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Supreme Court Serves Stunning Reminder of Patent Bargain

The House of Commons Committee on Industry, Science and Technology has spent the past few months hearing from a myriad of companies on the Canadian intellectual property system. With few public interest groups invited to appear, one of the primary themes has been the call for more extensive patent protections, as witnesses link the patent system to innovation and economic growth.

While policies that purport to help the economy unsurprisingly generate considerable support, my weekly technology law column (Toronto Star version, homepage version) notes the Supreme Court of Canada recently provided a powerful reminder about the true purpose of patent law in a decision involving Pfizer's patent for Viagra, the well-known erectile dysfunction medication. Teva Pharmaceuticals, one of the world's leading generic pharmaceutical manufacturers, had lost successive challenges against the Viagra patent, but managed to pull out a win when it mattered most. The decision has already had considerable fallout, as Pfizer has asked for a rehearing, had the patent confirmed as invalid in a Federal Court case with Apotex, and dropped its retail price to match the generic pricing.


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Supreme Court Serves Stunning Reminder of the Patent Bargain

Appeared in the Toronto Star on November 18, 2012 as Supreme Court Serves Stunning Reminder of the Patent Bargain

The House of Commons Committee on Industry, Science and Technology has spent the past few months hearing from a myriad of companies on the Canadian intellectual property system. With few public interest groups invited to appear, one of the primary themes has been the call for more extensive patent protections, as witnesses link the patent system to innovation and economic growth.

While policies that purport to help the economy unsurprisingly generate considerable support, the Supreme Court of Canada recently provided a powerful reminder about the true purpose of patent law in a decision involving Pfizer's patent for Viagra, the well-known erectile dysfunction medication. Teva Pharmaceuticals, one of the world's leading generic pharmaceutical manufacturers, had lost successive challenges against the Viagra patent, but managed to pull out a win when it mattered most.

Proponents of extending patent law often focus on the benefits of encouraging innovation that may come from offering patentees exclusive rights to their invention, yet the foundation of the law is about striking a balance between public disclosure and exclusive rights to the invention.  

The law includes disclosure requirements that mandate that the patentee "correctly and fully describe the invention." In this particular case, Pfizer failed to actually describe which chemical compound was effective. This led the trial judge to remark that the disclosure "plays games with the reader."

The Supreme Court was seemingly in no mood for such games as it reminded the parties that the patent system was based on a bargain that Pfizer had failed to meet. In a paragraph that is likely to be quoted for many years, the court stated:

"The patent system is based on a ‘bargain', or quid pro quo: the inventor is granted exclusive rights in a new and useful invention for a limited period in exchange for disclosure of the invention so that society can benefit from this knowledge. This is the basic policy rationale underlying the Act. The patent bargain encourages innovation and advances science and technology."

Disclosure is therefore a crucial part of the patent bargain. The court clarified that this involves not only a description of the invention and how it works, but rather a much more practical level of disclosure "to enable a person skilled in the art or the field of the invention to produce it using only the instructions contained in the disclosure."

In this case, the court found that Pfizer failed to provide sufficient disclosure, since the pharmaceutical giant "obscured the true invention." Pfizer argued that this should not result in invalidating the patent, but a unanimous court found no other alternative. The immediate effect is that the Viagra patent is therefore voided in Canada, which will allow for generic substitutes.

While some have tried to downplay the significance of the decision - the Viagra patent was scheduled to expire in 2014 and Pfizer filed a motion last week for a rehearing - the real importance lies in the court's unequivocal assertion of the need for balance in the patent system and the broader societal benefits that must accrue in return for patent protection.  

Innovation is a laudable goal, yet the court has reminded Canadians that it is only part of the patent equation. Pharmaceutical companies will undoubtedly continue to lobby for more extensive rights before Parliamentary committees and in trade agreements, but the policy focus from governments and courts should be on ensuring that the "patent bargain" remains intact.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.


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