COVID-19: impact of federal government measures on patents

Due to the current COVID-19 pandemic, the German government was forced to safeguard the health and care of its citizens also on a legal level.

As part of a corona crisis package, on 27 March 2020 the Federal Council approved the stricter provisions of the Infection Protection Act, in particular the draft law to protect the general public in the event of an epidemic situation of national importance. The law was signed by the Federal President on the same day and will enter into force after promulgation in the Federal Law Gazette.

To enable the Federal Government to react quickly and effectively in the event of a pandemic, the Federal Ministry of Health is entitled, during an "epidemic situation of national importance", under Section 5 of the Infection Protection Act (IfSG), to take measures by ordinance to ensure the supply of pharmaceuticals, medical devices and products for disinfection and laboratory diagnostics. This includes according to Sec. 5 para. 2 no. 5 IfSG that according to Sec. 13 para. 1 Patent Act (PatG) it can be ordered that an invention relating to one of the aforementioned products "shall be used in the interest of public welfare or in the interest of the security of the Federal Republic". This is to ensure a supply of these products in case of a crisis.

The expropriating order of use pursuant to Sec. 13 PatG applies to patents granted by the German Patent and Trademark Office (DPMA) and to European patents granted under the European Patent Convention (EPC) with effect for the Federal Republic of Germany. On the other hand, inventions do not fall within the scope if they have not yet been filed or if patent applications have not yet been disclosed.

The concrete use of such an invention can, for example, be arranged by license. The existence of the patent always remains unaffected; ie, the patent holder must tolerate the use, but retains his own right of use. In this case, the patent proprietor is entitled to appropriate remuneration pursuant to Sec. 13 para. 3 PatG. What is appropriate in a specific case will certainly be viewed differently by the Federal Ministry of Health and the patentee, especially since this remuneration will regularly compensate only a fraction of the losses which the patentee (or exclusive licensee) actually suffers because he cannot use the patent alone and in a profit-maximising manner.

The patentee has the possibility to challenge the expropriating order for use before the Federal Administrative Court. Such a challenge has, in principle, suspensive effect unless immediate enforcement has been ordered - the order for use would therefore not be effective until a final decision had been made.

However, the mere possibility of using the patent is not enough. Rather, a product based on the patent must also be placed on the market. In addition to taking actual steps, such as manufacturing and setting up a supply chain, this requires that the necessary regulatory requirements for products are met. These requirements differ depending on the regulatory qualification of a product. For example, if it is a pharmaceutical or a product for disinfection, a market authorisation procedure would have to be carried out; for a medical device, a conformity assessment procedure would be required. Such procedures can easily take up to months, although in situations such as the COVID-19 pandemic, exceptions or facilitations are quite feasible or have already been made: for example, in the area of the AMG Civil Protection Exception Ordinance, on the basis of official recommendations or orders or on the basis of legal ordinances¹.

The regulation in Sec. 5 para. 2 no. 5 IfSG abstains completely from the regulatory requirements for products. The grounds for the law are also silent on this subject. It can therefore be assumed that there is basically no relief in this respect for a third-party company acting on the basis of the expropriating usage order. This means that the third-party company in question may use the patent but must also meet the necessary regulatory requirements. The patent proprietor could take advantage of this fact: parallel to challenging the expropriating use order, he could start to ensure that the regulatory requirements are met. In case of doubt, the patentee will achieve this faster than a third-party company acting on the basis of the expropriating use order - because of the challenge and/or because the third-party company in question would have to procure further scientific material, such as documents or evidence, first.

In principle it is to be welcomed that the legislator wishes to ensure that the Federal Ministry of Health can also take crisis response measures in epidemic situations of national significance; this poses a decisive advantage in crisis situations. However, the provision in Sec. 5 para. 2 no. 5 IfSG must also be viewed critically. For example, because it could call into question the purpose of a patent and - like the other provisions - was knitted with a "hot needle". It remains to be seen how the law to protect the general public will affect patent practice and regulatory practice in the event of an epidemic situation of national significance.

See our Coronavirus (COVID-19) feature for more information generally on the possible legal implications of COVID-19.

¹ European Commission Recommendation No. 2020/402; Federal Institute for Occupational Safety and Health, General Provisions of March 4, 2020 and March 20, 2020; Federal Institute for Pharmaceuticals and Medical Devices, General Provisions of March 20, 2020.