Eli Lilly and the Office of the US Trade Representative are Not Fans of Canadian Patent Utility Doctrine

The Office of the United States Trade Representative (USTR), the government agency chiefly responsible for developing US trade policy, has released its annual “Special 301 Report” (Report) on the adequacy of intellectual property protection and enforcement by US trading partners. This year’s report saw Canada upgraded from the “Priority Watch List” to the “Watch List”, in recognition of Canada’s significant progress on copyright and trade-mark concerns (through the passing of the Copyright Modernization Act and the introduction of the Combating Counterfeit Products Act). However, in the 2013 Report, the USTR remains troubled by Canadian law surrounding pharmaceuticals, including “serious concerns about the impact of the heightened utility requirements for patents that Canadian courts have been adopting recently.” The Patent Act requires that an invention is useful. This term is understood in law to mean that, as of the patent filing date, the invention has been demonstrated or soundly predicted to deliver the result described in the patent. Since 2005, the Canadian Federal Courts have found that where another specific “promise” can be derived from the patent specification (e.g. a more effective drug treatment with fewer side effects), utility is to be measured against that more specific promise. Generic drug companies have had growing success in Canada based on the developing “promise doctrine”, making effective utility arguments against brand company patents as courts have looked deeper into at what exactly is “promised” by their patents. Recently, brand pharmaceutical company Eli Lilly (Lilly) sought leave to appeal to the Supreme Court of Canada regarding the invalidation of its patent for ZYPREXA® (olanzepine) for lack of utility. The patent in question was found to describe olanzepine as a safe and effective treatment for chronic schizophrenia, yet at the time the patent was applied for, Lilly had not completed a long-term human study. As a result, there was found to be insufficient evidence available at the time of application on which to soundly predict the long-term safety and efficacy of the drug that was promised. In a rare occurrence, the Supreme Court ordered an oral hearing of Lilly’s leave application. Leave to appeal was denied, leaving Lilly with no further avenue of appeal under Canadian domestic law. Notably, US and European versions of the Lilly patent were found valid on the issue of utility, entrenching the finding against Lilly as a prime example of the concerns expressed by the USTR over the Canadian utility doctrine. Lilly has served the Government of Canada with a notice of intent to submit a claim to arbitration under NAFTA Chapter 11, alleging that the invalidation of its patent for STRATTERA® (atomoxetine) on similar utility grounds is inconsistent with Canada’s investment obligations under NAFTA. With the pressure mounting on Canadian lawmakers to override the promise doctrine, ETIPS® will keep close tabs on any new developments. For the Federal Court decision on the Lilly patent for ZYPREXA® (olanzepine) (affirmed without reasons by the Federal Court of Appeal, 2012 FCA 232), see 2011 FC 1288. Summary by: John Lucas