EPO rules threaten biotech industry

For years, the European Patent Office (EPO) has delivered excellent results and quality and thus has an outstanding reputation internationally. In the past two years, the agency has worked hard to improve and speed up its services. In a first step of the so-called “early certainty initiative”, the EPO started to reduce the time of patent search to six months (Early Certainty from Search) of filing, which was widely applauded by academic tech transfer offices, biotech and pharma companies. This year, the EPO started to extend early certainty to opposition. “For opposition, we have now committed to ensuring that the overall duration of the procedure is reduced, from the current 26 months for cases with no specific legal complications, down to just 15 months”, explains EPO President Benoît Batistelli. But a third element dubbed “Early Certainty from Examination”, which has been adopted now, is set to ruin most of biotech SMEs. 

According to Batistelli, “grants will be concluded on average within 12 months after the start of the examination procedure”. The 12 months prosecution deadline is no longer optional as under the current PACE programme of the EPO but mandatory. For biotech, pharma and medtech companies, which currently file 25% of all patents but which have long product development times with high development risk, the obligation leads to several problems, José Pfizer, Head of Intellectual Property at Martinsried-based drug developer 4SC AG said in an interview in the German biotech magazine |transkript: “To attract investors, biotechs are under pressure to file a patent application a long time before its validation through clinical proof of concept. If patents will be granted earlier, the companies will have to pay the so-called nationalisation costs [up to several hundred thousands euros] in a development stage of their invention, in which they can’t estimate whether their drug candidate will receive market approval.” While 90% of clinical Phase I projects fail to achieve market authorisation, the EPO’s good plan to grant patents earlier is set to generate tremendous cost for the biopharmaceutical sector, sending out a negative signal for innovation.

“To supplement the internal changes that are being orchestrated to achieve this [speeding up examination], it has been decided to increase the existing 75% refund of the examination fee to 100% when the application is withdrawn before start of substantive examination,” says Batistelli. “In addition, an additional 50% refund will be introduced in cases where the application is withdrawn after the first official communication.” What’s worse: There are so many applications on the table of patent attorneys that the companies won’t be able to pay filing all of them from their annual budget. Experts predict a cost explosion that will affect particularly innovative SMEs and academic institutions, which don’t have enough resources to survive under the new cost-risk-“balance”. 

Nobody in the sector was prepared to comment officially, yet. However, IP and litigation experts from Big Pharma and the biotech sector told European Biotechnology that they are very concerned that the currently high quality of examination will suffer from the shortened timeline, which will put EPO’s patent assessors under significant pressure. “The EPO currently is hiring many young patent attorneys who have just finished studies. As patent examination needs a lot of experience and time, it is probable that the amount of withdrawals due to purely formalistic reason will increase and quality of granted patents will suffer,” a Big Pharma litigation expert told European Biotechnology.

According to current plannings of the EPO, the Early Certainty from Examination will be implemented without any transition period.