TIPS^®  Taiwan Intellectual Property Special

The New Pharmaceutical Affairs Act Exempts Pharmaceutical Clinical Trials from Patent Infringement Liabilities

Article 57 (1)(i) of Taiwan Patent Law stipulated that “the effect of invention patent rights shall not extent to any practice of the invention for research, educational or experimental purposes only, with no profit-seeking act involved therein.” This is the “experimental use exemption” for the patent infringement liability in Taiwan.

It has been disputed that whether a clinical trial for a pharmaceutical company, for the purpose obtaining a medicine license in order to manufacture and sell the medicine is an experiment qualified for the experimental use defense. On February 7, 2005, one newly added provision to the Pharmaceutical Affairs Act took effect, and the new provision provided an exemption to the practice of a patented invention of another in a research, education or experiment by a pharmaceutical company for the purpose of obtaining the medicine license from the competent authority. The new provision is silent as to the “non-profit-seeking” requirement as set forth in Article 57(1)(i) of Taiwan Patent Law. Based on the Standard Act for the Law and Regulations, if a newer regulation provides a special regulation to the same matter as an existing regulation, the newer provision prevails.

The newly added provision of the Pharmaceutical Affairs Act is peculiar. The new provision is added to the Chapter of the Medicine Inspection and Recordation, which regulates the application of the medicine license. It is obscure that a provision in a Pharmaceutical Affair Act may provide an exception to the Patent Law. Moreover, by eliminating the “non-profit-seeking” requirement, the new provision expanses the scope of the experimental use exemption, and such an expansion may not be appropriate. The purpose of the clinical trial is to obtain the medicine license so that the medicine can be sold in the market, and when the medicine is out in the market, the price will include the costs spent during the clinical trial for sure. In other words, the clinical trial is a very important stage for the whole profit making operation of a pharmaceutical company. It is believed that using a patented invention of another in a clinical trial of a pharmaceutical company should not be exempted from the patent infringement liability for its profit-seeking nature.

In the U.S., the experimental use defense is a narrow exemption that has to apply carefully. Based on the U.S. Supreme Court, “so long as the act is in furtherance of the alleged infringer's legitimate business and is not solely for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry, the act does not qualify for the very narrow and strictly limited experimental use defense.” Although Japan does not have such a limited application for experimental use exemption, the application of the experimental use exemption in Japan is not unlimited. Tokyo District Court has ruled that the practicing a patented invention of another in a clinical trial right before the patent term expires may be exempted from the patent infringement liability. In contrary to the international trend, the newly added provision of the Pharmaceutical Affairs Act not only eliminates the “non-profit-seeking” requirement, but also fails to provide any time limit for application of the exemption. In the eyes of patent practitioners, such piece of legislation recklessly disregards the rights of patentees and should be subject to a careful review. Currently, we would like to suggest the patentees for patented medicine maintain monitoring on the grant of new medicine licenses and trace the medicines that are likely to cause infringement in the marketplace.