This month, the Court of Justice of the European Union (CJEU) addressed a case of particular interest for pharmaceutical companies that are in the process of developing a new product. Regulatory and commercial considerations may cause marketing authorisation for the product to follow different timelines across jurisdictions. The Viridis Pharmaceuticals Ltd. (C-668/17 P) judgement, handed down by the Court of Justice on July 3, 2019 shows pitfalls that may occur when timing and interplay with the regulation are not carefully considered.
An appeal was brought by Viridis against a judgement of the General Court (GC), upholding the decision of the Board of Appeal of the European Union Intellectual Property Office to revoke its trademark “Boswelan”, for pharmaceutical products. The revocation was sought by a third party on the ground that the trademark was not put to genuine use in the European Union (EU) for a period of more than 5 years.
The applicant appealed, claiming firstly that the trademark had actually been used in the EU, even if only in the course of clinical trials. Secondly, Viridis contended that conducting clinical trials also clearly constitutes a proper reason for non-use, thus avoiding revocation.
Clinical trials and genuine use
Upholding the conclusions of the GC, the CJEU finds that a medicinal product which has not been authorised in the EU cannot be advertised to the public and thus, by definition, cannot be subject to commercial use (any use before the authorisation would not be intended to acquire or maintain a market share).
The CJEU also considered whether the use in clinical trials could be regarded as a preparatory activity in view of the commercialisation. The argument was rejected by the Court, which noted that preparatory activities may be relevant as genuine use of a trademark only if the actual commercialisation is imminent, and to the extent those preparatory activities have an external visibility and bear effects for the prospective consumers. The Court holds that the use of a trademark in a clinical trial is not an activity that is preparatory to an imminent commercialisation and that activity does not have, in any case, any external relevance for the public.
Clinical trials as grounds for non-use
The CJEU finds that clinical trials are not always and not necessarily a good reason for non-use. Two scenarios were considered:
- Where the time spent in clinical trials was objectively needed,
- Where the duration of the trial was unnecessarily long due to factors that were under the applicant’s control.
Again supporting the GC’s assessment, the CJEU states that in the Viridis case, time spent for the clinical trials was due to circumstances that were under the applicant’s control. The Court notes firstly that at the filing date the applicant knew (or ought to have known) that there was no certainty on when the commercialisation of the products could have been started. Secondly, that the GC correctly noted that the difficulties faced during the clinical trials (whose successful conclusion the applicant should have not taken for granted) were due to the applicant’s insufficient investment. Thirdly, the CJEU holds that the application for the regulatory authorisation of the clinical trials was filed three years after the filing of the trademark (on the assumption that the delay was not justified).
The CJEU concludes that the GC rightly did not generally exclude the relevance of clinical trials as a proper reason for non-use, but came to the conclusion that this was the case based on the specific circumstances.
The conclusion of the CJEU seems to be based on a strict interpretation of the law. While it is true that no advertising of a medicinal product is admitted before the grant of the marketing authorisation, exceptions still exist. According to the applicable national legislation, pharmaceutical companies may be able to offer so-called “early access programs”, which enable the company to supply unauthorized products to patients subject to strict requirements but not always and not necessarily free of charge. Such sales, however, were not reported in the case at issue.
The decision does not exclude that under certain circumstances the need to carry out clinical trials may be a proper reason for non-use when the time spent was not due to the applicant’s decisions. However, as a matter of fact, the distinction between circumstances under the applicant’s control and those which are not is generally not a clear one. Several factors play a role in the conduction of clinical trials and sufficient investments are by no means a warranty of success.
From a practical standpoint, it is worth noting that the development of a medicinal product is a complex process. Often, for technical or commercial reasons, regulatory approvals follow different timelines meaning that a marketing authorisation may come first in one jurisdiction and later (sometimes much later) in others. As a consequence, trademark protection is needed in the country of authorisation first. However, piecemeal trademark filings following the grant of the marketing authorisation in each relevant jurisdiction increases the risk of challenges from conflicting third party registrations.
There’s no one-size fits all solution, but this decision shows the importance of pursuing EU trademark protection according to a reasoned strategy, taking into account the regulatory development of the product. Steps to achieve this may include:
- First collecting information about: (i) the countries where the product marketing is planned; (ii) the envisaged scope, starting date and duration of the clinical trials and (iii) the expected duration of marketing authorization process, for each territory.
- Based on this information, planning when and where to file the trademark application(s).
- Closely Monitoring the 5-years period after trademark registrations to assess whether the specific circumstances can be deemed legitimate grounds for non-use, or adopt corrective actions (e.g. filing additional trademarks);
- Enforcing trademark rights against other companies with care to avoid actions backfiring on your trademarks. Indeed, the Viridis proceedings originated from a revocation claim filed by a third party, Hecht Pharma Gmbh which highlights the clear risk of underestimating third party reactions.