Litigation

Another judgment has recently been handed down in the ongoing global dispute between tobacco giants British American Tobacco (“BAT”) and Philip Morris International (“PMI”) over “heat not burn” alternatives to cigarettes. The judge has upheld the validity of two of PMI’s patents but found that they were not infringed by BAT.

Background

BAT and PMI are involved in litigation across the globe relating to heat not burn alternative tobacco products. Previous decisions in the UK have invalidated heat not burn patents owned by both BAT and PMI. In this trial BAT were seeking revocation of PMI’s patents EP (UK) 3266323 (“EP’323”) and EP 3741225 (“EP’225”) and PMI were alleging that BAT’s “glo” tobacco heating products infringed EP’323 but had dropped allegations of infringement in respect of EP’225. In parallel proceedings a German regional appeal court has recently ruled that BAT does not infringe the German designation of EP’323.

Heat not burn alternative tobacco products have been developed by tobacco companies such as BAT or PMI to produce nicotine products which contain fewer of the unwanted by products contained in cigarette smoke. This is because the temperatures generated by heat not burn products are lower than those generated by conventional tobacco products such as cigarettes. Various technologies, based on either electrical or chemical heating, have been developed since the 1980s, however, the early products were not commercial successes.

BAT’s glo products

BAT’s glo products are a variety of tobacco heating devices which are sold by BAT in the UK, whilst there are a variety of devices it was agreed between the parties that the differences between the devices did not matter. The glo products consist of various components but the point that mattered for this judgment is that the glo products have two independently controllable heating coils wrapped around a single steel tube which heats the tobacco.

PMI’s patents

PMI’s patents covered heat not burn electronic devices containing various elements. The main element focussed on in this case was the requirement in the patents for two separate heating elements, which allows the nicotine product, to be heated at different times to generate an aerosol. This was said to be an advantage of the patents as there would be greater control of the heating of the nicotine and less need to reheat the aerosol generated. This would lead to a better experience as reheated aerosol is said to taste stale. The judge found that it was a part of the claims of the patents that the multiple heating elements act separately from each other so that different parts of the heating substrate could be heated to different temperatures. Given that heat will transfer through any device the question of whether two heating elements are really acting separately was found by the judge to be a question of fact and degree and that there was not necessarily a clear dividing line.

Invalidity

BAT alleged that PMI’s patents were invalid for both added matter and obviousness.

The judge first addresses the added matter allegations which were that claims in PMI’s patents related to features from the patent’s disclosure which were stripped of context and not generally applicable to the invention and thus added new information about the invention. BAT’s argument was that as the patent application disclosed heat not burn devices with two or more heating elements which did not cover the entirety of the heated substrate, a claim requiring two or more elements that fully cover the entire heated substrate was impermissible. The judge rejects this argument in short order as he finds that the patent application did disclose a system where the entire substrate was covered by two heating elements, albeit it permitted further heating elements to be inserted between the two heating elements.

The judge then later addresses BAT’s argument that the patents were obvious over a patent application filed by a German company in 1998. This prior art was found by the judge to suggest that the way to improve heat not burn products over previous devices was to arrange the heating substrate as close as possible by the heat source by using a single conductive graphite loaded sheath within the nicotine substrate, rather than in the device. The judge then found that it was not obvious to move from a single heating element in the nicotine substrate itself to multiple different heating elements in the heat not burn device itself.

Infringement

The judge found that despite the device having two independently controllable heating coils, the single steel tube, which the heating coils were wrapped around, acted as a single heating element and so the glo products do not infringe EP’323 as the glo products do not have a “first heating element” and a “second heating element” as required by the claims. This decision by the judge is consistent with the approach of the German regional appeal court which found that EP’323 required two separate heating elements.

Takeaway point

The High Court and the German regional appeal court have both come to the same slightly counterintuitive conclusion that BMI ‘s glo heat not burn tobacco products do not infringe PMI’s patents as they do not have a first and second heating element as required by the patent despite containing two separate heating coils. This is a reminder, as the UK judge says, that in patent cases whether a device infringes is often “a matter of fact and degree”, and that the components in any particular device may not neatly align with those in the claims of a patent.

Data Exclusivity

Under the EU’s current framework, a newly authorised pharmaceutical will benefit from 8 years of data exclusivity and 2 years of market exclusivity, i.e. “the 8+2 regime”. The Commission is proposing to adjust this to a basic 6+2 regime, by reducing the period of data exclusivity by two years. However, there would be the possibility to extend this by up to four additional years, if certain criteria are met. Specifically:

There are also proposed changes to the regime in relation to orphan drugs:

Also in relation to the orphan medicines regime, the two years additional market exclusivity on completion of a paediatric investigation plan is abolished, but a six month SPC extension would be available, in line with the paediatric extension currently available for non-orphan drugs.

Data exclusivity is also proposed to be used as an incentive to encourage new antibiotics. In return for seeking authorisation for a "priority antimicrobial", a transferable data exclusivity voucher will be awarded. This can be used to extend data protection of a product for 12 months. That product could be the priority antimicrobial but need not be; instead the voucher could be used for another product, provided that product is within the first four years of data protection. The voucher would also be transferrable for use by another company.

Harmonised EU Bolar exemption

Although EU law makes provision for bolar exemptions to apply under national patent law, EU member states have applied this exemption differently. The Commission has therefore sought to harmonise the position. The proposal to do so would mean that a patent or SPC would not be infringed by activities conducted to generate data for an application for:

(i) a marketing authorisation of generic, biosimilar, hybrid or bio-hybrid medicinal products, and for subsequent variations;

(ii) health technology assessments (as they are defined in Regulation (EU) 2021/2282);

(iii) pricing and reimbursement.

The activities would have to be done exclusively for these purposes, but provided that is so, the exemption would apply to the submission of the application for a marketing authorisation as well as activities by third party suppliers and service providers.

This approach clarifies that wider regulatory processes, such as pricing, benefit from the exemption, and the fact that activities by third parties are also specifically exempted does clarify a point that was previously unclear. However, the proposal as drafted would apply not only to patents covering the medicinal product for which data is being generated, but potentially any patent used in the generation of the data, for example patents relating to research tools and devices. It is by no means clear if this was intentional (or even whether such an exemption would be compliant with TRIPS). This may be a point which the proposal is amended during the legislative process.

These proposals will now move to be considered by the European Parliament and Council before they can pass into law.

So, what does the Strategy include?

The Vision

The Strategy’s overarching vision focuses on three of the UK’s main strengths. These are R&D, design and IP and compound semiconductors. There are no surprises here. The UK already has an excellent university-based research base with a strong track-record in spinning out successful semiconductor companies. Design and IP refers to design companies like Arm and Imagination, two huge success stories, and the many smaller companies that follow in their steps. The compound semiconductor cluster in South Wales is well known to be world-leading in it’s R&D in the compound space. On the other hand the Strategy does not address manufacturing, acknowledging that the UK is not going to compete with Taiwan, China the US or even Europe when it comes to silicon-based semiconductor production. Again, no surprises here.

The Strategy is split into three core areas, which are: growing the UK sector; safeguarding the UK against supply chain disruption and protecting the UK against security. There are parallels here with other industrial policies on semiconductors. For example, the EU CHIPs Act includes provisions relating to European R&D and supply chain monitoring in Europe.

Growing the UK sector

The Government has promised up to £200M for the sector over the next three yea