The law that approves the new Industrial Property Code - Decree-Law 110/2018, of 10 December 2018 - amended the special regime for industrial property disputes between holders of patents related to medicinal products and companies that produce or distribute generic medicines which had been established by Law 62/2011, of 12 December 2011. The amendments to the said Law 62/2011 came into force on 9 January 2019.
Law 62/2011 produced a number of legal controversies and debates among scholars, arbitrators and higher courts. The amendments now in force address two of the most polemical aspects: the mandatory nature of arbitration and the validity defense.
In 2011 the Portuguese legislators established a regime of mandatory arbitration apparently with the intention was avoiding the lengthier State court proceedings. The special procedure provided by Law 62/2011 was preventive and expeditious and its final aim was to cut the delays of generic medicines entry in the market which had been identified by the European Commission.
The Constitutional Court confirmed that precluding the competence of the normal State court, the Intellectual Property Court, for the enforcement of patents or SPC in this specific sector, namely the transference of interim injunctive relief to mandatory arbitration, is compatible with the constitutional law (e.g. case 763/13).
However the 2018 law drafters considered that the circumstances justifying the mandatory nature of the procedure “were overcome”, possibly taking into account that a specialized intellectual property court is functioning normally since 2012.
The new rules provide that the mandatory character of the arbitration is repealed leaving to the claimant the option of initiating the special procedure at the Intellectual Property Court or, provided all parties agree, starting an ad hoc or institutionalized arbitration procedure. Consequently a party wishing to assert its patent or SPC under Law 62/2011 should submit the dispute to the Intellectual Property Court or, if the opposing party agrees, initiate voluntary arbitration, within 30 days counted from the publication of the application for marketing authorization or registration of the generic medicine on the INFARMED’s website.
Addressing another controversial matter, the new rules provide that in the arbitral proceedings the patent invalidity may be invoked and recognized with mere inter partes effects.
Law 62/2011 omitted any indication as to whether the defendant could raise validity issues whereas the Industrial Property Code stated clearly in article 35 that invalidity can only be declared by a judicial court. In the light of article 35 the dominant interpretation of higher courts’ was that the defendant wishing to argue the industrial property right invalidity must start an independent action at the IP court and request suspension of the arbitration procedure. However the Constitutional court came to consider that this solution was too cumbersome and an unproportioned limitation to the defense right (case 297/16). The solution now adopted by the 2018 legislators appears to be based on the interpretation of the Constitutional court.
Since arbitration procedures now can only take place where the defendant has agreed to such dispute resolution mechanism it is likely that new arbitration procedures will become absolute rarities and even more so the cases where invalidity is declared by arbitrators with mere inter partes effects.