Patent by Brook (CC BY-NC-ND 2.0)

Patent by Brook (CC BY-NC-ND 2.0)


U.S. State Department vs. USTR on Eli Lilly and Canadian Patent Utility Rules

The Eli Lilly claim against Canada for hundreds of millions due to a court decision involving patent utility has attracted considerable attention with fears that the case foreshadows many more corporate lawsuits if the Trans Pacific Partnership becomes a reality. While the Canadian government has raised doubts about the independence of the Canadian Chamber of Commerce intervention in the case, the government must be a bit confused on where the U.S. stands on the issue. Yesterday, the U.S. Trade Representative issued its 2016 report on foreign trade barriers and stated the following on the case:

With respect to pharmaceuticals, the United States continues to have serious concerns about the impact of the patent utility requirements that Canadian courts have adopted.

That is consistent with the Eli Lilly argument, yet last month the U.S. State Department provided its own submission in the case. The U.S. government appears to undermine USTR arguments, seemingly siding with the Canada on the issue. The U.S. submission states each country has the right to determine how it implements the utility requirement, the possibility of revocation of patent rights, and for its patent laws to evolve:

To satisfy the utility requirement, such inventions must be “capable of industrial use” or “useful.” The NAFTA does not prescribe any particular definition of the terms, “capable of industrial application,” or “useful,” but the text notes that these two terms may be deemed to be synonymous. Article 1709(1) provides each NAFTA Party with the flexibility to determine the appropriate method of implementing the requirements of Chapter Seventeen, including the utility requirement in Article 1709(1), within its own legal system and practice.

The U.S. submission continues:

Article 1709(8) provides that a Party may revoke a patent only when, inter alia, “grounds exist that would have justified a refusal to grant the patent[.]” Thus, if a court, in determining whether to revoke a patent, finds that “grounds exist” that would have provided the Party’s patent examining authority to refuse to grant the patent, then revocation of that patent would not be inconsistent with Article 1709(8). Article 1709(8) does not mean that courts are limited to reviewing the specific grounds of refusal before the patent examiner; the use of the present tense “exist” in Article 1709(8) confirms this interpretation. Nor can it mean that NAFTA Parties are required to freeze their intellectual property laws indefinitely from the date of review of a given patent. Article 1709(8) allows for evolvement of patent law.

In other words, it would appear that even the U.S. has now abandoned Eli Lilly and undermined its own trade representative’s claims about Canadian law and trade barriers.

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