The Federal Anti-Monopoly Service comes to the rescue in Russia

We have become accustomed to the anti-IP initiatives of the Federal Anti-Monopoly Service (FAS) in Russia. It has often come under the spotlight and calls for the liberalization of parallel imports. When the Constitutional Court three years ago explained the rules for banning or allowing parallel imports, the FAS began to worry about its direct responsibility to curb corporate monopolistic efforts.

The Nativa and Mamont strife

In this case, Nativa, a Russian company, brought its generic drug Nilotinib-nativ to market. The original patent for Nilotinib is owned by Novartis AG. Novartis sued Nativa, and in 2017, the court confirmed that Nativas ‘Nilatinib native infringed Novartis’ Patent No. 2348627 and banned its sale.

Nativa then handed over the product to its dependent company Mamont-Pharm, which renewed sales of Nilotinib-nativ but changed its name to Nilotinib.

This time, Novartis sued Mamont Pharm for infringement of the same patent No. 2348627. The court examined the claims and refused to allow them (Case No. A40-201092 / 20-15-1452, judgment of 3 March 2021).

The court found that Novartis’ arguments linking Mamont Pharm with Nativa and the link between Nilotitib-nativ and Nilotinib sold by Mamont Pharma were irrelevant because they were different and unrelated lawsuits. Reference to other lawsuits cannot be considered because they concerned different legal issues and were based on different circumstances. The previous ban concerned the Nilotinib native, while Mamont Pharm sold Nilotinib.

Novartis appealed the verdict to the Court of Appeal. At the hearing on May 24, 2021, Novartis withdrew its claims. The court approved the withdrawal of claims and closed the case. It further stated that if the case is closed in this way, no other claims will be allowed on behalf of the same persons and in connection with the same claims. The verdict was announced on May 27, 2021.

Complaint of unfair competition

At this point, the most interesting part of the saga began. Shortly after the verdict, Novartis Pharma, a Russian subsidiary of Novartis, filed a complaint against Mamont Pharma with the Antimonopoly Body, in which they accused Mamont Pharma of unfair competition. Novartis Pharma relied on Article 14.5 of the Competition Protection Act. It demanded that Mamont Pharma stop the production and sale of Nilotinib, using the invention protected by Novartis Patent No. 2348627.

FAS noted that the Pharmacy Register includes the registration of a drug preparation Nilotinib protected by Russian Patent No. 2348627 owned by Novartis (the complainant). Mamont Pharma (defendant) marketed a certain amount of Nilotinib. The registration certificate for that medicine was previously obtained by Nativa. FAS referred to section 4 of the Act on the circulation of medicinal products, according to which there is an original medicinal product with a new active substance and a reproduced medicinal product that has the same qualitative and quantitative composition corresponding to the referenced medicinal product, which is bioequivalent.

Clinical trials confirmed that Nilotinib and Nilotinib native are bioequivalent. FAS recalled that the previous court judgment of 2017 had established that patent No. 2348627 belonging to Novartis had been used by Nativa in the medicine Nilotinib-nativ. The court ruled at the time that Nativa should not use Nilotinib native before the expiration of Patent No. 2348627 in 2023.

Mamont Pharma claimed that the ban concerned another business entity (Nativa) and another medicine (Nilotinib-nativ). Its registration certificate was also different. FAS rejected this argument. FAS had previously sent an inquiry to the Ministry of Health regarding the registration certificate. The Ministry stated that the registration certificate confirmed the registration of one medicinal product regardless of changes in the files registered. The changes were of a purely administrative nature and did not concern materials, production processes, specifications, etc.

FAS therefore concluded that both drugs, Nilotinib-nativ and Nilotinib, are the same drug. Therefore, the previously imposed ban on the use of Nilotinib native also applied to Nilotinib.

According to Article 4 of the Competition Act, unfair competition means any action taken by business entities for the purpose of obtaining benefits during entrepreneurial activities. Article 14.5 prohibits unfair competition involving the illegal use of other persons’ intellectual property.

Furthermore, FAS concluded that the complainant and defendant are competitors in the market. It is not important that the plaintiff and the patent owner in the context of this case are different companies. The defendant claimed that it and Novartis (the patent holder) are not competitors (which is true – its competitor is Novartis Pharma, the Russian company). FAS rejected this argument, stating that any person can complain about violation of the Antimonopoly Act. The complainant is the competitor, so it has the right to raise this issue.

FAS stated that the defendant sold Nilotinib, which certainly knew it was infringing Novartis’ rights in Patent No. 2348627.

The FAS concluded that the defendant’s actions contained all the characteristics of unfair competition: it sought to obtain benefits as a result of its activities. It violated Article 10bis of the Paris Convention, which prohibited any competition contrary to honest practice. These actions can cause harm to the patent owner and reduce his sales of the medicine.

In conclusion, FAS considered Mamont Pharma’s activities to be unfair competition and issued a subpoena banning the production and sale of Nilotinib.

It is worth noting that the FAS did not hold back on absolutely formal considerations, as the court stated in March 2021. It used common sense without stretching the law. Although FAS ‘involvement in intellectual property disputes seems somewhat unusual, we can only welcome its initiatives to protect IP rights.

Vladimir Biriulin

Partner, Gorodissky

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