Eli Lilly Initiates NAFTA Challenge Based on the Patent Promise Doctrine

Eli Lilly & Co. has filed a Notice of Intent to Submit a Claim to Arbitration under NAFTA Chapter Eleven, in which it seeks consultations to have the Government of Canada rectify certain patent laws that Lilly asserts violate Canada’s obligations under NAFTA. Absent successful consultations, Lilly states it will submit a claim for arbitration seeking compensation for damages for lost patent rights in an amount not less than $100 million. The Notice of Intent relates to Lilly’s patent for the ADHD drug Strattera (atomoxetine), which was invalidated by the Federal Court in 2011 ( affirmed by the Federal Court of Appeal in 2011 (see E-TIPS® summary)). Lilly’s application for leave to appeal to the Supreme Court was dismissed on December 8, 2011. The patent was invalidated for lacking utility based on the “promise doctrine”, which Lilly argues is unique to Canada and is inconsistent with Canada’s commitments under the NAFTA and TRIPS treaties. The “promise doctrine” holds that if a patentee makes a specific promise of utility in a patent, it is this promised utility that must be demonstrated or soundly predicted in order to meet the utility requirement. If no such promise is made, then it is sufficient to merely demonstrate that there is a “scintilla” of utility, which is the usual requirement for utility. Lilly also argues that Canadian Courts have imposed a non-statutory disclosure obligation in cases involving sound prediction. In its submissions, Lilly references several other patents that have similarly been invalidated in Canada and points to the apparent upward trend in utility attacks. In addition, Lilly notes that several corresponding foreign patents have survived similar inutility attacks in other jurisdictions. Lilly cites the failure of the Federal Government to rectify the judge-made promise doctrine in a manner consistent with Canada’s treaty obligations. It further argues that the promise doctrine is directly contrary to Canada’s obligations under the Patent Cooperation Treaty (PCT), which is incorporated by reference into the Patent Rules. Summary by: Tom Feather