brought its claim after the Canadian courts revoked two of the company’s patents on the basis that these patents lacked utility. The courts applied “” to invalidate the patents on the basis that the patents lack . In ISA,   argued that the Canadian test for utility of the patent is arbitrary “judge-made law” and thus constitutes a violation of Canada’s international obligations under NAFTA. The company advanced its challenge against Canada on two accounts. First, Eli Lilly claimed that the judicial interpretation of utility in Canada (the so-called “promise doctrine”) contradicts the meaning “capable of industrial application” under NAFTA, Chapter 17. Second, the company alleged that Canada’s utility standard has abruptly changed over the years. According to Eli Lilly, such “dramatic” change in the judicial interpretation of the utility standard is problematic because it violates Chapter 11 of NAFTA. Both arguments questioned the traditional role of the domestic courts in interpreting and applying the patentability criteria. Ultimately, Eli Lilly’s argument failed in ISA. In short, the ISA arbitrators concluded that failed to produce sufficient evidence to support its allegations.

For the Government of Canada, however, it may be too early to celebrate this victory. The reasons become evident after appreciating the context of the Eli Lilly’s claim. First, the Eli Lilly’s dispute lasted more than five years. NAFTA does not provide parties to a dispute with procedural mechanisms to dismiss the claims early, akin to the summary judgment or a failure to state a claim provisions in common law jurisdictions. Accordingly, NAFTA permits claims that may eventually lack any legal or factual foundations without providing an opportunity to  curb such claims early to minimize the costs. Second, the tribunal did not explicitly address whether a change in the judicial interpretation of the state’s patent law can potentially violate this state’s international legal obligations, including those under IIAs. In practice, it means that the doors for claims similar to Eli Lilly’s remain open. The consequences are significant for states parties to ISAs. to defend the investment claims average at US 5 million dollars per one dispute. Losing such a claim is an even more expensive option for states for two reasons. First, the monetary costs may be substantial. For example, Eli Lilly demanded in damages. Second, losing a claim may result in reputational harm for a state as a potential destination for foreign investment. As a result, some states prefer a settlement of the dispute over facing a foreign investor in the ISA process.

These factors combined create a structure that encourages foreign investors to bring IP claims in ISA against states in hope to achieve a favourable settlement in a fashion similar to the “patent trolls”.  The claims similar to Eli Lilly’s can become a tool for speculation. In particular,  the claimants can allege that the states’ patent laws dramatically change and such change constitutes a violation of an applicable IIA. If an effective mechanism for the early dismissal is not available, a state has to defend its claim for a prolonged period of time and face substantial costs. Some states, however, lack financial or expert capacity to uphold such defence. From a policy perspective, the concern the Eli Lilly’s type claims may inspire foreign investors to file claims against states not to vindicate their property rights, but rather to use such claims as a bargaining chip to achieve profitable settlements. Such procedural use of IP rights (and particularly patents) fundamentally contradicts the purpose of the national IP systems that  grant IP rights for the benefit of society and not merely “”.

The post Eli Lilly v. Canada: Investor-State Arbitration Is an Open Gate for the “Patent Trolls” appeared first on IPOsgoode.

Per the Federal Court’s decision in , the Promise Doctrine holds that if a patent application promised a particular utility, it was necessary to prove that function in order to acquire the patent. Furthermore, in the absence of any promised utility, proving even a miniscule amount of utility is enough to be found patentable. Since patents are deemed invalid if there is an insufficiency of utility under s. 2 of the patent act's definition of 'invention' and per paragraph 46 of , the effect of the Promise Doctrine was to substantially raise the bar for applicants that alleged benefits to their inventions by denying patent protections for those who failed to meet the stated promises.

In court, the series of decisions and appeals in the AstraZeneca Canada Inc v Apotex Inc suit focused on whether the Promise Doctrine should be used to find AstraZeneca’s ‘653 patent – pertaining to optically pure salts of the (-) enantiomer of omeprazole, esomeprazole – invalid because the patent promised more utility than it could deliver.

At the , Justice Rennie found two alleged utilities: using esomeprazole as a proton-pump inhibitor (effectively reducing stomach acidity) and having superior pharmokinetic and metabolic characteristics so that its therapeutic profile in clients would be more stable. By applying the Promise Doctrine, the ‘653 patent was found invalid for not meeting the utility requirement of of the Patent Act for the alleged superior therapeutic profile, despite the utility of esomeprazole being proven as a proton pump inhibitor. At the , the judgment of the lower court and the applicability of the Promise Doctrine were affirmed.

However, the decision from the SCC demonstrated that the Promise Doctrine and the analyses of the lower courts run contrary to the form of the Patent Act by conflating the requirements set out in s. 2 and s. 27.3. demands there be some useful aspect of a creation for it to be regarded as an invention at law. If some usefulness is present, the invention must be disclosed as specified in of the Act in its patent application. In , Dickson J clarified that the usefulness standard set out in s. 2 of the Patent Act acts as a “condition precedent to an invention” whereas s. 27.3 merely sets out disclosure requirements that are to be interpreted independently of s. 2. So, the Promise Doctrine goes against the independent interpretation of these two sections of the Act by demanding that the utility requirement set out in s. 2 be fulfilled or predicted at the time of filing, or otherwise find the invention pre-condition for patentability vitiated.

The SCC noted that the Promise Doctrine is also at odds with the Act where multiple utility promises are made. Under the Doctrine, all utility promises would have to be satisfied for the usefulness threshold in s. 2 to be met. However, the opinion of the SCC is that any single use “that is demonstrated or soundly predicted by the filing date” would be adequate to satisfy the demands of s. 2. Requiring all utility promises to be met, would be “unfair” and can lead to “otherwise useful invention[s] to be deprived of patent protection” simply because some promises were not demonstrated or predicted.

Given the highly experimental and sometimes tangential nature of innovation, a lack of protection for inventions that have managed to achieve some, but not all, of the promised utilities highlights the the Promise Doctrine appears to have on research and development. Citing the work of , and , , the SCC found that “inventions are like a many-faceted prism: multiple claims… covering all facets are allowed in the same patent if a single general inventive concept links them.”

Considering a multiplicity of promises is especially important in pharmaceutical development and organic syntheses where broad, overarching concepts like an improved therapeutic profile may be anticipated, but not proven in full. The possibility of off-target therapeutic effects or side-effects can make an exacting prediction of utility difficult and, under the Promise Doctrine, may bar legal protection. After all, as the SCC established in ., “the patent regime has a dual purpose – to incentivise [creation] and to encourage inventors to publicly disclose [their knowledge] for society’s benefit.” If the bar for acquiring a patent is set too high, some inventors may get cold feet.

Dominic Cerilli is the IPilogue content editor and social media coordinator as well as a JD candidate at Osgoode Hall Law School.

The post Broken Promises: Utility Standards and Patent Applications in Canada appeared first on IPOsgoode.