USTR 2018 Special 301 Report – Priority Watch List Country – China

In April, the Office of the United States Trade Representative (USTR) released its 2018 Special 301 Report (the Report) identifying trading partners that do not adequately or effectively protect and enforce intellectual property (IP) rights or otherwise deny market access to U.S. innovators and creators that rely on protection of their IP rights.  The Report called on U.S. trading partners to address IP-related challenges with a special focus on the countries identified on the Watch List and Priority Watch List.

Countries identified on the Watch List are:

  • Barbados
  • Bolivia
  • Brazil
  • Costa Rica
  • Dominican Republic
  • Ecuador
  • Egypt
  • Greece
  • Guatemala
  • Jamaica
  • Lebanon
  • Mexico
  • Pakistan
  • Peru
  • Romania
  • Saudi Arabia
  • Switzerland
  • Tajikistan
  • Thailand
  • Turkey
  • Turkmenistan
  • United Arab Emirates
  • Uzbekistan
  • Vietnam

Countries identified on the Priority Watch List are:

Priority Watch List Country – China

In this post, we will examine several of the USTR’s concerns relating to China which has been on the USTR’s Priority Watch list for several years.  At the outset, the Report notes that although some positive developments emerged in China’s complex and fast-changing IP environment during the last year, U.S. right holders continue to identify the protection and enforcement of IP as well as IP-related market access barriers as the leading challenges in an already very difficult business environment.  The Report notes that concerns extend not only to gaps in legal authorities and weak enforcement channels, but also to investment and other regulatory requirements that promote the acquisition of foreign technology by domestic firms at the expense of providing reciprocity, a level playing field, transparency and predictability that the U.S. and other countries insist upon.  In fact, the Report suggests that China lacks an underlying commitment to address longstanding problems and its failure to do so undermines any confidence that might stem from any positive developments and high-level statements made by the country in support of IP and innovation.

Initial Positive Developments

Some positive developments that occurred in China during the last year include:

  1. A positive conclusion to China’s three-year pilot program for its specialized IP courts located in Beijing, Shanghai, and Guangzhou. Last year, China continued with its IP courts and added specialized IP tribunals which enjoyed cross-regional jurisdiction (sometimes including having jurisdiction over criminal, civil, and administrative enforcement as well), which aided in promoting the quality, efficiency, and consistency of IP adjudications.  The Report notes that according observers, the IP courts generally demonstrated competence, expertise and transparency to a greater degree than that seen in other Chinese courts.  Moreover, in August 2017, China opened the country’s first Internet Court in Hangzhou, with 40 judges and assistant judges.  Additionally, China is considering creating a national-level appellate IP court to lend consistency to outcomes.  Nonetheless, despite these developments, intervention by local government officials, powerful local interests, and the Chinese Communist Party remain obstacles to the independence of the courts and rule of law.  As noted by the Report, a truly independent judiciary is critical to promote rule of law in China.    In addition to the lack of true independence of the judiciary, stakeholders continue to report issues with respect to the onerous authentication requirements for evidence and documentation, lack of means to require evidence production and insufficient damage awards, all of which undermine the effectiveness of China’s court system for addressing IP infringement.
  2. Notices issued by China’s Food and Drug Administration. Last year, China’s Food and Drug Administration issued notices for public comment that set out a conceptual framework to protect against the unfair commercial use and unauthorized disclosure of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products and to promote the efficient resolution of patent disputes between right holders and the producers of generic drugs.
  3. Approval of government reorganization by the National People’s Congress on March 17, 2018. According to the State Council Reorganization Plan, the reforms place several IP-related government functions under a new State Administration of Market Supervision and Management.  According to Chinese officials, these reforms will increase the efficiency of IP protection and enforcement.  Time will tell whether these reforms will accomplish these goals and improve market access for persons that rely on IP in the country.

Disappointments and/or Failures

  1. Trade secrets. China’s 2017 amendment to its Anti-Unfair Competition Law (AUCL) represented a major missed opportunity to address a number of critical issues.  Unfortunately, China did not address major flaws in its outdated legislation, including the overly narrow scope of covered actions and actors, obstacles to injunctive relief, the need to allow for evidentiary burden shifting in appropriate circumstances as well as other concerns.  However, most importantly, despite long-term engagement with the U.S. and others, China chose not to establish a stand-alone trade secret law.  Instead, the government decided to continue to seat important trade secret provisions in the AUCL, which is an unfortunate arrangement that contributes to definitional, conceptual and practical shortcomings relating to trade secret protection.
  2. Manufacturing, domestic sale and export of counterfeit goods. In 2017, China failed to take decisive action to curb the widespread manufacture, domestic sale, and export of counterfeit goods.  Unfortunately, during the past year, China, together with Hong Kong (through which Chinese merchandise often transships), accounted for 78 percent of the value (measured by manufacturer’s suggested retail price) and 87 percent of the seizures by the U.S. Customs and Border Patrol.  Interestingly, these figures are similar to those reported by the European Union.  In fact, by one estimate, counterfeits may account for over 12 percent of Chinese merchandise exports.
  3. Failure to promote innovation through sound patent and related policies. Currently, China’s fourth amendment to its patent law remains pending.  With respect to this latest amendment, concerns exist regarding:  (i) the presence of concepts involving competition law that belong elsewhere; (ii) an undue emphasis on administrative enforcement; (iii) a one-size fits-all disclosure obligation in standards setting processes; (iv) a failure to clarify that a patentee’s right to exclude extends to manufacturing for export; and (v) the need to harmonize China’s patent grace period and statute of limitations with those of international practices.  For example, effective April 1, 2017, China’s revised patent examination guidelines came into effect that appeared to address, among other issues, the treatment of supplemental data submitted in support of pharmaceutical patent applications.  However, right holders report that Examiners still have not applied the guidelines to all examination questions to which supplemental data is germane which often leads to the denial of such applications on alternative grounds despite the fact that counterpart applications are granted by other major patent offices.  By way of another example, the U.S. was encouraged by the China Food and Drug Administration’s draft Notices 52-55 issued in May 2017.  This draft notice stated that China’s regulatory authorities would define a “new drug” as one that was new to China, including those first marketed outside of China.  However, in November 2017, China issued its draft Drug Registration Regulations (DRR), which failed to reinforce the notion set forth in the draft Notice 55.  Specifically, the draft DRR defined a “new drug” as only one that was new to the world, meaning that if a drug had been marketed outside of China, but had not yet launched in China, it would not quality as a “new drug”.  Unfortunately, only a “new drug” can receive full regulatory data protection in China.  Clearly, this regulation puts foreign pharmaceutical applicants at a competitive disadvantage with domestic counterparts which may have the indirect effect of forcing companies to file first in China, despite the fact that market demand or health needs reside elsewhere.
  4. China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. Unfortunately, despite years of negotiation and other engagement, China has repeatedly failed to address a range of measures and practices that force or pressure U.S. right holders to relinquish control of their valuable IP as a condition for accessing the large and growing Chinese market.  Specifically, the USTR has determined that the followings acts, policies, and practices by China are unreasonable or discriminatory and burden or restrict U.S. commerce: (i) China’s use of foreign ownership restrictions, such as joint venture requirements and foreign equity limitations, and various administration review and licensing processes, to require or pressure technology transfer from U.S. companies; (ii) China’s regime of technology regulations that force U.S. companies seeking to license technologies to Chinese entities to do so on non-market-based terms that favor Chinese recipients; (iii) China’s direct and unfair facilitation of systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies in order to obtain cutting-edge technologies and IP and the generation of technology transfer to Chinese companies; and (iv) conducting and supporting unauthorized intrusions into, and theft from, computer networks of U.S. companies to access their sensitive commercial information and trade secrets.

Thus, for these reasons, the Report states that China “remains a hazardous and uncertain environment for U.S. right holders hoping to protect and enforce their IP rights”.  Therefore, absent a significant commitment by China to address these longstanding problems, it appears that China will remain on the priority watch list for the foreseeable future.

This post was written by Lisa Mueller.

USTR 2018 Special 301 Report – Priority Watch List Country – India

In April, the Office of the United States Trade Representative (USTR) released its 2018 Special 301 Report (the Report) identifying trading partners that do not adequately or effectively protect and enforce intellectual property (IP) rights or otherwise deny market access to U.S. innovators and creators that rely on protection of their IP rights.  The Report called on U.S. trading partners to address IP-related challenges with a special focus on the countries identified on the Watch List and Priority Watch List.

Countries identified on the Watch List are:

  • Barbados
  • Bolivia
  • Brazil
  • Costa Rica
  • Dominican Republic
  • Ecuador
  • Egypt
  • Greece
  • Guatemala
  • Jamaica
  • Lebanon
  • Mexico
  • Pakistan
  • Peru
  • Romania
  • Saudi Arabia
  • Switzerland
  • Tajikistan
  • Thailand
  • Turkey
  • Turkmenistan
  • United Arab Emirates
  • Uzbekistan
  • Vietnam

Countries identified on the Priority Watch List are:

  • Algeria
  • Argentina
  • Canada
  • Chile
  • China
  • Colombia
  • India
  • Indonesia
  • Kuwait
  • Russia
  • Ukraine
  • Venezuela

Priority Watch List Country – India

In this post, we will examine several of the USTR’s concerns relating to India which has been on the USTR’s Priority Watch list for decades.  Although the Report acknowledges that despite a number of recent administrative actions taken by the Indian government to try and improve its IP system, the country still has not addressed a number of key, longstanding deficiencies in its IP regime. Not surprisingly, the Report notes that India remains one of the world’s most challenging major economies with respect to the protection and enforcement of IP.

Some longstanding patent issues listed in the Report include:

  1. Narrow patentability standards;
  2. Threats of compulsory licensing and patent revocations;
  3. Overly broad criteria for issuing licenses and revocations under the India Patents Act;
  4. Costly and time-consuming patent opposition hurdles;
  5. Long time lines to receive a patent; and
  6. Excess reporting requirements.

Additionally, the Report further states that in the pharmaceutical and agricultural chemical sectors, India continues to lack an effective system for protecting against the unfair commercial use, as well as the unauthorized disclosure of undisclosed test and other data generated to obtain market approval for such products.  Another contentious area in the pharmaceutical sector involves Section 3(d) of the India Patents Act which provides that the discovery of a “new form” of a “known substance” that does not result in increased efficacy of that substance is not patentable.  This restriction on patent eligible subject matter poses significant obstacles to innovators seeking timely entry into the Indian market for these products.  Moreover, the Report further notes that India continues to lack an effective system for notifying interested parties of marketing approvals for follow-on pharmaceuticals in a sufficient manner that allows for the early resolution of any potential patent disputes.  Moreover, in 2017, the Indian Ministry of Health and Family Welfare created additional uncertainty in the pharmaceutical market when it issued a notification eliminating a requirement from Form 44 which required applicants seeking approval of a drug to declare the patent status of that drug to the regulator.

Other issues involve the pressure faced by innovative industries to localize the development and manufacture of their products due to high custom duties directed to IP-intensive products, such as medical devices, pharmaceuticals, ICT (information, communication, technology) products, solar energy equipment and capital goods.    With respect to agricultural biotechnology, the Report notes that the Ministry of Agriculture and Farmer’s Welfare’s “Licensing and Formats for Genetically-Modified Technology Agreement Guidelines, 2016” contained overly prescriptive terms that, if implemented, would undermine market incentives critical to the agricultural biotechnology and other innovative sectors.

With respect to IP enforcement, the Report notes that India’s overall efforts remain deficient.  Unfortunately, the lack of uniform progress across the country threatens to undercut the positive steps that certain states have taken.  In fact, a 2017 publication produced by the OECD and EU Intellectual Property Office entitled, “Mapping the Real Routes of Trade in Fake Goods,” reported that India was a key producer and exporter of counterfeit foodstuffs, pharmaceuticals, perfumes, cosmetics, textiles, footwear, electronics and electrical equipment, toys, games and sporting equipment. With respect to counterfeit pharmaceuticals, the 2017 publication found that 55 percent of the total value of global counterfeit pharmaceutical seizures originated in India – the largest of any country.  Additionally, the publication also noted that these counterfeit pharmaceuticals are shipped around the world with particular emphasis placed on the African countries, Europe and the U.S.

Not surprisingly, the Report also notes that the overall level of trademark counterfeiting in India also remains high.  Moreover, U.S. brand owners continue to report issues with respect to opposition and cancellation proceedings, as well significant challenges and excessive delays in obtaining trademarks and efficiently utilizing opposition and cancellation proceedings as well as issues with the quality of examination.  Moreover, uncertainty continues to exist for companies due to insufficient legal means to protect trade secrets in the country.

It appears that unless significant changes are made and strongly implemented by the Indian government to specifically address these above issues that the country will remain on the Priority Watch list for the foreseeable future.

This post was written by Lisa Mueller.

USTR 2018 Special 301 Report: Pharmaceutical and Medical Device Innovation and Market Access

Last month, the Office of the United States Trade Representative (USTR) released its 2018 Special 301 Report (the Report), identifying trading partners that do not adequately or effectively protect and enforce intellectual property (IP) rights or otherwise deny market access to U.S. innovators and creators that rely on protection of their IP rights.  The Report calls on U.S. trading partners to address IP-related challenges with a special focus on the countries identified on the Watch List and Priority Watch List.

Countries identified on the Watch List are:

  • Barbados
  • Bolivia
  • Brazil
  • Costa Rica
  • Dominican Republic
  • Ecuador
  • Egypt
  • Greece
  • Guatemala
  • Jamaica
  • Lebanon
  • Mexico
  • Pakistan
  • Peru
  • Romania
  • Saudi Arabia
  • Switzerland
  • Tajikistan
  • Thailand
  • Turkey
  • Turkmenistan
  • United Arab Emirates
  • Uzbekistan
  • Vietnam

Countries identified on the Priority Watch List are:

  • Algeria
  • Argentina
  • Canada
  • Chile
  • China
  • Colombia
  • India
  • Indonesia
  • Kuwait
  • Russia
  • Ukraine
  • Venezuela

With respect to pharmaceutical and medical device innovation and market access, the Report details the efforts of the USTR over the last year to engage with trading partners to ensure that U.S. IP owners have a full and fair opportunity to use and profit from their IP, including by the promotion of transparent and fair pricing and reimbursement systems.  In addition to ensuring that trading partners have robust IP systems, the USTR has sought to reduce market access barriers to pharmaceutical products and medical devices, including measures that discriminated against U.S. companies, were not adequately transparent or did not offer sufficient opportunity for meaningful stakeholder engagement.  Additionally, the USTR pressed trading partners to appropriately recognize the value of innovative medicines and medical devices so that these partners can fairly contribute their share to the research and development of new treatments and cures.  USTR activities with respect to specific countries are described in more detail below:

  • Canada and Mexico: Sought strong IP provisions during the renegotiation and modernization of the North American Free Trade Agreement (NAFTA) including seeking provisions that ensure the national-level government processes for the listing and reimbursement of pharmaceutical products and medical devices are transparent, provide procedural fairness, are nondiscriminatory and provide full market access for U.S. products.
  • South Korea: Sought to obtain, through negotiations, improvement and better implementation by South Korea of the U.S.-Korea Tree Trade Agreement (KORUS FTA).  Specifically, the USTR sought to obtain Korea’s commitment to better implement its KORUS FTA commitments to provide fair and non-discriminatory treatment of pharmaceutical products, including imported products, under certain medical pricing and reimbursement programs.
  • Japan: Engaged with Japan in the context of the U.S.-Japan Economic Dialogue to ensure transparency and fairness and address other concerns with respect to pharmaceutical and medical devices pricing and reimbursement policies.
  • China: Pressed China on a range of issues that impact and affect the pharmaceutical sector.  These included: providing for effective protection against unfair commercial use, unauthorized disclosure of test and other data generated to obtain marketing approval for pharmaceutical products, as well as expediting the implementation of an effective mechanism for the early resolution of potential patent disputes.
  • India: Engaged with India to secure meaningful IP reforms on a number of longstanding issues. These issues included:  criteria for patentability and compulsory licensing as well as protection against unfair commercial use, as well as unauthorized disclosure of test or other data generated to obtain marketing approval for pharmaceutical products.
  • Indonesia: Engaged Indonesia to resolve a number of concerns regarding revisions to Indonesia’s patent law. These revisions included:  criteria for patentability, local manufacturing and use requirements and the grounds and procedures for issuing compulsory licenses.
  • Argentina: Engaged Argentina with respect to concerns regarding the scope of patentable subject matter and effective protection against unfair commercial use, as well as unauthorized disclosure of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products.
  • Saudi Arabia: Engaged Saudi Arabia regarding its protection and enforcement of patents and effective protection against commercial use as well as the unauthorized disclosure of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products.
  • United Arab Emirates: Sought confirmation that the United Arab Emirates will continue to protect pharmaceuticals through local procedures and the Gulf Cooperation Council (GCC) patent system.

The Report also highlights concerns regarding IP protection and enforcement and market access barriers affecting U.S. entities that rely on IP protection, including those in the pharmaceutical and medical device industries.  Examples of such barriers by trading partners include:

  • Unfair issuance, threat of issuance, or the encouragement of others to issue compulsory licenses. Trading partners being monitored with respect to such activities include Chile, Colombia, El Salvador, India and Malaysia.
  • Employment of measures that are discriminatory, nontransparent, or otherwise trade-restrictive that have the potential to hinder market access in the pharmaceutical and medical device sectors and which might potentially result in higher product costs. Examples include unreasonable regulatory approval delays and non-transparent reimbursement policies (such as pricing and reimbursement systems which are non-market-based or that do not otherwise appropriately recognize the value of innovative medicines and medical devices).  Trading partners being monitored with respect to such activities include Algeria, Australia, Canada, Japan, Korea, Turkey and New Zealand.

In our next few posts, we will examine in detail the USTR’s findings with the countries on the Priority Watch List.

This post was written by Lisa Mueller.

Brazilian Mailbox Patents: Big Loss for Alexion

On April 20, 2018, Alexion Pharmaceutical Inc.’s (Alexion) patent (PI9507594-1) covering Soliris® (eculizumab) was the subject of an unfavorable decision by the Superior Court of Justice involving the term of mailbox patents in Brazil.  Soliris® (eculizumab) is a humanized antibody targeting complement 5 and is used to treat paroxysmal nocturnal hemoglobinuria (PNH).

The Third Panel of the Court decided that the patent term for mailbox patents should be 20 years from the filing date and not 10 years from the date of grant.  The Court was persuaded by public health interest arguments made by associations representing various generic companies, specifically those citing the high price of Soliris® in Brazil (around 5,000 USD per unit).

The Soliris® patent is what is known as a “mailbox patent”.  Mailbox patents arose in Brazil following the creation of the World Trade Organization (WTO) on January 1, 1995.  When the WTO was created, one of the agreements that came into effect was the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. At the time, most member countries agreed to apply the TRIPS Agreement immediately upon joining the WTO. However, developing countries were permitted certain transitional periods in order to have sufficient time to enact new laws that were TRIPS compliant. One transitional period allowed developing countries up to ten years (specifically, until January 1, 2005) to introduce patent protection for pharmaceutical and agrochemical products. However, Article 70.8 of the TRIPS Agreement provided that developing countries that utilized this transitional period were required to allow patent applications to be filed on pharmaceutical and agrochemical products beginning on January 1, 1995, even though a decision to grant a patent on such applications could be delayed up until January 1, 2005. This provision of the TRIPS Agreement is often referred to as the “mailbox” provision (meaning that a “mailbox” would be created to receive and store such applications) and patents issuing from applications filed pursuant to this provision are frequently referred to as “mailbox” patents.

When Brazil became a member of the WTO, the grant of patents on pharmaceutical and agrochemical products was not permitted. As a result in 1996, Brazil enacted a Patent Statute that provided patent protection for these inventions.  Pharmaceutical and agrochemical product related patent applications filed in Brazil between January 1, 1995, and May 14, 1997 (date of publication of the Patent Statute) received the same treatment as other patent applications filed after 1997. When the Brazilian Patent Office (Instituto Nacional da Propriedade Industrial (INPI)) started to examine and grant pharmaceutical and agrochemical patents, the concept of transitory and mailbox applications no longer became relevant.

The issue involving the Soliris® patent involved the patent term of mailbox patents. In general, the Brazilian Patent Statute (Article 40) provides that the term of a patent is 20 years from its filing date or 10 years from the date of grant, whichever is longer. Specifically, Article 40 establishes:

Article 40 – The term of a patent for an invention shall be 20 (twenty) years and for a utility model 15 (fifteen) years as from the filing date.

Sole Paragraph – The term shall not be less than ten years for inventions and seven years for utility models, as from the date of grant, except where INPI is prevented from carrying out the substantive examination of the application due to pending litigation or for reasons beyond its control.

However, for patents filed between January 1, 1995 and May 14, 1997, Brazil’s legislators decided to establish a limit on the pendency of examination of such applications by INPI (which was already struggling with backlog at the time) until December 31, 2004.

The legislation reads as follows:

Article 229…Sole Paragraph – The patenting criteria of this Law shall apply on the effective filing date of the application in Brazil, or on the priority date, if any, to applications relating to pharmaceutical products and to chemical products for agriculture filed between January 1, 1995 and May 14, 1997, and protection is assured as from the date of grant of the patent for the remaining term, counted from the date of filing in Brazil, such term being limited to the one prescribed in the heading of Article 40.

Article 229-B – Product patent applications filed between January 1, 1995 and May 14, 1997, which were not granted protection under Article 9 letters “b” and “c” of Law No. 5.772 of [December 21,] 1971, whose applicants failed to exercise the right specified in Articles 230 and 231, shall be decided until December 31, 2004 in conformity with this Law.

For many years, INPI issued mailbox patents well beyond December 31, 2004. These patents have been receiving a term of 10 years from grant. For example, Alexion’s patent covering Soliris® was granted on August 10, 2010 and received a 10-year term having an expiration date of August 10, 2020.

In 2013, INPI filed several lawsuits involving mailbox patents against companies like AbbVie, Alexion, Astellas, Bayer, and Merck seeking to reduce the term of mailbox patents from 10 years from grant to 20 years from filing. For a general overview of the cases see infographic here:  MAILBOXLITGATION.

The decision by the Superior Court of Justice involving Alexion’s patent is limited to the arguments balancing the public and private interests namely, that 20 years from is sufficient time for companies to enjoy patent protection over their inventions.  Unfortunately, this decision ignores the incredible backlog of applications pending at INPI.

What are the next steps for Alexion?  Alexion can appeal the case to the Supreme Court.  Alternatively, Alexion can wait for a favorable decision on a mailbox patent by another Brazilian court.  Specifically, as will be discussed in a subsequent post, the Brazilian courts can may still change their opinion regarding the patent term of mailbox patents.

Please continue to watch BRICS & Beyond for updates on litigation involving mailbox patents in Brazil.

This post was written by Lisa Mueller, Roberto Rodrigues Pinho and Brenno Telles.

 

 

Patent Term Extension is Becoming a Reality in China

On April 12, 2018, the state council of China announced that beginning May 1, 2018, a maximum of 5-year patent term extension will be available for innovative drugs (commonly referred to as branded drugs) seeking market approval within and outside China. This decision by the state council will help move the intellectual property protection system for pharmaceuticals in China closer to that of many countries such as, for example, the U.S., Europe, Japan, Korea and Australia, which have well-established patent term extension systems.  Although the details of the patent term extension system have yet to be specified, it is believed that it will be similar to the U.S. system with respect to the types of products and patents that for which the extension will be applicable as well as how the term for extension will be calculated.

This decision demonstrates that China is serious in implementing more stringent intellectual property protection for pharmaceuticals.  As such, this decision by China to permit for patent term extension is good news to foreign investors, especially foreign pharmaceutical companies.

Please continue to watch BRICS & Beyond for further details on patent term extension in China as it becomes available.

This post was written by Lisa Mueller and Xu Li of Chofn Intellectual Property.

Protecting Life Science Inventions in the Arabian Gulf States – Part 1: Saudi Arabia

Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates comprise what is known as the Arab States of the Arabian Gulf or “Gulf States”.  Six of these seven countries, the exception being Iraq, form part of the Gulf Cooperation Council (GCC).  The GCC is a regional intergovernmental political and economic union between member countries, the charter of which was established on May 25, 1981. According to Article 4 of the GCC charter, the basic objectives of the GCC are to:

  • Effect coordination, integration and cooperation between GCC member states in all fields to achieve unity between the member countries;
  • Deepen and strengthen relationships, links and areas of cooperation that currently exist between the member countries and their people in various fields;
  • Formulate common regulations between the member countries in various fields such as in economic and financial affairs, commerce, customs and communications, education and culture;
  • Stimulate scientific and technological progress in the fields of industry, mining, agriculture, water and animal resource and establish scientific research; and
  • Establish joint ventures and encourage cooperation by the private sector for the good of the people of all the member states.

Not surprisingly, each of the Gulf States have established their own patent office and unique requirements for obtaining patents.  Moreover, the GCC has established a centralized system for obtaining a single regional patent (a GCC patent) that provides protection in each of the six member states.

In this multi-part series, we will examine the requirements for patenting life science inventions in each of the Gulf States.  Additionally, we will examine the requirements of obtaining a GCC patent.  Finally, we will compare and contrast the benefits of obtaining a patent separately in each of the Gulf States versus obtaining a single patent under the GCC system.

Saudi Arabia

Saudi Arabia is the largest of the Gulf States with a total land area of approximately 2,150,000 km2 (830,000 square miles).  It is the fifth largest country in Asia and the second largest state in the Arab world after Algeria.  Saudi Arabia is about five times larger than Texas and California and about five times smaller than China.

Saudi Arabia is the richest of the Gulf States.  It derives its wealth mainly from its vast reserves of oil (about one-fifth of the world’s reserves) and natural gas, which places the country as the largest exporter of petroleum.  As a result, Saudi Arabia has a leading role in the Organization of the Petroleum Exporting Countries (OPEC).

The Intellectual Property (IP) framework of Saudi Arabia has evolved to protect different intellectual property rights and cope with the rapid globalization and technological change. Both globalization and technological advancement have presented significant economic opportunities and challenges to the IP system. As a result, IP rights have become increasingly important in the country, but many of the challenges facing the IP system have yet to be addressed.

Patent Office

The Patent Office in Saudi Arabia (SAPO) is located at the King Abdulaziz City for Science & Technology (KACST), an independent scientific organization of the Saudi Arabian Government established in 1977.  The main activities and objectives of SAPO are to:

  • Apply the patent law and its implementing regulations, namely, the Law of Patents, Layout Designs of Integrated Circuits, Plant Varieties and Industrial Designs;
  • Grant Saudi patents, Layout Designs of Integrated Circuits, Plant Varieties and Industrial Designs;
  • Establish a Registry for the collection of local and foreign Layout Designs of Integrated Circuits, Plant Varieties and Industrial Designs;
  • Publish the Patents Gazette; and
  • Encourage the inventiveness of Saudi nationals.

SAPO is one of the few patent offices in the region which has developed in-house technical examination capabilities.   Specifically, patent applications are examined in Arabic, which is also the language used during (the entirety of) prosecution.  As a result, the Arabic translation of a foreign patent application is critically important as this document will be used in any future patent litigation.

In 2015, SAPO moved to an all-electronic filing system, thus streamlining the patent procurement process.  As a result, SAPO is considered to be a pioneering patent office, namely, it is constantly developing tools and capabilities that set it ahead of the rest of the patent offices in the region.

The below table shows the number of patent applications filed and granted in the SAPO from 2010-2016.

Year Number of Applications Filed Number of patents granted
2010 931 196
2011 987 252
2012 1061 213
2013 944 233
2014 788 561
2015 2408 764
2016 3266 595

In 2016, the countries that filed the most applications in the SAPO were: (1) Saudi Arabia (1064 applications); (2) U.S. (939 applications); (3) Germany (181 applications); (4) Netherlands (141 applications); and Japan (126 applications).

Patent Details

Intellectual Property Rights Available:  Several different types of intellectual property are available in Saudi Arabia:

  • Patents;
  • Layout designs of integrated circuits;
  • Plant varieties;
  • Industrial designs (or models);
  • Trademarks; and
  • Copyrights

No utility models are available.

Term of Protection:  The term of protection for intellectual property available in Saudi Arabia is provided below:

  • Patents – 20 years from the national date of filing or from the PCT filing date;
  • Layout designs of integrated circuits – 10 years;
  • Plant varieties – 25 years from date of filing for trees and grapevines; 20 years for other agricultural products; and
  • Industrial designs (or models) – 10 years

Legislation:  The main legislation covering patents, layout designs of integrated circuits, plant varieties and industrial models is Law no. 159 on the Protection of Patents, Layout Designs of Integrated Circuits, Plant Varieties and Industrial Models (Law No. 159).  Law No. 159 was promulgated by Royal Decree No. M/27 of 29/5/1425H on July 17, 2004.  This law contains 6 Chapters and 65 Articles.  The chapters are broken out as follows:  Chapter One (Articles 1-42) on General provisions, Chapter Two (Articles 43-48) on Special Provisions Governing Patents; Chapter Three (Articles 49-53) on Provisions Governing Layout Designs of Integrated Circuits; Chapter Four (Articles 54-58) on Provisions Governing the Protection of New Plant Varieties; Chapter Five (Articles 59-60) on Special Provisions Governing Industrial Designs; Chapter Six (Articles 61-65) on Concluding Provisions.

Note:  Saudi Arabia is not a member of the International Union for the Protection of New Varieties of Plants (UPOV).

Types of Patents available: 

  • Patents of invention; and
  • Divisional patent applications.

What types of inventions are not patentable?  Inventions that are not patentable include:

  • Discoveries, scientific theories and mathematical methods;
  • Aesthetic creations (such as literary, dramatic, or artistic works);
  • Schemes or methods for performing a mental act;
  • Games or business methods;
  • Presentation of information;
  • Plant varieties, animal species and biological methods of producing plants or animals, with the exception of microorganisms, non-biological and microbiological processes;
  • Surgical or therapeutic methods of treatment* applied to humans or animals and methods of diagnosis applied to humans or animals, with the exception of products used in any of these methods; and
  • Computer programs (but which can be protected by a copyright).

*Methods of treatment claims cannot be reformulated into Swiss-type claims.  However, such claims can be reformulated into the “product-for-use” type form permitted under the European Patent Convention (EPC) pursuant to the EPC2000 convention.  In addition, second medical use claims are permitted provided that such claims are formulated into the “purpose-limited-product” claim format.

Claims directed to specific dosing regimens are considered to constitute method of treatment type claims and are generally not patentable.  While claims to specific doses or formulations are permitted, claims directed to the frequency of dosing are not permitted.  Depending on the disclosure in the application, certain subject matter relating to dosing regimens may be patentable depending on how such claims are presented.

Additionally, certain subject matter which is considered contrary to public morals is not patentable in Saudi Arabia.  For example, inventions relating to embryonic stem cells (ESC) may fail a review by an ethical committee which evaluates subject matter as part of the examination and granting process. While ESCs or methods/processes of obtaining/using the same may not be patentable, it is possible to obtain patents relating to the use of pluripotent stem cells, their differentiation, and methods or processes thereof.

Moreover, SAPO does not consider patentable naturally occurring products, including genes and proteins.  However, novel methods or processes for isolating, purifying and using such naturally occurring products can be patented.  Modified genes and peptides can be patented as products as well as antibodies or fragments thereof, including primers and/or probes.

Claims directed to the in vitro or ex vivo diagnosis constitute patentable subject matter.  With the lack of any specific guidelines around the patentability of personalized medicine-type patent applications, obtaining in vitro or ex vivo results for developing a medical use are patentable.

Other restrictions on patenting inventions:  Patent protection will not be granted if the commercial exploitation of the invention contradicts the Sharia law or is harmful to human or animal life, public health, or is substantially harmful to the environment.  Examples of such inventions include alcoholic beverages and methods for producing such beverages.

What are the requirements for patentability?  To qualify for a patent, an invention must be:

  • New (Possess Novelty): Absolute novelty is required.  In other words, the invention must not have been made public in any way, anywhere in the world, before the filing or the priority date.
    • Exceptions:
      • If the disclosure of the invention occurred six months prior to the date of filing the application or the priority claim as a result of abusive acts against the Applicant or his predecessor; or
      • If the disclosure of the invention occurred as a result of the displaying of the invention at an officially recognized international exhibition in a country that is a member of the Paris Convention during the year preceding the filing of the application for the patent.
  • Possess Inventive step: An invention involves an inventive step if, when compared with what is already known in the art, it would not have been obvious to someone skilled in the relevant field.  An Examiner will use the closest prior art identified during a prior art search.
  • Possess Industrial applicability: An invention must be capable of being made or used in some kind of industry.

Written Description and Enablement:  According to Article (11) of the implementing regulations of the Saudi patent law, the specification must include a title, an abstract, full description, claims and drawings.  One peculiarity about the Arabic translation of an application first filed outside of Saudi Arabia involves scientific names, abbreviations and references.  Specifically, according to the provisions of Article (12) of the implementing regulations:

  • A scientific term will be written in its original language with the Arabic synonym when used for the first time in an application. Subsequently, the Arabic name will only be given, except in the claims where the term will be repeated in both languages;
  • When abbreviated names are used in a foreign language, the full name in both Arabic and English will be mentioned when used for the first time in the application. Subsequently, the abbreviation only will be given;
  • Symbols, units, names and basic physical constants approved by the International Union for Pure and Applied Physics (IUPAP), the SUNAMCO Committee, published in the Union Document No. 25 will be adopted;
  • Latin letters will be used in accordance with the IUPAC System for writing structural figures and chemical formula, symbols of chemical elements, compounds, and names. If a chemical name appears in the title it will be written in both Arabic and Latin; and
  • References, research papers, articles and scientific books will be written in their original language.

Claiming Priority:  Saudi Arabia has been a member of the Paris Convention since 2004.  As a result, Applicants can claim a right of priority by filing a corresponding Saudi patent application within twelve months of the earliest filed patent application.

Patent Cooperation Treaty (PCT):  Saudi Arabia became a member of PCT on August 3, 2013. SAPO began accepting PCT national phase applications as of February 3, 2015 (for PCT applications filed on or after August 3, 2013). The official fees of national phase applications are the same fees of regular applications. The documents required at the time of filing are the patent text in English and Arabic as well as the details of the PCT application.

Types of Claims Permitted:  Product and process claims are acceptable. When a patent is granted for a process, any product made directly by such a process is also protected.

Patent Application Workflow:  After filing, a formal examination is conducted.  If the application fails to meet the formal requirements, a notice will be issued giving the Applicant 90 days to complete (or correct) the formal requirements.  Once all the formal requirements have been complied with, SAPO will issue a notification, usually within 18 months from the date of national entry, for publication and requesting substantive examination. One peculiarity at this stage is that once this notification is issued, it is no longer possible to file any amendments to the claims or specification until the first search and examination report (Office Action) is issued. Upon payment of the examination fees, the application is transferred to the Examination Department and assigned to the proper art unit.  As mentioned previously, Examiners at SAPO are trained in the various arts.  During substantive examination, the Examiner will assess the application for patentability (namely, determining whether the application possesses novelty, inventive step and industrial applicability).  If the Examiner believes that the invention is not patentable, he or she will issue an Office Action setting a 90 day period for response (with no extensions of time available).  Applicant will be allowed to present arguments and claim amendments in response to an Office Action.  An Examiner will issue up to three Office Actions. If, after the third response filed by the Applicant the Examiner is still not convinced that the claims are patentable, then a final rejection will be issued and the decision published in the Official Gazette.

An Applicant can appeal a final rejection by filing a case with the Patent Committee (Committee), which resides at KACST. The Committee is formed of three law specialists and two technical experts.  Specifically, the Committee has jurisdiction over:

  • All disputes and appeals against decisions issued in connection with protection documents (meaning all intellectual property matters including patents); and
  • Penal lawsuits for violations of the provisions of the Law and its Implementing Regulations.

The Committee’s decision may be appealed to the Saudi Board of Grievances. The Saudi Board of Grievances (the Grievance Board), known in Arabic as “Diwan Al Mazalem”, was established pursuant to Royal Decree No. M/51, 17 Rajab 1402 [10 May 1982] (the “1982 Decree”) as an independent administrative judicial committee responsible directly to the King of Saudi Arabia. The Grievance Board comprises three levels of courts:

  • Administrative Courts – which are the lowest courts and have powers equivalent to those of a first instance court, the decisions of which can be appealed to the Administrative Courts of Appeal;
  • Administrative Courts of Appeal – the decisions of which can be appealed to the High Administrative Court; and
  • High Administrative Court – which is the highest court of the Grievance Board and has powers equivalent to those of a cassation court (no further appeals are available from the High Administrative Court).

 Once the Examiner determines that the claims are allowable, the Applicant will receive a decision of grant setting a 90 day period for payment of the grant and publication fees.    After payment, the patent will be granted in approximately 90 days and published in the Patent Official Gazette.  As will be discussed further below, no oppositions are provided under Saudi patent law.

Patent Term Adjustment (for delays in patent examination caused by SAPO):  No.

Annuities:  Payment of a yearly annuity is required, even while the application is pending.  Annuities are due within the first three months of each calendar year following the year the patent application was filed.  There is a three month grace period for late payment which also requires the payment of a surcharge. Annuity payments are also due for PCT national stage entries whereby the 1st and 2nd year annuities will become due the year following the national filing date. In most cases, the 3rd annuity will be due at that time as well.

Divisional applications:  If an application contains two or more inventions (such as where a lack of unity exists), an Applicant may submit a divisional application any time before receipt of a decision to grant or reject the application.  Additionally, it is possible to file a divisional application even if a lack of unity rejection is not raised.  However, depending on the scope of the claims between the parent and the divisional, a double patenting objection may be raised.  A divisional application will have the filing date of the original (parent) application. Divisional applications can only be filed off of a parent application.  In other words, a divisional application filed from another divisional application is not permitted.

Oppositions:  No opposition procedure is provided under Saudi patent law. However, once a patent application has published and issued, any interested third party may request invalidation (nullification) of the patent by filing a petition with the Committee.  The allowable grounds for an opposition include non-compliance with any of the articles of Saudi Patent law (e.g., lack of novelty and/or inventive step, etc.).  An invalidation action can be filed by a third party anonymously and be submitted in name of a law firm or attorney.   Generally, an invalidation action takes approximately six to twelve months, depending on the number of experts used.  If an invalidation action is initiated by a defendant in an infringement suit, the defendant can request that the infringement case be stayed pending the outcome of the invalidation action.

Third party observations:  Not available.  Since patent prosecution in Saudi Arabia is not publicly accessible, it is not possible for a third party know what application is pending or to submit any arguments during prosecution.

Searching for Saudi Arabian patents:  Patent searches are available at the SAPO via a formal request.  It is also possible to search informally using the on-line database. However, searches are limited to granted and published patents.

Working and Compulsory Licensing:  Patents must be worked in Saudi Arabia.  If a patent is not fully exploited, i.e. used, sold, imported, manufactured, filed for marketing approval, etc. by a Patentee within 4 years from the filing date of the application or 3 years from issuance, the patent can be subject to compulsory licensing.  To date, not a single compulsory license has been granted in Saudi Arabia.  A third party wishing to obtain a compulsory license will have to demonstrate that it attempted to obtain a license from the Patentee in good faith and failed.  Alternatively, if, in the opinion of the government, there is a dire need for use of the claimed subject matter of the patent (such as supply, cost, etc.), then a government issued compulsory license may be provided to a capable third party.  Again, an attempt must be made to obtain a license from the Patentee in good faith with no agreement being reached.  A compulsory license may be canceled if the conditions for its requirement are no longer in effect.

Bolar exemption:  Yes; 24 months before patent expiry.

Patent Term Extension:  No.

Data Exclusivity: Yes – 5 years.

Patent Linkage:  Based on circular letter no. 7448 dated February 2, 2013 (1434 Hijri years), the Saudi Food and Drug Authority (SFDA) does not allow generic drug companies to file for marketing authorization (MA) prior to 24 months before the expiration date of a relevant patent that covers the innovator drug in question.  Moreover, the SFDA will not approve any generic drug MA unless any relevant patents covering the drug have expired.  The first applicant for a generic drug must provide a letter from KACST and the Patent Office of the Cooperation Council for the Arab States of the Gulf (GCCPO) stating whether any patent(s) has been granted for the innovator product, if such a patent(s) exists, provide the expiration date.

Miscellaneous:  On April 13, 2018, the KACST and the European Patent Office (EPO) signed a memorandum of understanding (MOU) with respect to various patent activities relating to patent procurement.  The aim of the MOU is to strengthen the patent system in Saudi Arabia by increasing bilateral cooperation between Saudi Arabia and the EPO in the field of patents. Additionally, the MOU contemplates joint activities in the areas of patent procedures, search, examination and automation, as well as the use and exchange of patent data and databases. With this MOU, Saudi Arabia has demonstrated its commitment to develop and establish a robust patent system as well as its awareness of the strategic importance of patents in the country’s economic development.

This post was written by Lisa Mueller and Namir Sioufi of Saba IP.