At any one time, 30-40 medicines are in short supply, and this includes treatments for some cancers, depression and Parkinson’s disease.  The Group has called on the Government to “up its game” and do more to tackle the issue.  The British Association of Pharmaceutical Wholesalers, which represents the nine biggest businesses, supplying 85% of the UK medicines, says that just a few of the 1,700 licence holders are responsible.

The Patients Association has called on the Government to urgently investigate the problem. 

The APPG report contemplated whether the Government could consider issuing legal restrictions on the export of medicines on grounds of protecting public health.

Meanwhile, pharmacists have also suffered, as they have had to incur extra costs in sourcing medicines.  The Government has already paid them £12m a year because of that. Some believe that is nowhere near enough to compensate for the problem, and the real issue is for patients.

Amongst the specific recommendations made by the report are:

• The Government must unequivocally state that the interests of UK patients must come above everything – not provisions concerned with free movement of goods.
• Quota arrangements must be less burdensome for pharmacists and more transparent.
• Wholesalers should increase buffer stock.
• The Government should consider specific legislation.
• Pharmacists should remember the General Pharmaceutical Council’s guidelines always to put patients first.
• There needs to be much better market information.   Market-wide information should be collected and analysed over the next six months.
• The Department of Health should update the APPG in six months with details of its progress.

Paul Gershlick, a Partner and Head of Pharmaceuticals and Life Sciences at Matthew Arnold & Baldwin LLP, comments: “It is interesting that this report is looking to address the issue by stopping wholesalers from exporting (except if that does not harm patients).  However, equally, the suppliers could often manufacture more if they want to, but they need to protect their distributors in other countries.  The most important thing is that patients must not be adversely affected and made to suffer when enough medicine could reach them, and I applaud the Group’s clear message on that.  We are very much looking forward to the seminar we are holding on this important issue on 25 June and to hear what Kevin Barron MP will tell the audience.”

Claire Ward, CEO of the IPF, says, “It is unacceptable that patients’ health and lives are being put at risk by this failure in the supply chain. Pharmacists are sometimes wrongly getting the blame when the fault lies in other places.”

Paul Gershlick, a Partner and Head of Pharmaceuticals and Life Sciences at Matthew Arnold & Baldwin LLP, says: “This is a massive issue. It needs sorting. Anything that Parliament can do to address it is crucial. People’s lives are being put at risk, with at least one reported death arising out of the supply chain problems. Whether the issue is with too many drugs being exported to take advantage of commercial opportunities arising out of differential prices in different countries, or suppliers withholding supplies so that they can sell more in other countries at a higher rate, a solution is needed to protect patients’ interests. The All Party Pharmacy Group at Parliament has recently held an enquiry into the issue, and we look forward to their findings in June.”

The scale of the problem has been revealed by IMS Health figures showing that 11% of 12,600 UK pharmacies now engage in the export practice.  The manufacturers claim that there are more than enough pharmaceutical products being produced in the UK for UK patients, and they claim that it is the “greedy” people further down the chain who are putting people’s lives at risk.  Until recently, even NHS hospitals were making money by exporting drugs, with The Royal Surrey Hospital in Guildford making £300,000 profit on sales of £4m in one year.  The Government put a stop to that practice.

That export practice is perfectly legitimate, but some in the industry view it as unethical. The exporters say that the problem is actually caused by the suppliers’ failure to supply enough given that they know legal exporting is taking place.

The All Party Pharmacy Group is holding a full-scale inquiry to consider the industry-wide problem of drug shortage and what can be done about it.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP, comments: “After many years of problems for EU organisations of doing business with people in the US because of the US’s lack of data protection laws, this looks to be a major step forward in international trade. We need to await what the new law will look like. But this is promising.”

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP, comments: “This shows an interesting strategy in its fight to stamp out bribery. Despite the bribes having taken place in another country, this still fell within the SFO’s remit. Innocent people should still do their due diligence on the foreign businesses in which they invest, and they should try to make sure that the business is conducted properly. Otherwise, they can face clawback for dividends paid out to them despite not being at fault or having any knowledge of the issue.”

India and China both have an established and successful generics based pharmaceutical industry and as tens of billions of pounds of  patent protected drugs come off patent soon (known as the “patent cliff”), they look set to benefit by releasing cheaper generic  alternatives – making themselves a small fortune in the process. Both the Wall Street Journal and BBC News have reported on the most recent victim of the patent cliff in which India-based firm Ranbaxy Laboratories Limited confirmed the release of an FDA-approved generic version of the 10 billion dollar a year drug “Lipitor” owned by the global pharmaceutical company, Pfizer. The new generic drug will be called “Atorvastatin” and with Lipitor’s patent having now expired, there is nothing Pfizer can do about it – except try to develop itself or buy in the next big thing from another research and developer.

With such a Robin Hood approach to pharmaceuticals there are mixed opinions about the impact the patent cliff is having on the pharmaceutical industry as a whole. The large pharmaceutical companies claim that the patent cliff is affecting their ability to raise funds for research and development which in turn is inhibiting advances in new and improved pharmaceuticals, to the detriment of patients. The smaller generic based companies and some consumer groups however are hailing the patent cliff as an opportunity to offer a wider-ranging and affordable selection of medicines to both the public and private sectors.

Laura Mole, from Matthew Arnold and Baldwin LLP’s Pharmaceutical and Life Sciences Sector Group Team, says, “Whilst I appreciate continued research and development in the pharmaceutical industry as a whole is vital for the production of new, more advanced drugs to combat human illness, I cannot help but see good quality, affordable alternative medicines as a good thing for the consumer and the NHS in these difficult financial times. More drugs will cost less so more patients will benefit. The important thing in the long-term, though, is that there is sufficient funding in the industry to incentivise continued research and development so that patients continue to benefit with further medical advances. More of the early-stage development is being done by start-up companies, with big pharma companies stepping in if the prospects look good.”

There are two totally independent Merck companies. This arose out of the Treaty of Versailles at the end of World War I, under which the two different Merck companies were each given exclusive rights to the brand in different territories.

German Merck claims that it held the rights to material on the web page at www.facebook.com/merck, but it has recently discovered that those rights were now being allocated to the US company. German Merck has no argument with US Merck – its complaint is with the social networking site, which it claims has been less than helpful over the issue.

This case shows the issues that can arise with owners of parallel brands existing in an ever-smaller global market.

The results of the survey from the Chartered Institute of Arbitrators can be found here: http://www.ciarb.org/conferences/costs/2011/09/28/CIArb%20costs%20of%20International%20Arbitration%20Survey%202011.pdf.

The consultation can be accessed here: http://ec.europa.eu/internal_market/consultations/docs/2011/audiovisual/green_paper_COM2011_427_en.pdf.

In this case, a Dutch rights organisation sought the payment of a copyright levy from the German supplier, Opus, for sales of blank CDs by Opus to Dutch consumers. The Dutch courts had initially said that no levy should be payable by the German company. On appeal, though, the ECJ has said that a levy should be paid in order to compensate the harm done to rights holders by private copying. However, unhelpfully, the ECJ did not explain how the levy could be enforced. Assuming it would be enforced, though, this could affect UK suppliers too and take some money out of their profit margins, despite the fact that the UK does not have a private copying exemption.

Details of the case can be found here: http://curia.europa.eu/jurisp/cgi-bin/gettext.pl?lang=en&num=79889383C19090462&doc=T&ouvert=T&seance=ARRET&where.

This pseudo-tax known as the, Art Resale Levy, (or droit de suite in French) means that sellers will have to pay royalties on works by European artists who have died in the past 70 years, including Pablo Picasso, Henri Matisse and Francis Bacon. Cash is payable to the artist’s heirs each time a work is resold.

The tax already exists in mainland Europe and is due in Britain from January, applying to all works priced above (EURO)1,000 (£900) and on a sliding scale of 0.25 per cent to 4 per cent. 

There will be intellectual property implications of this, if the directive is brought into force in UK.

On the other hand, so the argument goes, why shouldn’t the family reap some of the benefits (in particular when success is mostly posthumous)?

For a more detailed review of the tax’s history and the UK’s derogation until 2012, I suggest an article in the FT, which can be found here (although please note that the FT is subscription only), and for the view of the art lobbyists (LAPADA), click here: LAPADA, and follow the links at the bottom of the page.

There will be scope for planning to avoid this levy if the UK is not be able to extend the derogation beyond 2012, and if you are interested in discussing this with a solicitor, please call 01923 20 20 20 and ask for the Wealth Management Department.

• Creation of a Digital Copyright Exchange. This would be a centralised digital copyright works marketplace where licences to copyright content could be readily bought and sold, akin to a copyright shop. This would extend what currently happens with through music collections agencies such as PRS. The aim is to have this implemented by the end of 2012. In addition, the UK should support the European Commission’s proposals to establish a framework for cross-border licensing.
• Introduction of legislation to permit use of orphan works – copyright works where the rights owner has not been ascertained. The European Commission has also come up with similar plans recently.
• Allowing wider exceptions for lawful copying, such as to include format shifting between a laptop and mp3 player, which is still unlawful. This may also include copyright exceptions for non-commercial research, such as digital copying of medical journals for computerised analysis in research. Parody and library archiving would also be exceptions to copyright. The exceptions would be enshrined in law and non-excludable by contracting out by agreement between the parties. There is no place in the report for anything as extensive as the “fair use” exception along the lines that US law has, as that would not be compatible with European Union law.
• Increasing the Intellectual Property Office’s ability to give legally binding opinions on changes to intellectual property law in response to economic or technological changes.
• A careful look at the enforcement of intellectual property rights. The Government should look not just to enforcement but also education, growing legitimate markets and modernising copyright law. Other countries’ experiences should be considered when the Digital Economy Act starts to become operational in 2012.
• Try to remove patent thickets that stifle innovation. Thickets arise where there are overlapping patent claims by multiple applicants, resulting in delays and extra costs in innovation. This should involve cutting backlogs in patent applications. There should also be a disincentive – perhaps through cost of additional fees for patent renewals – to discourage patents that do not add much value. Computer-related patent rules also need to be clearer and stricter to avoid patents being granted for non-technical inventions or business methods.
• Investigate whether the system of protection for designs should be made clearer. The Intellectual Property Office should conduct an assessment based on evidence within the next 12 months to consider the relationship between design rights and innovation.

It now remains to be seen what the Government will do in terms of implementation of the recommendations within the report. There have been other intellectual property reviews previously – most notably the Gowers Review – which were not then followed-up significantly.

• The rights and procedures regarding seizing infringing material would extend from the current position which catches goods infringing patents, trade marks, copyright or design rights. It would also cover trade names and semiconductor topographies.
• Parallel imported goods contrary to European Union law would also be seized.
• A new quicker procedure would be established to enable customs authorities to deal with goods abandoned by their owner for destruction without having to go through formal legal proceedings if the owner does not object within a short period of time.
• Have a new procedure whereby rights owners do not need to be involved with the destruction of small consignments.

In response, Espana’s Spanish representatives put forward a strong position defending Espana’s rights. They stated that Best Buy US’s use of the mark in Europe and particularly in Spain at the time created a conflict with its intellectual property rights, which would entitle it to take appropriate legal action to protect its interests. It added that its “Best Buy” brand had become distinctive and reputed. Use by the US group would cause confusion and lead to an unacceptable association with Espana’s products, causing irreparable and irreversible damage. Examples were given. The letter finished with three paragraphs that opened the door to a negotiated solution if there was sufficient compensation, but that the US group should refrain from using the mark until a negotiated solution was reached. The letter suggested a process to reach agreement.

An agreement was not reached and Best Buy US sued for unlawful threats, contrary to UK trade mark law. Under Section 21 of the Trade Marks Act, it is unlawful to threaten someone else with proceedings for registered trade mark infringement except for their application of the mark to goods or their packaging, their importing of the goods or the supply of services under the mark. The High Court threw out Best Buy US’s claim. However, on appeal, the Court of Appeal has sided with Best Buy US.

The Court of Appeal ruled that Espana’s response letter could amount to a threat. Despite the last three paragraphs of the letter that attempted to settle the matter amicably, the question to be answered was what a reasonable person receiving the letter with knowledge of all relevant circumstances at that time would have understood the writer of the letter to have intended. Following that test, a threat of proceedings had been made by Espana’s representatives, as it stated that the registered marks were distinctive and reputed and it would entitle Espana to take appropriate legal action to defend its interests. A reasonable recipient would have interpreted that to mean not just that Espana was asserting its legal rights but was intending to enforce those rights against Best Buy US. It was clear that the threat related to all of the EU and this included the UK. Accordingly, this threatened legal proceedings in the UK, thus bringing into play the UK’s unlawful threats provisions. The Court of Appeal added that although the letter related to use of the mark in connection with services (retail), it also referred to use of the mark in advertising and the media, which brought it outside of the exceptions to Section 21.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “This case illustrates the dangers of sending threats of trade mark infringement. Letters and emails need to be carefully written to come within the law. Otherwise, the person looking to strongly assert its own rights may end up being the wrong-doer. The particular facts of this case also show the dangers of non-UK lawyers communicating in a way that could impact on UK use of the rights, which could bring the UK Trade Mark law into play in a way that may not have been envisaged. This area is a minefield and specialist UK trade mark law advice should be sought when seeking to protect brands.”

The High Court said that Guna was in breach of the agreement and should have transferred the registrations. It struck out Guna’s competition law defence. For that defence to work, it should have produced detailed evidence. Instead, the evidence was only general and sketchy. These were complex issues and the arguments needed to be fully made out and argued with good supporting evidence. It may have been that Nelsons’ market share was very high and that its actions were not permitted in the circumstances, but this was not clear from the evidence presented. As the defence was uncertain, what was left was that Guna was in breach of contract.

There is the thorny issue of facilitation payments – payments made to officials to speed up processes, for example to get an export licence through quicker.  Lots of business are asked to pay these, but what should you do, as the Bribery Act makes it clear that you should not pay them?

Corporate hopitality – can you take clients to Lords or out to lunch?  Can you send them a client to say “thank you”?  One interesting question that came up yesterday was whether you can take away the personal partners or families of the people you want to impress?

But a big thank you must go to Lord Triesman and the Sunday Times.  Thank you for providing a very live case study about alleged corruption by certain members of football’s international governing body, FIFA.   Can the Bribery Act catch them if they have done anything wrong?  Would accepting a gift that is for a charity or a “good local cause that helps the community” rather than the member of the committee’s back pocket amount to a bribe?  And what is the story with Qatar’s bid, because according to Transparency International Qatar is deemed to be a less corrupt place than the UK, as can be seen here: http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results?  Should England have played ball to have won the right to host the 2018 World Cup?  Or should England be keen to be the winner of the more humble fair play award?

In your own business, can you afford not to play keepy uppy with what your competitors are doing?  Or can you afford not to play ball with the requirements of the new Bribery Act?  Do you play a gung ho formation and just go for it, or play it with a solid defence?

These are the dilemmas facing businesses.  But there are very serious issues at stake and businesses can’t afford to bury their heads in the sand.  To continue the sporting analogy, you might want to make your own luck, and speak to us to find out more what tactics to pursue.

The European Commission has been trying to introduce a single patent system in the EU for years, but has always struggled to get political agreement. Aside from Spain and Italy, due to their concerns over being sidelined in favour of the other large EU countries on the language issue, this seems like a possible step. Michel Barnier, the Commission’s Internal Mark and Services Commissioner, said: “It is my deeply held conviction there is no sustainable economic growth without innovation.  And no innovation without efficient intellectual property protection.”

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, is currently giving advice on the Act.  He is pleased with what is contained within the revised guidance. He says, “There had been a lot of concern amongst law-abiding business that the Act would be so onerous that they would be caught out and risked prosecution. However, what is clear is that they are not the target, and the Government is trying to ensure fair play. Reasonable and proportionate corporate hospitality, such as tickets to sporting events and dinners, can continue as a recognition that this is just about building normal business relations, unless it is a cover for bribery.

“Also, although businesses will be liable for anything done on their behalf unless they have good policies in place, the Government has helpfully clarified that the  type and extent of policies and risk assessments will depend upon the size and risks faced (such as which markets they are in). It is also clear, though, that businesses cannot turn a blind eye if there are genuine risks. This is a common sense approach to the implementation of what could have been a despised piece of legislation that could have hampered genuine business. “

Paul adds a word of caution. “The new guidance does, however, still make clear that facilitation payments are outlawed. Facilitation payments – sweeteners to encourage public officials to loosen red tape and allow their products to enter a market – are seen as a fact of life for businesses that export into some markets, whether or not the business wants to pay them. Concerns remain that this may still leave UK businesses at a competitive disadvantage when trying to win business overseas if businesses from other countries continue to pay facilitation payments.”

The console-owner/hacker battle continues…

This consultation, which was due to end on 22 September 2010, has now been extended until 22 October 2010 to allow further time for interested parties to comment on its proposals. Further details of the consultation are available here.

Prior to 2003, the European Commission did not think it was necessary to examine whether member states’ IHT laws were compatible with the EU Treaty. However, it has now revised its opinion because, since that date, (1) a number of IHT cases have been referred from national courts to the European Court of Justice, and (2) it has received a growing number of complaints from EU citizens about problems arising from cross-border inheritance.

The consultation paper identifies two main areas in which individuals and businesses may face obstacles:

1. Discriminatory application of IHT rules. Member states’ IHT laws tend to be less favourable to citizens whose assets or beneficiaries are in another country. This fact is particularly evident when you consider that in the eight IHT disputes that have been referred to the European Court of Justice since 2003, the Court ruled in six of them that the IHT laws of the member state in question were incompatible with EU rules on the free movement of capital; and

2. Double or multiple taxation of an estate. Most EU Member States levy IHT upon the death of a person; however, problems can occur because some member states (such as the UK) tax the deceased’s estate, while other member states tax the deceased’s heirs, who may be living in another member state to the deceased. This problem is further highlighted by the fact that there are only 33 bilateral IHT treaties between member states (out of a possible 351.)

Aside from the financial impact that these issues can have on EU citizens, the European Commission has also identified a social problem: that is to say, the way member states’ IHT rules apply in cross-border situations may be hindering EU citizens from fully exercising and benefiting from their right to move, as well as operate, freely within the EU.

The consultation closes on 22 September 2010; the European Commission will then study its findings to try and find a solution to these problems (and any others that are identified during the course of the consultation.)

• Agreement as to the actual or minimum resale price.
• Restrictions on the territories or customers to whom the buyer may sell, subject to certain exemptions such as an exclusive territory reserved to the supplier or another distributor.
• Restrictions on members of a selective distribution system from selling to end users.
• An prohibition on the buyer not to supply competing goods if that prohibition is indefinite or more than five years.

The Commission’s Guidelines, which need to be read alongside the new Regulation, contain particular points around use of the Internet. Receiving orders on a web site is generally considered to be passive selling, and passive selling cannot be restricted. This is also the case where a customer opts in to be automatically informed about developments and this leads to a sale. It is unacceptable to have a provision that prohibits a distributor from preventing customers in another territory from viewing its web site or automatically re-routing those customers to another distributor. However, a web site can have a link to another distributor’s site. Likewise, you cannot terminate a customer’s Internet transaction once it is clear from credit card data which shows an address not within the distributor’s own territory.

A further web development is that a distributor cannot be required to have a limit on the amount of Internet sales as a proportion of its overall sales. However, one new development which appeals to operators of selective distribution networks is that the supplier can require the buyer to sell a certain absolute amount (in value or volume) off-line in a bricks and mortar shop. The supplier can also require the buyer’s web site to be consistent with the supplier’s overall brand.

The Guidelines also consider the extent to which Internet advertising would be active or passive selling. Banner advertising or advertising on third party web sites addressed to certain customers is active selling, as is paying search engine service providers or other online ads where (in each case) the advertising is directed to users in a particular territory.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘It’s good news in terms of certainty that the previous rules have been largely replicated. One interesting change of emphasis is on Internet selling. The European Commission is keen to promote and enhance trade between Member States and the latest rules try to prohibit restrictions on distributors from using the Internet to obtain what are seen as ‘passive sales’ from customers in other countries.

It is important for businesses to conform with competition law, because I have often had to advise clients against use of terms that they do not realise infringe competition law. Failure to comply with the law in this area could have serious implications: fines of up to 10% of global turnover, an unenforceable agreement, and the right for third parties to sue for damages.’

The Bill has had its second reading in the Commons and goes into its committee stage tomorrow. It looks likely to receive Royal assent before the General Election (probably 6 May 2010).

Mr and Mrs Agbaje had been married for 38 years, by anyone’s definition a long marriage. The family assets, in barrister  Mr Agbaje’s name, were valued at around £700,000.  In the Nigerian proceedings concluded in 2005, Mrs Agbaje was awarded a life interest in a property in Lagos (the property itself being worth £86,000) and a lump sum of around £21,000. Mr Agbaje retained the rest, around £679,000 (subject to Mrs Agjabe’s limited life interest). On the face of it, an award of somewhere over 3% in Mrs Agbaje’s favour.

The Supreme Court reversed the Court of Appeal’s decision overturning Coleridge J’s conclusion that Mrs Agbaje should receive 39% of the parties assets. The Supreme Court found that the purpose of the particular legislation “…was the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where there were substantial connections with England” (Lord Collins, para 71), and that on the facts of this case “…there was a very large disparity between what the wife received in Nigeria and what she would have received in England, but that there was also a very large disparity betwen what the husband received and what the wife recived such as to create real hardship and a serious injustice”.

Nothing surprising there really, except that the case had to travel to the highest court to receive justice. The curious feature is the press reaction that such a case proves that London is the divorce capital of the world (The Independent, March 10, 2010 “Ruling confirms London as divorce payout capital” being one example).  Not really, or we might have expected Mrs Agbaje to receive 50% (or more).

The application of  Part III of the Matrimonial and Family Proceedings Act 1984 is not without its complexities as Munby J, Coleridge J, and the Court of Appeal might agree.  Nothing in the Supreme Court’s judgement should be taken as opening floodgates for those dissatisfied by their portion in foreign divorce proceedings (yes Scotland, that means you!).  Issues of English connection, hardship, delay and enforceability are all involved, before a “top-up” can become a realistic prospect.

The Commission has just updated the rules and data export contract terms that apply when a European data controller transfers data to a data processor that is not based in the EEA. A ‘data controller’ is someone who decides and controls what happens to personal data, and a ‘data processor’ is someone who processes personal data on behalf of a data controller but does not take decisions in relation to the personal data and is not ultimately responsible for that data. The new rules allow for the data processor to sub-contract the processing of the data to sub-processors under certain conditions, including by obtaining the prior written consent of the data controller that is exporting the data out of the EEA. The development is aimed at keeping pace with the way business is done, and in particular different levels of outsourcing in a chain.

Separate contract terms continue to exist in relation to transfers of data from data controllers within the EEA to data controllers outside of the EEA. They are unaffected by the updated contract terms in data controller to data processor situations.

Meanwhile, in a dramatic turn of events, Intel has paid AMD US$1.25bn as a settlement in a bid to end the ongoing legal disputes between the companies over Intel’s sales tactics. In return for the billion dollar settlement, AMD has agreed to withdraw all litigation and regulatory complaints worldwide. Under the terms of the settlement, the companies have agreed to enter into a five year cross-licensing agreement for patent rights.

Earlier this year, the European Commission fined Intel €1.06billion (£948million) for anti-competitive practices – the highest individual fine ever imposed by the Commission. Following years of investigations, the Commission found that Intel had engaged in illegal abusive conduct to exclude competitors from the market for CPUs between 2002 and 2007. Whilst the European Commission has acknowledged the settlement between Intel and AMD, a spokesman for the European Union stated that this does not change Intel’s duty to comply with EU competition law. Intel is continuing its appeal against the fine.