CANADA: INTERNATIONAL TREATIES AND THE PROMISE OF THE PATENT

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1 CANADA: INTERNATIONAL TREATIES AND THE PROMISE OF THE PATENT By Thomas Kurys July 24, DLA Piper Canada LLP July 24,

2 To Be Discussed 1 Comprehensive Economic and Trade Agreement 2 Utility and the Promise of the Patent DLA Piper Canada LLP July 24,

3 1 Comprehensive Economic and Trade Agreement

4 Comprehensive Economic and Trade Agreement What is CETA? Free-trade agreement between Canada and the European Union Will eliminate 98% of the tariffs between Canada and the EU Signed by Canada on 30 October 2016 Bill tabled on October 31, 2016 (Bill C-30) Received Royal Ascent on May 16, 2017 Provisional application to come into effect on September 21, 2017 Includes provisions affecting Canada s patent laws DLA Piper Canada LLP July 24,

5 CETA: Supplementary Patent Protection Sui Generis Protection for Pharma/Biopharma Products Currently no mechanism for pharma/biopharma patentees to extend the patent term as a result of delays in obtaining market approval Bill C-30 will amend the Patent Act to add the concept of patent term restoration for regulatory delays as a Certificate of Supplementary Protection Could effectively extend the patentee s monopoly by up to two years DLA Piper Canada LLP July 24,

6 CETA: Substantive Legislative Modifications Amendments to PM(NOC) Regulations Patented Medicines (Notice of Compliance) Regulations Linkage provisions for regulatory approval of generic drugs and biosimilars Proposed Regulations Amending the Patented Medicines published in Canada Gazette on July 15, 2017 process to be changed from an application to a trial with full right of appeal DLA Piper Canada LLP July 24,

7 2 Utility and the Promise of the Patent

8 The fall of the Promise of the Patent doctrine AstraZeneca Canada Inc. v Apotex Inc., 2017 SCC 36 (June 30, 2017) Considered the promise of the patent doctrine a controversial judge-made approach to the question of patent utility unique to Canada many argued it was out of step with the law in other countries held: the promise doctrine is not good law DLA Piper Canada LLP July 24,

9 What was the Promise of the Patent? invention means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter (Section 2 of the Patent Act) Where the specification does not promise a specific result, no particular level of utility is required; a mere scintilla of utility will suffice. However, where the specification sets out an explicit promise, utility will be measured against that promise. Eli Lilly v Novopharm, 2010 FCA DLA Piper Canada LLP July 24,

10 Promise Doctrine What was the big deal? Innovators: Labelled as innovation killing Promise Doctrine Cloud of uncertainty Imposes subjective utility standard that is arbitrary and unpredictable Invalidating patents on the basis of lack of utility despite invention at issue actually has a high degree of utility Response: Constraining innovators from overpromising is a reasonable approach to preserving the core policy objectives of patent law that: serve to create consistency and clarity in the bargain struck between innovators and the public Justice Rennie, AstraZeneca v Apotex, 2014 FC DLA Piper Canada LLP July 24,

11 Eli Lilly v Canada NAFTA Challenge On June 13, 2013, Eli Lilly initiated a $500 million CAD claim under NAFTA against the Government of Canada Decision: March 16, 2017 Heart of the claim: Use of the promise doctrine to invalidate patents in Canadian courts for lacking the level of utility promised in the patent specification Lilly s Canadian patents directed to Zyprexa and Strattera were invalidated under this doctrine Lilly alleged that Canada s utility test was contrary to NAFTA DLA Piper Canada LLP July 24,

12 Eli Lilly v Canada NAFTA Challenge Tribunal sided with Canadian government promise doctrine did not represent a dramatic change in Canadian patent law Canada s law on utility underwent incremental and evolutionary changes Eli Lilly s legitimate expectations were not violated by application of doctrine Tribunal s decision came out three months before Supreme Court of Canada decision declaration the promise doctrine not good law DLA Piper Canada LLP July 24,

13 Promise Doctrine - the beginning of the end Nexium (esomeprazole) AstraZeneca Canada v Apotex, 2014 FC 638, 2015 FCA 158 Lower Court held that the patent promised more than it could provide Promised utility of the claims comprised three elements, including improved pharmacokinetic and metabolic properties which will give an improved therapeutic profile This element was not demonstrated by the Canadian filing date for the patent, and the Court held it was also not soundly predictable as of that date Court ultimately held that there is no heightened disclosure in sound prediction cases, except in the context of new use patents Affirmed by Federal Court of Appeal Appealed to the Supreme Court DLA Piper Canada LLP July 24,

14 SCC: promise doctrine is abolished Supreme Court allowed the appeal and abolished the promise doctrine (AstraZeneca Canada Inc. v Apotex Inc., 2017 SCC 36 - June 30, 2017) Approach taken by the lower courts was overly onerous for patentees in that: there was a heightened standard of utility which was applied if there was a promise found in the patent specification, and the approach required a patentee to meet all promises where there are multiple, expressed promises of utility. DLA Piper Canada LLP July 24,

15 SCC: promise doctrine is abolished The Promise Doctrine is flawed: It conflated the utility requirement under section 2 of the Patent Act with the disclosure requirement under section 27(3). Under section 27(3), the inventor must fully disclose the invention to enable the skilled person to use or construct the invention when the monopoly period has expired. Section 2, on the other hand, requires the subject-matter of the invention to be useful the bounds of which are defined by the claims. The effect of the Promise Doctrine was to undermine the disclosure requirement by discouraging fulsome disclosure for risk of invalidity on the basis of an unintentional overstatement of even a single use. DLA Piper Canada LLP July 24,

16 The Proper Approach to Utility Courts are to apply the following analysis: First, courts must identify the subject-matter of the invention as claimed in the patent. Second, courts must ask whether that subject-matter is useful is it capable of a practical purpose (i.e. an actual result)? A mere scintilla of utility will do DLA Piper Canada LLP July 24,

17 Example Invention: an innovative genetically modified microbe for the purification of waste water. Patent specification: discusses the ability of the microbe to improve nitrate reduction in waste waters. states that the microbe of the invention would result in 90% purification Under the new regime since 2017 SCC 36, a scintilla of utility demonstrated for this purpose should suffice, regardless of any language in the specification about desired or expected levels of purification. Under the old "promise" approach the patent could fail if this "promised" efficiency level had not been demonstrated or could not have been soundly predicted. DLA Piper Canada LLP July 24,

18 Implications Supreme Court Decision viewed as a big win for rights holders generally. Established a clear threshold for patent utility that is lower than the Federal Courts had applied under the Promise Doctrine. By restricting the assessment of utility to the claims, full, frank, and good faith disclosure in the specification will not jeopardize patent rights, if challenged. However, overpromising is still a mischief: disclosure that is not correct or full, or states an unsubstantiated use, may be insufficient overly broad claims may be invalid overpromising in a specification may void a patent under s. 53 (omission or addition willfully made for the purpose of misleading) Thus, decision may shift focus of patent attacks to other areas DLA Piper Canada LLP July 24,

19 DLA Piper (Canada) LLP is part of DLA Piper, a global law firm operating through various separate and distinct legal entities. For further information please refer to the Legal Notices section at DLA Piper Canada LLP July 24,