The expiry of a patent marks a crucial stage in the lifecycle of industrial property, paving the way for new economic and legal dynamics. This transition raises many questions about the practical consequences for inventors, competitors, and consumers.
Entry into the public domain
Once the patent term expires, the invention falls into the public domain. This means that anyone can freely use, manufacture, and commercialise the invention without needing permission or a licence. This fundamental rule of intellectual property law is one of the pillars of the balance between protecting innovation and public access to knowledge.
A patent is limited to a duration of 20 years from the filing date. This maximum duration is only valid provided that the fees for maintaining the patent in force, known as renewal fees or annuities, are paid. The French Intellectual Property Code, in articles L611-1 to L623-44, precisely frames these provisions.
The patent can be kept in force for a maximum period of 20 years. After this period, or when annual fees are no longer paid, the patent enters the public domain, meaning that the invention it protected is no longer protected and anyone can exploit it freely.
The different causes of expiry
A patent's expiry does not solely occur at the end of the statutory 20-year period. As a general rule, a patent expires once this 20-year period has passed. However, there are other grounds for a patent to lapse: The first is lapse due to non-payment (Article L. 613-24 of the Intellectual Property Code): when the patent holder fails to pay the annuities within the prescribed deadlines (on the last day of the month of the patent's filing anniversary), they forfeit the rights they held over the patent or patent application.
If an applicant decides to abandon their patent or if they no longer pay their fees before the 20-year limit, he loses his property rights. If the applicant decides to abandon the patent rights or if they stop paying the royalties, the patent will eventually fall into the public domain.
The immediate legal consequences
Once the patent has expired, it is no longer enforceable against third parties wishing to exploit the protected invention. The former holder will therefore no longer be able to invoke it before the courts.. In the same way, the rights arising from a patent lose their effect upon the expiry of the patent's expiration date.
This loss of exclusivity immediately opens the market to competition. Companies can now freely use the patented technology, without risking infringement lawsuits. This legal transition is generally accompanied by significant economic effects, particularly visible in certain sectors such as the pharmaceutical industry.
The impact on the pharmaceutical sector
The pharmaceutical sector perfectly illustrates the issues related to patent expiry. When intellectual property rights expire, the invention is said to be « falls into the public domain »In this case, the original medicine can be legally copied; these are called generic medicines.
So, once the invention «falls» into the public domain, nothing prevents the production of copies of the reference drug which will be sold at a lower price. This competitive dynamic directly benefits healthcare systems and patients, who can access less expensive treatments.
However, it has been observed that the economic effects of a patent may be felt for longer than its legal effects. Even after the patent expires, the price of the medication often remained at a high level, detrimental to public finances.
Expiry preparation strategies
Pharmaceutical companies develop various strategies to prepare for the expiry of their patents. In the pharmaceutical sector, potential competition can arise long before the expiry of a patent protecting the active ingredient of a branded drug, as manufacturers of generic drugs want to be ready to enter the market at the time of this expiry.
This preparation can sometimes lead to anti-competitive practices. When the patent for a brand-name drug expires, its manufacturer may be tempted, while waiting for protection of new processes by new patents, to block the arrival of generic medicines. Under the guise of amicable settlement of patent disputes, it enters into «pay for delay» or entry postponement agreements with their manufacturers, whereby these generic drug manufacturers agree not to launch them on the market immediately in exchange for financial compensation.
Regulatory exceptions: the Bolar case
To facilitate market entry for generic medicines, many countries have adopted «Bolar exceptions». In the Canada – Patent Protection for Pharmaceutical Products dispute, the WTO Panel ruled that this provision, which allowed for limited exceptions, covered a provision in Canadian legislation that allowed generic drug manufacturers to use patented products, without authorisation and before the expiry of the protection period, in order to obtain marketing approval from public health authorities.
In France, Article L.613-5 of the same Code provides useful clarification by excluding experimental use from the scope of infringement, namely «studies and trials required for obtaining marketing authorisation for a medicinal product, as well as [the] acts necessary for their undertaking and for obtaining that authorisation».
The positive economic effects of expiry
The expiry of patents generates substantial economic benefits for society. Firstly, after protection expires, the knowledge gained behind the innovation (and revealed in patent applications and MAA filings) can be freely used by other innovators to develop new products, whether similar or unrelated. Secondly, the introduction of cheaper generics or biosimilars contrasts with the ability of innovators to profit from high revenues from market exclusivity, and will therefore encourage the originator producer to continue investing in research and development activities for products under development in order to secure their future revenue streams. Competition from generics and biosimilars therefore not only lowers the prices of older medicines, but also acts as a discipline mechanism obliging originator producers to continue to innovate.
The balance between innovation and public access
Patent expiry perfectly illustrates the balance sought by the intellectual property system. Article 7, entitled Objectives, recognises that the protection of intellectual property should contribute to the promotion of technological innovation and the transfer and dissemination of technology, to the mutual benefit of those who generate and those who use technical knowledge, and in a manner conducive to social and economic welfare, and to the maintenance of a balance of rights and obligations. The Agreement does not simply aim to maximise the level of intellectual property protection; on the contrary, it is the result of a genuine negotiation process focused on the need to find a balance.
This philosophy is realised through the automatic transfer of inventions into the public domain, allowing society to fully benefit from innovations after a temporary period of protection granted to inventors.