On February 3rd, after extensive analysis, the National Economic Prosecutors office (FNE) released the results of a study that consolidates the effects that part of the Chilean patent protection system has on fair competition.
They released a report titled “Study on the system of supplementary protection of patents in Chile and its impact on fair competition,” which set its objectives to uncover and analyze “the effect on free competition resulting from law 20.160, which introduces the supplementary protection of patents, a modification required by the free trade and economic partnership agreements between Chile, United States and the European Union, respectively.”
The FNE made this analysis within the framework of implementing the Agreement of Inter-institutional Cooperation that is currently active with the Institute National of Industrial Property (INAPI). Therefore both institutions collaborate to introduce, within our system of patent protection, criteria that will help maintain an appropriate balance between industrial property rights and fair competition in national markets.
According to the report, the FNE found large distortions that are caused in the pharmaceutical industry regarding the examinations made by Industrial Property Court when determining whether or not to grant supplementary protection on an already approved patent. The Report stated, “They [INAPI] do not take into consideration the effects of granting unnecessary extensions within the protection period, thus hindering or preventing the entry of competitors.”
In regards to this, the FNE expressly states that “there are certain characteristics that exist in the Chilean system that have created a problem of interpretation with significant negative effects on competition laws. Specifically, since the beginning of the supplementary protection system, the term of guaranteed exclusivity for industrial property rights has been artificially increased and is currently at 15 years (patents processed and registered under the previous legislation to Law No. 19.996). This is also happening with the so-called “revalidation patents” (Inventions, improvements and industrial models or drawings patented foreign country that may also be patented in Chile by fulfilling the formalities and legal requirement), whose term has extended beyond the timeframe that the current legislative body that regulates it, expected.” They have come to argue that “the increase in the period of protection in these cases, lack any legal and economic justification and impose a high social cost, due to the unnecessary excess of market power by the applicant.”
Felipe Irarrázaval, the National Economic Prosecutor, stated that such term extensions impede “the admission of generics in the drug market for the treatment of diseases such as cancer and diabetes” (El Mercurio, February 2, 2016).
Various participants in the national market, among which the founding partner of our firm, Gabriel Zaliasnik, have been critiquing such protection in the academic sphere for years as its costs and externalities have been of continuing concern.
Moreover, the FNE’s interpretation of the Industrial Property Act makes it clear that certain patents would have been granted outside of what the law permits, reason why the cancelation would be justified. They also recommended “an extensive interpretation of the cancelation system of patents, also applicable to the system of supplementary protection” in order to obtain the cancellation, if applicable, of these additional protections.
It is important to note that for over 20 years, our firm’s departments of Antitrust, Regulated Markets, and Life Sciences have been actively involved in the debate over the access and control of drugs in Chile, specializing not only in litigation against patent infringements, but also in pharmaceutical regulations and regulatory litigation. Thus, the report prepared by the FNE describes the position that AZ has publicly maintained throughout its history. As a result, our firm is recognized in Chile as one of the best equipped firms who have greater professional abilities in matters of Pharmaceutical Regulation and Antitrust.
The complete report from the National Economic Prosecutors Office can be found here: PDF
Head of Litigation Group
Head IP Group