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Juergen Dressel, head of global patent litigation strategy at Novartis Pharma talks with us about the new Unified Patent Court and how it will change the patent litigation strategy in the pharmaceutical industry. Trisha Volpe of Barnes & Thornburg gives us an overview of the legal implications of Drones. And the European Patent Office recently threatened a Munich Staff Union Leader.
Rolf Claessen and Kenneth Suzan
Episode 37 – September 18, 2015
RC = Rolf Claessen
KS = Kenneth Suzan
TV = Trisha Volpe
JD = Juergen Dressel
Hi! My name is Juergen Dressel and I am the Head of Global Patent Litigation Strategy at Novartis Pharma AG in Basel, Switzerland and here I am speaking on a podcast for IP Fridays.
KS: Hello and welcome to this episode of IP Fridays. Our names are Ken Suzan and Rolf Claessen and this is THE podcast dedicated to Intellectual Property. It does not matter where you are from, in-house or private practice, novice or expert, we will help you stay up-to-date with current topics in the fields of trademarks, patents, design and copyright, discover useful tools and much more.
RC: Welcome to Episode 37 of IP Fridays. Today we have an interview with Juergen Dressel who is head of Global Patent Litigation Strategy at Novartis Pharma, Tricia Volpe of Barnes & Thornburg LLP tells us about the latest developments in the field of drones, and then we also have the very latest on the conflict between the Staff Union and the President at the European Patent Office.
This Monday, September 14, 2015, an important IT magazine, IX, had an article about the European Patent Office threatening the leader of the Staff Union of the European Patent Office in Munich. Supposedly she was summoned to the Investigative Unit that was established by the President of the European Patent Office and this summons to the hearing before the Investigative Unit was somehow leaked into the public so now the European Patent Office is threatening the leader of the Munich Staff Union to fire her and threatening other legal steps for disclosing confidential information about the summons to the hearing before the Investigative Unit. If you want to read the full story, unfortunately it is in German, you can head over to www.ipfridays.com/staffunion.
Now. Trisha Volpe of Barnes & Thornburg LLP has the latest about the legal implication of drones. Take it away….
TV: Technology once reserved for the military has the potential for exponential commercial growth. But drone technology has become a kind of technological intersection of debate – where intellectual property, economic impact, issues surrounding security and privacy meet.
Earlier this month members of the Senate Judiciary Subcommittee on Courts, Intellectual Property and the Internet examined the policy and legal implications of commercial drones.
We’ve seen their use expand already – and in some cases, attract headlines. Recently, a drone crashed on the White House lawn. Another crashed into the stands at the U.S. Open. Amazon has proposed delivering packages by drone. The potential seems limitless.
Currently, the FAA has in place temporary guidelines and grants permission to use drones for commercial purposes on a case by case basis – requiring users to apply for an exemption called the Section 333 Exemption.
Chris Polychron, President of the National Association of Realtors told subcommittee members the real estate industry represents a good portion of those exemptions…urging lawmakers to support the expanded use of commercial drones.
Chris Polychron: “The potential applications for UASs in real estate are plentiful and will grow. Currently UASs can provide the opportunity for real estate practitioners to offer photographs and videos of properties that would otherwise be difficult to obtain. Using UAS technology to do the same thing is typically less expensive, less time-consuming and less dangerous for everyone involved. As UAS technology progresses, the type of applications will grow as well.”
Supporters also point to potential uses in the insurance and energy industries, news, sports and film industries – and even for delivering emergency supplies to dangerous places.
However, those concerned about safety and the potential impact to civil liberties urge a more cautious approach.
In the air – concerned about sharing airspace and the potential for collisions, the Airline Pilots Association, the main union representing U.S. and Canadian pilots, have called for a go-slow approach to permitting wider use of unmanned aircraft systems.
And from the ground – civil liberties advocates want tighter controls as well.
Chris Calabrese testified at the subcommittee hearing on behalf of the Center for Democracy and Technology.
Chris Calabrese: “There are three key realities that should drive congressional action around drones. The first is that unmanned aircraft systems are a promising technology that have the potential to erode civil liberties through pervasive surveillance. The second is that current laws do not provide strong privacy protections from government or private unmanned aircraft invasions. This lack of privacy protection undermines public trust in drone technology which holds back the industry.”
Calabrese also asked lawmakers and the drone industry to address civil liberties through legislation and an industry code of conduct.
A tough balancing act for lawmakers and federal regulators – as an important deadline approaches to integrate drones into the national airspace.
The FAA has proposed a framework of regulations to allow routine use of some small drones under 55 pounds, a proposal that would, among other things, limit flights to daylight and include height restrictions and operational limits. But it’s not clear yet when and if the proposal will become a mandate.
Reporting for IP Fridays, I’m Trisha Volpe.
RC: Thank you Trisha. Now, we have the interview with Juergen Dressel, Head of Global Patent Litigation Strategy at Novartis Pharma, a major player in the pharmaceutical industry. He has been in the pharmaceutical industry for the past 32 years and he has worked for the generics but now he has joined the originator side and is in his current or a similar position for the last nine years. Thank you for being on the show Juergen.
JD: Ah, my pleasure.
RC: So it seems that the UPC will be established and the Unified European Patent will be established so do you think the pharma industry, and in particular Novartis, will use the new European Patent with Unitary Effect?
JD: Absolutely. There is no way of actually avoiding using this patent. I think it is a logical consequence of the European Union and it reflects the globalization with the big economic blocks which we experience like the United States and China and we obviously have to remember the market of .5 billion people in the European Union. I also think it is a logical consequence of the European Patent Convention which was responsible for granting the patents. Of course, it’s intimately linked to the Unified Patents Court so you cannot imagine the European Patent with the Unitary Effect without the Unified Patents Court and, as you know, patents are extremely important for the pharmaceutical industry when you look at our huge research and development efforts with very, very long development times for the drugs and also very high expenses.
RC: So you say you will embrace the Unitary Effect of the European Patent. What do you think could be the drawbacks of the new system?
JD: I think the current drawbacks, and I hope it is only a teething problem, is that important countries will not play along. Spain, Italy and Poland are currently not included and that will, of course, add substantial translation costs because under the current system, the European Bundle Patent, when we use only a selection of those for maybe not so important inventions, we will still at least include Spain and Italy so we will have the translation costs into Spanish and Italian. I hope this will eventually change and that they will join over time.
RC: It seems that Italy just took the first steps to join the system, right?
JD: Yes. Exactly.
RC: But Spain is still hesitant. You have a really long experience in patent litigation on both sides; generics and originators. How do you think that the Unified Patent Court will change the litigation strategy of Novartis as an originator?
JD: It is certainly an additional tool which we have in addition to the national litigation that we currently have so it will be good to try it out. We obviously don’t want to stand by at the sidelines. We want to play an important role when it comes to actually shaping this European Patent and especially the UPC but we will need to decide on a case-by-case basis which patents we, in the end, will opt out and which ones we will leave in the system because of the risks that are associated here with such a transition period. We know very, very little how this is actually going to work. As I emphasized earlier, these patents are so extremely important for our industry. You can’t imagine what our business would say if we had to tell them that we made the wrong decision by leaving the patent in this system, although we haven’t really tried it out, and one of our crown jewels goes down the drain.
RC: So you are saying that you will actually have a parallel system? You will try to have national patents as well as the unified patents?
JD: We will. Probably not for the same patents or though even that you could imagine for some with provisionals. Where there are similar patents, one could be in the system and one could be __________________ as a matter of principle. But I guess rather we will distinguish according to the importance of the patent.
RC: Right. I mean, the major advantage for many people seen in the reduced costs so if you are saying you will have in parallel the Unified Patent as well as National patents, probably you will only have National Patents in the most important markets in the future? Like you probably won’t have National Patents in Romania anymore? Or will you also have National Patents in Romania and parallel to the Unified Patent?
JD: Costs are not such a huge factor in our industry; at least not for the patent. So usually when we have a patent that covers a commercial aspect of a drug, yet the active ingredient or formulation or something like that, then we usually validate it at least in the traditional European Patent in each and every country of the European Dominium and so usually we only have defensive patents with the smaller countries.
RC: I see. So currently there are a lot of judges training already for the new Unified Patent Court. Are you afraid of judges with little or no experience in patent cases dealing with the invalidity of EU-wide patents?
JD: Yes. Of course we are afraid of that and that is, again, due to the lack of experience we have until now. I think the people who are responsible for selecting the judges and also for setting up the whole system try to mitigate this issue. You are probably familiar with the system UPC and you know that the local division with less experience they will actually have two judges from the experienced patent judges pool. What I am a little bit worried about is the same provision does not seem to exist for the regional division, so that could be an issue. In the central division, of course, we would expect experienced judges. Again, a lot will depend on whether you are actually able to attract one of those experienced judges. What I am hearing until now is that all the well-known judges want to join, they want to play a role, but I guess it will heavily depend on the details which still need to be hammered out. Some of those details are, for example, salaries, which some countries are quite hesitant to give a decent salary to these judges. When you pay peanuts, you get monkeys.
RC: That’s true, and also there is a big difference in the number of cases in the countries. Let’s say we have around 2,000 patent litigation cases in Europe each year and 1,200 are in Germany and only 50 in the UK and there are actually 14 countries I think where there is actually basically no patent litigation going on at all. From these countries there will also be judges recruited to the UPC.
JD: Certainly. Again, they are trying to actually bring those judges on board. You know a training center in Budapest and there is actually training already ongoing at this point in time in Germany, the U.K. and probably the Netherlands where you do have the bulk of the pharmaceutical patent litigation so I do hope that these judges from the other countries will be very bright people that just lack experience and so I am optimistic that eventually it will work out but it will also have its teething problems and, of course, you don’t want to have your most important case in such a transition period. This is something that any reasonable person will be afraid of.
RC: Right. I am also optimistic actually that it will take some time but the judges who have currently no or little experience will quickly pick up I guess.
JD: So let’s keep our fingers crossed.
RC: Right. So how do you think the generics will react to the new system?
JD: I can only speculate how that is going to work but I think similarly to us the generics which in the meantime, especially the big generics, have become very, very sophisticated in pharmaceutical patent litigation. They will also consider the system as an additional tool. Also, they will play on it like on the keyboard of a piano and they will use this tool in order to eliminate a patent threat on the European level. For example, by invalidation or by declaration of non-infringement and they can clear the way across the whole of the European Union but at the same time you still have other tools like the EPO where you also can clear the way so I think it will add to the repertoire of possibilities for generics.
RC: Do you think the new system favors the generics or favors the originators?
JD: That is a very, very difficult question to answer, especially in the absence of any experience. Of course, the human factor will play a role but I guess your question is more aimed at when you look at the rules is that actually more pro-generic or pro-originator. I think all in all it is a relatively balanced system. Also, I am not absolutely concerned as an originator. I think in the end the proof comes with the eating of the pudding so we will have to see how these different regulations and rules will work out. But I think all in all the people who are responsible for the system have done a pretty good job in order to achieve a balanced system.
RC: The EPO just released the annual fees for the European Patent with Unitary Effect. Are you happy with the fees?
JD: I think it is far too high. I told you before that this is not our biggest concern, the fees, but I think in general an opportunity has been lost here for political reasons. I guess a compromise had to be made in order to keep the National Patent Offices happy but I think in the end, at least in the long run, this whole system should become a really, really cheap system similar to the _____________ system. So I don’t think they have actually realized the savings potential, at least a theoretical one.
RC: Yes. You said that the pharmaceutical industry will probably not care too much but I am sure there are many industries, especially in the medium-sized companies, who will care about the cost and they might hesitate to use this system.
JD: I think so too. That will be an issue. I think it is not clear yet whether they want to take the top three or the top four countries but when it comes to the fees at least for the European Patent with Unitary Effect but keep in mind that you can still have countries like Spain and Poland that are very important markets and at least at this point in time still need ___________ which will still require translation costs so translation costs are one big part of the bill in the end.
RC: That was very interesting to hear your perspective. If people want to learn more about you, where can they reach you?
JD: They can reach me under my e-mail address which is Juergen.Dressel@Novartis.com.
RC: Thank you very much for being on the show.
JD: My pleasure again Rolf.
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