Should health and life insurers use the data collected by health-related apps?

With the generalisation of health-related apps, health and life insurers are keen to use the collected data to improve the accuracy of their insureds’ profiles. This trend raises important questions in terms of privacy but also in terms of risks mutualisation in society.

A bit of context

With the increase of technology and the ability of our smartphones or smartwatches to collect our heartbeats, count our steps, and assess our pace, developers have naturally seen an opportunity to develop health-related apps.

These apps track running performances (Runkeeper, Runtastic, Nike+, Fitbit…), monitor diet (MyFitness Pal…), analyse sleeping habits (Fitbit, Jawbone, isommeilr…), etc.

Citizens are using more and more of these health-related apps in their daily life.

Of course, health and life insurers are greatly interested in the health data collected by these apps. This is not necessarily a bad thing as this can mean that insurers can better assess the risk they insure and its evolution, and request more accurate premiums from their policyholders. Nonetheless, this trend also raises important questions in terms of privacy, but also in terms of insurance paradigm as such.

The privacy issue

The privacy issue is rather obvious. One might reasonably desire to keep certain aspects of one’s life private.

The privacy issue is not limited to the insurance world. Privacy is primarily addressed by the EU General Data Protection Regulation (GDPR). The purpose of this news is not to examine this regime in details. Let us simply remind that under Article 9 of the GDPR, health-related data are considered as “special categories of data”.

The process of this kind of data is subject to higher requirements and may only serve highly valued purposes. The data subject may, however, always give its explicit consent to the use of his/her health-related data (Art. 9, 2, (a) GDPR).

This explicit consent is rather well protected and must be free and genuine. For instance, a service provider may normally not monetise or subject the delivery of its services to the data subjects’ consent.

The segmentation issue

Where do we stand?

The insurance industry is based on the idea of risk mutualisation. This principle can be extremely useful to the operation of a society. In a nutshell, the healthy clients’ premiums pay for the insurance indemnity of the ill insured persons.

Health and life insurers have always tried to assess the risks presented by insured persons with the highest accuracy possible using statistical data. Typically, all things being equal, a young sporty person is less likely to die than and old person suffering from diabetes. This reality will normally result in the young person paying a lower insurance premium.

The division of insured persons in categories (e.g. young and healthy versus old and ill) is called “segmentation”. To each category corresponds a level or premium, certain categories of risk being simply refused by insurers (depending on their risk appetite). This is the reason why health and life insurances are almost systematically subject to a medical questionnaire and, in some cases, a medical examination.

Naturally, the more accurate and detailed the segmentation is, the less insurance services offer a mutualisation of risk to society and – arguably – the less useful become insurance services to society as a whole.

This risk has been identified by the Belgian legislator. One of the main Belgian attempts to avoid the risk of “demutualisation” is embodied in Article 44 of the law of 4 April 2014 relating to insurances. Under this provision “Any segmentation made in terms of acceptance, cost, and/or extent of the insurance cover must be objectively justified by a legitimate purpose, and the means to achieve this purpose must be appropriate and necessary”.

This provision lays down the legislator’s ideal but it is very broad and offers a lot of room for interpretation.

What’s next?

Certain members of Parliament fear that connected devices and health-related apps unduly change the paradigm of mutualisation in the insurance sector.

To prevent this potentiality, they have filed a law proposal with the intention of prohibiting the use by health and life insurers of personal data collected by connected devices. The law proposal further prohibits to subject insurance acceptance, pricing and/or extent of the insurance cover to the use by the insured person of health checkers and the sharing of data collected by such health checkers with insurers.

Practically, if enacted, the law proposal would bring a new Article 44, § 2nd, to the Law Insurances:

In derogation to Article 43, § 1st, this paragraph applies to the following insurance contracts:

1° Individual life insurance;

2° health insurance […].

No segmentation can be applied to acceptance, pricing and/or extent of the insurance cover subject to the condition that the policyholder accepts to acquire or use a health checker, accepts to share the data collected by the health checker, or subject to the condition that the insurer uses such data. The processing of the personal data collected by a health checker, relating to the way of life or health of the policyholder, is prohibited”.

The concept of “health checker” would be defined in a new Article 5, 53°, of the Law Insurances as “a device allowing the measurement of one or more variables associated to the way of life or the health of the policyholder”.

At the end of January 2020, the Belgian Data Protection Authority (“DPA”) issued an opinion on the law proposal.

The law proposal is primarily based on Article 9.4 of the GDPR, according to which “Member States may maintain or introduce further conditions, including limitations, with regard to the processing of genetic data, biometric data or data concerning health”.

The proposal is further based on abovementioned Article 9, 2, (a) of the GDPR, which provides that special categories of data (such as health-related data) cannot be processed unless “the data subject has given explicit consent to the processing of those personal data for one or more specified purposes, except where Union or Member State law provide that the prohibition […] may not be lifted by the data subject”.

According to the DPA, these two provisions of the GDPR effectively allow the Belgian legislator to introduce additional limitations to the processing of health data so that the law proposal is compliant with the GDPR.

Conclusion

While nothing is (yet?) cast in stone, the discussed law proposal is a perfect illustration of the difficult balance regulators need to strike between innovation and the preservation of existing paradigms.

Interestingly, it shows a strong desire of certain members of Parliament to safeguard the principle of mutualisation of risks in the insurance industry. This mutualisation is often seen as a key principle to the health system as a whole.

The DPA’s opinion is also a good reminder that the GDPR, although an EU regulation, still allows Member States to adopt stricter requirements when it comes to protecting special categories of data. In the case at hand, the law proposal somehow “protects the data subjects from themselves” by revoking their right to agree to certain use of their connected devices.

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For any question or assistance, please contact Thomas Derval
td@simontbraun.eu  |  +32 (0)2 533 17 09

Comment faire face au coronavirus (COVID-19) sur le lieu de travail ?

Update 18 Mars 2020  |  L’épidémie de coronavirus prend de plus en plus d’ampleur dans notre pays et les mesures prises par le gouvernement sont de plus en plus contraignantes pour les citoyens, avec un impact direct sur leur vie professionnelle.

Il nous semble dès lors utile de rapidement rappeler les mesures qu’il est possible de mettre en place au sein de votre entreprise pour faire face aux décisions prises par le gouvernement et aux risques de contamination.

Chômage temporaire

Suite à l’épidémie de coronavirus, les employeurs qui sont directement impactés peuvent recourir à deux types de chômage temporaire, les dispensant de payer le salaire à leurs travailleurs :

  1. Chômage temporaire pour force majeure

Si le coronavirus crée des situations rendant impossible le travail effectif de la main-d’œuvre ou d’une partie de celle-ci, l’employeur peut tout d’abord envisager de demander un chômage temporaire pour force majeure. Si cette demande est acceptée, le salarié reçoit une allocation de l’office national du chômage (RVA/ONEM) pendant les jours d’inactivité.

Pour demander un chômage temporaire, l’employeur doit faire une demande électronique le plus rapidement possible au bureau du chômage du siège d’exploitation en indiquant “coronavirus” comme motif de force majeure. En outre, il doit également introduire, par courrier ou par e-mail au bureau de chômage compétent, un dossier qui apporte des explications circonstanciées démontrant que le chômage est la conséquence d’une force majeure due au coronavirus (c’est-à-dire l’événement qui n’est pas lié aux propres actions de l’employeur). Cette étape s’ajoute aux exigences formelles habituelles. La reconnaissance du chômage temporaire pour cause de force majeure se fait, selon le site de l’ONEM, dans les 3 à 4 jours.

D’après les informations reprises sur le site de l’ONEM, le régime de chômage s’applique uniquement aux travailleurs qui sont en théorie aptes au travail mais qui:

(i) ont été mis en quarantaine sur instruction des autorités, ; ou

(ii) dont l’employeur dépend de fournisseurs situés dans les régions touchées ; ou

(iii) dont l’employeur a été contraint par le gouvernement de suspendre totalement ses activités (notamment, les commerces autres qu’alimentaires et pharmacies, les employeurs actifs dans le secteur culturel, festif, récréatif, sportif et horeca sont fermés).

Nous supposons qu’il en sera de même pour les travailleurs qui occupent une fonction pour laquelle le télétravail à domicile ne peut s’appliquer et dont l’employeur ne sait prendre les mesures nécessaires pour garantir le respect des règles de distanciation sociale imposées par le gouvernement (à savoir le maintien d’une distance d’1,5 mètre entre chaque personne) et est dès lors contraint de fermer.

Pour les commerces qui, malgré la fermeture obligatoire, sont encore en mesure d’offrir des services limités (par exemple, un service traiteur pour un restaurant obligatoirement fermé), du chômage temporaire pour cause de force majeure peut également être demandé pour tous les jours où les travailleurs ne peuvent pas être occupés. Ainsi, à titre exceptionnel, dans ce régime, les jours de chômage peuvent alterner avec les jours de travail.

Les travailleurs qui, en raison de la suspension des cours dans les écoles, restent à la maison pour s’occuper de leurs enfants, ne peuvent pas être mis en chômage temporaire pour cause de force majeure pour cette raison, puisque les écoles doivent prévoir un accueil pour tous les enfants.

Par contre, selon l’ONEM, le simple fait que les travailleurs reviennent des régions touchées ou qu’ils aient prétendument été en contact avec des personnes ayant séjourné dans ces régions ne suffit pas pour qu’une demande de chômage pour force majeure soit acceptée. En outre, si les employeurs prennent des mesures préventives limitant la probabilité que leurs travailleurs soient infectés par le coronavirus, ils ne se verront pas accorder le chômage temporaire dû à des circonstances imprévues pour les employés touchés par cette mesure (par exemple, les employés auxquels on a demandé de ne pas venir travailler temporairement ou de faire du télétravail).

En cas de chômage temporaire pour force majeure, le travailleur est dispensé de stage. Par conséquent, il ne doit pas prouver en premier lieu un certain nombre de jours de travail avant de pouvoir ouvrir le droit aux allocations. Le travailleur reçoit 65 % de sa rémunération moyenne plafonnée (plafonné à 2.754,76 EUR par mois). Un précompte professionnel de 26,75 % est retenu sur l’allocation. Jusqu’au 30 juin 2020, le montant de l’allocation de chômage temporaire est porté à 70% de la rémunération moyenne plafonnée.

L’ONEM a annoncé qu’il acceptera les demandes basées sur le coronavirus jusqu’au 30 juin 2020. Il pourrait revoir sa position en fonction des développements futurs.

Attention ! Les employés qui sont incapables de travailler pour cause de maladie ont le droit de recevoir leur salaire normal pendant une période allant en principe jusqu’au premier mois de maladie (salaire garanti), aux frais de l’employeur, et ne peuvent pas entrer dans le régime de chômage temporaire payé par l’État.

  1. Chômage temporaire pour raisons économiques

En dehors de la situation spécifique du chômage temporaire rémunéré par l’État lié au coronavirus, les employeurs touchés par une baisse de leur activité pourraient également bénéficier du chômage temporaire pour des raisons économiques pour leurs employés, s’ils remplissent les conditions y afférentes.

Pour ce faire, l’entreprise peut introduire une demande auprès du ministre de l’Emploi pour être reconnue comme entreprise en difficulté sur la base de circonstances imprévisibles qui entraînent, sur une courte période, une diminution substantielle du chiffre d’affaires, de la production ou du nombre de commandes. L’employeur ne peut envoyer la communication prévisionnelle de chômage temporaire pour raisons économiques prévu au bureau du chômage compétent qu’après que l’ONEM ait été informé de la reconnaissance en tant qu’entreprise en difficulté. Pendant la procédure de reconnaissance en cours, une demande de chômage temporaire pour cause de force majeure peut être introduite, à condition que l’employeur puisse démontrer qu’il a entamé la procédure préliminaire de reconnaissance en tant qu’entreprise en difficulté ou qu’il s’est engagé à le faire.

Le travailleur qui est mis au chômage temporaire pour des raisons économiques doit remplir les conditions normales d’admissibilité. Le travailleur reçoit 65 % de sa rémunération moyenne plafonnée (plafonnée à 2.754,76 EUR par mois). Un précompte professionnel de 26,75 % est retenu sur l’allocation. Jusqu’au 30 juin 2020, le montant de l’allocation de chômage temporaire est porté à 70% de la rémunération moyenne plafonnée.

Dans les situations non reconnues par l’office national du chômage comme étant du chômage temporaire, il sera beaucoup plus difficile pour l’employeur de suspendre valablement son obligation de payer le salaire.

Mesures nécessaires pour protéger la santé, la sécurité et le bien-être des travailleurs

En vertu du Code sur le bien-être des travailleurs, les employeurs sont tenus de prendre des mesures préventives pour protéger leurs employés contre les problèmes de santé et de sécurité sur le lieu de travail. À cet égard, la loi belge oblige les employeurs à effectuer une analyse des risques d’exposition des employés à des agents biologiques (tels que les virus). L’analyse des risques doit inclure les mesures nécessaires et appropriées pour minimiser les risques d’exposition au coronavirus (par exemple, un régime d’hygiène des mains sur le lieu de travail, des directives pour prévenir la contamination, une interdiction de voyager dans les pays touchés, une limitation des réunions internes ou avec des clients, etc.).

Les travailleurs ont également un rôle important à jouer dans la santé et la sécurité sur le lieu de travail. Ils doivent coopérer pour permettre à l’employeur de respecter ses obligations. Il s’ensuit que les travailleurs doivent se conformer à toutes les instructions légitimes et raisonnables données par l’employeur pour préserver la santé et la sécurité au travail, comme, par exemple, l’obligation pour les travailleurs de travailler à domicile ou le simple refus d’accès à certains travailleurs à risque. Toutefois, il convient d’éviter que les consignes données ne puissent être interprétées comme une modification unilatérale des conditions de travail pouvant conduire à un « licenciement déguisé ». Il ne serait ainsi pas non plus possible d’imposer aux travailleurs qu’ils prennent tous leurs jours de vacances pour faire face à la crise.

Mettre en place le télétravail occasionnel

Depuis ce 18 mars, le télétravail est obligatoire dans toutes les entreprises non essentielles (voir la liste reprise dans l’Arrêté ministériel du 18 mars 2020), quelle que soit leur taille, pour tous les membres du personnel dont la fonction s’y prête.

Pour rappel, les caractéristiques du télétravail occasionnel sont les suivantes :

  • comme pour le télétravail régulier, il peut être effectué au domicile du télétravailleur ou en tout autre lieu choisi par lui ;
  • il ne constitue qu’une modalité de l’organisation du travail et n’induit aucune modification des droits et obligations du télétravailleur occasionnel, tels qu’applicables les jours où il effectue son travail au sein de l’entreprise même, à l’égard de ses collègues travailleurs qui effectuent le même type de prestations dans les locaux de l’employeur ;
  • il doit être effectué dans le cadre de la durée du travail applicable dans l’entreprise afin de permettre un encadrement par l’employeur de l’autonomie du travailleur dans l’organisation de son travail. Le travailleur devra donc prester le nombre d’heures prévues dans son horaire de travail, sans avoir à respecter strictement son horaire de travail à cet égard.

Le travailleur qui veut faire usage du télétravail occasionnel doit en faire la demande à son employeur au préalable et dans un délai raisonnable, en indiquant le motif. En cas de force majeure, ce délai peut être très court, et le travailleur pourrait, par exemple, informer son employeur par téléphone ou par e-mail lors de la survenance de l’événement.

Le travailleur n’a aucun droit absolu au télétravail occasionnel. L’employeur peut en effet refuser sa demande s’il a des motifs fondés pour ce faire, liés, par exemple, à des impératifs propres à la fonction concernant le fonctionnement du service ou de l’entreprise.  Le gouvernement a décidé que si le télétravail ne pouvait être mis en place, l’employeur devait prendre des mesures nécessaires dans l’entreprise pour garantir le respect des règles de distanciation sociale (à savoir le maintien d’une distance d’1,5 mètre entre chaque personne). A défaut, l’entreprise doit fermer, sauf si elle est considérée comme « essentielle ».

Soulignons enfin que l’employeur et le travailleur doivent trouver un accord, par écrit ou oralement, sur certains aspects du télétravail occasionnel. Cela concerne :

  • la mise à disposition éventuelle par l’employeur de l’équipement nécessaire et le support technique ;
  • la prise en charge éventuelle par l’employeur des frais relatifs au télétravail occasionnel ; et
  • l’éventuelle accessibilité du travailleur pendant le télétravail occasionnel.

Plus les choses sont claires dès le départ, moins il y aura de discussions par la suite.

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Nous restons bien entendu à votre disposition pour toute question que vous pourriez avoir en la matière et vous assister dans la gestion de cette crise sanitaire dans votre entreprise.

Pierre Van Achterpva@simontbraun.eu – +32 (0)2 533 17 36

Patent dispute settlements under scrutiny by the CJEU: the crossroads between IP & competition law

Introduction and context

It is safe to say that on 30 January 2020, the Court of Justice of the European Union (hereafter the “CJEU”) handed down a landmark decision in EU IP and competition law. The CJEU writes a new chapter in the patent dispute settlements saga, and more particularly in the debate commonly known as “pay-for-delay”. To recall, in the context of the pharmaceutical sector, “pay-for-delay” is a term used for agreements between originator pharmaceutical companies and generic manufacturers where the latter agrees for a certain period not to enter the market with generic medicines in exchange for a value transfer.

The question arose whether there was an issue with competition law. It is particularly hard to answer when it takes place in the context of a settlement between the originator company and the generic manufacturer following a real dispute (i.e. patent dispute settlements). Ever since the European Commission launched its sector inquiry regarding patent dispute settlements that ended in 2009 (the full first report available here and the latest report of 2018 here), where the issue was brought to the surface, market players and practitioners have been eager to know the CJEU’s take on the matter.

There has been a belief that competition rules on restrictive agreements do not apply to settlement agreements between originator pharmaceutical companies and generic manufacturers who have not yet entered into the market as the companies are not in competition. The pharmaceutical context – and patent law specifically – would constitute an insurmountable barrier to enter the market. There is also the belief that, even if competition law would apply, agreements to settle ongoing court proceedings pursue a legitimate objective which is from the outset incompatible with the categorisation of an agreement as restricting competition by its object, since such settlement agreements have a public interest and are encouraged by the public authorities.

The question of whether a patent dispute settlement agreement would constitute a restrictive agreement by object or by effect is of great importance. When it is considered a restrictive agreement by object, the restrictive effect of the agreement on competition does not need to be proven for there to be an infringement of competition law, as opposed to when it is considered a restrictive agreement by effect.

By way of preliminary ruling, the CJEU, in line with the reasoning of AG Kokott (which you can read here), sheds light on the matter and inter alia (figuratively) bursts these two assumptions. You can read the judgement here.

By way of information, the present case takes place within the context of Lundbeck (case T-472/13) and Servier (T-691/14), currently pending before the CJEU, in which the European Commission found that agreements in settlement of patent disputes constituted infringements of article 101 of the Treaty on the Functioning of the EU (“TFEU”) and with regard to Servier, article 102 TFEU.

 It should also be mentioned that the debate is not only taking place in Europe but also elsewhere in the world. For instance, in California (US), Assembly Bill No. 824 – commonly referred to as the “Pay for Delay” bill (here) – passed, which makes it unlawful for companies to settle patent infringement claims filed by generic manufacturers by providing “anything of value” in exchange for settlement. Any attempts to settle in such a fashion will be considered anti-competitive and open the company to civil litigation. The bill is aimed at lowering the cost of prescription medicines and fostering greater access to healthcare. It became effective on 1 January 2020. Not completely surprising considering that the Supreme Court of the United States had already found in 2013 that these settlements could violate antitrust laws (here).

The position of the CJEU

In the judgement of 30 January 2020, the CJEU responds to 10 questions (which the CJEU boiled down to 5) referred to by the Competition Appeal Tribunal (UK). The latter wonders, in essence, whether an agreement to settle a medicinal product patent dispute constitutes a restriction of competition by object or by effect and whether the conclusion of that agreement, possibly combined with entry into other agreements, constitute an abuse of dominance.

Before going into the decision, it is important to recall the facts briefly. It concerns an originator pharmaceutical company that is the holder of a manufacturing process patent for an active ingredient that is in the public domain, and generic manufacturers who have not yet entered but are preparing to enter the market with generics having the same active ingredient. The originator pharmaceutical company and the generic manufacturers were in dispute as to whether the process patent is valid and/or whether the generics infringe the patent.

Given that the originator pharmaceutical company only held a process patent, there was uncertainty of whether or not there was an infringement. Against that background, the originator pharmaceutical company and the generic manufacturers, even the ones with whom at that time no patent litigation was yet pending, concluded settlement agreements. The generic manufacturers undertook not to enter the market and not to pursue their actions challenging the validity of the patent for the duration of that agreement, in return for transfers of value.

In light of those circumstances, the CJEU responds very precisely by ruling that:

  • the pharmaceutical company and the generic manufacturers are potential competitors provided that the latter have a firm intention and an inherent ability to enter the market, and do not meet barriers to entry that are insurmountable;
  • the settlement agreement where the net gain has no other explanation than the commercial interest of the parties not to engage in competition on the merits, constitutes an agreement that has as its object the prevention, restriction or distortion of competition unless the settlement agreement is accompanied by proven pro-competitive effects capable of giving rise to a reasonable doubt that it causes a sufficient degree of harm to competition;
  • the strategy of the dominant undertaking, which leads it to conclude settlement agreements, which have, at least, the effect of keeping temporarily outside the market potential competitors who manufacture generics, constitutes an abuse of dominant position, provided the strategy has exclusionary effects going beyond the specific anti-competitive effects of each of the settlement agreements.

What should you take away from the judgment?

The decision is without a doubt of significant interest to pharmaceutical company patent holders, generic manufacturers as well as competition and IP lawyers. It provides much food for thought for those presently involved in or contemplating settlement agreements.

In general, the decision teaches us that patent dispute settlements are not immune from competition law review. In particular, it will be important to keep in mind that the mere fact of a dispute between a pharmaceutical company patent holder and a generic manufacturer may be sufficient to demonstrate that they are potential competitors and thus any settlement between them involving a value transfer is likely to attract antitrust scrutiny.

In that regard, the mere existence of the patent, or the likelihood of success in litigation (for example, in proceedings about validity or whether a patent has been infringed) is irrelevant to whether the parties are potential competitors and whether an agreement can affect competition. The question is rather whether, notwithstanding the existence of the patent, the generic manufacturer has real and concrete possibilities of entering the market at the relevant time. To that end, the CJEU explicitly recognised the ‘at risk launch of a generic medicine’ as inherent to the pharmaceutical market.

Positively, the CJEU affirms that patent dispute settlements are not as such prohibited by competition law and neither is the transfer of value in that setting. However, there is a high probability that where agreements involve significant value transfers and the sole consideration given for that value transfer is the generic manufacturer refraining from market entry and from challenging the patent during an agreed period, there will be a finding of a ‘restrictive agreement by object’ prohibited under article 101 TFEU.

The attentive reader might have spotted that the CJEU, as it only responds to the facts presented by the referring judge, leaves certain issues open. For example, one might wonder how the analysis might change if it was not a process patent but a compound patent or whether the transfer of value is not made solely in return for market exit and no-challenge commitments, but reflects other considerations between the parties.

Another interesting issue to further develop is the consequences of pro-competitive effects on the finding of a ‘restrictive agreement by object’. Of great value is the explicit recognition by the CJEU that pro-competitive effects are not completely excluded from the debate of whether or not there is a ‘restrictive agreement by object’. What is certain is that the CJEU does not require a balancing test to be carried out or consider that the mere existence of pro-competitive effects would be sufficient to exclude the finding of a ‘restrictive agreement by object’. The pro-competitive effects should be considered with the other circumstances of the case to verify if it raises a reasonable doubt on the conclusion that the agreement, by its nature, would result in a sufficient degree of harm to competition and whether it should thus be categorised as a ‘restrictive agreement by object’.

We look forward to the CJEU further expanding on the above and its guidance on patent dispute settlements in general when it delivers its Servier and Lundbeck judgement.

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Eric De Gryse and Christopher Dumont
You may always contact the authors should you have any questions:
eric.degryse@simontbraun.eu – +32 2 533 17 52
christopher.dumont@simontbraun.eu – +32 2 533 17 58

20181010

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When should a pharmaceutical company apply for a trademark for its medicinal products?

The pharmaceutical market presents unique challenges to pharmaceutical companies seeking to launch new medicinal products. Before they can introduce a new medicinal product on the market, they must go through a lengthy process of executing clinical trials as a prerequisite for obtaining a market authorisation. A crucial question in this context is whether they could already register their trademark during the clinical trials phase, without risking revocation of their trademarks (i.e. due to non-use when the marketing approval process outlasts the five-year grace period).

In its decision dated 3 July 2019, the CJEU stated that when choosing to register a trademark for their medicinal product early on, pharmaceutical companies will either have to make sure that they are certain to obtain a marketing authorisation within the five-year timeframe or to make sure that they invest sufficient financial resources to reasonably expect obtaining a marketing authorisation within the five-year timeframe.

The case brought before the CJEU

On 3 July 2019, the Court of Justice of the European Union (CJEU) rendered an important decision for pharmaceutical companies. The case revolved around a trademark dispute, in relation to medicinal products, that raised two far-reaching issues concerning the scope and definition of the requirement of genuine use within the provisions of Article 58 of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trademark (“EUTMR”). You can read the judgement here (in Dutch, currently not available in English).
The decision was given in the context of an appeal brought by Viridis Pharmaceutical Ltd. (“Viridis”) against the judgment of the General Court in Case T-276/16, Viridis v European Union Intellectual Property Office (“EUIPO”). The primary proceedings concerned the revocation by the EUIPO of the EU trademark “Boswelan”, registered by Viridis for class 5 of the Nice classification (pharmaceutical and sanitary preparations), following the application filed by Hecht-Pharma GmbH to have the trademark revoked due to lack of genuine use for a period of more than five years by Viridis.

In short, the main points of discussion were whether the use of the trademark during clinical trials may constitute genuine use and, if not, whether conducting clinical trials, as a prerequisite for receiving a market authorisation, may constitute a proper reason for non-use.

Genuine use

According to settled case law, genuine use is made of a trademark within the meaning of Article 51(1)(a) of Regulation No 207/2009 (now article 58.1(a) EUTMR), when it is used, in accordance with its essential function of ensuring the identity of the origin of the goods or services in respect of which it is registered, to find or preserve an outlet for those goods or services, to the exclusion of any symbolic use intended solely to enforce the rights conferred by the trademark (judgements of 11 March 2003, Case C-40/01 Ansul, EU:C:2003:145, paragraph 43, and 8 June 2017, W.F. Gözze Frottierweberei and Gözze, Case C-689/15, EU:C:2017:434, paragraph 37 and the case law cited there).

Thus, the normal use of the trademark presupposes that it is used on the market for the goods or services protected by the trademark and not only within the undertaking concerned. The use of the trademark must relate to goods or services which have already been placed on the market or which can be placed on the market at any time, and the company is preparing to do so with a view to winning customers, in particular in the context of advertising campaigns (see, to that effect, Case C-40/01 Ansul v Commission [2003] ECR I-145, paragraph 37).

On the other hand, the affixing of a trademark to goods which are not supplied to the customer with a view to their penetration into the market for the goods covered by the trademark registration cannot be regarded as genuine use of that mark, since such affixing does not help to find a market for those goods or to distinguish them, in the interests of consumers, from goods originating from other undertakings (see, to that effect, Case C-495/07 Silberquelle v Commission [2009] ECR I-10, paragraph 21).

After recalling the settled case law and general principles on genuine use, the CJEU went on to address the first plea.

The CJEU affirmed the observations of the General Court:

  • That Viridis had adopted preparatory acts which consisted in the conduct of a clinical trial carried out in view to apply for marketing authorisation and which included certain acts in the form of advertising for that trial;
  • However, the use of the trademark during the clinical trials could not be equated with marketing or even with a direct preparatory act, but had to be regarded as an internal use, since that use had taken place outside competition, within a limited circle of participants, and without its purpose being to obtain or maintain market shares. Also, the use (400.000 capsules) had not been shown to be significant in the pharmaceutical sector;
  • In addition, Viridis did not demonstrate that the marketing of the medicinal product designated by the trademark was imminent since it had not produced any evidence to show that the clinical trial was almost complete; and
  • In any event, only the acquisition of a marketing authorisation by the competent authorities could have allowed a public and outward-looking use of the trademark, since the legislation on medicinal products prohibits the advertising of medicinal products which have not yet been the subject of marketing authorisation and, consequently, any communication intended to gain or maintain a market share. It was therefore impossible to use the trademark designating a medicinal product on the relevant market as required by the settled case law.

The CJEU dismissed the following two arguments of Viridis as irrelevant:

  • The fact that the acts of use relied on were in conformity with the applicable legal provisions; and
  • The argument that the five-year period to make genuine use is inadequate for the pharmaceutical sector and does not take into account the specific circumstances of the pharmaceutical market.

The CJEU thus followed the reasoning of the General Court and declared the first plea in law partly unfounded and partly irrelevant.

Proper reasons for non-use

Again, the CJEU started with recalling the settled case law and general principles on proper reasons for non-use. According to the case law of the Court, only obstacles which are sufficiently directly related to a trademark and render its use impossible or unreasonable and which are beyond the control of the proprietor of that mark can be regarded as ‘valid reasons’ for non-use of that mark. It must be determined on a case-by-case basis whether a change in the business strategy in order to overcome the obstacle in question would render the use of that mark unreasonable (judgments of 14 June 2007 in Case C-246/05 Häupl, EU:C:2007:340, paragraph 54, and of 17 March 2016 in Case C-252/15 P Naazneen Investments v OHIM, not published, EU:C:2016:178, paragraph 96).

Regarding the second plea, the CJEU affirmed that conducting a clinical trial may constitute a proper reason for non-use, but observed that the acts and events in the present case, were within the sphere of influence and under the responsibility of Viridis and, therefore, could not be regarded as obstacles which arose outside its control.

The CJEU argued that Viridis had already, on the basis of its own choice and not on the basis of any legal obligation, applied for registration of the trademark even though there was considerable uncertainty as to both the date and the possibility of marketing the goods designated by that mark, since those goods were in the clinical trials phase. It noted that Viridis’ application for a clinical trial had been submitted more than three years after the registration of the trademark. Also, the difficulties alleged during the clinical trial in question were, in view of the specific characteristics of the sector concerned, due to insufficient investments by Viridis.

With the above reasoning, the CJEU declared the second plea unfounded and dismissed the appeal in its entirety.

Key takeaways

It can be tricky to register a trademark in relation to a medicinal product for which no market authorisation has yet been obtained. Pharmaceutical companies will have to determine whether or not the benefit of registering the trademark early on outweighs the risk of losing the trademark due to non-use.

The judgement, read together with the opinion of AG SZPUNAR, makes it clear that the chances for a pharmaceutical company to make genuine use of their registered trademark during the clinical trial phase are, although not fully excluded, very low. The use during clinical trials, no matter how quantitatively large, is aimed at testing the medicinal product (scientific objective) and is not aimed at maintaining or creating a share in the market for the goods or services protected by the mark (economic objective). The restrictions flowing from the legal framework relating to medicinal products (prohibition of sales and advertisement of non-authorised medicinal products) make it (nearly) impossible to make genuine use of the registered trademark during the clinical trial phase.

When choosing to register a trademark for their medicinal product early on, pharmaceutical companies will thus either have to make sure that they are certain to obtain a marketing authorisation within the five-year timeframe or to make sure that they invest sufficient financial resources in order to reasonably expect to obtain a marketing authorisation within the five-year timeframe.

The CJEU confirmed that a clinical trial and the restrictions of use flowing from the legal framework relating to medicinal products that go with it may constitute a proper reason for non-use.

However, pharmaceutical companies’ own behaviour in coping with the legal barriers to use its trademark is also taken into consideration when examining the proper reasons for non-use. Waiting three years after registering the trademark to start the clinical trials with insufficient funds will clearly not suffice for the CJEU. Conversely, the reasoning of the Court does seem to suggest that a pharmaceutical company that registers a trademark and starts the clinical trials early on with sufficient funds and reasonable expectations of finishing the clinical trials and obtaining a market authorisation to make use of the trademark before the expiry of the five-year period, may successfully invoke clinical trials and the unexpected delay during the clinical trials as a proper reason for non-use.

In sum, the decision teaches us that timing, careful assessment and awareness are essential when it comes to applying for and maintaining a trademark for medicinal products in the pharmaceutical context.

***

Eric De Gryse and Christopher Dumont

You may always contact us should you have any questions.
eric.degryse@simontbraun.eu – +32 2 533 17 52
christopher.dumont@simontbraun.eu – +32 2 533 17 58

UBO Register – Important updates in the FAQ document

An important update of the UBO Register FAQ document has been published by the Federal Public Service Finance on 2 April 2019. It provides a number of clarifications on the scope of the regulations, notably with respect to the notion of senior managing official, the situation in case of a usufruct / bare ownership, co-ownership, shareholders’ agreements… It also confirms that UBOs will have the right to know who consults their data. The updated FAQ document is available here: http://bit.ly/QandA-ubo

For any question, please contact Sandrine Hirsch or Nikita Tissot.

The final text of the new Companies Code has been published

Today has been published the Law of 23 March 2019 introducing the Code of companies and associations and amending certain other regulations (notably the Law on takeover bids). The final text is now available here.

For any assistance, please contact Sandrine Hirsch or Nikita Tissot.

Register of Beneficial Owners – Obligation to identify UBOs

1) INTRODUCTION

The Belgian anti-money laundering regulations (the Law of 18 September 2017 and the Royal Decree of 30 July 2018) require all companies, non-profit-making organisation and foundations, as well as trusts, fiduciaries and other similar legal entities managed from Belgium, which are the responsible “information providers”, to obtain and hold adequate, accurate and up to date information on their “beneficial owners” (UBO) and to transmit it to the UBO Register, managed by the General Administration of the Treasury.

2) DEFINITION OF UBO

UBO are individuals who directly or indirectly exercise effective control over information providers. There are different categories of UBO depending on the type of control exercised and on the type of information provider.

For companies, the following are considered as beneficial owners:

  1. Individual(s) who directly or indirectly has/have ownership of a sufficient percentage of voting rights or own sufficient shares in the company (an indication of a sufficient percentage is the possession, directly or via ownership interest held by one or more companies, of more than 25% of voting rights or of shareholding);
  2. Individual(s) who control via other means (such as via a shareholders’ agreement) ;
  3. In the case no individual(s) is/are found under the first two categories, the senior manager.

Others persons qualify as UBO for non-profit-making organisations, foundations, trusts, fiduciaries or other similar legal entities. If your entity corresponds to one of those, we will provide you with further details.

 3) INFORMATION TO PROVIDE

As mentioned in the Royal Decree, the following information regarding each beneficial owner must be communicated to the UBO Register by the company which is the information provider:

  1. last name, first name, date of birth (day/month/year), citizenship(s), country of residence, complete address of permanent residence, date on which they became the UBO of the company, national registry number or registration number with the Crossroads-Bank for Companies (or overseas equivalent),
  2. the relevant category of UBO to which he/she belongs,
  3. if he/she is a direct or indirect UBO (via one or more other entities),
  4. if the individual(s) meets the criteria alone or in coordination with others,
  5. for indirect beneficial owners, full identification of each of the intermediary entities is required,
  6. the percentage of shares or voting rights owned and,
  7. in case of indirect holding or control, the percentage of shares or weighted voting rights held in the company.

4) ACCESS TO THE REGISTER

The UBO Register is an online register accessible on the FPS Finance website.

UBO Register data are accessible not only to the competent authorities and obliged entities (notably the Ministry of Finance, the tax authorities, the Belgian Financial Intelligence Processing Unit (CTIF), the police, the National Bank of Belgium, the FSMA, company auditors, accountants, lawyers, notaries, bailiffs, etc.), but also, for companies, to all members of the “general public”, in line with the increased transparency principle enshrined in the 5th Anti-Money Laundering directive.

However, those persons will not have access to the first name, the exact date of birth, the complete address of residence, the national registry number or equivalent of the beneficial owners.

All consultations of the register made by those persons will be recorded and kept for a period of 10 years.

The data held in the register will also be kept for a period of 10 years after the date of loss of legal personality of the information provider or the date on which it ceased its activities.

5) REQUEST FOF DEROGATION

A request for derogation can be made via the UBO Register online platform. In this case, access for the general public to the information is suspended until the General Administration of the Treasury grants or declines to accept the derogation.

In principle, a derogation may only by granted under exceptional circumstances, expressed as follows under in the directive:

“in the event the beneficial owner concerned demonstrates that this access exposes him/her to disproportionate risk, to risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation, or in the event the beneficial owner is a minor or incapacitated”. 

A specific request may also be made directly via the General Administration of the Treasury.

Supporting documents which evidence the derogation request must be attached to the official request.

6) DEADLINE

The different entities must transmit the information to the UBO Register before 30 September 2019.

Administrative or criminal fines will apply in case of non-compliance by companies and more particularly by the directors of their obligations. The fines range between 250 EUR and 50,000 EUR.

Thereafter, all modifications must be recorded within a one month period.

Moreover, the information recorded in the Register must be confirmed annually by the information providers. The companies are required to establish a procedure which ensures it is possible to make information available and to keep up to date and correct information, clearly identifying their beneficial owners.

7) FORMALITIES

Companies are required to take the following measures:

  1. Set up internal procedures to facilitate the collection of the requested information and communication of any potential changes relating to it;
  2. Identify the beneficial owners and their corresponding category(ies), and where necessary compile the documents testifying to the veracity of the information communicated (e.g.: a copy of an identity card, a shareholder register, a notarial deed, articles of association of the intermediary company in case of indirect ownership).
  3. Appoint the legal representative or an external representative with an E-ID card who will be responsible for providing the information listed in the Royal Decree via MyMinFin on behalf of the information provider. In the scenario an external representative is chosen, it may be either an internal agent to the information provider or an external agent (e.g. an accountant, a legal advisor, a natural or legal person).

Practical information is available on the website of the Federal Public Service Finance, particularly under the FAQ document.

*     *     *

Sandrine Hirsch and Nikita Tissot

For any question, do not hesitate to contact the authors:
sandrine.hirsch@simontbraun.eu – +32 2 533 17 64
nikita.tissot@simontbraun.eu  – +32 2 533 17 06

 

Le droit du procès civil – Colloque et parution du Volume 2

Le colloque « Le droit du procès civil – Etat actuel et analyse des réformes à venir » a attiré plus de 300 participants ce lundi 28 janvier à l’ULB.

Fanny Laune et Marc Baetens-Spetchinscky – Le droit du Procès civil

 

Les interventions de Fanny Laune et de Marc Baetens-Spetschinsky sont disponibles ici :

pdfLa déformalisation de l’acte juridictionnel et le régime des nullités par Fanny Laune
pdfIncertitude concernant les conditions de recevabilité de l’appel incident et actualités en matière de délai d’appel par Marc Baetens-Spetschinsky

Ce colloque s’est tenu à l’occasion de la parution du volume 2 du Précis « Droit du Procès civil » (Anthémis), un outil résolument orienté sur la pratique essentiel pour tout praticien de la procédure, auquel Fanny Laune et Marc Baetens-Spetschinsky ont contribué.