Top Headlines of 2018

Last year ushered in a number of changes to the Canadian pharmaceutical and life sciences sector. 2018 also served as a year to explore the impacts of major intellectual property decisions and regulatory changes from 2017 including the impact of the Supreme Court’s decision in NEXIUM striking down the Promise Doctrine and the implementation of CETA on single-track patent litigation under the newly amended Patented Medicines (Notice of Compliance) Regulations. Further, a number of IP and regulatory developments arose, such as: the potential for a national pharmacare program, advances to the self-care products framework for non-prescription drugs, natural health products and cosmetics, and amendments to the Patent Act and other intellectual property statutes as a result of Bill C-86.

We have compiled our list of Pharma in Brief’s top headlines from 2018 below:

Legislative Developments

Bill C-86. The enactment of Bill C-86, the Budget Implementation Act, 2018, No. 2 in December 2018 brought with it significant changes to Canada’s core IP statutes, including changes to the Patent Act that will affect patentees in the pharmaceutical and life sciences sector, such as: (i) the possible admissibility of the patent prosecution history (file wrapper) in litigation as evidence to rebut a patentee’s representations on claims construction, (ii) revised and restated exceptions to infringement for experimental use and continued acts first undertaken prior to the claim date, (iii) provision for standard-essential patents, and (iv) regulations for demand letters and related offences.
New protections for biologics and other pharmaceuticals under the USMCA. The United States-Mexico-Canada Agreement (USMCA), which replaces the North American Free Agreement (NAFTA) will introduce new protections for biologics and other pharmaceuticals, including an extended data protection term of ten years for new biologics and a new patent-term restoration system for unreasonable delay in patent prosecution. This new system is not specific to pharmaceuticals and will be additional to any Certificate of Supplementary Protection (CSP) that may be available for pharmaceutical patents. Although signed in 2018, the USMCA awaits ratification by its member states in 2019 before it will come into force.
Health Sector Payment Transparency Act delayed or abandoned. The Ontario government passed the Health Sector Payment Transparency Act (HSPTA) as part of Bill 160 in December 2017 and published draft regulations for consultation in February 2018. The draft regulations defined terms, set thresholds, and established the manner and frequency of, and exceptions to, reporting requirements. However, in April 2018, the Ontario government delayed implementation until after the fall election. The regulations have not been revisited since the election and it is unclear whether they will be enacted or abandoned under the current Ontario government.

Regulatory Schemes and Guidance

Health Canada Expands the Submissions Under Review List to include ANDSs. As of October 1, 2018, Health Canada is publishing a list of abbreviated new drug submissions (ANDSs) under review on the Generic Submissions Under Review (GSUR) List. The list includes the medicinal ingredient(s), the therapeutic area and the number of submissions under review. Health Canada also expanded its Regulatory Decisions Summaries to include certain ANDSs, supplemental abbreviated new drug submissions (SANDSs) and supplemental new drug submissions (SNDSs).
The potential for a national pharmacare program. In February 2018, the Federal government tabled its 2018-2019 budget, which contemplated the creation of a national pharmacare program that would introduce a pricing and reimbursement model for certain prescription medications. Beyond the Standing Committee on Health’s April 2018 recommendations on the best way to move forward with a universal single payer prescription drug coverage program, the Advisory Council on the Implementation of National Pharmacare is expected to provide a 2019 report commenting on the proposed implementation.
New CADTH guidelines for biosimilars. In February 2018, the Canadian Agency for Drugs and Technologies in Health (CADTH) released new procedural guidelines for both cancer and non-cancer-related biosimilar submissions. Key changes to the review and resubmission for biosimilars included shorter review times, fewer submission requirements, a new fee structure, and no provincial/territorial reimbursement recommendation.
Self-care products framework. Health Canada announced that it will advance the new self-care products framework, a new risk-based regulatory framework for non-prescription drugs, natural health products, and cosmetics, under existing legislation by updating the Natural Health Products Regulations and the Food and Drug Regulations on a rolling basis through 2020.

Case Law Developments

Developments on PM(NOC) cases and CSPs following CETA. In September 2017, following the enactment of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), key reforms to the Patent Act were introduced, including patent term restoration (CSPs) for patented pharmaceuticals under the Certificate of Supplementary Protection Regulations and a new single-track pharmaceutical patent litigation system under the Patented Medicines (Notice of Compliance) Regulations. With respect to CSPs, 16 CSP applications have been granted, 4 applications have been refused, and 7 applications are still pending, according to Health Canada’s online Register. The first application challenging the Minister’s decision to refuse a CSP was commenced in the Federal Court (Federal Court file No. T-1603-18) in August 2018. With respect to proceedings under the newly amended Patented Medicines (Notice of Compliance) Regulations, approximately 20 actions were started in 2018. Early interlocutory decisions included: (i) the Federal Court’s decision to dismiss Amgen’s motion against Genentech, Inc. and Hoffman-La Roche Limited for early dismissal of two patents under section 6.08 of the Patented Medicines (Notice of Compliance) Regulations, and (ii) the requirement for a concurrent trial on issues of validity in cases brought by a first person against two generics related to patents covering Biogen’s FAMPYRA .
Post-NEXIUM decisions. The impact of the Supreme Court’s landmark ruling in AstraZeneca Canada Inc. v Apotex Inc., 2017 SCC 36 (NEXIUM), which rejected the “Promise Doctrine”, played out in different contexts throughout the year. For one, the Ontario Court of Appeal and the Federal Court of Appeal reached conflicting conclusions as to whether the NEXIUM decision’s change in law triggered the special circumstance exception to the doctrine of issue estoppel. Further, AstraZeneca successfully relied on the NEXIUM decision to avoid liability for section 8 damages. The Court also refused Apotex’s motion to re-open validity to adjudicate the issue of overpromising in light of the Supreme Court decision. Finally, the Ontario Superior Court rejected Apotex’s later attempt amend its pleadings in a section 8 damages action in order to revive the Promise Doctrine under the guise of invalidity allegations.
Infringement damages and accounting of profits decisions. The Federal Court of Appeal upheld the Federal Court’s damages order that Teva pay Janssen over $18 million for infringing sales of levofloxacin (LEVAQUIN) in Canada. The Federal Court of Appeal also held that Janssen US had standing to claim damages under section 55(1) of the Patent Act (i.e., Janssen US was not required to demonstrate that it had held title in Canada to the LEVAQUIN tablets it had sold to Janssen Canada). In a decision relating to Bayer’s patents for YAZ and YASMIN, the FCA reiterated that the patentee, and not the infringer (Apotex), is entitled to elect between damages and an accounting of profits after a finding of infringement. In a case between Eli Lilly and Apotex related to CEFACLOR, the Federal Court of Appeal confirmed that in assessing the availability of a non-infringing alternative (NIA) defence, the NIA must be legal and cannot infringe any patent, and its economic viability must be considered objectively. The Federal Court of Appeal upheld the Federal Court’s damages award but remitted the issues of prejudgment interest to the Federal Court for redetermination. Finally, in a redetermination of profits decision related to COVERSYL (perindopril), the Federal Court dismissed Apotex’s NIA defence finding that Apotex could not and would not have sold the NIA in the hypothetical world. The Court refused to reduce Servier and ADIR’s profits.

As 2019 unfolds we will continue to monitor developments in these areas and look forward to sharing them with you in Pharma in Brief.

FCA Confirms that Non-Infringing Alternative Must be Legal and Objectively Economically Viable

By Morgan Westgate, David Yi and Allyson Whyte Nowak on December 20, 2018 Posted in Intellectual property, Life sciences and healthcare, Pharmaceuticals and life sciences

The Federal Court of Appeal (“FCA”) confirmed that in assessing the availability of a non-infringing alternative (“NIA”) defence, the NIA must be legal and cannot infringe any patent, and its economic viability must be considered objectively. The FCA upheld an award for damages for patent infringement by the Federal Court (“FC”) but remitted the issue of prejudgment interest back for redetermination.

Background

This case arises from a dispute between Apotex Inc. (“Apotex”) and Eli Lilly and Company and Eli Lilly Canada Inc. (together, “Lilly”) regarding eight of Lilly’s process patents in respect of the drug cefaclor (the “Lilly Patents”). The infringement action was bifurcated into a liability phase and a quantification phase.

During the liability phase, two of three of Apotex’s manufacturing processes were found to infringe the Lilly Patents. The third process (referred to as the “Lupin 2 process”) was found not to have infringed. It was the product made using the Lupin 2 process that Apotex raised as an NIA in the quantification phase of the action, and the FCA’s focus on appeal.

An NIA must be objectively economically viable

The FC found in the quantification phase that an NIA defence is not available in law in a patent infringement action. This decision predates the FCA’s cases confirming the availability of NIAs in patent damages cases in AstraZeneca Canada Inc et al v Apotex Inc, 2017 FC 726 and Les Laboratoires Servier et al v Apotex Inc et al, 2018 FC 346 , which we previously wrote about here and here. Accordingly, the FC erred on this issue; however, this error was immaterial as the FCA found that Apotex’s NIA defence was not available on the facts of the case.

In assessing Apotex’s NIA, the FCA confirmed that, in addition to proving that the infringer could and would have used the NIA, the NIA had to be economically viable. This economic viability has to be measured objectively.

In this case, the evidence showed that the Lupin 2 process increased Apotex’s costs by at least 40%. As a result, Apotex lost more than $5 million on the sale of its products using this process. At the damages trial, a majority of the experts agreed that unless there were other valid economic reasons to market the product, a rational generic drug manufacturer entering an exclusive market would not view the Lupin 2 process as commercially viable. The FCA was not persuaded by Apotex’s suggestion that it would use the NIA even if it meant losing money on sales since the purpose of an NIA is to quantify the true value of the patent. Accordingly, assessing the viability of the NIA only from the infringer’s subjective perspectives could artificially reduce a patent damages award.

An NIA must not infringe any patent

The FCA also found that an NIA defence was not available to Apotex because it failed to show that its NIA was otherwise lawful.

Although the Lupin 2 process was found not to have infringed any of the Lilly Patents in issue in the liability phase, another patent that was in force during the damages period was raised at the quantification phase of the action (the “646 Patent”). Once Lilly had put the issue of infringement of the 646 Patent into play, it was Apotex’s burden to show that its NIA would not have infringed the 646 Patent. The FCA found that, on its face, the Lupin 2 process infringed the 646 Patent.

Regardless, the FCA also found that Apotex could not and would not have entered the market with an NIA.

Interest as damages

The only basis on which the FCA remitted the matter back for redetermination was on the issue of prejudgment interest. The FC awarded Lilly compound interest at the quantification stage. It suggested that there ought to be a presumption of compound interest to reflect commercial realities. It also found that Lilly did not have to prove what use it would have made of the money it would have made had the patent not been infringed.

The FCA disagreed and found that, although compound interest is available, there is no general presumption regarding compound interest, and interest as a head of damages must be proved in the same way as any other form of loss or damage. Despite this, the FCA seemed to suggest that it would be open to the FC to award compound interest on the evidence that it already had before it.

Link to decision:

Apotex Inc. v. Eli Lilly and Company and Eli Lilly Canada Inc., 2018 FCA 217

Bill C-86 receives Royal Assent, bringing amendments across Canada’s IP statutes

By Christopher A. Guerreiro, Amy Grenon and Jordana Sanft on December 14, 2018 Posted in Intellectual property, Life sciences and healthcare, Pharmaceuticals and life sciences

Canada’s core IP statutes have been amended by Bill C-86, which received Royal Assent as the Budget Implementation Act, 2018, No. 2, SC 2018, c 27 on December 14, 2018. The final version of the legislation includes amendments to the Patent Act that are substantially identical to the version that received first reading 46 days ago, on October 29, 2018. The patent-law changes in Bill C-86 are not specifically directed at pharmaceutical patentees, but have the potential to affect this area of litigation.

As we reported following first reading, the changes to the Patent Act include:

Patent prosecution history (file-wrapper) may be admitted in appropriate cases as evidence to rebut patentees’ representations regarding claims construction.
Exceptions to infringement concerning experimental use and continued acts first undertaken prior to the claim date have been revised and re-stated.
Regulation of demand letters and related offences have been introduced.
Provision has been made for standard-essential patents.

The omnibus budget Act also includes amendments to the Trade-marks Act and the Copyright Act; provides for a new College of Patent Agents and Trade-mark Agents Act; and effects changes to diverse legislative schemes impacting the IP regime, including privacy and bankruptcy.

We will be reporting on other implications of these amendments for Canadian IP here and on our Brands Protection Blog in the coming days — stay tuned.

Two generics, one hearing: Federal Court orders common trial on patent validity issues in section 6 actions

By Chelsea Nimmo, Christopher A. Guerreiro and Judith Robinson on November 22, 2018 Posted in Intellectual property, Pharmaceuticals and life sciences

The Federal Court has ordered that the trial of two actions brought under the post-CETA Patented Medicines (Notice of Compliance) Regulations (the Regulations), against two separate generics, be heard concurrently, on issues of invalidity. This decision highlights the Federal Court’s push to streamline section 6 actions. The court rejected the defendant Taro’s arguments that the common hearing of issues reduces the likelihood that Taro will benefit from any “first to market” advantage.

Background

Taro and Apotex are both seeking to market a generic version of Biogen’s FAMPYRA (fampidrine) product in Canada. Both generics served Notices of Allegations (NOAs) alleging that each of their products will not infringe Canadian Patent 2,562,277 (the 277 Patent) and that the 277 Patent is invalid. In response, Biogen commenced section 6 actions against both generics; first, the Taro action on June 15, 2018 (T-1163-18), and subsequently, the Apotex action on July 24, 2018 (T-1416-18).

The Court first set the Taro action down for trial to begin on March 2, 2020. When scheduling the Apotex action, Biogen and Apotex advised that they could also be ready for a trial on March 2, 2020. With Biogen’s consent, Apotex intended to amend its pleadings to include Taro’s invalidity allegations and the two parties therefore proposed that the issues of validity raised in both actions be heard concurrently. Despite Biogen’s offer to permit matching amendments to its pleadings, Taro opposed the idea of a concurrent hearing.

Concurrent trial does not deprive the “first” generic of any commercial advantage

Taro argued that a concurrent trial would result in simultaneous judgments, depriving Taro of any commercial advantage of being first to market with a generic fampidrine product. The Case Management Judge disagreed, explaining that a concurrent trial may or may not result in Apotex having its judgment at the same time as Taro. In any event, the Court noted that “[b]eing the first to send out a [NOA] in respect of a particular medicine does not entitle a generic to be the first to obtain a judgment in an action pursuant to the Regulations, or guarantee it that result.”

Efficient use of judicial resources dictates a concurrent trial

The Court held that a concurrent trial on common validity issues is the most efficient use of the Court and the parties’ time and resources. This was based on a number of common elements across both actions: same judge; similar invalidity issues; same counsel for Biogen in both actions; and the same inventors.

In conclusion, the Court stated that a concurrent trial would “achieve the just, most efficient and least expensive determination of the issues in both actions, and would not likely result in prejudice to Taro’s substantive or procedural rights, including any rights it may have pursuant to the Regulations.” The Court ordered accordingly, holding that the Apotex trial would be adjourned following the conclusion of the case on invalidity in order to permit argument on infringement in the Taro case. The Apotex case would then resume on issues of infringement at a later date.

ONCA Permits Pleading Amendments Asserting Validity of Previously Invalidated Patent following Nexium Decision

By Kassandra Shortt, David Yi and Allyson Whyte Nowak on November 18, 2018 Posted in Intellectual property, Pharmaceuticals and life sciences

This decision of the Ontario Court of Appeal (ONCA) arises in the context of a novel action brought by Apotex seeking damages for the delayed market entry of its generic version of Sanofi’s blockbuster ramipril drug.

Apotex’s claims in this action are linked to the invalidity of Canadian Patent No. 1,341,206 (206 Patent). The 206 Patent had previously been invalidated based on the application of the “promise doctrine”. In June 2017, the Supreme Court of Canada (SCC) held that the invocation of the “promise doctrine” was an error in law and abolished the doctrine once and for all in AstraZeneca Canada Inc. v. Apotex Inc. (Nexium). This decision of the ONCA reverses a lower court decision denying Sanofi’s pleadings amendments, which asserted that the underlying decision invalidating the 206 Patent was based on wrong legal principles, and relied on the Nexium decision.

This is a significant development in this case which also highlights a growing tension between decisions of the Federal Court and the Ontario Superior Court in a novel legal proceeding.

Background

In this action Apotex claims damages pursuant to three statutes: An Act concerning Monopolies, and Dispensation with penal laws, etc., R.S.O. 1897, c. 323 (Ontario Statute of Monopolies); An Act concerning Monopolies and Dispensations with Penal Laws, and the Forfeitures thereof, 1624, 21 Jac. I, c. 3 (UK Statute of Monopolies, and collectively with the Ontario Statute of Monopolies, the Monopolies Acts); and the Trade-marks Act, R.S.C., 1985, c. T-13. While the Patented Medicines (Notice of Compliance) Regulations (the Regulations) provide a specific remedy for delayed generic market entry pursuant to section 8, and despite Apotex having already received $215 million in section 8 compensation, Apotex commenced this novel action in the Ontario Superior Court claiming additional sums under the Monopolies Act and Trade-Marks Act.

Following the SCC’s rejection of the promise doctrine in Nexium, Schering and Sanofi-Aventis et al. (Defendants) sought to amend their pleadings, which Apotex opposed on the basis of issue estoppel. The motions judge denied the Defendants’ amendments, as we previously reported.

The amendments assert the validity of the 206 Patent, which was previously held to lack utility in both PM(NOC) proceedings and in a subsequent infringement action. Both cases predated the abolition of the promise doctrine by the SCC in the Nexium decision, reported here. The ONCA found that the SCC’s rejection of the promise doctrine in Nexium constituted “special circumstances” that exempted the application of the doctrine of issue estoppel and distinguished a decision by the Federal Court of Appeal (FCA) on a similar point in Eli Lilly Canada Inc. v. Teva Canada Ltd., 2018 FCA 53 (FCA Olanzapine), previously reported.

Decision on Appeal

The ONCA allowed the Defendants to amend their pleadings, finding that the preconditions for issue estoppel had been met, but exercised its discretion not to apply the doctrine. It found that the SCC’s decision in Nexium constituted a change in the law and that denying the amendments would work an injustice in the circumstances of the case. Apotex’s own claims for relief put the validity of the 206 Patent in issue — it is an essential element of Apotex’s claims. Additionally, the quantum of damages claimed is approximately $1 billion to $3 billion. The ONCA accepted that allowing the amendments would lead to re-litigating the 206 Patent’s validity, but noted that the costs of any re-litigation of patent validity paled in comparison with the quantum of damages claimed by Apotex. Accordingly, it would be fundamentally unfair to deprive the Defendants of the opportunity to defend the validity of the 206 Patent in these circumstances.

Distinguishing FCA Olanzapine

In its analysis, the ONCA also distinguished the FCA Olanzapine decision. In FCA Olanzapine, the impact of Nexium on the validity of a patent was raised on appeal in a section 8 action. The FCA found that the validity of the patent had been previously determined and that Nexium did not warrant the application of the “special circumstances” exception to issue estoppel in the circumstances of that case.

The ONCA observed that the exercise of discretion in the application of issue estoppel permits different courts to exercise their discretion differently. Nevertheless, it distinguished FCA Olanzapine on the bases that it:

Concerned a section 8 damages award, not claims for damages pursuant to the Monopolies Acts and the Trade-marks Act; and
Was an appeal of a trial decision rather than a decision on a motion for leave to amend pleadings.

The ONCA also expressly disagreed with the FCA on certain issues. First, the ONCA rejected the distinction drawn by the FCA between litigation involving commercial interests and other types of litigation and the FCA’s suggestion that issue estoppel is more applicable in commercial litigation. Second, the ONCA disagreed that permitting a change in the law to constitute a “special circumstance” weakened the objective of finality and held instead that the change in the law presented by Nexium was “precisely the type of special circumstance” that warranted the principle of finality yielding to the circumstances of the case.

Link: Apotex Inc. v. Schering Corporation, 2018 ONCA 890; rev’g 2018 ONSC 903

Ontario Superior Court rejects Apotex attempts to revive the Promise Doctrine by dismissing motion for leave to amend, awards substantial indemnity costs

By Morgan Westgate, David Yi and Kristin Wall on November 18, 2018 Posted in Intellectual property, Pharmaceuticals and life sciences

The Ontario Superior Court of Justice (ONSC) recently denied Apotex’s attempt to repackage the now defunct “promise of the patent” doctrine (the Promise Doctrine). Apotex sought to amend its pleadings to reintroduce the Promise Doctrine under the guise of invalidity allegations of over-breadth, insufficiency, and willful misrepresentation pursuant to sections 27 and 53 of the Patent Act.

The motion was heard in the broader context of the quantum phase of an action for damages by Apotex pursuant to section 8 of the Patented Medicines (Notice of Compliance) Regulations (the Regulations). Abbott and Takeda counterclaimed for infringement of two patents relating to lansoprazole (Lansoprazole Patents), which Apotex alleged were invalid. In dismissing Apotex’s motion, the ONSC awarded substantial indemnity costs against Apotex for its unfounded allegations of fraud.

This adds to the body of law that has resisted attempts to revive the Promise Doctrine following the Supreme Court of Canada’s decision in AstraZeneca Canada Inc. v. Apotex Inc., 2017 SCC 36 (AstraZeneca).

Background

This dispute, which has been ongoing for the past eight years, has a complex procedural history that includes the hearing of two summary judgment motions, in addition to raising various other interlocutory matters. In 2013, Abbott and Takeda were successful in seeking an order for partial summary judgment against Apotex denying it the right to a disgorgement of profits for the period after the parties agreed to settle the litigation with respect to liability. The motion was brought on the basis that the parties had initially agreed on a settlement of future damages, even though that agreement had since dissolved.

Four years later, Abbott and Takeda brought another summary judgment motion seeking dismissal of the damages action in its entirety on the basis that Apotex’s generic lansoprazole product would not have been approved at the relevant time because it did not comply with applicable health regulatory laws. This motion was dismissed; the Court granted summary judgment to Apotex for damages under section 8 of the Regulations, and ordered that the action be set down for trial. We have previously reported on the results of this most recent summary judgment decision here and here.

In 2018, following the release of AstraZeneca, Apotex brought a motion seeking leave to amend its pleadings prior to the damages trial. If granted, the proposed amendments would have allowed Apotex to include in its defence new allegations of over-breadth, insufficiency, and willful misrepresentation pursuant to sections 27 and 53 of the Patent Act in respect of the Lansoprazole Patents.

Another Attempt to Revive the Promise Doctrine

Since the Supreme Court put an end to the Promise Doctrine last year, a number of proceedings have made their way through the Federal Court on the issue of whether promise-based claims can still support an allegation of patent invalidity. We have previously reported on some of this post-AstraZeneca case law, which can be found here.

The ONSC noted that there had been five judgments in the post-AstraZeneca jurisprudence where, in every case, the Federal Court specifically rejected the efforts of generic drug manufacturers (including Apotex) to advance these types of “Promise Doctrine allegations” cloaked as grounds of insufficiency, overbreadth, and willful misrepresentation. The ONSC also emphasized Apotex’s admission that that there had been no changes to the facts underlying its allegations.

The Supreme Court did not Intend Promised-based Claims of Patent Invalidity to Survive AstraZeneca

The ONSC found that it is “counterintuitive” that the Supreme Court would intend for promise-based arguments to survive the banishing of the doctrine by being imported into claims of overbreadth, insufficiency, or misrepresentation. The ONSC concluded that “a party cannot change what was really a promise based pleading into one that could result in invalidity under s. 27 or 53, even though the Supreme Court recognized that there are “mischiefs” that could fall under those heads.”

On the issue of Apotex’s allegations of willful misrepresentation, the Court held that Apotex had failed to meet the requirements of section 53 of the Patent Act. In light of the seriousness of the assertion, allegations of fraud must “set out precisely” each alleged wrongful act, including the “when, what, by whom and to whom” of the relevant circumstances, and be plead with “full particularity”.

Apotex failed to meet this standard. It had expressly admitted that it had “merely recycled” its Promise Doctrine allegations, and specifically acknowledged that its section 53 fraud allegations were not informed by anything other than AstraZeneca.

In light of the severe prejudice that the defendants would have faced if these unfounded allegations were permitted to be advanced, the Court awarded heightened costs against Apotex.

Link to decision:

Apotex Inc. v. Abbott Laboratories, Limited et al, 2018 ONSC 5199

File-wrapper admissibility and other changes to the Patent Act are coming: what’s new for pharmaceutical patentees in Bill C-86

By Christopher A. Guerreiro and Jordana Sanft on November 2, 2018 Posted in Intellectual property, Life sciences and healthcare, Pharmaceuticals and life sciences

The federal government’s recent omnibus budget bill, Bill C-86 tabled October 29th, 2018, proposes significant changes to Canada’s IP laws. Division 7 of the Bill is intended to implement many aspects of the government’s IP strategy, announced in April 2018. The Bill targets the Patent Act, the Trade-marks Act, and Copyright Act; provides for a new College of Patent Agents and Trade-mark Agents Act; and effects changes to diverse legislative schemes impacting the IP regime, including privacy and bankruptcy.

Below, we have outlined some of the most significant changes likely to affect the patent-intensive life sciences industries. To read more about other IP changes in Bill C-86, be sure to visit our Brand Protection Blog and watch for our forthcoming IP Monitor post.

Background

The patent-law changes in Bill C-86 are not specifically directed at pharmaceutical patentees, but have the potential to significantly affect this area of litigation. In general, each of the changes below applies in parallel to certificates of supplementary protection (CSPs), which are either directly referenced in the new provisions or addressed by coordinated amendments in other parts of the Act. For simplicity, we have referred only to patents below.

Prosecution history (file-wrapper) admissible for claims construction

The government intends to make a patent’s file wrapper admissible on the issue of claims construction in litigation, overturning a long-standing Canadian Supreme Court precedent. Here are the details:

The proposed new provision, section 53.1, is limited to written communications (or parts thereof) and can only be used to rebut a patentee’s representations in the action regarding claims construction.
The prosecution history of a divisional application is deemed to include that of the original application before that divisional is filed.
The prosecution history of a reissued patent is deemed to include both that of the application for the patent that was surrendered and from which the reissued patent results, as well as the application for reissuance.

The proposed transitional provisions indicate that litigants will be able to rely on this provision in any action or other proceeding that has not been finally disposed of on the date that it comes into force.

Revised and re-stated exceptions to infringement

The proposed amendments include two changes to the statutory exceptions to infringement provided by the Patent Act:

Experimental use. The government proposes to add a new provision stating that an act committed for the purpose of experimentation relating to the subject-matter of a patent is not an act of infringement.
- The exception is contained in new section 55.3, and would stand alongside the existing exception to infringement for activities reasonably related to seeking government regulatory approval, which remains in subsection 55.2(1) of the Act. Although many of the details regarding implementation have been left to regulations, it appears that these amendments are intended to codify and replace an existing common law exception.
- The proposed transitional provisions indicate that the new exception will apply to any action or other proceeding that has not been finally disposed of on the date that it comes into force.
Continued acts first undertaken prior to the claim date. The proposed amendments would replace the existing prior-use exception in section 56 with a new provision.
- Notably, the revised section 56 requires that the prior act was undertaken in good faith. It does not apply if the person claiming under the provision obtained knowledge of the subject-matter of the claim directly or indirectly from the applicant and knew that the applicant was the source of the knowledge.
- Revised section 56 also extends protection to situations where “serious and effective preparations” to commit such an act were committed prior to the claims date, and includes flow-through protection for third-party purchasers/users.
- The proposed transitional provisions indicate that the current version of section 56 will continue to apply in respect of any action of other proceeding concerning a patent filed after October 1, 1989 (i.e., “New Act” patents), provided the proceeding was commenced before October 29, 2018.

Demand letters

Bill C-86 provides for regulations stipulating requirements of a written demand concerning a patent, apparently addressing a concern regarding the use of IP demand letters as a means to extort funds. Bill C-86 also provides a right of action for persons who receive a written demand that does not comply with the regulations, or who are aggrieved by another person’s receipt of the same. This provision extends to letters in respect of any invention patented in Canada or elsewhere, provided the letter is received by a person in Canada and meets other prescribed requirements. Under special circumstances, a corporation’s directors, officers, agents, or mandataries may be held liable for a non-compliant written demand sent by the corporation.

Standard-essential patents

New sections 52.1 and 52.2 introduce the concept of standard-essential patents (SEPs) to the Act on terms to be defined by regulation. The only substantive requirement with respect to SEPs is contained in section 52.1, which provides that an SEP patentee’s licensing commitments bind any subsequent patentee. The inclusion of CSPs as a potential form of SEP is interesting and noteworthy. Section 55.2 confers the power to make regulations concerning what constitutes (or does not constitute) an SEP or licensing commitment.

The authors wish to thank Amy Grenon and Anna Wilkinson for their help in preparing this legal update.

New protections for biologics and other pharmaceuticals under the United States-Mexico-Canada Agreement (USMCA)

By Christopher A. Guerreiro, Kristin Wall and Judith Robinson on October 14, 2018 Posted in Intellectual property, Pharmaceuticals and life sciences

As we reported, Canada has joined a new trilateral trade deal called the United States-Mexico-Canada Agreement (USMCA). The USMCA contains important new protections for biologic and other pharmaceutical innovation. Chief among them, Canada will introduce an extended ten-year period of data protection for biologics and patent-term restoration (PTR) for delays in the patent office.

The USMCA, which replaces the North American Free Trade Agreement (NAFTA), will come into force after it has been signed and ratified by the member states. It is anticipated that the USMCA will be signed before the end of 2018, but dates for its ratification and the NAFTA’s expiry have yet to be determined.

Extended data protection for biologics

Ten years of protection… Article 20.F.14 of the USMCA requires parties to provide new biologics with a minimum of ten years’ data protection from the date of first marketing authorisation. This period is greater than the eight years currently provided by Canada for biologics (together with all other pharmaceuticals), but less than the twelve years already provided for biologics by the U.S. under the Biologics Price Competition and Innovation Act.

…for new biologics. The USMCA obligations regarding extended data protection apply to new pharmaceutical products that are or contain biologics. The scope of this obligation is defined by the following:

New pharmaceutical products are defined to be those that do not contain a chemical entity that has been previously approved in that party.
The USMCA does not include a definition of “biologic” per se, but provides that each Party shall apply this Article to, at a minimum, a product that is produced using biotechnology processes and that is, or, alternatively, contains, a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein, or analogous product, for use in human beings for the prevention, treatment, or cure of a disease or condition.
Parties are not required to apply this provision to biosimilars.

Coming into force. Pursuant to the transitional provision, Canada is not required to fully implement Article 20.F.14 until five years after the date that the USMCA comes into force.

Patent-term restoration

PTR for all. Article 20.F.9 of the USMCA requires Canada to adopt a PTR system for time lost due to “unreasonable delays” in the issuance of a patent, at the request of the applicant. This new PTR system is not specific to pharmaceuticals, applying to all patents generally. PTR granted under this system will be additional to any certificate of supplementary protection (CSP) that may be available for pharmaceutical patents under existing Canadian law.

What is an “unreasonable delay”? The definition of “unreasonable delay” in the USMCA is non-exhaustive, but includes at least patent issuance after the later of: (1) more than five years from the filing date in the party country; or (2) more than three years after a request for examination. In determining the duration of a delay, periods of time may be excluded, e.g., if they are attributable to the patent applicant.

Coming into force. Pursuant to the transitional provision, Canada is not required to fully implement Article 20.F.9 until 4.5 years after the date that the USMCA comes into force. PTR applies to all patent applications filed after the date of entry into force of the USMCA, or the date two years after the signing of the USMCA, whichever is later for that party.

Other provisions

Other IP provisions. Chapter 20 of the USMCA contains other provisions relating to the protection of intellectual property, similar to pre-existing obligations under the NATFA and/or the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and/or that are already reflected in Canadian law.

Other provisions regarding pharmaceuticals and medical devices. In addition, Annex 12F and Chapter 29, Section B, contain articles related to the administration of the drug-regulatory system, including issues of transparency and procedural fairness.

Investor-state dispute-resolution system (ISDS). Notably, Canada has withdrawn from the ISDS under the USMCA. You can read our summary of the changes to the ISDS and transitional provisions here.

Links:

Other NRFC publications on the USMCA:
- “NAFTA rebranded and updated: maintaining, protecting and preserving free trade” (Erin Brown: 2 October 2018)
- “Major changes for investor-state dispute settlement in new United States-Mexico-Canada Agreement” (Martin J. Valasek, Alison G. FitzGerald, & Jenna Anne de Jong: 2 October 2018)
Complete text of the United States-Mexico-Canada Agreement, subject to legal review for accuracy, clarity, and consistency and subject to language authentication (Office of the United States Trade Representative); key chapters for pharmaceuticals:

Abbreviated New Drug Submissions will be posted on the Submissions Under Review List and other pre-market transparency initiatives

By Jillian Hyslop, Kristin Wall and Sara Zborovski on October 14, 2018 Posted in Life sciences and healthcare, Pharmaceuticals and life sciences

Health Canada recently published a notice outlining its phase III pre-market transparency initiatives for prescription drugs. Beginning October 1, 2018, Health Canada will publish a new list of abbreviated new drug submissions (ANDSs) on the Submissions Under Review (SUR) List, as well as publish Regulatory Decision Summaries (RDSs) for ANDSs, supplemental abbreviated new drug submissions (SANDSs) and certain supplemental new drug submissions (SNDSs).

These phase III initiatives are being implemented further to five proposals related to prescription drug product transparency that Health Canada consulted on in the fall of 2017. A “What we heard” report was published in April 2018 and Health Canada is now moving forward with implementing the five proposals.

Beginning October 1, 2018, Health Canada will:

Prepare and post RDSs for final positive decisions (issued on or after October 1, 2018) and negative decisions (for submissions accepted into review on or after October 1, 2018) for ANDSs and SANDSs that might be of interest to stakeholders, including where Health Canada has significantly deviated from its published guidance, for critical dose drugs and for complex drug substances or drug products;
Prepare and post RDSs for SNDSs for positive decisions (issued on or after October 1, 2018) for new routes of administration, dosage forms, and strengths;
Publish a new list of ANDSs under review on the SUR List (accepted into review on or after October 1, 2018). The list will include medicinal ingredient(s), therapeutic area, and number of applicable submissions;
Publish the sponsor (company) name for new entries on the SUR List for New Drug Submissions (NDSs) and SNDSs (for submissions accepted into review on or after October 1, 2018); and
Publish the submission ‘class’ on the SUR List for NDSs and SNDSs (accepted into review on or after October 1, 2018). The submission classes are as follows: (i) extraordinary use submission, (ii) new active substance, (iii) biosimilar, (iv) being reviewed under the priority review policy, (v) being reviewed under the notice of compliance with conditions guidance, (vi) being reviewed under the submissions relying on third-party data guidance, and (vii) part of ‘aligned review’ with a health technology assessment (HTA) agency.

Links: Notice: Phase III of Pre-Market Transparency Initiatives for Prescription Drugs

CETA Tracker: Update on CSPs

By Jillian Hyslop and Kristin Wall on September 30, 2018 Posted in Pharmaceuticals and life sciences

As we reported, on September 21, 2017 the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act and accompanying regulations came into force. The legislation provided key reforms to the Patent Act affecting the pharmaceutical industry, including up to two years of patent term restoration for patented pharmaceuticals under the Certificate of Supplementary Protection Regulations (CSP).

The protection given under a CSP is intended to “partly compensate for time spent in research and obtaining marketing authorization.” A CSP provides “patent-like rights” that take effect after patent expiry, and is subject to the “same limitations and exceptions” as the patent. Like a patent, a CSP is subject to the jurisdiction of the Patented Medicine Prices Review Board and can be listed on the Patent Register, as well as on the CSP Register.

A year has passed since the Regulations came into force – we provide below an update on recent developments relating to CSPs.

Updated Guidance Document. On September 4, 2018, Health Canada has released an updated Guidance Document on CSPs which provides additional guidance regarding the roles and responsibilities of applicants and the Therapeutic Products Directorate (TPD) with respect to CSPs and applications, the new email address for corresponding with the TPD, and an explanation of how the TPD calculates the CSP term.

“Timely submission requirement” decreases to one year. To be CSP-eligible, the Canadian NDS for the drug in question must be filed within 24 months of any first international drug submission filing for the same drug in the European Union, United States, Australia, Switzerland or Japan. For CSP applications submitted on or after September 22, 2018 this period decreases from 24 months to 12 months. A new CSP application form that provides for the one year period is available, intended for use on or after September 22, 2018.

To date, a total of 14 CSPs have been issued and three have been refused. On August 31, 2018, the first application challenging the Minister’s decision to refuse a CSP was commenced in Federal Court (Federal Court File number T-1603-18).