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Court Decision on First Patent Linkage Litigation in Taiwan (MSD v. China Chemical)—The Impact on Patent Linkage and the Takeaways



On January 14, 2021, the Judicial Yuan published the judgment rendered by the Intellectual Property Court ("IP Court") on the first-ever patent linkage litigation case, Merck Sharp & Dohme Corp. v. China Chemical & Pharmaceutical Co., Ltd., IP Court case number 109-Min Zhuan Su Zi-46 ("Judgment"). The new drug from MSD was Ezetrol Tablets 10 mg. In the Judgment, the IP Court prohibited China Chemical from manufacturing its generic drug, Ezetity Tablets 10 mg, and authorized MSD to execute permanent injunction against China Chemical. The reason given is that by the Doctrine of Equivalents, the generic infringes Claims 1 to 4 of MSD's I337083 patent. Lee and Li represented MSD in this leading case.

Whether to introduce the U.S. patent linkage mechanism into Taiwan has been hotly debated in the last 20 years. The patent linkage practice in the Pharmaceutical Affairs Act took effect on August 20, 2019. According to the Taiwan Food and Drug Administration's ("TFDA") online database, there are around 19 Paragraph IV cases filed by local generics against NDAs alleging patent invalidity or non-infringement. The pharmaceutical industry has been closely monitoring the 19 cases and awaiting guidance from the court. The three takeaways from the Judgment are as follows. 

First, the patent linkage suit was filed on February 24, 2020, assigned to the trial judge on May 22, and concluded on December 31 (page 66 of the Judgment). The case lasted only around 10 months, which is even shorter than the 12-month stay period. The speed and efficiency of the trial process fully demonstrates that the IP Court can resolve patent infringement disputes expeditiously as intended under patent linkage.

Second, though patent linkage took effect in 2019, the bill to amend Article 60-1 of the Patent Act, similar to the U.S. Section 271 (e), is yet to be passed by Congress. There is a longstanding legal controversy over whether a patentee is entitled to cite Article 96 of the Patent Act to file a patent linkage suit. The IP Court in MSD v. China Chemical clearly stated that a patentee may in fact invoke Article 96 to bring a suit, the pending law amendment notwithstanding. The IP Court found China Chemical had no justification to file the Para. IV notification, wait to have its 12-month generic marketing exclusivity, and at the same time allege no linkage litigation can be initiated. Its argument defies the legislative intent of the patent linkage laws (pages 21–24 of the Judgment).

Third, China Chemical alleged that it had yet to do any manufacturing or selling, and its only activity so far was to submit an ANDA to the TFDA, so it could assert the Bolar Exemption under Article 60 of the Patent Act. The IP Court in MSD v. China Chemical specified that the submission of an ANDA would not amount to the manufacture or sale of patented items, so Article 60 could not be invoked for an exemption over a non-infringing act. According to the court holding, Article 60 or the Bolar Exemption is not a justifiable defense in patent linkage litigation (page 21 of the Judgment).

The IP Court, in its opinion, prohibited China Chemical only from manufacturing the generic product at issue rather than also barring it from selling, importing or using the generic product, as requested by MSD. According to the IP Court, the purpose of patent linkage litigation is to deter patent infringement, and the court had weighed the risk of infringement as well as the means to prevent infringement; it is the court’s conclusion that MDS’s rights could be protected by the manufacture prohibition (page 75 of the Judgment). In fact, the prohibition makes it impossible for China Chemical to commit infringement.

The IP Court has rendered a watershed decision in IP Court Judgment No. 109-Min Zhuan Su Zi-46. Its impact on the patent linkage system as well as patent linkage litigation will reverberate for years to come.

 

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