Newsletter
PATENT COVERING NEW DRUGS DOES NOT EXCLUDE RESEARCH, TEACHING OR EXPERIMENTS CONDUCTED BEFORE APPLYING FOR DRUG REGISTRATION
According to the Patent Act, owner of a product patent has the right to exclude others from manufacturing, offering for sale, selling, using, or importation of the product covered by the patent. Where a patent covers a manufacturing process, the patentee has the right to exclude others from using the process covered by the patent, or offering for sale, selling, or importing the products made directly by the patented process. However, Article 57 of the Patent Act provides several exceptions to the patent right stated above. According to said Article 57, Item 1 of Paragraph 1, a patent shall not extend to any non-profit-making practice of the patented in-vention for research, teaching, or experimental purposes. The legislative intent of the provision is to avoid any unnecessary and unfair obstacle to research and development, which may nega-tively affect technical innovations and industrial development.
A "new drug monitoring system" has been im-plemented in Taiwan's pharmaceutical admini-stration system. Drugs conforming to the defi-nition of a "new drug" set forth in Article 7 of the Pharmaceutical Affairs Act (PAA) (i.e., drugs that are examined by competent authorities and have new ingredients or new therapeutic com-pounds, or which have been prepared by new means) must undergo clinical trials to prove their safety and effects before an applicant applies for a permit with the competent authorities. If the original developer of a new drug has been granted a patent, and if other parties apply for permits for such new drug, there may be a dis-pute about whether the patent of the original developer was infringed and whether the ex-perimental activities in clinical testing are ex-ceptions to the exclusive rights as discussed above.
The newly amended Paragraph 5 of Article 40-2 of the PAA, effective as of 7 February 2005, expressly provides that "a patent covering a new drug does not apply to research, teaching, or experiments conducted before an applicant ap-plies for a drug permit." The PAA which was formulated for "pharmaceutical affairs admini-stration" purposes, provides such a special pro-vision to limit the patent, but the provision is silent on the "non-profit behavior" requirement, which is inconsistent with what is set forth in Article 57 of the Patent Act. Issues about the relation between such two laws and the balanc-ing of different parties' interests will be clarified through future decisions by local courts.
After Paragraph 5 of Article 40-2 of the PAA took effect, the Taipei District Court pointed out in its Judgment No. 2004-Chi-77 that though the purpose of the newly amended Paragraph 5 of Article 40-2 of the PAA is to balance the strict exclusivity of a patent, such provision was not intended to reduce patent protection; furthermore, the provision should be interpreted strictly, and the scope of exception to a patent should be lim-ited to activities of research, teaching, and ex-periments. The court ruled that activities con-ducted by the accused party before applying for a drug permit with the Department of Health were only an addition of water to drugs manufactured based on the patented method, which did not involve use of any technology, and such activi-ties cannot be regarded as activities of research or experiments. The court concluded that the activities of the accused party are not those pre-scribed in Paragraph 5 of Article 40-2 of the PAA and the accused party had infringed the patent.
The case was appealed by the accused party, and the Taiwan High Court has recently dismissed the appeal.