October 2012

Patents typically seek to enforce the rights of the proprietor by forbidding the use, production and/or sale of the patented product without due authorisation by the proprietor.  The only partial exception to the above lies in the so-called ‘bolar provision’. The bolar exemption has its origins in US legislation and permits pharmaceutical companies who do not hold the rights to a patent to undertake any work of a prepatory nature in relation to the protected invention during its lifetime. Examples of such work of preparatory nature include research and development in relation to the patented pharmaceutical product. This allows the immediate marketing and distribution of the patented product once the patent period lapses, without the need to wait for the necessary tests to be conducted or health or sanitary authorities’ approvals.

Maltese law incorporated the bolar exemption at a time when the relevant EC Directive encouraging its adoption had not yet been adopted. Malta has embraced a wide definition of the Bolar Exemption.

Indeed, the effects of a Patent under the Patent and Designs Act (Chapter 417 of the Laws of Malta) are the following:

Where the patent concerns a product, the owner of the patent has the right to prevent third parties from performing the following acts without his authorization:

• The making of a product that incorporates the subject matter of the patent;
• The offering or placing on the market of a product that incorporates the subject matter of a patent, the use of such product, or the importation or stocking of such product for such offering or placing on the market or for such use;
• The inducing of third parties to perform any of the above acts;

Where the patent concerns a process, the owner of the patent has the right to prevent third parties from performing the following acts without his authorisation:

• The use of a process that is the subject matter of the patent; With regard to any product obtained by the use of the patented process, the offering or placing on the market of a product that incorporates the subject matter of a patent, the use of such product, or the importation or stocking of such product for such offering or placing on the market or for such use, even where a patent cannot actually be obtained for the product. The inducing of third parties to perform any of the above acts.

However, the owner of a patent shall have no right to prevent third parties from performing the abovementioned acts in the following circumstances:

• Where the act of a third party concerns a product which has been put on the market either directly by the owner of the patent, or with his express consent, but only insofar as such an act is performed after that product has been so put on the market in Malta or in any territory as may be specified in the regulations.
• Where the act of a third party is done privately and for non-commercial purposes provided that it does not significantly prejudice the economic interests of the owner of the patent.
• Where the act of a third party consists of making or using such product for purely experimental purposes or for scientific research.
• Where the act of a third party consists of the extemporaneous preparation for individual cases, in a pharmacy or by a veterinary doctor, in accordance with a medical prescription or of acts concerning the medicine so prepared.
• Where the act of a third party is done solely for uses reasonably related to the development and submission of information required under any law of Malta or any other country that regulates the manufacture, construction, use or sale of any product.
• When the use of the patented invention is on board vessels of the countries of the Union of Paris for the protection of Industrial Property of the patented invention, in the body of the vessel, in the machinery, tackle, gear and other accessories, when such vessels temporarily or accidentally enter the waters of Malta, provided that such invention is used exclusively for the needs of the vessel.
• When the use of that patented invention is in the construction or operation of aircraft or land vehicles of countries who are members of the Union of Paris for the Protection of Industrial Property or of accessories to such aircraft or land vehicles when such aircraft or vehicles temporarily or accidentally enter the territory of Malta.

The broad application of the Bolar provision coupled with Malta’s commitment towards attracting pharmaceutical companies by offering tax incentives and other investments opportunities coupled with the fact that very few inventions were registered before the mid-2000s, has provided numerous beneficial factors which do not conflict with patent infringement law.

Indeed, the Maltese Government has sent out a clear signal to pharmaceutical companies internationally that Malta is open for business and ready to support the establishment of pharmaceutical companies through the development of key sectors and the placing into action of several incentives including some of the following:

• Tax exemption for income derived from licensing of Patent Rights & Copyright Royalties;
• The adoption of a Full Computation Fiscal Regime and the implementation of a system of taxation that offers a final taxation of 5% on trading income;
• The Conclusion of over 60 Treaties for the avoidance of Double Taxation;
• The Establishment of a Freeport and tax free trade zone for shipping;
• The development of beneficial schemes and incentives for investment in Malta.

This information has been provided merely for information purposes and does not constitute legal or specialist advice. Should more information be sought it is recommended to contact Valletta Legal.

For further enquiries kindly contact us:

VALLETTA LEGAL
20/1, Republic Street,
Valletta, VLT 1111,
Malta 

T: +356 2122 8340