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www.dlapiper.com 0DLA Piper Canada LLP July 24, 2017

July 24, 2017

CANADA: INTERNATIONAL TREATIES

AND THE PROMISE OF THE PATENT

By Thomas Kurys


1 Comprehensive Economic and Trade

Agreement

2 Utility and the Promise of the Patent

To Be Discussed

1 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

Comprehensive Economic and Trade Agreement


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

CETA: Supplementary Patent Protection


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

CETA: Substantive Legislative Modifications

2 Utility and the Promise of the Patent


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”

The fall of the “Promise of the Patent” doctrine


“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 197

What was the Promise of the Patent?


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 638

“Promise Doctrine” – What was the big deal?


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

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”

Eli Lilly v Canada – NAFTA Challenge


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…

“Promise Doctrine” - the beginning of the end


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.

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”.

SCC: promise doctrine is abolished


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

The Proper Approach to Utility


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.

Example


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

Implications


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 www.dlapiper.com.

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CANADA: INTERNATIONAL TREATIES AND THE PROMISE OF THE … · “serve to create consistency and clarity in the bargain struck ... an innovative genetically modified microbe for the