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Manage your Intellectual Property in South-East Asia

Case Study 6 – Patent dispute in Southeast Asia

Background
A British pharmaceutical manufacturer is a market leader in the production of an anti-cancer drug, which it has been exporting to every major developed country for the last 20 years, and also more recently to developing countries, particularly in Southeast Asia.

The active ingredient of the drug was patented, but the original patent expired 3 years ago. However, a new improved process for making the drug was patented 10 years ago, and this patent is still in force in various countries, including Singapore, Malaysia, and Indonesia.

Two years ago, the manufacturer found out that a generic manufacturer based in Vietnam was making and exporting the anti-cancer drug to Malaysia, and being sold in these countries for half the price of their own drug. This was having a serious adverse effect on sales.

Advice
The British manufacturer was informed that patents are national rights, and therefore action could only be taken in the countries where a patent existed. In this case the manufacturer had not registered any patents in Southeast Asia.

A patent for a product is infringed if a third party makes, imports, sells, offers to sell, stores or uses the product without the permission of the patent owner. A patent for a process is infringed if a third party uses that process without the permission of the patent owner, and also if a third party makes, imports, sells, offers to sell, stores or uses the product directly obtained from that process.

The British manufacturer was advised to contact a local expert to determine the exact process steps being used by the generic manufacturer before engaging in litigation.

Outcome
It was not possible to take action against the generic manufacturer for infringement of the product patent as no patents had been filed in Southeast Asian countries (it is possible they would have had a longer term than those in developed countries due to differences in national laws).

In addition, it was not possible to take action against the generic manufacturer for infringement of the process patent in Vietnam directly, as no patent had been filed in this country. Since the process patent had been filed and published many years ago, it was also not possible to extend the protection to Vietnam.

However, the generic manufacturer was importing the drug into Malaysia. The local expert determined that all but one of the process steps used by the generic manufacturer were identical to that defined by the claims of the patent.

In the non-identical step, the claim specified that an ‘aliphatic alcohol containing 1-3 carbon atoms’ should be used as a solvent, whereas the generic manufacturer used acetonitrile for the same effect. On reviewing the patent, the Malaysian court determined that, while claims should be construed purposively (i.e. ‘what did the patentee mean’, not ‘what was literally stated’), the meaning of ‘aliphatic alcohol containing 1-3 carbon atoms’ was very clear (i.e. methanol, ethanol and propan-1-ol), and in fact only narrow references to ethanol were used in the examples. As such, the court held that use of acetonitrile instead of alcohol did not infringe the patent, and therefore the product was not made directly by the same process. Consequently the patent was not infringed.

The loss in sales was worth EUR 30,000. However, the cost of litigation was EUR 50,000.

Lessons Learnt:

  • Submit your patent applications in potential future markets in Southeast Asia.
  • Process patents are usually more difficult to enforce than product patents.
  • Malaysia is one of the few countries in Southeast Asia with a dedicated IP court – judgements may not be consistent in other countries.
  • The cost of litigation can be high (both financially and in managment time) and may outweigh the cost of lost business, so reaching a settlement is often more cost-effective.
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