Rare Disease Community Loses a Champion

Conversations and healthy debate about issues facing our industry and the health care system are critical to addressing some of today’s challenges and opportunities. The Catalyst welcomes guest contributors, including patients, stakeholders, innovators and others, to share their perspectives and point of view. Views represented here may not be those of PhRMA, though they are no less key to a healthy dialogue on issues in health care today.

We’re pleased to host a guest blog from Patrick Kilbride, executive director of international intellectual property for the Global Intellectual Property Center at the U.S. Chamber of Commerce.

Robert Frost once wrote, “Good fences make good neighbors.” To make good neighbors, Frost suggested that we need to respect the boundaries that exist between us. But what if it’s actually the walls that alienate us from one another? And what if, to truly make good neighbors, we must tear down the barriers in order to promote better cooperation?

Nowhere does this ring more true than in Canada. As our closest neighbor and top export market, having a deep, effective economic partnership with Canada is critical to U.S. global competitiveness. This week, the United States welcomed Canadian Prime Minister Trudeau for an official state visit – the first in nearly 20 years – where the leaders discussed growing the bilateral relationship. Robust intellectual property (IP) laws on both sides of the border are critical to growing this partnership and fostering greater investment between both nations. However, the differences in IP protections between the United States and Canada remain one of the barriers to furthering this trade relationship.

In recent years, the Canadian government has taken a number of steps to strengthen Canada’s IP system. Through the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU, Canada agreed to a number of changes to pharmaceutical IP protections. Most notably, CETA would introduce an effective right of appeal for innovative pharmaceutical companies and create a minimum period of patent term restoration for pharmaceutical products. If ratified and implemented, CETA would improve patent protection in Canada. These changes have not gone unnoticed by industry. Indeed, industry largely welcomes the provisions in CETA as steps in the right direction, in turn strengthening the overall IP system and reinforcing Canada’s existing international IP obligations.

Yet challenges remain. Since 2005, the Canadian Judiciary has applied a heightened standard for patent utility which requires innovators to demonstrate the “promise” of the patent at the time of application. This unique standard – which exists only in Canada – has led to the revocation of 24 patents and is inconsistent with Canada’s treaty obligations under the North American Free Trade Agreement (NAFTA) and the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. The U.S. Chamber’s 2016 International IP Index, which maps the IP environment in 38 economies around the world, notes that patent utility is one of the policies that contributes to Canada’s position as an international outlier on IP relative to its high-income peers.

While U.S. industry has highlighted its concerns with the patent utility policy, the government continues to state that the promise doctrine is not new nor is it discriminatory. However, from 1980 to 2005, not a single patent was found to be invalid on the grounds of inutility. Since 2005, the courts have ruled 25 times that patents lacked utility, leading to the revocation of 24 patents. Taking the court’s lead, the Patent Office included the utility standard in its Manual of Patent Office Practice (MOPOP), the government’s reference guide for Canadian patent examiners. Further, each of those 24 revoked patents was for pharmaceutical products, indicating that the utility standard is applied only to one industry.

The Canadian government has also tried to downplay the scope of the promise doctrine’s application by stating that only three of the cases were “true invalidations” through infringement proceedings. While this may be true, the remaining 22 determinations were issued through PM(NOC) proceedings. These proceedings apply the same utility standard and set the same legal precedent as the invalidations of infringement cases. Thus, the distinction between infringement and PM(NOC) proceedings does not change the fact that 22 patents have been found not useful over the past decade.

While the details of the application of the patent utility standard are important, it’s also important to look at the broader implications of strengthening Canada’s IP system. Canada is a market of tremendous economic potential and opportunity. Industry remains engaged on encouraging changes to Canada’s IP laws because stronger IP protections will only further the trade and investment relationship between both nations, which is beneficial to industry and consumers alike on both sides of the border. It is critical that IP protections are raised as the dialogue between President Obama and Prime Minister Trudeau continues. Working together, we can tear down the barriers that exist between the United States and Canada and create a mutually advantageous environment for IP protections, which furthers innovation, stimulates greater economic growth and promotes greater cooperation with our ally to the north. Good neighbors deserve nothing less.