Thought leadership from our experts

What might the next few years hold for Canadian pharmaceutical patent law?

An appeal to the Supreme Court of Canada on patent utility, a NAFTA investor-state dispute also on utility, and CETA provisions changing the nature of Canadian patent litigation, appeal rights and patent term extension, all weigh on the path ahead for Canada's patent law, particularly as it applies to pharmaceuticals.

Patent Utility

In assessing patent utility, Canadian courts typically start with considering the oft quoted test for sound prediction from the Supreme Court of Canada's 2002 decision in Apotex v Wellcome Foundation relating to a patent on AZT. The test applies where there has been no demonstrated utility for the invention, rather, where utility is predicted. The test requires a factual basis for the prediction, an articulate and sound line of reasoning from which the desired result can be inferred, and proper disclosure. After AZT, sound prediction attacks on pharmaceutical patents became common, and numerous decisions contemplated, and in some ways arguably debated, what the patentee must disclose to the public in order to meet the "proper disclosure" requirement. In a 2013 decision in Teva Canada v Novartis relating to a patent on imatinib (Gleevec®), Justice Snider of the Federal Court notably observed, however, that sound prediction was not to "give a crushing hammer to those who challenge patents."

A second utility-based line of attack on pharmaceutical patents, premised on the perceived promise of a patent, also became common after the AZT decision. The line evolved out of a 1981 statement of the Supreme Court of Canada in Consolboard v MacMillan Bloedel, in which Justice Pigeon observed that "'not useful' in patent law…means 'that the invention will not work, either in the sense that it will not operate at all or, more broadly, that it will not do what the specification promises that it will do'" (emphasis added). Under this line, Canadian courts have reviewed the patent specification to determine whether the inventor has made an express promise concerning the invention's utility. If the court subsequently finds that the inventor made an express promise, the sound prediction analysis is then measured in relation to that promised utility.

Cases involving the promise doctrine typically have turned on whether what can appear to be simple words or statements by the inventor amount to a promise, as opposed to merely a goal or objective. For example, in a 2014 decision in Pfizer Canada v Mylan Pharmaceuticals relating to a patent on celecoxib (Celebrex®), Justice Harrington considered whether a patent passage that included the words "may indicate an ability to reduce…side effects" (emphasis added) might amount to a promise; he concluded no. But in other cases, an ultimately fatal explicit promise has been found.

On November 8, 2016, the Supreme Court heard an appeal from the Federal Court of Appeal's decision in AstraZeneca Canada v Apotex, which held that AstraZeneca's patent covering esomeprazole (Nexium®) was invalid for lacking utility. The Supreme Court reserved its decision. The lower court decisions had focused on one particular passage in the patent which stated that compounds of the invention "will give an improved therapeutic profile such as a lower degree of interindividual variation" (emphasis added). It was held by Justice Rennie and upheld by the Federal Court of Appeal that this passage constituted an explicit promise, and the data in the patent needed to support this utility was found lacking. The Supreme Court's decision will most likely issue late this Spring 2017.

Lilly NAFTA Challenge

Eli Lilly chose in 2013 to challenge through a NAFTA investor-state dispute the Canadian approach to evaluating utility, because Canadian patents relating to two of its successful drugs, Strattera® and Zyprexa®, had been invalidated for lack of utility, and it saw the result as "absurd". Under the dispute against the Canadian Government, Eli Lilly asked for $500 million in damages, raising allegations including discriminatory treatment of pharmaceutical patents and the creation of what it perceives to be highly onerous standards in relation to the promise doctrine and sound prediction disclosure requirements. The NAFTA hearing was heard from May 30 to June 8, 2016, and a decision should be available possibly as of Spring 2017.

CETA

Canada and Europe approved and signed the Comprehensive Economic and Trade Agreement ("CETA") on October 30, 2016. The following day, the Canadian federal government introduced a Bill to implement portions of CETA. The Bill provides regulation-making authority to permit the replacement of the existing summary Patented Medicines Notice of Compliance ("NOC Regulations") proceedings with patent infringement and validity actions. The Bill also provides a patent term extension system.

The NOC Regulations currently allow a patent owner to apply to Federal Court to keep a generic company's potentially infringing medicine off the market before the generic company receives Health Canada approval to sell its medicine. The NOC Regulations are "linkage regulations", because they link regulatory approval of a drug to the condition precedent of passing an initial review of patent issues.

The NOC Regulations operate by allowing a patent owner to file an application in court to request an order prohibiting the government from issuing an NOC to the generic company – it is not a determination of patent infringement. In order to take advantage of the NOC Regulations, the patent owner lists its patents on a Health Canada "Patent Register" within strict time limits. If the patent owner cannot add its patent to the Patent Register, then there is no trigger for the NOC Regulations.

The NOC proceedings are not final determinations of patent validity or infringement. They were intended to be summary proceedings that would be quick, straightforward and efficient court assessments of patent issues to determine whether the generic drug company can get its marketing authorization and go on the market. However, NOC proceedings quickly became complex and cumbersome, with many issues in play and much expert evidence. As well, patent owners had no right of appeal, but could bring patent infringement actions.

The Bill and related regulations, when proclaimed into force, will replace the NOC Regulations, and bring the new patent infringement and validity action regime into effect.

Also included in the Bill is a system to effectively extend patent term up to a maximum of two years. The extended patent rights will be for approved drugs (eligible drugs are defined broadly to include human and veterinary drugs), and will be available by way of a Supplementary Protection Certificate ("SPC"). The proposed Canadian SPC system is based on the European SPC system. It will provide the same practical effect as a patent term extension, but the additional patent protection is effected by the SPC. The SPC will be limited to the particular medicine that is an approved drug (for example, if the patent covers non-commercialized drugs, the non-commercialized drugs will not be protected further). The additional SPC patent protection will be capped at a maximum of two years.

The SPC will be available upon request of the brand name company, for a patent filed on or after October 1, 1989. The patent will have to pertain to a medicinal ingredient, or a combination, that was authorized after a cut-off date to be set by government. Drugs approved for sale in Canada prior to this cut-off date will not be eligible to apply for a SPC. The SPC will only be available where the drug is being approved by Health Canada for the first time. There will be no stacking of multiple SPCs – one SPC for one patent per drug.

Thus, the next few years should bring Canadian pharmaceutical patent law more certainty relating to patent utility, the replacement of NOC Regulations proceedings with patent infringement and validity actions (including appeal rights relating to decisions coming from those actions), and what is effectively a maximum two year patent term extension, by way of supplementary protection certificates.