Will 2025 see pharmaceutical and biotech companies embrace the UPC?

Pharmaceutical and biotech businesses were enthusiastic about the UPC before the court opened, but so far there has only been a handful of UPC disputes involving such companies.

Now the court has been operating for 18 months, the reasons for this relatively low level of activity are becoming clearer. Engagement is expected to increase over time as the UPC case law evolves and offers more certainty to businesses.

The UPC’s first instance caseload (4-page / 353KB PDF) of 585 as of 30 November, with a large majority of infringement actions continuing to be filed before German local divisions, signals that the court is now accepted as an important forum for handling patent disputes in Europe.

Engagement with the UPC has been across a wide range of sectors, but the picture in the life sciences space has been mixed.

Medical technology – medtech – disputes stand out as a clear winner before the UPC, with companies involved in global litigation – such as continuous glucose monitoring device manufacturers Abbott and Dexcom, and insulin pump competitors Insulet, Menarini and Eoflow – being active before the UPC. Medical diagnostics disputes, such as 10x Genomics v NanoString  and Advanced Cell Diagnostics v Molecular Imaging, in which Pinsent Masons acts for Advanced Cell Diagnostics, are also ongoing.

Medtech companies are helping to develop UPC case law, and other life sciences sub-sectors will be guided by the learnings from such cases. However, there are some limitations: Medical devices are often underpinned by fewer patents – in some cases only one – which may make these disputes easier for the new court to address, than in traditional pharmaceutical disputes. 

However, although pharmaceutical companies were enthusiastic about the UPC before the court opened, the number of pharmaceutical and biotech UPC disputes remains extremely low, with many life sciences innovators having opted all of their patents out of the UPC. 

After 18 months, there are only two innovator versus innovator disputes, notably Sanofi v Amgen in which Amgen’s evolocumab/PCSK9 antibody patent was revoked by the Munich Local Division, and the GSK v Pfizer RSV vaccine dispute which is underway before the Dusseldorf Local Division.  Preliminary injunctions have been heard in the biosimilar disputes between Novartis v Celltrion and Alexion v Amgen & Samsung Bioepis. However, only one traditional originator versus generic medicine dispute, between Sanofi v Accord & Others - in which Pinsent Masons represents Accord - is in train.  

The reasons for this hesitancy are multi-faceted. 

Timeframes and costs

The UPC’s aim of handing down first instance decisions within 12-14 months, which it has achieved so far, has the advantage of providing commercial certainty earlier than national litigation.  However, this has to be balanced with case management practicalities, and there is uncertainty as to whether the court will be able to stick with this aim in the long term as the case load and complexity of issues before it increases. 

There is no escape from the fact that there is an imbalance between originator and generics/biosimilar companies during the transitional period because the patentee has control – they choose whether to keep their patents in or, as many have done, opt their entire patent portfolios out of the UPC. 

This, and the UPC’s front-loaded procedure and short deadlines for filing a defence and counterclaim, pose a significant challenge for defendants. This is a particularly difficult path for generic and biosimilar companies to navigate: they face challenges in preparing a comprehensive defence and counterclaim even when they may, to some extent, be expecting it, such as where they are engaged in pre-existing national proceedings; let alone in trying to anticipate when, if at all, a relevant patent – which may be one of thousands – may be opted back in to within the UPC’s jurisdiction.

Costs are also a big consideration for pharmaceutical companies. The UPC’s aim of making European patent litigation more cost effective may be more realistically achieved in simple, single patent actions, compared with complex pharmaceutical disputes. The tight deadlines, likely procedural challenges and interaction with national proceedings will require a large legal team, making case management difficult and making UPC litigation expensive. 

Indeed, many of the UPC life sciences disputes are part of wider, pre-existing multi-jurisdictional litigation such as Sanofi v Amgen, Edwards v Meril and Dexcom v Abbott, where undoubtedly time and costs may have been saved due to work previously undertaken for the national disputes.

Testing the waters with weaker patents

The commercial impact of UPC litigation and the risk of UPC-wide relief being granted against a business are a concern for pharmaceutical and biotech companies – perhaps the main reason why, at this point, there has been limited engagement. 

This is a particular concern for smaller companies, such as those in the biotech and medtech spaces, or those with smaller patent portfolios, as losing a key patent risks shutting down the entire business.

Further, while it is too early to determine any clear patterns, a number of first instance decisions have seen the patent in issue be revoked – including in the UPC’s first revocation decision in Sanofi v Amgen – or upheld only in amended form, such as Kaldewei v Bette. This may support the idea that litigants may have decided against bringing their strongest patents before the UPC, preferring to risk weaker patents to test the water.

Influence of national laws

The German UPC divisions and judges have played a significant role in the UPC’s first 18 months.  Prior to the court opening, it was generally accepted that the UPC would be heavily influenced by the German courts and procedure.

Like the German patent courts, the UPC was expected to take a generally patentee-friendly approach to preliminary injunction applications and revocation actions.  However, 18 months after the court became operational, there are no clear trends with regards to whether the UPC is more likely to grant or refuse a preliminary injunction, and, as mentioned above, patents have been revoked or upheld in amended form in a number of early UPC decisions. 

Despite the fact that a large majority of UPC actions have been brought before German local divisions of the UPC, and decided by judges who were formerly judges of German national courts, they do not seem to be adopting a heavily-weighted German approach. 

This does not mean that certain decisions have not been influenced by the judges’ national experience, but this is not limited to the German UPC divisions, with The Hague Local Division recently applying the Dutch national approach to the assessment of infringement by equivalence.

The UPC judges seem to be adopting a more nuanced, UPC-first approach, but there are inconsistencies between the decisions of different divisions on certain issues. 

Uncertain laws

Such inconsistencies, along with wider uncertainty as to how the UPC will approach some aspects of patent law that have yet to come before it, impact business’ ability to assess risk and predictability of outcomes.  With different UPC divisions adopting inconsistent approaches to issues such as inventive step and the use of the prosecution history in claim interpretation, or following national approaches, such as in respect of the assessment of infringement by equivalence, there is some uncertainty as to how such important issues will ultimately be dealt with by the UPC, whereas the approaches of national courts are clearer.

Ultimately, there will be a large degree of uncertainty until some of the first instance decisions, and issues such as these, come before the Court of Appeal. Harmonisation of laws, led by future Court of Appeal decisions, will likely be game changing for many businesses and a clearer approach to important technical issues will be welcomed by pharmaceutical and biotech businesses.

Strategic decision between national and UPC proceedings

For the time being, multiple national actions may still be preferable to the risk of central revocation for high value pharmaceutical and biotech patents. EPO oppositions may provide challengers with more freedom, whereas UPC judges have taken steps to limit the number of arguments before them, undoubtedly to help manage the short UPC timelines. 

During the transitional period, for European patents that have not been opted out of the UPC, there remains a choice as to whether to bring national or UPC proceedings. As many of the experienced national judges have moved over to the UPC, depending on the strength of a patent, the national route with less experienced judges or slower timelines may provide more favourable strategic options.  

The UK has lost none of its shine in playing a key role in high value patent disputes, and the judges have responded with flexible case management approaches and an intention by the English Patent Court to encourage active dialogues between the UPC and UK judges to keep them appraised of the progress of parallel proceedings. Further, opportunities for UK courts to diverge from EU case law, notably in relation to supplementary protection certificates (SPCs), with the appeal in Merck Serono v Comptroller due to be heard in December 2024, are of interest. 

Sector will warm up to the use of the UPC

The UPC has undoubtedly changed the face of European patent litigation. Lessons will be taken from the UPC successes seen by medtech businesses. Confidence in the system will increase as more judgements, leading to more predictability, are issued, and less ambiguity about how proceedings will unfold from a practical perspective. In the short term, engagement by pharmaceutical and biotech businesses is expected to remain muted, but the sector will warm up to the use of the UPC in the longer term.