwan is working towards compliance with the Doha Declaration by loosening the restrictions on compulsory licences in order to enhance the affordability of essential drugs in developing countries. The amendment allows for an application for a compulsory licence in order to export essential drugs for AIDS, tuberculosis, malaria and other contagious diseases to countries that are incapable of producing such drugs, on the condition that a licence cannot be obtained under reasonable commercial terms within a period during which no compulsory licence has been granted in the importing country. The amendment further prescribes the details of the procedure for a compulsory licence application, such as: 

• notice to the Agreement on Trade-Related Aspects of Intellectual Property Rights Council; 
• management of the exported quantity; 
• the packaging of such exported drugs; and 
• appropriate compensation to the patentee.