Andrew Masson is an IPilogue Writer and 2L JD candidate��at Osgoode Hall Law School.��

A business’ success is strongly tied to the ability to protect Intellectual Property. However, the USA appears to use patent protections as a sword to attack and acquire large market shares, instead of as a shield to protect from other companies’ encroachment on another’s IP. This position is demonstrated by the , which suggests that the primary use of patents is protection of the market share and not innovation.

The patent office’s enforcement and issuance process greatly impacts the number of competitors that can enter a market. The patent office has therefore become a fundamental part of the economy, as patent protection plays an important part of many businesses’ strategies. Priti Krishtel, Attorney and Co-Founder of the , states that . This naturally leads to questions about the role patents should play in society, especially in the USA, where the enforcement and granting of patents has been seen .

Purpose of Patents

The ‘sword and shield’ metaphor likely oversimplifies the patent process. The data suggests that in practice, patents are not used for innovation. . Thus, many ��incorrectly view the patents primary function as protecting or fostering innovation. Patents ��are instead being used to .

Some believe that using patents as a sword abuses their purpose and others support the protection of businesses it provides. It may be a subjective question if patents should serve this role in business, but this use may have gone too far. Practically speaking, the , and if successful – these issued patents will limit competition and can permit industry monopolies.

How the System Can Be Exploited

It is important to dissect society’s perspectives on the role of patents. For example, one way to “game” or exploit the USA patent system and . “New” medical devices can obtain faster regulatory approval by showing regulators that a product is like an existing product warranting approval. At the same time, the companies will also submit to the patent office that it is novel enough to require a new patent. This process has allowed medical devices to ��is granted through incremental changes.

Conclusions

The problems highlighted are of much greater concern currently in the USA but do not exclusively occur there. The actual rules and laws appear similar to those in Canada but in the USA, the to benefit businesses or large corporations. This perspective initially could have been useful in protecting companies and establishing markets but can result in monopolies and stifle small companies’ innovation. The patent office may need to reform in some way because they have allowed patent “swords” to become common practice. The US ��patent system should ensure patents are not morphed into solely a tool to control market shares. Unfortunately, wielding patents as swords can harm innovation and to solve the problem, the patent office should consider their ability to dull the edge of the patent sword.

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Canada has notably faced challenges in its ability to procure vaccines, quickly falling behind other countries in our vaccination campaigns despite contracting to receive more than enough vaccines for the population. While Canada’s vaccine rollout has increased in recent weeks, still of our population has been fully vaccinated as of March 14^th, 2021. This is compared to and a staggering

One proposed mechanism for increasing the availability of vaccines worldwide is to loosen patent protections held by vaccine makers over their products. Some countries, including South Africa and India, have sought a waiver under the Trade-Related Aspects of Intellectual Property, or TRIPS, agreement from the World Trade Organization, which would temporarily suspend global intellectual property protections for COVID-19 vaccines during the pandemic. While attempts to secure a waiver have thus far been unsuccessful, another potentially useful tool available under TRIPS is compulsory licensing.

refers to the circumstance where a government permits a third party to produce a patented product without the patent holder’s consent. While compulsory licensing typically requires the user to make an effort to obtain the patent holder’s consent to produce the product, this during a “national emergency”, of which the pandemic would qualify according to Article 31(b) of TRIPS.

Canada has a history of using compulsory licensing, including to support the availability of more affordable pharmaceuticals. For instance, in June 1969, Parliament amended the to allow companies to produce generic copies of pharmaceutical products that were still under patent protection. Recent amendments to the Patent Act under Canada’s COVID-19 have strengthened the Federal Government’s ability to address vaccine shortages through the use of compulsory licenses. Specifically, the are aimed at allowing the Federal Government to permit the “construct[ion], use, and [sale of] a patented invention to the extent necessary to respond to a public health emergency that is a matter of national concern”. The Government must still provide notice and pay royalties to the patent holder; however, the government has no further obligations to negotiate with patent holders.

While compulsory licensing is an attractive potential tool to increase the availability of vaccines, if Canada pursues these licenses, it must first address domestic vaccine production capacity. Unfortunately, similar to the Federal Government’s , Canada’s vaccine manufacturing capacity is also deficient. If Canada commits to increasing its domestic vaccine production capacity, whether through the construction of new facilities or by fitting existing industrial facilities to be capable of producing vaccines, then the use of compulsory licensing could be a future tool to produce generic COVID-19 vaccines or boosters in Canada. These efforts will be particularly important given recent concern that and in the future to control the spread of COVID-19.

Regardless of the strategy employed, Canada clearly needs to improve its approach to secure vaccines for Canadians, and the domestic production of generic vaccines through compulsory licensing should be considered as a potential strategy moving forward.

Claire La Mantia is a 2023 JD Candidate at Osgoode Hall Law School interested in intellectual property, privacy, and health law.

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Efforts to ameliorate this alarming trend have shifted concerns to the role of patent protection in restricting access to pharmaceuticals. The tension between the global intellectual property regime, regulated by the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and human rights is at the forefront of this discussion. requires ratifying countries to adopt a minimum standard of intellectual property rights to protect creators and promote innovation. Considerable lobbying by developing nations, concerned that their socio-economic development would be unduly impaired by patent restrictions, led to the incorporation of protective mechanisms into the agreement. Known as , these include tools such as parallel importing and compulsory licensing of pharmaceuticals. While developing nations view these flexibilities as critical for protecting the right to health, nations with strong pharmaceutical infrastructures the implementation of these flexibilities when they view the mechanisms as an infringement on guaranteed intellectual property protection.

While compulsory licensing allows for patent protection to be circumvented during , the continued protection of undisclosed information often impairs the ability of other manufacturers to begin pharmaceutical production. This delay holds particularly true in vaccine production. Discerning the involved in vaccine development takes considerable time and research. Moreover, unlike with generic medications, where demonstrating therapeutic equivalence is sufficient, vaccine manufacturers must develop a production process and conduct timely clinical vaccine trials to test for efficacy and safety. Unless the undisclosed data describing the “k�ԴǷ�-��Ƿ�” can be obtained directly from , patent waiver is insufficient to bring vaccines to market in a timely manner.

In an effort to bring Covid-19 vaccines to in-need regions sooner, India and South Africa submitted a to the World Trade Organization in October 2020 advocating for the waiver of TRIPS obligations, including undisclosed information beyond the purview of the agreement’s flexibilities, in the interest of public health. Developed countries and pharmaceutical companies currently remain to this proposal, maintaining, in part, that it will create a to innovate in future pandemics, and arguing that existing will permit sufficient Covid-19 vaccine access. Whether these claims hold true remain to be seen. These arguments do highlight the consistent conflicting interests in the international intellectual property regime, in which an inherent tension exists between human rights and innovation rights.

Written by Ally Maddeaux, a second year JD candidate at Osgoode Hall Law School. She is a guest contributor to the IPilogue and a Coordinator with the IP Osgoode Innovation Clinic.

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Therapeutic use of biologics has increased considerably in recent years.[5]�� Unfortunately, due to the complexity of these molecules, development and commercial production have proven very costly.[6]�� Indeed, it is estimated that most biologics must enjoy market exclusivity for, on average, 12.9 to 16.2 years before initial research and development costs can be recovered.[7]�� Adequate IP safeguards are then vital for continued research and investment in this area.

It is axiomatic that patents play a key role in the pharmaceutical industry, but their practical value is questionable when applied to biologics in Canada. On account of the fundamental nature of biologics, it is often said that the “product is the process.”[8]�� Process patents are, therefore, of central importance. Nevertheless, pure process patents are not permitted for listing in the Patent Register for the purposes of proceedings under the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations).[9]�� The result is a significant gap in patent protection. There remains, of course, the option to pursue an action for patent infringement against manufacturers of SEBs, but this avenue is fraught with practical difficulties. Chief among these issues are the typical length of time for a case to come to trial and be tried and how rarely preliminary injunctions are granted in Canada.[10]

Due to this gap in patent protection, data exclusivity serves as important insurance to safeguard innovator investment.[11]�� Data protection garnered considerable debate among stakeholders during CETA negotiations as innovators pressed unsuccessfully for the US standard of 12 years.[12]�� Under the current Canadian regulatory scheme, SEBs are barred from relying on reference biologic data for 8 years and will remain so should CETA be ratified.[13]�� This falls well short of the estimated market exclusivity that a biologic typically requires to be profitable. Without adequate insurance, investment in these medicines is discouraged.

Under these circumstances, reliance on trade secrets may represent a reasonable supplement or alternative to data protection and patents.[14]�� For reasons already discussed, innovators may see trade secret protection as a more attractive mechanism than process patents. Indeed, in light of patent law’s disclosure requirements, it may be worthwhile to forego patenting entirely.[15]�� Alternatively, innovators may seek to obtain substance patents that do not disclose the best mode of manufacture, although there is debate as to whether this is permissible.[16]�� As a practical consideration, innovators that opt for trade secrets over patents would also find themselves outside the jurisdiction of the Patented Medicines Price Review Board (PMPRB).[17]

For the public, the costs of a trade secret strategy are significant. Besides the obvious detriment to the pool of collective knowledge, this strategy will force prospective SEB manufacturers to reverse engineer reference biologics in order to identify the necessary manufacturing processes – an expensive and time-consuming procedure.[18] In turn, the time and cost incurred by the SEB manufacturer will delay the arrival of more affordable therapies and increase the market price of these medicines.[19]

How then can the Canadian IP regime better protect biologics? With CETA negotiations over, the opportunity to increase data protection in the near future has likely passed. Another possibility is to develop a patent-based framework specific to biologics. In Canada, such a framework could be established with a second patent register that would allow for process patents to be listed for biologics. The pharmaceutical industry`s familiarity with the PM(NOC) framework may make this an appealing option with real potential for improved enforcement of biologic-related patents. Whatever the solution, Canada must not be shortsighted in its approach to emerging medical therapies and should design balanced protections that are alive to the realities of the industry.

Stephen J. Dalby is a JD Candidate at Osgoode Hall Law School.�� Stephen is currently enrolled in Osgoode’s Intellectual Property Law Intensive Program. As part of the program requirements, students were asked to write a blog on a topic of their choice.

[1] Health Canada, “Guidance For Sponsors: Information and Submission Requirements for Subsequent Entry Biologics (SEBs)”, (Ottawa: Health Canada, 2010), online: .

[2] Ibid.

[3] Ibid.

[4] Kristina Lybecker, “The Biologics Revolution in the Production of Drugs” in Steven Globerman, ed, Intellectual Property Rights and the Promotion of Biologics, Medical Devices, and Trade in Pharmaceuticals. (Vancouver: Fraser Institute, 2016) 9 at 12.

[5] Ibid at 16 – 20.

[6] Supra note 4 at 30.

[7] Henry Grabowski, Genia Long, and Richard Mortimer, “Data Exclusivity for Biologics” (2011) 10 Nature Reviews: Drug Discover 15 at 15.

[8] Walter Jeske et al, “Update on the safety and bioequivalence of biosimilars – focus on enoxaparin” (2013) 5 Drug, Healthcare and Patient Safety 133 at 135.

[9] Health Canada, “Guidance Document: Patented Medicines (Notice of Compliance) Regulations”, (Ottawa: Health Canada, 2015), online: .

[10] Aleksandar Nikolic, "A Comparative Study of Patent Infringement Remedies Related to Non-Practicing Entities in the Courts of Canada, the United Kingdom, and the United States" (2014). LLM Theses. Paper 4 at 73.

[11] Henry Grabowski, “Data Exclusivity for Biologics: What is the Appropriate Period of Protection?” (2009) 10 American Enterprise Institute for Public Policy Research 1 at 5; Biotechnology Industry Organization, “The Trans-Pacific Partnership and Innovation in the Bioeconomy: The Need for 12 Years of Data Protection for Biologics” (2013) at 4, online: .

[12] Biologics Price Competition and Innovation Act, 42 USC §262 (2009) s 351(k)(7)(A), online: .

[13] Canada CRC, c 870, C.08.004.1(3)(b); Comprehensive Economic and Trade Agreement, Canada and European Union, art 20.29 at s 2(b).

[14] Paul A Calvo, “Choosing Between Patent And Trade Secret Protection In A Biosimilar World” (13 January 2016), Biosimilar Development (blog), online: .

[15] Patent Act, RSC, 1985, c P-4, s 27(3).

[16] Teva Canada Ltd. v Novartis AG, 2013 FC 141 at para 376; David Vaver, "Best Mode Disclosure in Canadian Patents" (2013).��Comparative Research in Law & Political Economy.��Research Paper No. 30/2013, online: .

[17] Supra note 14 at s 80(1).

[18] W. Nicholson Price II and Arti K. Rai, “Manufacturing Barriers to Biologics Competition and Innovation” (2016) 101:3 Iowa L Rev 1023 at 1029.

[19] Ibid.

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The United States Patent and Trademarks Office (USPTO) has released an updated set of Eligibility Examination Guidelines to provide guidance to examiners on when to reject claimed inventions as ineligible abstract ideas. These guidelines give a sense of what computer-implemented subject matter the USPTO considers to be ineligible for patent protection.

Developing guidelines was difficult for the USPTO as the courts have provided little explanation of when patent claims are invalid for defining ineligible abstract ideas, or even what abstract idea means, and the USPTO lacks the authority to craft its own definitions. The USPTO is largely limited to telling examiners that patent claims cover abstract ideas if they cover subject matter that is similar to what the courts have determined to be abstract ideas. Given the absence of general concepts or principles for identifying the kinds of abstract ideas that are not eligible for patent protection, practitioners and applicants need to be aware of all of the Federal Circuit and Supreme Court case law on patent subject matter eligibility, and to craft patent claims with arguments in mind as to why the subject matter covered by the claims is materially different from subject matter determined to be ineligible in any of this case law.

The original 2014 Interim Guidance on Patent Subject Matter Eligibility¹ document (“the Guidance”) defines steps to be taken by an Examiner to assess subject matter eligibility.�� Steps 2A and 2B apply the two-part analysis from Alice² and Mayo³.��In step 2A the Examiner determines whether the claim is directed to a statutory exception to patent protection: a law of nature, natural phenomenon or an abstract idea.��If not, then the claim is eligible for protection (although the Examiner must still determine whether the claim meets the other requirements for patentability, such as novelty and non-obviousness).��If the claim is directed to a law of nature, natural phenomenon or an abstract idea, then step 2B applies and the Examiner determines whether the claim as a whole represents “significantly more”.�� Claims that do not cover significantly more than a law of nature, natural phenomenon or abstract idea are ineligible for patent protection and are to be rejected under 35 U.S.C. § 101.

The posting of the Guidance in 2014 provoked much comment and criticism, some critics alleging that under the Guidance virtually nothing was eligible for patent protection. The July 2015 Update on Subject Matter Eligibility⁴, (“the Update”) responds to these comments and criticism.

The Update provides an updated set of subject matter examples, and also divides the case law into different categories of abstract ideas, which are useful both as a credible attempt to organize the case law, and to provide insight into the USPTO’s perspective on this case law and arguments they may find persuasive.�� It also provides reassurance that the USPTO is addressing criticism that under the current rules post-Alice⁵ there is not a clear path forward for software patent applications because of the difficulties encountered with subject matter objections. The Update makes it clear that examiners should not determine a claimed concept to be an abstract idea unless the claimed concept is similar to at least one concept that either the Federal Circuit or the Supreme Court have identified as an abstract idea. In other words, applicants should be able to avoid having their claims rejected, at least in the USPTO, on subject matter eligibility grounds by defining concepts in the claims that differ sufficiently from claim concepts invalidated on these grounds by the Federal Circuit or the Supreme Court.

Of course, much will depend on how aggressive and creative examiners are in determining that claimed concepts they are considering are similar to a concept determined to be an abstract idea by the courts. Further, the Update makes it clear that this determination of similarity does not require evidence: examiners can ground such a rejection by merely explaining, clearly and specifically, why the claimed concepts are similar to concepts determined to be abstract ideas by the courts, and are thus ineligible for patent protection.

New Examples

In the Update, several new examples are provided in addition to those found in the original Guidance document and include:

21. ��Transmission of Stock Quote Data – modeled after the claims at issue in Google Inc. v. Simpleair, Inc.⁶, (Claim 1 ineligible, Claim 2 eligible).
22. ��Graphical User Interface for Meal Planning – based on Dietgoal Innovations LLC v. Bravo Media LLC⁷ (Claim 2 ineligible).
23. ��Graphical User Interface for Relocating Obscured Textual Information (Claims 1,4 eligible, Claims 2-3 ineligible).
24. ��Alerting System for a Catalytic Chemical Process --�� based on Parker v. Flook⁸ (Claim 1 ineligible).
25. ��Temperature Control of Rubber Molding --�� based on Diamond v. Diehr⁹ (Claims 1-2 eligible).�� Claim 1 is the actual claim 1 from Diamond v. Diehr, Claim 2 is a hypothetical claim in the form of computerized instructions.
26. ��Exhaust Gas Recirculation in an Internal Combustion Engine – based on technology from U.S. Pat. 5,533,489 (Claim 1 eligible).
27. ��A method of loading System Software (BIOS) into a computer – based on technology from U.S. Pat. 5,230,052 (Claim 15 eligible).

In each example, the Update evaluates the hypothetical claims based on steps 2A and 2B, and discusses how an Examiner might determine patent eligibility for patent claims covering an analogous technology.

Example #25 – Diamond v Diehr

An interesting example in the Update is #25, since it introduces hypothetical claims modeled after the technology in the 1981 case Diamond v. Diehr, 450 U.S. 175 (1981).�� This case dealt with a patent involving a computerized process controlling a rubber molding press.��The invention offered significant advantages over the prior art at the time, as it enabled in situ temperature monitoring and automatic recalculation of the optimal cure time.��This calculation involved using the temperature inputs and the Arrhenius equation, long used to calculate the cure time of rubber molding processes.

The reasoning in the Update for Diamond v Diehr differs from the reasoning provided by the Supreme Court. In the 1981 decision, the Supreme Court obliquely refers to the machine or transformation test in determining subject matter eligibility:

“A mathematical formula, as such, is not accorded the protection of our patent laws, Gottschalk v. Benson, 409 U. S. 63 (1972), and this principle cannot be circumvented by attempting to limit the use of the formula to a particular technological environment. Parker v. Flook, 437 U. S. 584 (1978). Similarly, insignificant post-solution activity will not transform an unpatentable principle into a patentable process. ��To hold otherwise would allow a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection. On the other hand, when a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of § 101. Because we do not view respondents' claims as an attempt to patent a mathematical formula, but rather to be drawn to an industrial process for the molding of rubber products, we affirm the judgment of the Court of Customs and Patent Appeals.”¹⁰

In example #25, according to the Update, Claim 1 from Diamond v. Diehr involves a repeated calculation of the Arrhenius equation, a mathematical relationship held to be representative of a law of nature, and therefore Step 2A is met. Next, analyzing the claim as a whole using the Guidelines, the combination of steps taken together amount to significantly more than just the abstract idea of the Arrhenius equation (Step 2B). ��Thus, claim 1 in Diamond v Diehr is patent eligible, satisfying the “significantly more” step of the test.

The USPTO may have seen fit to rewrite the justification for this case to bring it into accord with the Alice framework.��The Court in Diamond v Diehr determined that the structure claimed, considered as a whole, was the kind of structure and performed the kind of function the patent laws were designed to protect. In making this determination, the Court refers to the machine or transformation test to establish the patentability of the claimed invention. However, after the decision of the Supreme Court in Bilski, the machine or transformation test is no longer the definitive test, although it remains a helpful indicator of subject matter eligibility.

Categories of abstract ideas outside the scope of patentable subject matter

The US courts have provided little explanation of when and why patent claims are invalid for covering abstract ideas.��Since the USPTO lacks the authority to create its own definitions, and it is difficult, perhaps impossible, to discern principles from the case law, the USPTO has instead focused its efforts on helping examiners to determine if the concepts defined in claims are similar to what the courts have determined to be abstract ideas, and are thus invalid.��The Guidelines and Update construct several different categories of ineligible abstract ideas based on the case law.�� Each category covers many different examples, taken from the case law, of concepts defined in patent claims that have been invalidated by either the Federal Circuit or the Supreme Court as abstract ideas. Clearly, patent applicants should do whatever they can to define their inventions using claim language and concepts that fall outside these categories.

These categories are the closest the USPTO gets to general concepts or principles for subject matter eligibility. These categories include the set of “judicial descriptors” associated with software based subject matter that has been identified by precedent in the Federal Circuit and the Supreme Court as patent ineligible, including

1. “Fundamental economic practices” including concepts dealing with the economy and commerce including contracts, legal obligations and business relations.
   1. Mitigating settlement risk -- Alice¹¹.
   2. Mitigating hedging risk -- Bilski¹².
2. “Certain methods of organizing human activity” including concepts dealing with personal and intrapersonal activities including relationships, transactions involving people, social activities and behaviour.
   1. Managing human behaviour, specifically meal planning -- Dietgoal¹³.
   2. Advertising, marketing and sales – Ultramercial¹⁴.
3. “An idea ‘of itself’” i.e. an idea standing on its own including a bare concept, plan or scheme, and
   1. Methods of comparing data that could be done mentally -- Cybersource¹⁵.
   2. Concepts relating to organizing, storing, and transmitting information – Cyberfone¹⁶.
4. “Mathematical relationships/formulas” including algorithms, mathematical relationships, formulae and calculations.
   1. Converting binary coded decimal values to pure binary values -- Benson¹⁷.
   2. A mathematical formula for hedging – Bilski¹⁸.

It is difficult to find recent cases where software related patents have survived subject matter eligibility analysis by the Federal Circuit or the Supreme Court. Given the numerous examples of ineligible subject matter in the Update and Guidelines combined with the rejection statistics¹⁹ from the USPTO and invalidation statistics²⁰ at the Federal Circuit, it is reasonable to ask whether any claims have recently survived challenge on subject matter eligibility grounds. ��One example outside of the scope of software subject matter is Myriad²¹, where the Supreme Court allowed claims for complementary DNA.

While the Supreme Court invalidated all of the claims in both Bilski and Alice; there is one case related to software subject matter that has survived scrutiny, at least at the level of the Federal Circuit:�� DDR Holdings v Hotels.com²².

DDR Holdings v Hotels.com²³

The Guidelines discuss this case. This is the first Court of Appeal for the Federal Circuit case to uphold the validity of a software subject matter patent since Alice.�� In this patent, the claims were directed to managing the look and feel of an e-commerce website to provide “store within a store” functionality.

The claims in DDR covered a software solution to a problem, which, according to the judgment but not the dissent, was unique to the internet.��The claims dealt with the problem of retaining website visitors at an ecommerce site and offered a solution anchored in software that addressed a challenge unique to the web.�� Specifically, in the prior art a user clicking on an advertisement would be taken away from the host website to the advertising merchant. The claimed invention involves presenting a hybrid page generated by the host website to include a composite of the host website and advertising merchant’s product information. The decision was based, at least in part, on the grounds that the claimed concept lacked a non-technological analog.

Takeaways

When drafting new applications for software-based inventions, it is important to keep in mind the judicial descriptors of ineligible subject matter, and to draft the claims to avoid categorization under any of these judicial descriptors if at all possible.��However, it is also important to keep in mind that this area of law is in flux, and will almost certainly see significant change over the next few years.��In particular, the categories of ineligible subject matter constructed by the USPTO may evolve or grow in number over the next few years as more cases are decided. Eventually, as the courts grapple with more and more cases, clear principles may start to emerge from the present chaos. One day, it may again be possible to rely on general principles to distinguish patent eligible subject matter from ineligible subject matter. At present, that day seems far distant, and for the foreseeable future it will be even more important to keep up-to-date on the latest Federal Circuit and Supreme Court precedent, mostly to know what kinds of subject matter to avoid claiming, but also to keep an eye out for the occasional beacons of hope, such as a DDR.

��is a partner,��lawyer and patent agent in��Bereskin & Parr's Patent Group in the Mississauga��Region. He��is active with the Intellectual Property Institute of Canada (IPIC) and has contributed extensively to patent education in Canada. is a JD candidate at Osgoode Hall School and was a summer student in��Bereskin & Parr's��in��Toronto.��Twitter: .

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In September of 2014 the consolidated text of the Comprehensive Economic and Trade Agreement (“CETA”) was released to the public. [1]�� CETA is a landmark free trade agreement between Canada and the European Union that has been in negotiations since 2009. [2]�� CETA has been touted by the Canadian Government as its “most ambitious trade agreement to date” and the agreement looks to have far-reaching effects on the economy through provisions covering everything from dairy tariffs to investor-state disputes. [3]�� However, the issue that has attracted the most commentary and fierce debate throughout the CETA negotiations is the agreement’s potential impact on Canada’s pharmaceutical industry. This controversy was primarily due to the fact that the European Union had been putting pressure on the Canadian government during the CETA negotiations to allow for provisions that would strengthen its patent protection for pharmaceuticals,[4] despite the fact that according to some commentators, Canada already provides for some of the strongest amount of protection for pharmaceuticals in the world.[5]�� Irrespective of this debate, the official consolidated CETA text contains two provisions that increase patent protection for pharmaceuticals in Canada through (1) the availability of patent term restoration for time lost in pharmaceutical regulatory processes,[6] and (2) the implementation of “equivalent and effective right of appeal” for all litigants that engage in a “linkage” mechanism where the granting of market authorization for pharmaceuticals is linked with patent protection.[7]

Although the implementation of patent term restoration is a relatively straightforward exercise, the addition of an “equivalent and effective right of appeal” for all litigants under Canada’s pharmaceutical linkage mechanism is a more contentious point. These changes were sought by the European Union due to the unique nature of Canada’s pharmaceutical patent linkage mechanism, the Patented Medicines (Notice of Compliance) Regulations (“PM(NOC) Regulations”),[8] which does not currently grant a brand manufacturer an effective right of appeal for adverse rulings. In addition, proceedings under the PM(NOC) Regulations are not a final determination of the issues of patent infringement or validity and therefore often lead to the dual litigation of these same issues under the Patent Act. The need to remedy this situation has also been recognized by the CETA agreement and it has been agreed that changes to Canada’s linkage mechanisms through the CETA agreement will “give scope for Canada to end the practice of dual litigation [of pharmaceutical patents]”.[9]�� Although Parliament has signaled that Canada’s linkage mechanism are here to stay,[10] there is no indication of how amendments to Canada’s PM(NOC) Regulations can lead to equivalent and effective rights of appeal being available to all litigants and an end to dual pharmaceutical litigation (“the CETA goals”). The complex nature of Canada’s pharmaceutical regulatory and patent framework makes changes to the system difficult, and it is apparent that there are no simple amendments that will be able to easily accomplish the CETA goals.

This paper suggests that Canada’s pharmaceutical linkage mechanism that is provided by the current PM(NOC) Regulations is in need of major reform, and the implementation of the CETA goals offers the perfect opportunity to enact changes that will allow the system to better achieve that balance between enforcing patent rights and ensuring that generic drug products enter the market as soon as possible that Parliament intended when enacting the PM(NOC) Regulations.[11]�� Two major changes to the PM(NOC) Regulations will be proposed in order to accomplish these objectives: (1) Changing the nature of proceedings under the PM(NOC) Regulations to a full adjudication of rights between the parties, and (2) Amending provisions that allow for generic manufacturers to be more fairly compensated for damages caused by being wrongly kept off the market due to the PM(NOC) Regulations. These amendments will remove some of the numerous inefficiencies and imbalances present in the current PM(NOC) Regulations and will allow for provisions that both disincentivize the abuse of the proceedings and provide rewards for the successful challenge of invalid or non-infringing patents which leads to the early market entry of generic drugs.

The purpose of this paper is two-fold. I will first present a critical analysis of Canada’s current pharmaceutical linkage mechanism in order to illustrate the necessity of its reform. I will then propose changes to the PM(NOC) Regulations that accomplish the CETA goals and at the same time lead to a more optimal pharmaceutical linkage system. In an effort to achieve these purposes, I will proceed in the following way: (i) first, I will provide a brief overview of Canada’s pharmaceutical regulatory and patent regime; (ii) second, I will set out the goals of a pharmaceutical linkage system and present a critical analysis Canada’s current system; (iii), finally, I will propose amendments which I believe incorporate the CETA goals and produce a more optimal patent linkage system in Canada.

Adam Falconi is a graduate of Osgoode Hall Law School.�� This paper was submitted by Adam as his major research paper assignment for Osgoode's Intellectual Property Law & Technology Intensive Program ("IP Intensive").���� Adam received the Barry D. Tomo Memorial Prize for his research paper.�� The prize was established in 1986 in memory of the late Barry D. Torno, who for many years was a leading practitioner in the field of entertainment law. The annual income from a fund contributed by his friends and associates is awarded to the student who submits the best research paper each year on a subject related to Industrial or Intellectual Property Law.

[1] Government of Canada, “Canada-European Union: Comprehensive Economic and Trade Agreement (CETA) Consolidated Text”, online: Foreign Affairs, Trade and Development Canada <> [CETA Text].

[2] Stephen Harper, Prime Minister of Canada, “Declaration by the Prime Minister of Canada and the Presidents of the European Council and European Commission – a new era in Canada/EU relations”, Office of the Prime Minister online: <> .

[3] Government of Canada, “Canada-European Union: Comprehensive Economic and Trade Agreement (CETA)”, online: Foreign Affairs, Trade and Development Canada < >.

[4] Paul Grootendorst & Aidan Hollis, “The Canada-European Union Comprehensive Economic & Trade Agreement, An Economic Impact Assessment of Proposed Pharmaceutical Intellectual Property Provisions” (February 7, 2011) online: Canadian Generics < >.

[5] Edward M Iacobucci, “Innovation for a Better Tomorrow: A Critique,” May 30, 2011, online: Canadian Generics
<-%20A%20Critique_FINAL.pdf> [Iacobucci].

[6] CETA Text, supra note 1 at Chapter 22 Article 9.2.

[7] Ibid at Chapter 22 Article 9 bis.

[8]�� SOR/93-133 [PM(NOC) Regulations].

[9] Government of Canada, "Technical Summary of Final Negotiated Outcomes, Canada-European Union Comprehensive Economic and Trade Agreement, Agreement-in-Principle", Canada Action Plan online: �� at page 19. [Agreement in Principle].

[10] Due to the fact that provisions addressing a pharmaceutical linkage system are contained in the CETA text and Canada is the only party to the agreement that currently has a pharmaceutical linkage system, it seems very unlikely that Parliament would dissolve its linkage system and make these extensively negotiated provisions moot.

[11] Regulatory Impact Analysis Statement, (1998) 132 C Gaz 7 II 923 at pg 1058 [RIAS 1998].

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