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Pharma patent litigation in Russia: latest trends

In Russia 2018 and 2019 have been interesting years for patent litigation. There was a number of truly revolutionary rulings made in favor of international pharma producers while the local generic producers fiercely fight against innovators' attempts to enforce IP rights.

The Russian courts for the first time allowed international pharma producers to bring action based on a mere threat of patent infringement (rather than actual patent infringement). This has significantly broadened the legal tools available to pharma businesses for patent rights protection and, in particular, created a legal basis for obtaining permanent injunction against generic product before its launch. In practice, this means that patentees do not have any more to wait with the claim until the infringement is actually happening.

For the ease of reference, it needs to be noted that Russian law encompasses a rich variety of preliminary and permanent injunctions which may be used for securing a claim or legitimate interests of the applicant. In civil proceedings only courts may impose injunctions, whereas in criminal proceedings injunctions may be also imposed by an investigator. A motion for injunction imposition may be filed at any stage of court proceedings which facilitates the effective and swift protection of rights and legitimate interests. In order to impose the injunction applicant shall prove that failure to take such measures may impede or make impossible the execution of a court ruling, as well as inflict extensive harm to the applicant.

However, Russian courts may also take into account interests of the defendant and, for this purpose, ask the applicant to provide security for reimbursement of the defendant's possible losses. If the applicant asks the court to impose preliminary injunction, it is obligatory for the claimant to provide such a security. The list of possible injunctions under Russian procedural law is not exhaustive which makes it an efficient instrument for rights protection. The court in each particular case has discretion to determine injunction which will be most suitable for securing applicant's interests. The defendant and other persons whose rights and/or legitimate interests have been violated by injunction are authorized to claim damages from the applicant.

Still, despite this procedural framework until recently the injunctions were available to right holders in pharma patent disputes only after the infringing product was actually commercialized and the originator has already suffered high and sometime unrepairable damage. This has been changed by the above mentioned threat of patent infringement type of claim.

Such patentee's claim is based on the following arguments. At the moment of claim filing the infringing generic product was not yet introduced into commerce but all the preparations for introduction into commerce were made many years before the compound patent expiry date. The generic producer did not just complete the bioequivalence studies where the generic was compared with the claimant's product but also obtained a marketing authorization (MA) for the generic and even registered the maximum price for introduction of the generic product into commerce via state auctions organized by the Russian Ministry of Health (MoH) and regional healthcare authorities. The claimant stated that such early compliance with regulatory formalities may only be for a reason of early commercialization of the generic before patent expiration. This position is justified by Russian pharma regulations which would not allow that MA survives if no safety and efficacy data is provided to the regulator in three years and in absence of commercialization such data would not be available to the generic producer. Equally, the registered price for the generic product would hardly be justified in more than five years' time due to various factors including the production cost.

Based on the above logics the Russian courts ruled that the chain of the above actions by the generic producer constitutes a threat of patent infringement which is an appropriate legal ground for permanent injunction claim. The position has been confirmed by the courts of first instance, appeal and second appeal where the court of second appeal is the specialized Russian Courts for IP rights.

This change in Russian court practice has encouraged generic producers to test new defense strategies. So, one of the generic producers has become active in patent filings. Interestingly enough all of the patents obtained were secondary (for example, chrystalline form of compound) to valid innovators' patent on which the innovators based their claims to this generic producer. The generic producer stated in patent infringement proceedings that the generic is based on its own patent rather than the patent of the originator. This statement was, however, not confirmed either by expert opinion or by the generic's registration dossier filed with the Russian MoH. To the contrary, the registration dossier contained information supporting use of innovator's patent in the generic product. Fortunately, this argumentation did not pass scrutiny of the Russian Courts for IP rights who looked critically at this composition of evidence.

The generic producers immediately adopted a new defense strategy by, quite contradictory, bringing parallel compulsory licence claims where generic producers state that such own patents are dependent on originators' patents. The case law on compulsory license is quite sparse so far. However, some cases are still pending and statutory criteria for compulsory license issuance ("significant economic advantage" and "important technical achievement") are vague and should be further clarified by the Russian courts in next months. The cases where compulsory licenses have been granted to date, cannot be considered as representative since one of them has resulted in settlement and the other was not based on proper analysis of compliance of the generic's patent with the "significant economic advantage" and "important technical achievement" criteria. Further development is expected in 2019 and 2020 when a couple of other compulsory licence cases is due for consideration on the merits by Russian courts.

Simultaneously, generic producers defer to traditional defence methods such as patent invalidity actions before the Chamber for Patent Disputes under the Russian PTO (Rospatent). Since these proceedings are purely administrative rather than judicial, the generic producer may file such an action with the Chamber as many times as the generic producer likes by adjusting the grounds and polishing the content of invalidity action. There have been cases where the invalidity actions were filed by the patent attorneys without even disclosing the client's name but fortunately such approach remains an exception. The purpose of patent invalidity action filing includes, first, an attempt to invalidate the innovator's patent, and, second, a wish to stay patent infringement proceedings which, as opposed to the patent invalidity action, are heard before the Russian courts.

While generic producers polish defense strategies, the patentees succeeded in a patent linkage type of claim which allowed them to require from a generic producer withdrawal of maximum price registration for a product covered by originator's patent. The innovator's claim covered both order to the generic producer to withdraw price registration and prohibition to proceed with such a registration before the patent expiration or any earlier date in case of patent invalidation. The Russian courts ruled that withdrawal of maximum price registration is perfectly justified as such registration presents a threat of patent infringement. As to prohibition of a new price registration, this part of claim has been considered by lower courts as excessive so far but this may be revisited once the case enjoys attention of the Russian Courts for IP rights.

The further new initiatives concerning patent linkage in Russia include the following. The Russian MoH prepared a draft law on providing the information about patents to the Russian MoH. The draft law is aimed at amending the legislation on circulation of drugs. It provides the requirement to indicate in applications for obtaining MAs the information on patents and trademarks which are used in the respective drugs and valid in Russia. The proposed amendments are planned to apply to those applications which are submitted after the law's entry into force. All new applications for a MA shall also contain a warranty that all data in the registration dossier is obtained in the prescribed manner and the drug does not violate the intellectual property rights of third parties. The holders of MAs issued before the law's entry into force will be obliged to send the respective information to the Russian MoH by 1 January 2020. The draft law's text was published in October 2018 and is currently being discussed.

Simultaneously, Rospatent has suggested launching the Unified Register of pharmacologically active substances protected by invention patents. The Unified Register is supposed to include the following information. First, inventions protected by patents and used in drugs (namely the numbers of the relevant patents, INN, patents' validity periods, patent holders, patent's type). This information shall be entered into the Unified Register by Rospatent upon a patent holder's motion. Second, numbers of MAs and holders of MAs. Third, date of introduction of such drugs into civil circulation in Russia. This information shall be entered into the Unified Register by the Russian MoH. The initiative is currently under discussion.

Finally, in April 2019 the section "Information related to pending MAs" was launched within the online-database of the State Register of Drugs. This section contains information about applications submitted for obtaining MAs. Such information will be entered into the Register within five working days from the date of receipt of the application for obtaining a MA by the Russian MoH. Prior to this, originators could monitor only the status of generics' clinical trials and the status of the registered drugs for which MAs have already been obtained. Once the clinical trials were completed, the originators presumed that a generic manufacturer applied for a MA for the related generic drug, but they could not know this for sure. Now access to the online-database of pending applications for obtaining MAs will allow originators to track potential threats of patent infringements and react promptly.

All the above speaks to the fact that the Russian pharma litigation environment remains fairly dynamic and not at all one-sided in terms of IP protection and enforcement despite existing biased views. We see international pharma businesses prevailing in complex patent disputes before the Russian courts and local producers losing in patent infringement and patent invalidity actions. It is very clear already now that the remainder of 2019 and 2020 will lead to new and may be non-trivial outcomes in pharma patent disputes in Russia.