China’s First Supreme Court Patent Linkage Decision

The SPC upheld the first instance judgment of the Beijing IP Court (the “BIPC”) and dismissed Chugai’s suit and appeal. The judgment was published on 18 August 2022.

The China patent linkage system, introduced in July 2021, provides an early mechanism for originators/generics to resolve patent disputes relating to a generic drug application (the “ANDA”). For more detail on the patent linkage mechanism and judicial practice – see our articles – News flash – Patent Linkage Implementing Measures came into force in China on 4 July 2021 and China Patent Linkage News Flash (II) – The Supreme Court finalized the Patent Linkage Judicial Interpretations on 5 July 2021.

1. Background

(1) Originator drug

The drug in dispute was Eldecalcitol Soft Capsules (specification: 0.75μg) used for the treatment of osteoporosis. Chugai was the patentee and marketing authorisation holder (the “MAH”) and the marketing authorisation (the “MA”) was approved on 11 December 2020 in China (MA number- HJ20200058).

(2) Patent in dispute

On 13 July 2021 Chugai registered and published ZL200580009877.6 (the “ZL877”, titled ‘ED-71 Preparation’) on the China Marketed Drug Patent Information Registration Platform (the “Patent Linkage Platform”) in relation to its Eldecalcitol Soft Capsules.

ZL877 was filed on 7 February 2005 and granted on 8 December 2010 in China. The granted claims include 1 independent claim and 6 dependent claims. Claims 1 and 2 are as follows (the “Granted Claims”):

“1. A preparation comprising:

(1) (5Z,7E)-(1R,2R,3R)-2-(3-hydroxypropoxy)-9,10-secocholesta-5,7,10(19)-triene-1,3,25-triol;

(2) fat and oil; and

(3) an antioxidant;

wherein the antioxidant is used for …;

2. The preparation according to claim 1, wherein the antioxidant is one member selected from dl-α-tocopherol, dibutylhydroxytoluene, butylhydroxyanisole, and propyl gallate.”

On 15 April and 10 June 2021, two Chinese companies, Sichuan Gowell Pharmaceutical Co., Ltd. and Jiangsu Chia Tai-Tianqing Pharmaceutical Co., Ltd. filed invalidation proceedings against ZL877 respectively.  On 2 July and 6 August 2021, Chugai amended claims 1 and 2 as follows (the “Amended Claims”):

“1. A preparation comprising:

(1) (5Z,7E)-(1R,2R,3R)-2-(3-hydroxypropoxy)-9,10-secocholesta-5,7,10(19)-triene-1,3,25-triol;

(2) fat and oil; and

(3) an antioxidant; the antioxidant is dl-α-tocopherol;

wherein the antioxidant is used for …;

2. The preparation according to claim 1, wherein the antioxidant is one member selected from dl-α-tocopherol, dibutylhydroxytoluene, butylhydroxyanisole, and propyl gallate.”

On 30 December 2021, the CNIPA invalidated ZL877 for obviousness. Chugai appealed against the invalidation decision.

(3) ANDA

Haihe filed a P4.2 patent certification (i.e. the generic drug does not fall within the scope of originator patent) against ZL877’s claim 2 which was published on the Patent Linkage Platform on 16 August 2021. Haihe’s ANDA was accepted by the Center for Drug Evaluation (“CDE”) of the National Medical Products Administration (the “NMPA”) on 23 August 2021 (application number- CYHS2101591).

2. Patent linkage proceedings

Chugai sued Haihe at the BIPC and the BIPC accepted the case on 8 November 2021 [(2021) Jing 73 Min Chu No.1438]. On 15 April 2022, the BIPC issued the first instance judgment and dismissed Chugai’s suit. Chugai subsequently appealed to the SPC and the appeal was accepted on 23 May 2022. As the case involved trade secrets, the SPC held a private hearing on 5 July 2022. On 5 August 2022, the SPC dismissed the appeal and the judgment took effect.

According to the Patent Linkage Implementing Measures (2021), an effective judgment permits the NMPA to grant final approval for the generic if it has passed the CDE’s technical review. Pursuant to the Measures, there is a 9 month moratorium in which the NMPA cannot grant approval for a MA application pending patent linkage proceedings. The BIPC and SPC completed and rendered judgments within the 9 month statutory timeline.

It is worth noting that the courts did not dismiss the case simply on the ground that ZL877 was invalidated by CNIPA, because Chugai and Haihe applied to the court for a trial on the merits, i.e. whether the generic drug falls within the patent scope.

3. Issues in dispute

In the appeal, Chugai claimed that (1) the generic drug of Haihe fell within the protection scope of ZL877; and (2) Haihe did not provide the correct patent certification.

As the trial on the merits of a patent linkage case i.e. whether the generic drug as stated in the ANDA falls within the patent scope is substantially the same as a patent infringement trial, the SPC opined that the PRC Patent Law and judicial interpretations also apply to patent linkage cases.

The SPC opined that there were 3 main issues (1) did Haihe contravene the obligations provided in Patent Linkage Implementing Measures (2021); (2) what is the generic drug’s antioxidant; and (3) whether the generic drug’s antioxidant is an equivalent of dl-α-tocopherol in ZL877.

(1) Did Haihe contravene the obligations provided in Patent Linkage Implementing Measures (2021)

i. Chugai

Chugai claimed that (a) Haihe provided the P4.2 patent certification on claim 2 of the Granted Claims but did not provide certification for claims 1 and 3-7, of which Claims 1-7 had been registered on the Patent Linkage Platform; and (b) Haihe did not notify Chugai of the patent certification and the corresponding grounds within the statutory timeline, i.e. within 10 working days of acceptance of the ANDA.

ii. Haihe

Haihe claimed that it did request NMPA to amend the claim numbers of the certification from claim 2 to claims 1-7, but the NMPA did not allow the amendment. Haihe also served the evidence and claim chart with the BIPC after the commencement of the BIPC proceedings.

iii. BIPC

The BIPC did not rule on this issue as the BIPC considered this was outside the scope of the trial and should not be mentioned in the judgment.

iv. SPC

The SPC commented on Haihe’s patent certification and its obligation of notification.

• Article 6 of Patent Linkage Implementing Measures (2021) only requires the patent certification to be provided for each originator’s registered patent, not for particularpatent claims in the patent. It further states that, as to a P4.2 certification, it should cover the independent claims in the registered patent on the Patent Linkage Platform, because an independent claim has the widest protection scope.However, Haihe only provided the P4.2 certification to dependent claim 2 of the Granted Claims (not the independent claim 1 of the patent) so Haihe’s certification was not proper. Nevertheless, Chugai amended the claims of ZL877 resulting in that the protection scope of claim 2 of the Granted Claims to be wider than claim 1 of the Amended Claims. Therefore, even though Haihe’s P4.2 certification was not proper, it did not adversely impact on Chugai’s substantive and procedural rights.
• In relation to the notification obligation, Haihe did not serve the relevant documents in compliance with the Article 6, and only provided them after Chugai had commenced patent linkage proceedings, so the SPC considered that Haihe’s behaviour was improper.

In conclusion, the SPC criticized Haihe’s improper behaviour but no sanctions were imposed.

(2) What is the generic drug’s antioxidant

i. Chugai

Chugai claimed that the antioxidant used in Haihe’s generic drug was dl-α-tocopherol as:

• The generic dossier submitted by Haihe in the proceedings was not consistent with those obtained by the BIPC from the NMPA, therefore further investigation on the generic dossier was needed;
• According to the generic dossier obtained by the BIPC from the NMPA, the antioxidant submitted by Haihe for clinical trial approval was dl-α-tocopherol;
• BIPC wrongfully determined that the generic drug’s antioxidant is *** (note: the name of substance was redacted in the judgment for confidentiality based on the purported trade secret).

Chugai also applied to the SPC to investigate two pieces of evidence-: (1) the drug manufactured by Haihe which was used during the clinical trial; and materials related to excipient *** in Haihe’s ANDA.

ii. Haihe

Haihe argued that its antioxidant is ***, as opposed to dl-α-tocopherol, in particular that the materials related to the excipients submitted for clinical trial approval do not belong to the evidence of this case, and it is Haihe’s trade secret.

iii. BIPC

The BIPC considered that according to the generic dossier submitted by Haihe, its excipient is ***, a different substance from dl-α-tocopherol.

iv. SPC

The SPC held that whether the actual antioxidant of a generic drug is consistent with that stated in the ANDA dossier is outside the scope of the trial. If the actual antioxidant used is not the same as that submitted in the ANDA dossier, the generic applicant would be subject to statutory liabilities, and the patentee or an interested party may further sue for patent infringement.

Further, the SPC held that Haihe’s ANDA dossier, etc was sufficient to prove that Haihe’s antioxidant in the ANDA is ***, not dl-α-tocopherol.

The SPC refused Chugai’s argument that Haihe’s antioxidant is not ***, and rejected Chugai’s application on the investigation of the two pieces of evidence because they were irrelevant and the investigations were unnecessary.

(3) Whether the generic drug’s antioxidant is an equivalent of dl-α-tocopherol

i. Chugai

Chugai appealed that the doctrine of donation was wrongfully applied by the BIPC in the first instance because:

• Doctrine of donation is not applicable to the amended claims in the invalidation proceedings;
• Claim 1 of the Granted Claims could cover ***, which means *** used as an antioxidant was not donated to the public domain, and Chugai only abandoned dibutylhydroxytoluene, butylhydroxyanisole, and propyl gallate as an antioxidant during the invalidation proceedings but did not abandon dl-α-tocopherol’s equivalent feature including ***;
• The adduced evidence proved that *** shall have the equivalent features of dl-α-tocopherol.

ii. Haihe

Haihe argued that the doctrine of donation and doctrine of estoppel are applicable in this case, which indicate that *** is not an equivalent of dl-α-tocopherol.

iii. BIPC

The BIPC held that the doctrine of donation is provided in Article 5 of SPC Patent Infringement Case Judicial Interpretations (2010) which states:

With regard to the technical solutions described in the descriptions or drawings but not stated in the claims, where the patentee includes such solutions in the protection scope of patent right in a patent infringement case, the people’s court shall not uphold such inclusion.

As stated in Paragraph [0029] of ZL877, the antioxidant is preferably one member selected from tocopherol acetate, dibutylhydroxytoluene, natural vitamin E, dl-α-tocopherol, d-α-tocopherol, concentrated mixed tocopherol, ascorbyl palmitate, L-ascorbyl stearate, butylhydroxyanisole, and propyl gallate, *** used as an antioxidant had been recorded in the description of ZL877 but not included in claim 1. Therefore, *** is not covered by dl-α-tocopherol pursuant to the doctrine of donation.

The BIPC also dismissed Chugai’s argument that *** as an antioxidant was not donated as it was covered by the claim 1 of Granted Claims. The BIPC considered that the doctrine of donation has to be directed to and applicable to the valid amended claims, to protect the public in the reliance on the publication of patent documents.

iv. SPC

The SPC held that the doctrine of donation and doctrine of estoppel can restrict the application of doctrine of equivalence, whose objective is to balance the interest between the patentees and the public. Therefore, unlike the BIPC, the SPC only commented the doctrine of estoppel in this case.

Doctrine of estoppel is provided in Article 6 of SPC Patent Infringement Case Judicial Interpretations (2010) which states:

Where the patentee includes the technical solutions in the protection scope of patent rights that have been waived by the patent applicant or the patentee in patent granting or invalidation procedures by the amendment or statement on the claims or descriptions, the people’s court shall not uphold such inclusion.

The SPC opined that a patentee needs to provide evidence or reasonable explanation if it was considered that a particular technical solution between the original claims and the amended claims was not abandoned. The SPC considered that Chugai’s amendment on the claims limited the antioxidant from any one antioxidant to dl-α-tocopherol only. In addition, the description of ZL877 listed a number of antioxidants including dl-α-tocopherol and ***. A person skilled in the art would conclude from the description and the patent amendment that Chugai made a clear selection on the particular technical solution to be protected, and it selected one antioxidant from the four antioxidants in claim 2 of the Granted Claims, which further indicates that there was a clear and specific intention to abandon *** as a claimed antioxidant by the amendment.

Chugai did not explain why it did not adopt *** as an antioxidant in the amendment and did not state that the amendment was irrelevant to maintain patent validity. In support of the amendment, Chugai stated the amendment was to overcome the lack of support. Therefore, Chugai had no reasonable explanation or evidence to prove that other antioxidants were not abandoned by the amendment. Accordingly, the SPC applied the doctrine of estoppel and determined that *** is not an equivalent feature of dl-α-tocopherol.

Given above, the SPC ruled that the generic drug does not fall within the patent scope and dismissed Chugai’s appeal.

The first SPC judgment indicates that the SPC and BIPC can adjudicate on a patent linkage case within the 9-month moratorium of a generic chemical drug application. This 1^st patent linkage court case also shows that the BIPC and SPC may consider different issues.