Case in which an act of unfair competition (Article 2, Paragraph 1, Item 21 of the Unfair Competition Prevention Law) was contested in relation to patent linkage system

1. Summary
   The obligor (Bayer HealthCare LLC) notified the Ministry of Health, Labour and Welfare (hereinafter referred to as “MHLW”) and the Pharmaceuticals and Medical Devices Agency (hereinafter referred to as “PMDA”; collectively with MHLW, “MHLW, etc.”) that the manufacturing and sales of biosimilars of the obligor’s pharmaceutical products (hereinafter referred to as “Obligor’s Products”) infringed the patent in question (Patent No. 7320919, hereinafter referred to as “Present Patent”).
   This case concerns the obligee (Samsung Bioepis Company Limited) alleging that the above-mentioned notification constitutes an act of unfair competition as defined in Article 2, Paragraph 1, Item 21 of the Unfair Competition Prevention Act, and that it is likely to infringe on the obligee’s business interests, and has sought a provisional injunction against the obligor to stop the acts described in the petition, based on the right to seek an injunction under Article 3, Paragraph 1 of the Unfair Competition Prevention Act.
   The Tokyo District Court dismissed the obligee’s appeal, finding that the above conduct did not constitute unfair competition as defined in Article 2, Paragraph 1, Item 21 of the Unfair Competition Prevention Act.

2. Background
   The obligor and non-petitioner Regeneron Pharmaceuticals, Inc. jointly developed the Obligor’s Products, and the obligor’s affiliate, Bayer Yakuhin, Ltd. (hereinafter referred to as “Bayer”), began selling the Obligor’s Products in November 2012.
  Global Regulatory Partners, LLC (hereinafter referred to as “GRP”), the manufacturer and distributor of the Obligee’s Products in Japan, applied for approval to manufacture and sell the Obligee’s Products as biosimilars of the Obligor’s Products to the MHLW on May 31, 2023, based on Article 14, Paragraph 1 of the Pharmaceuticals and Medical Device Act (hereinafter referred to as the “Present Application for Approval”).
   The obligor obtained the registration of the patent on July 27, 2023 and submitted a Pharmaceutical Patent Information Report to the MHLW. The obligee, GRP and the MHLW held a meeting regarding the Present Application for Approval on September 21, 2023.
   On November 9, 2023, GRP removed wAMD (wet age-related macular degeneration) from the indications in response to the MHLW’s instructions, and on June 24, 2024, GRP received approval for the manufacture and sale of the Obligee’s Product with the indications changed to macular edema associated with retinal vein occlusion, choroidal neovascularization in pathological myopia, and diabetic macular edema. Thereafter, the obligor provided information to the MHLW, claiming that the Obligee’s Product infringed the obligor’s patent, as an act of notification by the obligor to the MHLW, etc.

3. Inventions of the Present Patent
   The description of claim 1 of the Present Patent is as follows (hereinafter, the invention described in claim 1 is referred to as “the Present Invention.”).
   [Claim 1] A pharmaceutical composition including Aflibercept as an anti-VEGF agent for use in the treatment of patients with wet age-related macular degeneration (wAMD) who have an active CNV lesion size less than 50% of the total lesion size as determined by fluorescein angiography, wherein a wAMD patient meets the following key inclusion criteria:
   – Classic Active subfoveal choroidal neovascular (CNV) lesions, secondary to AMD, including parafoveal lesions affecting the fovea, as revealed by fluorescein fundus angiography (FA) in the study eye;
   – ETDRS test eye best-corrected visual acuity (BCVA) of 73 to 25 letters (snellen equivalent visual acuity of test eye 20/40 to 20/320); and
   – Age 50 years or older;
and wherein a wAMD patient meets the following key exclusion criteria:
   – Total lesion size is greater than 12 papillary areas (30.5 mm2, including blood, scar and neovascularization) assessed by FA;
   – The subretinal hemorrhage is ≥50% of the total lesion area, or the size of one or more papillary areas if the blood is below the fovea (if blood is below the fovea, the fovea must be surrounded by 270 degrees of visible CNV);
   – Presence of CNV of origin other than wAMD, including subjects with polypoidal choroidal vasculopathy (PCV);
   – Presence of scarring, fibrosis or atrophy, including fovea indicative of virtually irreversible vision loss;
   – Presence of retinal pigment epithelium tears or fissures involving the macula; and
   – Presence of CNVs of origin other than wAMD, including history or clinical evidence of disease of any retinal vessels other than diabetic retinopathy, diabetic macular edema or wAMD.

4. Decision of the Court
4-1. Criteria for Decision
   After explaining the purpose and practice of the patent linkage system in Japan, the court ruled that the Pharmaceutical Patent Information Report Form “is voluntarily submitted by patent holders, etc. who manufacture and sell original drugs, and there are no particular restrictions on the content, etc., of the form, and does not prevent the above-mentioned patent holders, etc. from recording their own views on whether or not there is a patent conflict between the original drug patent and the generic drug.”
   In addition, Article 2, Paragraph 1, Item 21 of the Unfair Competition Prevention Act defines the act of a competitor who notifies or disseminates false facts that damage the business reputation of the competitor as one of the unfair competitions. The court stated that there is a “competitive relationship” between the patent holder of the original drug and the person applying for approval of manufacturing and selling a generic drug. The court then ruled that “if, under patent linkage, the act of the above-mentioned patent holder, etc., stating that there is a patent conflict between the patent of the original drug and the generic drug, contrary to a subsequently finalized court decision, were to immediately become illegal as a false notification, the above-mentioned patent holder, etc., would no longer be able to fully state his or her opinion on the existence of patent conflict in the Pharmaceutical Patent Information Report,” and therefore ruled that this could hinder the purpose and objective of the patent linkage system.
   From the above perspective, the court ruled that, as the standard for determining whether patent linkage constitutes unfair competition, the act of a patent holder of an original drug giving a false notification in a patent linkage system that there is a patent conflict between the original drug patent and the generic drug constitutes unfair competition as set forth in Article 2, Paragraph 1, Item 21 of the Unfair Competition Prevention Act if there are special circumstances that are deemed to be extremely unreasonable in light of the purpose of the patent linkage system.

4-2. Applicability of the criteria
<Applicability to the practice of the present invention>
   The court ruled that a use invention is a technical feature that “the unknown properties of a known substance are discovered and a new use with a remarkable effect is created based on said properties.” It also ruled that the “implementation” in Article 2, paragraph 3 of the Patent Act in case of a use invention means “producing, using, transferring, etc. a known substance solely for use in a new use”, and that the “implementation” in Article 2, paragraph 3 of the Patent Act in case of the Present Invention means “producing, using, transferring, etc. an anti-VEGF agent solely for administration to the specific patient group in question”.
   The court then ruled that the Obligee’s Product had not been applied for approval to be administered to the Specific Patient Group in question, and stated that “even if there were special circumstances that would indicate the probability that the obligee would deliberately sell the Obligee’s Product for purposes other than those for which approval was applied in this case, the evidential materials in this case were insufficient to clearly indicate such special circumstances”, and therefore found that the obligee’s manufacture, sale, etc. of the Obligee’s Product was not enough to be found to infringe the patent in question.
   Furthermore, the court ruled that even if the obligor took the view that “the manufacturing and selling of the Obligee’s Product infringed the patent right on the grounds that the Obligee’s Product would ultimately be administered to a certain percentage of the Specified Patient Group in question”, the Obligor’s Product was “manufactured and sold prior to the priority date in question, and therefore the Obligor’s Product, like the Obligee’s Product, can be recognized as having been administered to a certain percentage of the Specified Patient Group in question,” and therefore the manufacturing and selling of the Obligor’s Product constituted public working as defined in Article 29, Paragraph 1, Item 2 of the Patent Act, and the Patent in question should be invalidated.
   For these reasons, the court ruled that the Obligor’s notification that the manufacturing and selling of a biosimilar of the Obligor’s product would infringe the patent should be found to have been a false notification.
   The obligor responded by arguing that “due to changes in common technical knowledge, the manufacturing and selling of the Obligor’s Product before the priority date does not constitute public working of the patent, while the current manufacturing and selling of the Obligee’s Product satisfies the patent requirement.” However, there was no objective evidence of changes in common technical knowledge, and the obligor’s argument was denied.

<Applicability of “special circumstances”>
   The court acknowledged that the obligor’s notification that manufacturing and selling a biosimilar of the Obligor’s Product would infringe the patent at issue was a false notification, and stated that with regard to the submission of the Pharmaceutical Patent Information Report Form in the patent linkage system, “it is intended to be provided as internal material to enable the MHLW, etc. to determine whether or not a stable supply of generic drugs can be ensured, and giving a different notification before the court’s decision on whether or not there is a patent infringement is finalized does not immediately make it illegal.”
   The court then ruled that “since the prior biopharmaceutical (the Obligor’s Product) and the subsequent biopharmaceutical (the Obligee’s Product) are for the same indication (wAMD), and the target patient populations for both the prior biopharmaceutical and the subsequent biopharmaceutical necessarily include the target patient population of the Present Invention (the specific patient population), it is recognized that at least a part of the Obligee’s Product will be used for the specific patient population.” The court also ruled that “if the obligor’s view is adopted, then even if this is its own view, it may be possible to assert an infringement of the patent right,” and “it cannot be said that the obligor’s view is immediately inappropriate.”
   Furthermore, the court ruled that “if the obligor’s view on sufficiency is taken, the obligor alleges that the manufacturing and selling of the Obligor’s Products prior to the priority date did not constitute a public working of the patent, while the manufacturing and selling of the Obligee’s Products came to satisfy the patent due to subsequent changes in common general knowledge. In this case, the change in common general knowledge is prima facie the core issue.” With regard to this point, the court ruled that “a review and judgment based on the expert knowledge of a person skilled in the art is essential. At a stage when the obligor has not yet exhausted its arguments and presented evidence and has not yet exhausted its review by appointing expert committee members and considering their expert knowledge, the obligor’s above-mentioned claim cannot be immediately found to be inappropriate.”
   The court also ruled that “there had been no previous court decision in which the provision of information by patent holders, etc. in the patent linkage system constituted false notifications under the Unfair Competition Prevention Act, and no judicial precedent had been set for similar cases. Moreover, regarding the relationship between the patent in question and its biosimilars, similar patent infringement lawsuits have been filed in countries around the world, and the present case is positioned as part of that global dispute. Therefore, it can be said that there was an unavoidable aspect to the obligor’s notification in this case to the MHLW, etc. based on its own view.”
   In addition to these circumstances, the court also determined that “taking all the various circumstances that have arisen in this case into consideration, the obligor’s act of making the notice in this case cannot be avoided from being criticized as reckless. However, unless the obligor plans to continue making the notice in this case in the future, it cannot be said that the notice in this case was extremely inappropriate in light of the purpose of the patent linkage system, and the above-mentioned special circumstances cannot be recognized,” and ruled that the obligor’s act of making the notice in this case cannot be said to constitute unfair competition as set forth in Article 2, Paragraph 1, Item 21 of the Unfair Competition Prevention Act.

4. Comments
   The court set out the criteria for determining whether the act of a patent holder, etc., submitting a Pharmaceutical Patent Information Report in the patent linkage system constitutes unfair competition as stipulated in Article 2, Paragraph 1, Item 21 of the Unfair Competition Prevention Act. In other words, the court stated that the act of submitting a false notification in a Pharmaceutical Patent Information Report constitutes unfair competition if there are “special circumstances that are deemed to be extremely unreasonable in light of the purpose and objective of the patent linkage system”. In addition, regarding the “special circumstances”, the court stated that, regarding the submission of a Pharmaceutical Patent Information Report in the patent linkage system, “giving a different notification before the court’s decision on the existence of patent infringement is finalized does not immediately become illegal,” and stated its view that “even if it is a unique opinion, it can be argued as an infringement of the patent right in question,” thereby denying the existence of special circumstances.
   In the future, it will be important to prepare and submit Pharmaceutical Patent Information Report Forms for the patent linkage system, considering the findings of this judgment and the possibility of false notifications and special circumstances.
   The court also ruled that the “implementation” of a use invention “should be interpreted as producing, using, transferring, etc. a known substance for use solely in a new application,” and that off-label use “may be special circumstances that show the probability that the obligee will deliberately sell, etc. the Obligee’s Product for a use other than that of the application in this case, but the entire prima facie evidence in this case is insufficient to clearly show such special circumstances,” denying the infringement of the patent right in this case through the manufacture and sale of the Obligee’s Product. When examining the scope of effect of a patent right for a use invention for a pharmaceutical product, it is important to consider “special circumstances that show the probability that the obligee will deliberately sell, etc. the Obligee’s Product for a use other than that of the application in this case,” and this will be useful in future practice.
Regarding changes in common technical knowledge, the court stated that “examination and judgment based on the expert knowledge of those skilled in the art is essential,” and that “at the stage when sufficient examination with all arguments and evidence, including appointing expert committee members and considering expert knowledge, has not been conducted thoroughly, it cannot be said that the obligor’s argument is immediately inappropriate.” This suggests the need to utilize the expert committee system when making judgments on the patent linkage system, and is useful in considering the future practice of the patent linkage system.
   In addition, with regard to the concept of false notification (unfair competition) and special circumstances in the patent linkage system, it is necessary to accumulate court cases, and it is important to pay close attention to future trends in court cases.

https://www.courts.go.jp/app/files/hanrei_jp/519/093519_hanrei.pdf