Patent Farm: Chilling Innovation in the Great White North

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  • 06/29/2007
“All animals are equal, but some animals are more equal than others.” A famous line from a famous book with a famous lesson – they’re not.

Today that lesson needs to be relearned. Case-in-point, a Canadian judge’s apparent belief that all patents are equal, but some patents are less equal than others.

Specifically, pharmaceutical patents.

But first a point of order – this is not about the position of the Government of Canada, which is very good on these issues. This is about the actions of an activist judge – the Honourable Mr. Justice Hughes, of the Federal Court of Canada.

It’s about a patent case brought by Novopharm (the large Canadian generics company) against Eli Lilly (the large American pharmaceutical company). But the issue is considerably broader and the precedent is frightening not only for innovator pharmaceutical firms – but for the future of Canadian public health.

The issue, relative to a pharmaceutical patent, “… is the sufficiency of the disclosure in the patent itself…” Judge Hughes’ decision has created a requirement that “… the advantage must be plainly and fully set out in sufficient detail so as to enable a person skilled in the art to know and appreciate what they are.” That is, the judge found that it is “mere rhetoric” to only state the advantages of the invention in the patent specification.

And get this – Judge Hughes ruled on an argument that wasn’t even made by Novopharm. He invented and then ruled on his own argument.

Here's a link to Judge Hughes’ June 5, 2007 decision:

(PS/ A Canadian appellate court chastised Judge Hughes' decision.)

A couple of crucial points:

Eli Lilly Canada Inc. v. Novopharm Limited raises a significant new question of law and represents a significant shift in the requirement for disclosure in patent applications that has an immediate impact on presently pending applications and patents-in-force in Canada.

Judge Hughes’ ruling is out of step with Canadian law; it violates international IP treaties (TRIPS, PCT), and makes Canada an outlier among all developed and developing countries.

For example, the Patent Cooperation Treaty (PCT) provides for the requirements of a patent specification and states that the “description shall disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art.” Considering that Canada is a member of the PCT, it seems that the Federal Court has now made Canada non-compliant with its treaty obligations.

Furthermore, by applying this “super-sufficiency” requirement to a certain class of improvement patents (so-called “selection” patents); the decision also violates the nondiscrimination clauses of TRIPS. TRIPS requires that the standards of patentability for all technology must be the same. In addition, by applying this requirement only to selection patents, the legal requirements in Canada now improperly establish a higher standard of patentability for this type of innovation in contravention of the non-discriminatory clauses of TRIPS.

And, even worse, the Court of Appeals in Canada has created a practice of dismissing any adverse ruling against the pharmaceutical patent as being moot if the generic obtains its marketing approval before the appeal can be heard. So, a generic challenger has their day in court and a full opportunity to appeal a ruling. The innovator pharmaceutical company has their day in court with the first challenger and if there is an adverse ruling will have no opportunity to appeal. To further exacerbate matters, the Court of Appeals has also held that once the first generic challenger has prevailed subsequent challengers should also be granted an approval.

So much for checks and balances.

These actions are manifestly unfair to the research-based pharmaceutical industry and will chill pharmaceutical innovation in the Great White North. This illegal and unfair attitude, if it continues unfettered or unquestioned, will lead to fewer innovative pharmaceutical products being made available to Canadians.

Ah, those pesky unintended consequences.

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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