The attempt to regulate intellectual property rights issues during the war, undertaken after the full-scale invasion of Ukraine by Russia, has led to problems in the pharmaceutical market, the inability to introduce to the market and launch production of new drugs.
Such opinions were expressed by lawyers interviewed by Interfax-Ukraine, commenting on the consequences for the pharmaceutical market in Ukraine of the law on the protection of individuals’ interests in intellectual property during martial law, imposed in connection with the armed aggression of Russia against Ukraine, adopted in March 2022. The document extends the validity of all intellectual property rights without exception until the day following the day of termination or cancellation of martial law.
Partner and Co-Head of the Intellectual Property Practice at Arzinger Law Firm Taras Kisliy noted that the law was adopted at one of the most dramatic stages of military aggression, when many citizens were forced to leave their homes and could not fully work, “including those who work in the field of intellectual property – for example, submit documents for renewal of trademark certificates or patents for inventions”.
“In order to prevent this from leading to mass miss deadlines for filing all sorts of documents with the Patent Office, this law was basically passed. But its wording, unfortunately, was not clear enough and was perceived differently, primarily in relation to the pharmaceutical market, “- he said.
The lawyer explained that the originator pharmaceutical companies (owners of active drug patents – IF) “saw in this law that their patents, which should expire during the war, now will not actually expire and will remain in force as long as the war lasts”. As a result, after the law was passed, there was a discussion among intellectual property professionals. Some of their colleagues (including the authors of the law) believed that the patents had not been extended, while others insisted that the vague wording of the law could be interpreted as carte blanche for the originator pharmaceutical companies, which would hold a monopoly on their drugs throughout the war.
Kislyy specified that this led to dozens of lawsuits, disruption of entry into the market of cheaper generic drugs, state budget losses on more expensive drug purchases, reduced access to treatment for patients and many other negative consequences”.
The lawyer also stressed that in terms of extending the monopoly on pharmaceuticals, the adopted law directly contradicts the European commitments of Ukraine, in particular the provisions of the EU-Ukraine Association Agreement. At the same time, only international generic pharmaceutical companies that received an open-date monopoly benefited from the law.
“International generic pharmaceutical companies, which release cheaper analogues of drugs on the market after the end of patent protection, suffer greatly in this situation. Now they are deprived of the possibility to plan to enter the market with new drugs at all. All they have to do is to sue and hope that the court will make a legal decision in this situation of direct conflict with the provisions of the EU-Ukraine Association Agreement. However, trials are ongoing and the Supreme Court has not yet put a final point in this category of cases,” he said.
At the same time, Kislyy noted that the situation with domestic pharmaceutical manufacturers is even worse.
“The current interpretation of the law actually closes them to foreign markets due to the peculiarities of registration procedures, necessary for the sale of medicines,” – said the lawyer.
In turn, a lawyer of the law firm “Legal Alliance” Alexander Tsurkan said that the risks of losing intellectual property rights at the beginning of the war were indeed high and in some cases the law justifiably allowed to retain these rights to trademarks and patents, which expired during the martial law.
“An example can be given where a company owned trademarks and patents on drugs that expired after February 24, 2022. The company was relocated, the employees were outside of Ukraine and at the beginning of the war no one was physically able to file for renewal of IP rights. Thanks to this law all IP rights of the company were preserved, competitors were not able to take advantage of the expiration of trademark certificates and register identical trademarks. The loss of intellectual property rights for business is sometimes equal to the loss of business itself”, he said.
At the same time Tsurkan agrees that this law has a number of drawbacks. In particular, he called the extension of patents beyond their maximum possible term of legal protection one of its problems.
“The term of a patent in Ukraine is 20 years, and at the end of that term, legal protection is usually cancelled, and everyone can use the present invention. However, because of the law, patents that should have lost legal protection since the beginning of martial law continue to operate, and as a consequence some of the patents are already in effect for 21 years instead of the maximum term of 20 years,” he said.
In particular, the case of the drug “Caspofungin-Teva”, whose patent expired during martial law, is currently pending before the Cassation Economic Court. Plaintiff was the patent holder for the active ingredient “caspofungin,” and the patent expired on April 16, 2022, and after that date other pharmaceutical companies could use the substance in medicinal products without infringement.
The defendant, in turn, knowing of the termination of legal protection, applied for registration of a drug using the compound “caspofungin” and intended to begin selling such a drug after the termination of the plaintiff’s patent.
The trial and appellate courts found that the law extends the term of the patent, the defendant is prohibited from using the compound “caspofungin” and from selling the drug “Caspofungin-Teva” protected by such patent.
“Thus, the problematic aspect of the law is to provide the patent owner with an additional term of legal protection beyond the maximum possible, so other players in the market cannot produce an identical product,” Tsurkan explained.
At the same time, the lawyer noted that “Ukrpatent” has repeatedly pointed out in its letters that the continuation of patents, under the law, applies only to patents that could have been extended (and not to those that have been terminated – IF), but the courts did not agree with this position.
As an example, the lawyer cited a court case on the drug Exib, for which the patent was expiring during the war and another pharmaceutical company began using the chemical formula of the invention in its drugs. The court did not agree with the position of “Ukrpatent” and prohibited the use of the patent’s formulation, valid beyond the maximum possible period, in the drug “Exib.
“Thus, the courts now formally apply the law without deep analysis for compliance with international law and the arguments of “Ukrpatent”, which adds additional term of protection to patent owners, turning such patents into evergreen,” – said Tsurkan.
According to him, pharmaceutical companies very carefully monitor the validity of their competitors’ patents and in the last months of the patents they start preparatory actions to bring new drugs to the market.
“Because of this law, after the end of 20 years of patent protection, the companies that expected to bring the product to market cannot do so, because the IP rights of the patent owner formally continue to operate even in cases where they should no longer. In this situation, on the one hand, there is a positive effect for pharmaceutical companies, which are owners of patents, because they have received an additional period of legal protection, but on the other hand pharmaceutical companies, having made pre-sale preparation and waiting for the end of the patent, cannot sell their medicinal product,” he said.
“The law was passed at a difficult time and was intended to protect and equitably preserve intellectual property rights in every possible way. However, the creation of legislative opportunities to provide additional term of legal protection contrary to the provisions of international conventions is a negative effect for many players in the market, “- said the lawyer.
For her part, partner of the law firm Asters Yulia Semenii also believes that the need for this law was due to the war, and its purpose was to prevent the applicants and right holders from losing their rights due to noncompliance with the terms. However, the situation with patents in the pharmaceutical market was a side effect of this document.
To resolve the problem, according to Semenya, could be the position of the Supreme Court in this category of cases, where it will be determined that the law does not extend the patents for medicines or to amend it.
“All bona fide pharmaceutical players always strive for transparent and clear rules of the game. Now the said law has created chaos, the elimination of which is waiting for the whole pharmaceutical market”, – stressed the lawyer.
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