Beijing No.2 Intermediate People’s Court issued in late December 2006 its ruling over a patent infringement lawsuit filed by Japan’s Sankyo Ltd. and Shanghai Sankyo Pharmaceutical Ltd. (thereafter as Sankyo) in February 2006 against Beijing Wansheng Pharmaceutical Ltd. (thereafter as Wansheng).

Sankyo claimed that Wansheng infringed its Chinese process patent ZL.97126347.7 (a process for preparation of pharmaceutical composites that are used to treat or prevent high blood pressure) which covers mixing of Olmesartan with pharmaceutical inactive materials to make pharmaceutical preparations.  The company maintained that Wansheng infringed its process patent ZL.97126347.7 by producing Omesartan tablets for its preclinical and clinical studies initially and three more sample batches of this product (which can be sold after approval) to support its application to the SFDA for production and marketing approval.  Sankyo sought punitive damages of CNY 500,000 and legal fees of CNY 200,000 from Wansheng. 

Wansheng claimed that it did not infringe on Sankyo’s patent because: 1) It had not yet been approved by the SFDA for production and marketing of Omesartan tablet, thus the Omesartan tablet it produced was only for the purpose of preparing for registration of this product; 2) As the product registration process may take years to complete, it is reasonable for the company to initiate its registration process years in advance of patent expiration, and both regulations in the US and Japan and the current draft of the new Chinese patent law allow clinical study and registration application of patented drug products before patent expiration; and 3) as the Sankyo patent was approved in 1992, it was subject to the Chinese Patent Law 1985.  As Sankyo’s process patent for making pharmaceutical composites resembles pharmaceutical product patents in its broad claims, it should be invalidated as the patent contradicts the spirits of the Chinese Patent Law 1985 which did not allow pharmaceutical product patents. 

The Beijing court determined that Wansheng produced Omesartan tablet using a process similar to Sankyo’s patented process, but the court ruled against Sankyo and rejected all of its requests on the basis that Wansheng did not produce Omesartan tablet for the purpose of selling for profits, as such it is not within the scope of patent protection.  　　

Following its initial victory, Wansheng planned to pursue invalidation of Sankyo’s process patent ZL.97126347.7 arguing the broad claims of the process patent resembles those of a pharmaceutical product patent and thus is in contradiction with the Chinese Patent Law 1985 which does not permit product patent protection for pharmaceuticals.  It is believed that Wansheng is only one of the 20 to 30 local pharmaceutical companies that are seeking to launch Omesartan in China.  If Wansheng succeeds, Sankyo’s Chinese market for Omesartan will be flooded with local competition soon.  With huge past investments and good market prospects at stake, it is not impossible that an alliance among relevant local companies, like the one that challenged Pfizer’s Chinese patent for Viagra, will be formed again.

Foreign companies are also taking this landmark case seriously as it may have far reaching impacts for their patents in China.  At a national intellectual property strategy forum held in March, Chinese experts and representatives of foreign companies held heated discussions over the case.  Foreign companies hope the Chinese court system to establish the following: 1) all process patents for preparation of new drug composites patented before January 1, 1993 are valid and do not contradict with the principles of the Chinese Patent Law 1985, and 2) pilot production of patented drug products for the purpose of drug registration constitutes patent infringements. 

However, a large number of Chinese experts are convinced that the broad claims of many process patents for preparation of pharmaceutical composites do resemble pharmaceutical product patents. If their claims are supported, the requirement by the Chinese Patent Law 1985 for denying pharmaceutical product patents would become totally ineffective.  In addition, this will produce substantial negative impacts on the development of the Chinese pharmaceutical industry. 

However, some legal experts argued that such patents should not be invalidated simply because they resemble pharmaceutical product patents, as they were drawn up in compliance with the requirements of the Chinese Patent Law 1985 and legally approved under it.

Even in the case when the claims of such process patents contradict with the principle of the Chinese Patent Law 1985 that did not permit patenting of pharmaceutical products, foreign companies stressed, protection of such patents should continue to be upheld if new chemical compounds were involved. 

A US patent attorney suggested that “if the chemical compound involved (in such a patent) is new, then all preparation methods for this new compound are also new, thus they all should be protected. This type of process patents in essence protects all pharmaceutical use of this new compound.”