Wednesday, December 22, 2010

Doha Round to conclude?

The Doha Round of trade negotiations at the WTO has been underway since 2001.  Every so often one could read about talks "collapsing", deadlines being missed and/or extended, and various commentaries about how awful it was that there was no agreement yet.

All of which strikes me as overblown.  Yep, trade negotiations at the WTO take a long time - especially since the talks now feature effective involvement by many more countries with a greater diversity of economic development and interests.  What else could you expect?  Surely, any new agreement would require years of talking first, and waiting to see how things are working out under the last big trade agreement (which was a pretty major change - establishing the WTO).

Anyway, there are thoughts that the Doha Round may conclude next year.

Thursday, December 16, 2010

CETA talks moving along...

An article appeared in the National Post today by John Ivison discussing the Europe/Canada free trade deal talks.  The article specifically brings up the pharmaceutical/IP issue as a stumbling block:

One sleeper issue could yet derail the whole process. Most of the negotiations should be encouraged, since they are likely to reduce the costs to consumers on both sides of the Atlantic.

However, the European Union is pressing for intellectual property changes that would give brand name drugs several years more of patent protection, delaying the entry into the market of cheaper generic drugs.

In the House of Commons, NDP MP Peter Julian asked Mr. Van Loan if the government has done any due diligence on what this would mean for provincial drug plans. The answer was equivocal but it is clear any such agreement would increase costs to provinces already battling soaring health costs.

One drug, Pfizer’s Lipitor had annual sales of $1.3-billion in Canada during its last year of patent protection, which ended in July. Generic versions of the drug are now being sold for 25% of that price, which would mean provinces would be paying an extra $1-billion this year if the EU’s rule was in place. The brand-name companies argue this is short-sighted and that Canada will be by-passed when the latest drugs come out if it doesn’t fall into line with the EU on patents. It remains to be seen whether the provinces buy that argument.
As has been noted before, the depth and breadth of any deal relies on the cooperation of the Canadian provinces.  On the pharmaceutical issue, even though the European draft language addresses areas of Federal jurisdiction (i.e. the Federal government has the authority to legislate the changes Europe wants without provincial cooperation), it is the provinces who will largely be paying for any extra periods of exclusivity for patent- or data- protected pharmaceuticals.  One possible outcome is that pharma/IP issues are sacrificed in a trade - for example, the provinces get a win on pharmaceutical costs in return for the provinces' agreement to open up their procurement processes to European companies.   

Its a bit dated, but Cyndee Todgham Cherniak wrote about a month ago that provincial agreement to the EU/Canada deal might be difficult, pointing out that several provincial premiers are on politically shaky ground and may not want to face a trade-related debate.

Tuesday, December 7, 2010

Google to solve European patent harmonization deadlock?

An interesting note via IPKat: The European Patent Office and Google have signed an agreement to use Google's machine translators to translate patent documents into the many languages used in Europe. 

This is potentially a bigger deal than may be apparent to readers in the New World.  There has been a movement in Europe since at least the 1970's to have a true European Patent, enforceable in all European states, including the moribund and non-enacted Community Patent Convention.  Since a European patent isn't in the cards, Europe has instead concentrated on harmonizing national systems and growing the European Patent Organisation, via the European Patent Convention (which is in force).  

In both cases, perhaps the biggest obstacle is language.  Its costly for applicants to translate patents into national languages, and European patent law harmonization efforts are largely European patent language harmonization efforts.  Language is highly political in Europe: if European patents are required to be translated into English, French and German, but not Spanish or Italian, what does that say about the state of Spanish and Italian in the world (or at least Europe) today?

Personally, I think that patents aren't just for multinational corporations, but should be able to be read by the guy running the family manufacturing business - which means I think that if you live in Poland, you ought to have Polish patents (or European patents enforceable in Poland) available to you in Polish.  Even if it does mean foreign companies have to pay to translate their patents.

But, having said that Europe has its own reasons for harmonization and reducing national sovereignty (WWI & II, for starters), so if they want to make Europe an English/German/French patent zone, who am I to complain?  Although I note that the European drive for political and economic harmonization can hardly be said to apply to global patent harmonization efforts - or even other regional harmonization efforts.

Anyway, getting back to the main point of this post, automatic translators like google raise the possibility of cutting the gordian knot regarding language and patents.  If the google and similar translators become able to do a "good enough" job - and I don't think that perfect translation is necessary in the case of patents - a very central, expensive and highly political feature of the patent law harmonization landscape may disappear.

Which would be pretty profound.  (Albeit, working universal translators would probably be pretty profound in general...  ) 

Gilbert's is #1 !

At recruiting!  For the second year in a row, the Ultra Vires student newspaper at the University of Toronto Faculty of Law has named us the top boutique firm for recruiting.

Gilbert's has mastered the art of recruiting, earning top spot among boutique firms for the second consecutive year.  Students marveled at the "fantastic OCI team" and described the recruiting process with the "fun, young" firm as "amazing". 
A tip of the hat to Alison Lester, who coordinated recruiting this year.  

Thursday, December 2, 2010

CSI Ottawa (Patent Unit)

A should-read if you're interested in high tech patent litigation - the Globe and Mail has an article on Ottawa's latest high-tech industry - tearing apart high tech devices looking for proof of patent or other intellectual property infringement.

An interesting quote

Canada’s other competitive advantage is that it’s not the United States, where the global patent wars are largely fought. Mr. Page of UBM TechInsights pointed out that some of its customers feel more comfortable dealing with a Canadian company, convinced their confidential information is better shielded from the prying eyes of patent lawyers and U.S. court orders. “Our clients like that we keep … all the dialogue surrounding their programs on Canadian soil,” he explained.

RIM sues KIK Messenger for patent infringement

As has been widely reported, RIM has sued KIK Messenger for patent infringement, breach of contract etc. etc. in the Federal Court.  KIK Messenger's texting app went viral over the last two months; several people have pointed out that it challenges the market positioning of RIM's own BBM service.  Another twist is that the founder of KIK, Ted Livingston, used to work for RIM, and the suit accuses Livingston of violating his confidentiality agreement with RIM.

NP article HERE

Ted Livingstone's post in response HERE  (titled "A Sad Day in Waterloo")

Tuesday, November 16, 2010

Amazon case appealed

The Federal Government has appealed the recent Amazon case dealing with patentable subject matter.  HERE is a copy of the Notice of Appeal (from Alan Macek's  Unsurprisingly, the government is appealing on a long list of grounds. 

An interesting background point - there may be an underlying clash between the "spirit" of the invention and what the claims actually say.  For example, suppose that a person has invented a "business method" (whatever that is) but the actual claim says "A machine comprising..." - is the court and patent office bound to treat that claim as a claim to a machine (which is definitely patentable subject matter) and then deal with it under the usual rubrics of anticipation, obviousness, utility etc.?  What if the claim is for "A system comprising..."?   Supposedly, the purposive approach to claim construction does away the "spirit" of the invention, but some courts and officials keep on wanting to resurrect it under a different name...

Thursday, November 11, 2010

Dosage regimen invalid as a method of medical treatment

A quick...  OK, long blog post on yesterday's PM(NOC) decision concerning a Janssen patent covering galantamine.   Matt Dugas, who wrote this, Nathaniel Lipkus and Tim Gilbert argued the case. 

On November 10, 2010, the Federal Court released its judgment in Janssen Inc. v. Mylan Pharmaceuticals ULC, 2010 FC 1123.  In this Patented Medicines (Notice of Compliance) decision, Justice Barnes found that the claimed dosage regimens are, as methods of medical treatment, unpatentable subject matter.

The 950 Patent

The subject of the decision is Patent No. 2,310,950 (the “950 Patent”), which relates to galantamine.  Galantamine is drug used to treat Alzheimer’s disease.  The compound galantamine was known well before the 950 Patent, as was its use as a treatment for Alzheimer’s disease. 

The 950 Patent claims an escalating dosage titration schedule.  Specifically, the 950 Patent claims a dosage schedule where a smaller initial dose of galantamine is slowly increased to a final effective dose.

The decision

Mylan Pharmaceuticals ULC (“Mylan”) applied to the Minister of Health to obtain a Notice of Compliance for its generic version of galantamine, alleging that Janssen’s 950 Patent was invalid. 

The present decision concerns the resulting Application brought under the PM(NOC) regulations.  The Federal Court found Mylan’s allegation of invalidity justified on the grounds that the subject matter claimed is unpatentable as a method of medical of medical treatment, and denied Janssen Inc.’s (“Janssen”) Application for an Order prohibiting the Minister of Health from issuing a Notice of Compliance to Mylan.

Method of medical treatment

The doctrine of method of medical treatment was articulated by the Supreme Court of Canada in Tennessee Eastman Co. v. Canada (Commissioner of Patents) [1974 S.C.R. 111, 8 C.P.R. (2d) 202.  There is a general distinction in the case law between vendible products on the one hand, and decisions related to the professional skill and judgment of the medical profession on the other hand.  The former is patentable, the latter is not.[1]

The Federal Court’s rationale is that physicians should not be prevented or restricted by patented monopolies from applying their best skill and judgment in treatment decisions.

As it has done in the past, the Federal Court once again dismissed the argument raised by Janssen that the doctrine should be reformulated or abandoned because of the repeal of a section of the Patent Act which was partially at issue in Tennessee Eastman.  Justice Barnes states: “Notwithstanding the intervening repeal of s.41, Tennessee Eastman, above, remains good law in Canada because the policy concerns it recognized continue to be valid.” 

Stating that the policy concerns apply in both jurisdictions, the Federal Court also references a decision by the United States Court of Appeals for the Federal Circuit[2].  The Federal Court also sees no problem reconciling the method of medical treatment doctrine and the recent Inc. v. Canada and the Commissioner of Patents, 2010 FC 1011 decision on business method patents because of the policy rationale of the method of medical treatment doctrine.

The method of medical treatment doctrine applies to the dosage regimen claimed in the 950 Patent

The claims of the 950 Patent cover the dosing schedule recommended in the Product Monograph for galantamine and other sources.  Janssen originally led evidence that physicians prescribing galantamine more or less rigidly follow the recommended dosing schedule, which does not involve any professional skill and judgment. 

However, all of Janssen’s expert witnesses (except one expert witness who was impeached and had his testimony strongly rejected by the Federal Court) admitted on cross-examination that, while the recommended dosing schedule may be a helpful starting point, there are many examples where a physician must employ an individualized treatment approach. 

The Federal Court stated that “Contrary to the affidavit evidence put forward by Janssen’s witnesses, [consideration of individualized factors] does not begin and end with the manufacturer’s dosing advice”  and that “It is simply not a valid argument that, in the face of a manufacturer’s dosing recommendation, the exercise of all professional judgment by treating physicians goes out the window.”  Physicians used their professional skill and judgment in selecting appropriate dosage schedules for their patients, and this process is therefore covered by the doctrine of method of medical treatment.

Other grounds of invalidity

The Federal Court did not formally address any of the other allegations of invalidity because it found the method of medical treatment analysis sufficient. 

However, the decision briefly suggests that the 950 Patent may also be invalid because of either obviousness or lack of utility.  Justice Barnes notes that one inventive promise of the 950 Patent was well-known prior to the 950 Patent, and that the other inventive promise relies on conclusions not supported by the evidence.

- Matthew Dugas - 

[1] Apotex Inc. v. Wellcome Foundation Ltd., 2002 SCC 77, 21 C.P.R. (4th) 499; Visx v. Nidec Co. (1999) 181 F.T.R. 22 3 C.P.R. (4th) 417, affirmed by Federal Court of Appeal 2001 FCA 215, 16 C.P.R. (4th) 251; Merck & Co. v. Nu-Pharm Inc., 2010 FC 510, 85 C.P.R. (4th) 179; and Axcan Pharma Inc. v. Pharmascience Inc., 2006 FC 527, 50 C.P.R. (4th) 321.
[2] King Pharmaceuticals, Inc. v. Eon Labs, Inc., 09-1437 (Fed. Cir. 2010).

Shoppers moves ahead with private-label generic drugs

From the newspaper today, Shoppers is moving ahead with its plan to market its own private-label generic drugs despite the disapproval of the Ontario government.  They plan to sell in seven other Canadian provinces, as well as export products.  They are also challenging the Ontario government's  regulations forbidding pharmacies from selling their own store-brand products.

Tuesday, November 9, 2010

no baseline for Canada/Europe patent and pharmaceutical trade negotiations

So, last Friday - actually, two weeks ago Friday, where does the time go? - I participated in Foreign Affairs’ briefing phone call regarding the Canada-European free trade negotiations.  Overall, the negotiators are reportedly making progress - “better than the two sides had anticipated.” 

But, on the patent and pharmaceutical topics that I am interested in, the issues are described as “difficult”, with discussions ongoing but no particular progress.  This is unsurprising - since there is no normative or other baseline on which to base discussions or converge on a position, the best the negotiators can do is to define positions (for example, agree on some alternative texts) and present these to the politicians, who will have to make the hard calls regarding trade-offs. 

Cue the lobbying  ;)

One reason that patent law and pharmaceuticals are a big deal in this negotiation - pharmaceuticals are one of Europe’s largest exports to Canada, at about $5 billion per year.

An interesting point is that it is the provinces that will have to deal with the fallout from any potential patent/pharmaceutical deal via their health care programs.  The provinces are being actively consulted by the federal negotiators.

As noted in this article in the National Post, lobbyists are therefore busy lobbying the provincial governments as well as federal officals, and the innovative pharma companies have garnered some support from the Alberta, Quebec and New Brunswick governments.

But to get back to the point that there is no underlying normative baseline on these issues - focus on the reported Alberta position

Alberta decided to write a letter of support in July after the brand sector raised the issue with Premier Ed Stelmach, said George Samoil, director of operations in the Premier’s office.
He said the fact he had himself earlier been manager of government relations for AstraZeneca had nothing to do with the province’s stance.
Quebec and New Brunswick also sent letters of support to Tony Clement, the federal Industry Minister.
“It seems pretty straightforward that if Canada wants to be in line with one of its major trading partners, that its intellectual property protection policies be in line also,” Mr. Samoil said.
I have no problem with that as one underlying principle - heck, its one of the main points in my (shameless plug alert ;) ) book on international patent law cooperation coming out next year.

But I don't think it gets you anywhere in this case.  Among other things, which major trading partner is Canada supposed to be getting in line with - the U.S. or Europe?

For example, the US has a "linkage system" - approval to market generic pharmaceuticals from a health perspective is linked to addressing potentially relevant patents held by the innovative or brand-name drug company. 

In line with the US, Canada also has a similar linkage system.  In fact, Canada arguably goes beyond the protection the US provides by allowing patent holders two shots at stopping generic competition - once via a PM(NOC) application and again via a patent infringement case - while the US system just has one patent infringement action.

Europe does not have this linkage protection for innovator pharma companies.

So, Europe must be satisfied with this - Canada is granting higher protection to patent-holders than Europe itself grants.  Right?


Europe is pressing for an additional right of appeal to be added for patent-holders in the PM(NOC) process.  Europe is asking Canada to agree in a treaty to strengthen patent protection in a system Europe doesn't adopt itself. 

So much for reciprocity.  ;)

In light of this, Mr. Samoli's statement of principle doesn't make very much sense as a baseline.   Presumably, if Canada wanted to get in line with Europe, it would eliminate the PM(NOC) regulations altogether.  But then it would be out of line with the US.  There's no baseline here.  Its just a non-reciprocal demand.

To put it another way - there really isn’t common ground on these issues - there is an EU position and a Canadian position.  At some point there will be a trade-off on political grounds between EU and Canadian positions across a whole range of issues, including patent law and pharmaceuticals. 

And that's about it.  



The recruiting season just ended.  Congratulations to Patrick Dyke, Zarya Cyrander and Harman Dhillon who will be Gilbert's LLP summer students!

Pictures from our student party setup here.

Friday, September 24, 2010

Intent to infringe not a requirement for inducing patent infringement

Here's an article by summer student Jamie Goodman on the Bauer v. Easton case and inducing patent infringement in Canada.  The Bauer case is being appealed, and it will be interesting to see what happens.  

In Bauer v. Easton,[1] the Federal Court found Easton Sports Canada liable for inducing or procuring the infringement of a patent for a popular Bauer’s skate design.  The judgment explained that to induce infringement an actor must only intend for a third party to follow their influence to achieve a particular end (the infringing act), and that knowledge of the patent’s existence is not a requirement of this tort.  This decision, currently on appeal, has for the first time in Canada provided a firm and definitive statement on the “intent to infringe” requirement for inducing infringement. 

However, because of the Court’s statement that no intent to infringe was required in the “very unique circumstances” of this case (referring to the high degree of control that Easton had exercised over the actions of the third party infringer),[2] the decision, perhaps unintentionally, raises questions about the degree of control that is required to “induce” another, and whether or not this legal standard is consistent with actual expectations held in the business world. 


Direct patent infringement may be characterized as a strict liability tort, as liability can be attached to an infringing party even if it never had any intention of violating the rights of a valid patent holder, or any knowledge that the patent it was violating existed.  On the other hand, the law pertaining to inducing (or procuring) patent infringement – whereby one party influences another party to directly infringe a patent, often present in outsourcing arrangements among manufacturers - has not been so clear cut.

There are three basic requirements for inducing infringement in Canadian law: (1) there must be an infringing act committed by the direct infringer; (2) this infringing act must have been influenced by the alleged inducer (akin to a “but for” analysis), and; (3) the influence must have been knowingly exercised and intended by the inducer.[3] 

A source of uncertainty in law, both in Canada and abroad, has arisen from the third requirement, for it has raised questions as to the level of knowledge and intent that is needed to attach liability to an allegedly inducing party.  For example, does an alleged inducer need to have knowledge of the patent at issue, such that the inducer specifically intended for the influenced party to infringe that patent?  Or, is the simple intention that the inducer’s directions be followed enough to attach liability?  Or, might the answer fall somewhere in between, such as liability for wilful blindness towards existing patents?

In Bauer v. Easton, Justice Gauthier reiterated the principle that the tort of inducing infringement is to be treated the same as direct infringement, thereby clarifying that an alleged inducer need not be aware of the patent at issue in order to be found liable for influencing its infringement. 

Unfortunately, in answering this question, the Federal Court managed to raise a different question, one that could become a source of contention in future patent infringement cases.  To what extent does the level of control that an alleged inducer exhibits over the direct infringer affect the intent threshold required for liability?  Furthermore, would it be fair for courts to attach liability to a business if it had almost no control over the third party’s actions (and thereby also had no foreseeability of any potential patent infringement)?

Bauer v. Easton

In this case, Easton Sports Canada Inc. was found to have infringed a patent belonging to Bauer Hockey Corp. (the patent described Bauer’s popular “Vapor 8” ice skate model).  Based on the facts of the case, Justice Gauthier was able to easily determine that Easton was responsible for inducing a third party into directly infringing Bauer’s patent. 

The Easton skates were outsourced for manufacture to a third party company known as Rock Forest Inc.  While Rock Forest employees did assist with some minor aspects of the skates’ composition (such as development of the footwear pattern), it was clear on the evidence that Easton had significant control over the entire manufacturing process.  Not only did Easton employees fully conceive of the design and conception of the skates (presumably without the aid of Bauer’s patent), but Easton went as far as to station one of their employees at the Rock Forest premises to directly oversee production of the skates. 

As a result of this overt relationship of principal-to-agent influence and control, the Federal Court was given a solid opportunity to shed light on the law of inducing infringement in Canada. 

Inducement to Act Must Be Intentional, Resulting Infringement Need Not Be

Despite arguments that were put forth by Easton, Justice Gauthier was adamant in proclaiming that “there is no case law stating clearly that one could not infringe by inducement or procurement unless it knew of the patent.”[4]

To be held liable, the alleged inducer must only intend for the actions of the direct infringer (the third party manufacturer) to be completed in accordance with whatever directions were given by the inducer.  Whether the inducing party intended for infringement of a patent to occur is completely irrelevant to the analysis. 
The Court explained that to hold otherwise would “create an unwarranted and unjustifiable distinction” between companies who manufacture their own products and companies who instead choose to outsource their production by giving specific instructions.[5] If there were to be a higher threshold for intent, any third party who had been contracted to simply follow instructions could unfairly be held as the only party responsible for any resulting patent infringement (as the inducing party could deliberately avoid, or deny, having any knowledge of the interfering patents).  The lower threshold of intent in Bauer v. Easton therefore avoids situations where a mastermind can escape punishment while their servant is found guilty.[6] 

In the U.S., courts have been split on what level of intent should be required for inducing infringement, known there as “active inducement.”  In one case, it was actually conceded that this area of the law is plagued with a “lack of clarity.”[7]  Competing American precedents have held that (similar to Canadian law) there is no “intent to infringe” requirement,[8] while others have held entirely the opposite.[9]  As recently as February of 2010, the U.S. Federal Circuit has endorsed the position that active inducement may be found at least where the inducer has shown “deliberate indifference” to a patent.[10] 

The Legal Model is Misaligned with the Practical Reality

The Supreme Court of Canada has already declared that patent infringement is a “statutory tort,”[11] and the principle that inducing infringement is akin to direct patent infringement has been present in Canadian law for a long time.[12]  Bauer v. Easton affirmed this, stating that “inducing or procuring another to make or construct a patented invention is not a tort distinct from that of infringement.”[13]  This entails that the low threshold for intent should be applied evenly in any case involving patent infringement, regardless of the reasonable expectations or business arrangements among the parties involved. 

Nonetheless, the Federal Court’s acknowledgment of this overlap of torts - when read in conjunction with the facts of the case - may muddy the waters in a new vein.  “Here, through [an Easton employee’s] involvement … Easton was actually participating in the making of the skates that are now found to infringe.”[14]  The Court’s judgment was straightforward precisely because Easton exercised such unequivocal control over the actual infringer of the patent; the characterization of Easton’s liability as “inducement” is, in this case, interchangeable with a characterization of “directly infringing.”
Whether or not a party needs knowledge of a patent (or intent to infringe) in order to be liable for inducing infringement has often been a source of confusion in Canada.  As such, the relationship between the law on this matter and the expectations of real actors in the business world is uncertain.  By all means, where the inducing infringer exercises tremendous control over the actor who actually infringed, it is justifiable to overlook intent, because that inducer may just as well be liable for direct infringement. 
Yet, what if, instead, Easton had actually only exercised minimal control over its third party manufacturer (such that Easton did not even play a role in the design of the infringing skate)?  Yes, this might still qualify as inducing infringement according to the law (since the law on its face only requires minimal influence to be exercised by the inducer); but, in this hypothetical, it would be highly unlikely that Easton could have reasonably expected to be implicated in the unforeseen infringement caused by a third party.  Is it not problematic that the notion of “reasonable expectations” - a focal point of tort law - is given no weight when assessing the statutory tort of inducing patent infringement? 

Drifting Towards Common Design?

By essentially lumping the tort of inducing infringement together with direct infringement, Bauer v. Easton appears to be steering Canadian law in the direction followed by English Courts via the doctrine of infringement by common design (also known as “joint infringement”), which holds both the inducer and the direct infringer equally liable for patent infringement.  The standard for this type of liability also neglects knowledge of the infringed patent and limits the intent threshold to infringe, not unlike Canadian law.  More notably, infringement by common design barely contemplates issues of influence or control (which are pivotal to a finding of induced infringement in Canada).  In a leading British case that was cited by Justice Gauthier in Bauer v. Easton, it was stated of infringement by common design that: “This idea does not…call for any finding that the secondary party has explicitly mapped out a plan with the primary offender.  Their tacit agreement will be sufficient.”[15] 

Thus, where there is an agreement in place between two parties to work together under some type of business/manufacturing arrangement, any patent infringement by either party, regardless of the involvement of the other, could render both parties liable as joint infringers.  This is not yet an accepted position in Canadian law, and infringement by common design could greatly expand the risks involved in any joint business venture in an industry where patents are abundant. 
In the U.S., meanwhile, “joint infringement” (or, “indirect infringement”) might impose a higher burden on plaintiffs seeking to enforce liability on multiple parties who have together carried out all of the claims of a patent.  This area of somewhat unsettled law lacks a bright-line test, but does put tremendous emphasis on a factual assessment of the amount of direction and control present in each case.[16]  Ideally, significant evidence must be put forth by the plaintiff indicating contractual agreements between the direct infringer and the controlling party; anything less, and the plaintiff’s action may be subject to dismissal or summary judgment.

Stick to the Facts

The U.S. doctrine of “joint infringement” aligns more closely with the facts of Bauer v. Easton than the alternative U.S. approach of active inducement (which requires a specific intent to infringe).  Canadian law, however, does not distinguish between active inducement and joint infringement; instead, each case will be assessed by the same standards of “inducing infringement.”  As a result, the lines for when multiple parties can be held mutually accountable for the infringement of a Canadian patent remain unclear.
Eventually, a situation that falls hazily between the second and third prongs of Canada’s three part test for inducing infringement (the direct infringement must have been influenced by another party, and that party’s influence must have been intentional) is likely to arise; in this situation, there would be a limited relationship between the parties and a minimal degree of control exercised from one over the other.  In such a case - whereby the opportunity would arise for the influencing party to claim ignorance as a potential defense - perhaps Canadian Courts could best decide on infringement liability by avoiding any bright-line test altogether, and instead focus more closely on the factual circumstances at hand.  To do otherwise (i.e. by attempting to decide the case using existing legal boundaries on inducing infringement) might conflate inducement and joint infringement principles even further, adding more confusion to this area of the law and more uncertainty for the patent holders and third parties involved.


Pending the appeal of Bauer v. Easton, the law in Canada is settled on the premise that inducing patent infringement does not require knowledge of the patent’s existence.  Still, the chances that a business will be surprised to find itself responsible for patent infringement – even though that business may have only played a very limited, and unintentional, role in having influenced the resulting infringement caused by a third party – seems possible.  When the Federal Court is inevitably faced with a patent infringement action whereby the inducing infringer exercised substantially less control and influence than Easton has done, issuing a judgment of liability via our existing guidelines for “inducing infringement” may prove to be much more contentious and controversial than it was in the battle over the Vapor 8 ice skate design. 

[1] Bauer Hockey Corp. and Nike International Limited v. Eason Sports Canada Inc., 2010 FC 361 [Bauer v. Easton].
[2] Bauer v. Easton, at para 209.
[3] Dableh v. Ontario Hydro, [1996] 3 F.C. 751 (Fed C.A.); leave to appeal refused (1997), 1997 CarswellNat 3240 (S.C.C.).
[4] Bauer v. Easton, at para 197.
[5] Ibid, at para 203.
[6] Lemley, Mark A., Inducing Patent Infringement. UC Davis Law Review, Vol. 39, p. 225, 2005; Stanford Law School, Public Law Working Paper No. 110. Available at SSRN:, at 21.
[7] Insituform Techs. V. CAT Contracting, 385 F. 3d 1360 (Fed. Cir. 2004).
[8] Hewlett-Packard v. Bausch & Lomb, 909 F. 2d 1464 (Court of Appeal, Fed. Cir. 1990).
[9] Manville Sales v. Paramount Sys., 917 F. 2d 544 (Fed. Cir. 1990).
[10] SEB S.A. v. Montgomery Ward & Co., Inc., 594 F.3d 1360 (Fed. Cir. 2010).
[11] Bristol-Myers Squibb Co. v. Canada (Attorney General), 2005 SCC 26, 39 C.P.R. (4th) 449, at para 134.
[12] Hatton v. Copeland-Chatterson Co., 10 Ex. C.R. 224, 1906 CarswellNat 10, at para 16.
[13] Bauer v. Easton, at para 199.
[14] Ibid., at para 205.
[15] Bauer v. Easton, at para 206, citing Unilever plc v. Gillette (UK) Limited, [1989] R.P.C. 583 (U.K.C.A.) at p. 609.
[16] Eckstein, Maya M. and Spalding, Shelley L., “What Remains of Joint Patent Infringement?” IP Litigator, September/October 2009.

Friday, September 10, 2010


Those of you who know me well know that in the past I have harped on patent office statistics like pendency and backlogs.  I think they are important - central, critical even - to understanding how patent law functions in a country. 

Well, the USPTO has certainly taken the idea of transparency in such matters to heart.  Check THIS out.

So, CIPO...  when can we expect a similar level of disclosure?  ;) 

(adding a comparison of CIPO stats to USPTO stats for corresponding applications would be nice too...)

Thursday, September 9, 2010

Interesting Article on "Tax Accountant Priviilege?"

An interesting article "Tax Accountant Privilege" in this week's Lawyer's Weekly.   The lead:

"Should privilege extend to communications between tax accountants and their clients? As there is “no tax without law,” advising on the law is what tax accountants do. The English Court of Appeal is now examining whether privilege should be based on the nature of the advice or the qualifications of the person providing it." 

With all due respect to the tax profession, this is interesting mainly because of the similarities to the issue of privilege for communications between patent agents and their clients.  ;)  To paraphrase, as there is "no patents without law", advising on the law is what patent agents do. 

One of the arguments raised against privilege for communications between clients and patent agents is that it would open the floodgates to let communications between clients and the great unwashed (i.e. tax accountants) also attract privilege.  I don't know how credible that actually is (what do you need to do to become a tax accountant anyway?).    

I have an article coming out in Managing Intellectual Property in October on privilege for communications with foreign lawyers and patent agents in Canada, for those who are interested.  

Thursday, September 2, 2010

Generic Drug Supply Problems

The National Post has an article on shortages in the supply of about 10-15 generic drugs.

The generic drug companies point to manufacturing and supply problems - and remember that this is a global industry, so we're often talking about off-shore supply problems - but the journalists can't help wondering if this reflects the recent changes in generic drug pricing regimes.

Wednesday, September 1, 2010


If you think that Investor/State disputes are only won by the investors, the Canadian government won a claim last week against Chemtura, a US company that sought $78 million (US) in compensation for banning the use of lindane, which is a fungicide. 

I have no idea about the details of this case, so this may have be a complete change of topic ;)

but in general, critics of investor/state dispute provisions often talk as if these provisions prohibit governments from taking action.  But often the only restraint on the government is procedural - i.e. you have to pass/make the regulation in fair manner.  But governments can actually pass and implement legislation/regulation, and often the procedural or fairness hurdles are hardly high.

Not to say that there aren't significant and real concerns about investor/state provisions in trade deals.   Here's a "Public Statement on the International Investment Regime", posted yesterday on the OHLS website, which appears to be led by Professors Gus van Harten of Osgoode Hall and David Schneiderman of the University of Toronto. 


Wednesday, August 25, 2010

AbitibiBowater gets $130 Million fof NAFTA claim

Remember the fuss back when Newfoundland  took away water and timber rights and expropriated hydroelectric assets from AbitibiBowater?  Newfoundland said that under the terms of the 1905 lease, these rights were all contingent on Abitibi operating a mill in the province.  Since Abitibi closed the mill (itself a long drawn out affair), all of these assets reverted to the provincial government.

Abitibi, which is a Delaware company, threatened to launch an investor-state complaint under Chapter 11 of NAFTA.

Today, the Canadian federal government settled with Abitibi for $130 million - which must be one of the largest, if not the largest, NAFTA Chapter 11 payouts.

Note that since this is a NAFTA issue, its the Federal government that is settling the matter, not NL.


Thursday, August 19, 2010

Swiss Claims in Canada

Here's an article by summer student Shaughnessy Hawkins, on Swiss claims, which she published recently on lexology

Swiss Claims in Canada

Swiss claims arose to circumvent restrictions on the patentability of a medicinal use of an already-patented compound.  Canadian courts are faced with the difficulty of determining how to interpret such claims, particularly in light of their inherent discrepancy between form and substance. Both European and Canadian courts have recently considered such claims and their legal grounding.  A review of these decisions reveals strategic implications for parties considering Swiss claims in the Canadian context, and raises questions about the future treatment of Swiss claims under Canadian law.

Overview of Swiss Claims

Swiss claims are claims of the form “the use of [compound X] in the manufacture of a medicament for the treatment of [disorder Y]” where compound X is previously known. They are therefore (when construed literally) aimed at the manufacture of the substance, rather than the use, thus circumventing any restrictions against patenting a subsequent use.

Swiss claims highlight an ongoing struggle faced by the courts: whether the language of the claims or the substance of the invention should guide the process of construing the claims. By giving weight to the substance of the invention, the court protects the patentee and her idea. By giving weight to the language of the claims, the court protects the public by providing clear notice as to the scope and contents of the patentee’s monopoly. Particularly in the case of subsequent patents involving the same compounds, courts are attuned to the risk of evergreening by a patentee to protect its monopoly.

Canadian Law

What was once a blanket prohibition in Canada against patents for medical uses has softened into a prohibition against patenting methods of medical treatment. The result of such a shift has been that in recent years, use claims have generally been accepted by Canadian courts, provided they do not amount to methods of medical treatment. Hence there is no particular need to use a Swiss claims structure in Canada.  Still, such claims exist in many Canadian patents, reflecting international claiming practices.

However, there is more at stake in the Canadian context than mere patentability. Canada has a regime for generic manufacturers seeking entry into the market called the Patented Medicine (Notice of Compliance) or PM(NOC) Regulations, similar to the Hatch-Waxman Act in the United States.  Under the PM(NOC) Regulations, a patent containing a claim to the use of a medicinal ingredient is considered eligible for listing under the patent registry, similar to the Orange Book in the US, and the generic company must address the claim prior to gaining entry into the market.  In contrast, methods of manufacturing are not eligible for listing and do not need to be addressed. In light of these regulations, what weight should Canadian courts give to the inclusion of the terms “for the manufacture of a medicament useful for…”?

As a general matter, courts have placed increasing emphasis on the specific language used in a patent claim in the past decade. However, interpreting so-called Swiss claims literally would require judges to deliver a potentially hefty blow to patentees, who might then be forced to restructure their claims solely to adapt to Canadian policies. Courts therefore give careful consideration to the issue of dealing with Swiss claims.

Justice Hughes of the Federal Court of Canada recently considered the development of law dealing with Swiss Claims both in Canada and abroad in Merck Co. v. Pharmascience, 2010 FC 510. In this case, he suggested that the treatment of Swiss claims by Canadian courts has been somewhat inconsistent,[1] and pointed to two such cases in support of this fact. However, I would argue that these cases, as well as Justice Hughes’ own decision, are relatively consistent in their approach. When faced with Swiss claims, the courts seem to give greater weight to the substance of the invention, or what is truly being claimed, as opposed to the language of the claim. While the substance of the invention may have been different in each case, leading to different outcomes, the actual approach taken by the judges seems consistent.

For example, in Abbott Laboratories v. Canada (Minister of Health)[2], the Federal Court of Appeal upheld the trial judge’s finding that a claim for “the use of [clarithromycin] Form 0-ethanolate in the preparation of [clarithromycin] Form II for use as an antibiotic” was not a claim for the use of a medicine eligible for listing under the PM(NOC) regulations because the words “for use as an antibiotic” added nothing to the construction. It was well-established that clarithromycin’s only use was as an antibiotic. Hence what constituted the actual invention, or the substance thereof, was the method of preparation of Form II, and this is what guided the court’s interpretation of the claims in this context.

Similarly, in Pfizer Canada Inc. v. Apotex Inc.,[3] Mosley J. found that a claim of the form “the use of a compound of formula (I) […] for the manufacture of a medicament for the curative or prophylactic treatment of an erectile dysfunction in man”, coupled with other claims to various forms of sildenafil in the treatment of erectile dysfunction in man, was directed to the use of the medicine, the manufacture being secondary. This was influenced by the fact that all of the claims described the use of the medicine, while only some referenced the manufacture, leading the judge to read in that the use was the key element of the invention.

In the recent Merck decision, Justice Hughes held that a claim of the form “the use of finasteride for the preparation of a medicament adapted for oral administration useful for the treatment of male pattern baldness in a person and wherein the dosage amount is about 1 mg” was directed to the use of a medicament for treatment of a human condition at a particular fixed dosage, given that the manufacture of the medicament and its use in the treatment of male pattern baldness generally was already well-known. Once again, the judge considered what the inventive concept, or substance of the invention was, and construed the claim in that light.

The Canadian jurisprudence suggests that courts have not considered the Swiss-style structure of a claim to be determinative in the analysis, regardless of the context. Rather, courts have instead considered what has in fact been allegedly invented.

Swiss Claims under European Law

Both the UK Court of Appeal and the Enlarged Board of Appeal of the European Patent Office (the “EBA”) have recently considered the status of Swiss claims under European law. In Britain, the Court of Appeal considered the issue in Actavis UK Ltd. V. Merck  Co. Inc.[4] The decision held that Swiss claims are acceptable claims for both new uses as well as new dosage forms of an old compound. The court pointed out that the patent generally does not really teach the manufacture, and may in fact teach how to actually treat a patient. In line with previous jurisprudence on the subject, they held that while a Swiss claim is necessary for the purpose of avoiding the prohibition on claims to the use of medicines, the structure will be ignored when considering issues such as novelty.

Shortly after Actavis was decided, the EBA considered the same issue in Kos Life Sciences.[5] In Kos, the EBA altered their longstanding approach to Swiss claims. Previously, the construction of Swiss claims was considered a necessary and acceptable mechanism to circumvent the prohibition on claims to the use of medicines, though their structure was ignored when considering issues such as novelty. However, the prohibition that gave rise to a need for Swiss claims had since been removed.[6] Given that Swiss claims also lack a connection between what is being claimed and what is in fact novel, the EBA held that, prospectively, such claims will not be read in, i.e., will be construed literally.

Strategic Considerations for Patentees

Canada’s most recent decision on Swiss claims, Merck, considered developments in European patent law, yet gave no suggestion that Canadian law would or should move in a similar direction. However, it may be the case that as Swiss claims come before courts in both Europe and Canada, the Canadian approach may also shift away from reading in the substance of the invention to create more cohesive and predictable treatment internationally. Canadian courts and the Canadian Intellectual Property Office often draw from international treatment of claims in issue.  Such a move would also increase predictability in the interpretation of claims in the Canadian courts.  Ultimately, it may be the case that as a result of the Kos decision, fewer Swiss claims will be filed abroad, and subsequently in Canada.

          Parties filing (or responding to) a Notice of Allegation against a patent containing a Swiss claim should also be attuned to the various characterizations that are possible of such claims and may want to consider addressing multiple such characterizations in the alternative. In Merck, for example, Justice Hughes dismissed Pharmascience’s arguments that the claim was for the manufacture, because the Notice of Allegation had characterized the claims as being for the dosage.


          Swiss claims are difficult to construe because their structure often does not reflect the underlying substance of the invention.  Canadian courts have tended to emphasize the inventive concept rather than the language of the claim; however, European courts have recently shifted towards a literal interpretation. This may eventually result in Canadian practice conforming with the new European approach.  In the meantime, parties considering Swiss claims should bear in mind the possibilities for alternative interpretations under Canadian law.

Shaughnessy Hawkins
Summer Student
Gilbert’s LLP

[1] Merck Co. v. Pharmascience Inc., 2010 FC 510.
[2] (2007), 59 C.P.R. (4th) 1 (F.C.A.).
[3] (2007), 61 C.P.R.(4th) 305 (F.C.).
[4] [2008] EWCA Civ 444, [2009] 1 All E.R. 196 (21st May 2008) [Actavis].
[5] Case No. G 0002/08, 19 February 2010
[6] Article 54(5) of the European Patent Convention now permits purpose-related protection for any further specific use of a known medicament in a method of therapy.

Wednesday, August 11, 2010

Trade-driven changes coming to Canadian patent and data-protection laws?

I have published an article on the Canada - European Union trade negotiations - the Comprehensive Economic and Trade Agreement - in the latest issue of the Food and Drug Law Institute's Update magazine.

Here is a link to the article.  Please note that this is distributed with the permission of Update magazine of the FDLI.

Monday, August 9, 2010

Unpredictable but not surprising: enantiomer patents and obviousness

There was some big news last Wednesday in a case I was involved in - a decision by the Federal Court regarding a patent for repaglinide. We (Gilbert's) argued successfully in a PM(NOC)application for Cobalt that Canadian patent no. 2,111,851 (owned by Novo Nordisk) should be invalid - although see the footnote.*  This is a big deal because the '851 is an enantiomer patent.  There were significant findings of fact and law that should be widely applicable to patents covering enantiomers.

Here's an article by Sana Halwani on the decision.

Unpredictable but Not Surprising
The Federal Court clarifies the application of the obvious-to-try test

On August 3, 2010, the Federal Court released reasons in Novo Nordisk Canada Inc. et al. v. Cobalt Pharmaceuticals Inc. et al. (2010 FC 746; “Novo Nordisk”)) finding Cobalt’s allegation of obviousness justified with respect to Canadian Patent No. 2,111,851. The patent covers repaglinide (an (S) enantiomer), its use for the treatment of Type 2 Diabetes, and processes to make it.

Novo Nordisk
is an important case both from legal development and commercial perspectives. The Federal Court has made clear that scientific knowledge evolved after 1987, the date considered by the Supreme Court of Canada (“SCC”) in Sanofi, and that by 1991 it was the state of the art to separate and test enantiomers of racemic potential drugs. This decision refines the obvious-to-try test set out by the SCC and suggests a review of all enantiomer patents applied for in or after 1991.

The decision in a nutshell

The patent involved in this proceeding (the “851 Patent”) essentially covers the enantiomer repaglinide. Repaglinide is sold under the brand name GLUCONORM™.

Enantiomers are mirror image molecules that cannot be superimposed on each other (think of right and left hands). They are normally synthesized together, as a “racemate”, and one cannot know how each of the two enantiomers comprising the racemate (denoted (S) and (R)) will act in the body until it has actually been made and tested. Activity and toxicity can be different as between the racemate, the (S) enantiomer and the (R) enantiomer.

Unlike other recent cases, the racemate comprising repaglinide was never approved or marketed as a drug product, although the racemate had been identified in a previous “genus” patent covering numerous compounds, as well as a patent covering new solid forms of the racemate.

Nonetheless, Cobalt alleged repaglinide to be obvious, and the 851 Patent to be invalid on this and other grounds. The Court agreed and found the 851 Patent obvious to try.

This is only the second decision known to the author in which the Court found allegations of invalidity of an enantiomer patent justified.

Refining the obvious-to-try test

In the Sanofi case, the SCC dealt with an enantiomer patent and in that context, set out the obvious to try analysis applied by the Court to repaglinide in this case. The obvious to try factors include asking whether it is more or less self-evident that what is being tried (i.e. the invention) ought to work.
In answering this question, the SCC stated:

As I have observed earlier, Shore J. found that the skilled person would not know, before separating this particular racemate into its isomers and then testing the separated isomers, that the properties of the dextro-rotatory isomer [(R) enantiomer] would be different from the properties of the racemate or the levo-rotatory [(S) enantiomer] isomer (para. 81). Similarly, he found that the person skilled in the art would not know before trying the different salts in combination with the dextro-rotatory isomer what the bisulfate salt’s beneficial properties would be (para. 82).

Just because there are known methods of separating a racemate into its isomers does not mean that a person skilled in the art would necessarily apply them. The fact that there are such known methods of separation will be of no account if the evidence does not prove that it was more or less self-evident to try them. It is true that at the relevant time there was evidence that a skilled person would know that the properties of a racemate and its isomers might be different. However, a possibility of finding the invention is not enough. The invention must be self-evident from the prior art and common general knowledge in order to satisfy the “obvious to try” test. That is not the evidence in this case. [emphasis added]

At its broadest, this holding would mean that – in the case of an enantiomer or other selection patent – the discovery of advantageous properties could be the foundation of a valid patent, as long as the properties were not predictable in the particular selection of compounds. Given that routinely-identified properties (such as toxicity, solubility, pharmacokinetic profile, etc.) are often unpredictable, it was unclear how this holding would be reconciled with previous jurisprudence suggesting that routine testing may not qualify as an inventive step.

Novo Nordisk addresses this seeming tension by clarifying that unpredictable but unsurprising properties are not necessarily a bar to a finding of obviousness.

The Court found that an enantiomer claim can be obvious even if the enantiomer’s advantages were unknown. In addition, the Court held that it was impossible to predict what the differences in the pharmacokinetic profiles of enantiomers would be before actually separating and testing them. Nevertheless, as of 1991, it was known that these differences could well exist, and that it was, therefore, important to test for them.

The Court held Cobalt’s allegation of obviousness justified even though the Court found that there was no clear preference for one enantiomer or the other expressed in the prior art, and that the advantages of the (S) enantiomer were not previously identified. The basis of this finding was that pharmacokinetic properties that differ between enantiomers would inevitably have been discovered as a result of testing that was a routine part of the state of the art in 1991.

The evolution of enantiomer science

In addition to refining the obvious to try test, this decision should make all patentees ask the question: “Are enantiomers patentable after 1991?”

In Sanofi, the SCC found that as of 1987 there was little motivation to pursue enantiomers. The relevant date in Novo Nordisk is in 1991. The Federal Court found it clear on the evidence that by 1991:

- the world had evolved and it was now the state of the art to separate and test enantiomers;

- techniques for separating racemates into their isomers were generally known; and

- testing enantiomers for differences in pharmacokinetic properties was a routine matter.

The evidence in this case included the fact of an enantiomer policy approved in 1989 by Dr. Karl Thomae GmbH – the patent owner – which confirmed that “A forced move towards the development of enantiomer-pure active substances results out of the necessity to minimize development time and costs, as well as in order to comply with the current state of the art. The development of racemates will thus only still be justifiable in exceptional circumstances” [emphasis added].

This decision also highlights the importance of strong evidence of how drug development was actually undertaken at the relevant time.

The Court specifically contrasted the evidence presented by Cobalt in this case to that presented in the recent Lundbeck case, where the evidence was found to be “appallingly thin”. In Novo Nordisk, Cobalt’s experts all had significant drug development experience – none was simply an academic talking head.

* * *

Moving forward it will interesting to see how other Federal Court decisions grapple with the issue of unpredictable but not surprising properties of compounds claimed in selection patents.

Sana Halwani
August 4, 2010

* Technically, as it was a PM(NOC) application, we argued that the plaintiff had not rebutted our assertion that the patent was obvious, which is not the same as the court declaring the patent invalid. The '851 patent still exists in Canada and can be asserted against anyone, including Cobalt. The valuable part of the win in purely Canadian terms is that Cobalt now has permission from Health Canada to market generic repaglinide in Canada - it has received a Notice of Compliance.

Canadian provinces team up on drug purchases

Interesting though perhaps not surprising development on the drug purchasing front: the Canadian provinces have "teamed up" to purchase drugs for their respective provincial drug plans.

Globe and Mail article

"The premiers unveiled plans on Friday to set up a national agency that would be responsible for purchasing $10-billion in prescription drugs a year as well as medical supplies and equipment.

Having one entity responsible for drug purchases for all 13 provinces and territories would lower costs on a major contributor to the growing tab for health care.

Rising health-care costs dominated the premiers’ two-day annual meeting in Winnipeg. For the first time as a group, the premiers tackled the question of whether the country can sustain a system many Canadians appear to take for granted."

Easier said than done, I suppose - but its maybe inevitable. A) if purchasing power lowers drug prices, presumably more purchasing power can lower them further, and B) this can eliminate two problems: beggar-thy-neighbour provincial drug policies, and changes in one province's policies having unintended negative results in other provinces (i.e. negative externalities, for the economically-inclined ;) ).

A long term concern, however, is whether this will stifle policy and regulatory innovation. With parallel provincial programs comes the opportunity for one province to take the initiative and try something new - maybe it works, maybe it doesn't but at least something new was tried. And if it worked, then all the other provinces could copy it. With a national program, however, there is less scope for experimentation (i.e. Canada can only run one "experiment" at a time), and an innovation might need to gain wider acceptance before actually ever being implemented. This may not make any difference in a 2-3 year timeframe, but over a 20 year timeframe? This may end up not being a good idea in the long run.

Friday, July 9, 2010

NTP continues to sue

Also in the news: NTP, the company that secured a $612.5 million settlement from Research In Motion (RIM) in 2006, has sued six smartphone manufacturers - Google, Apple, Microsoft, HTC, LG Electronics and Motorola.

Interestingly (for lawyers), the suit has been launched is in the Eastern District of Virginia.

And now, B.C.

B.C. has also moved to cut the price of generic drugs.

The B.C. government will announce on Friday that it will cut the price of generic drugs by reducing rebates manufacturers pay to pharmacies in return for selling their products, industry sources familiar with the plan said. Unlike Ontario, British Columbia will not abolish the rebates altogether, the sources said.

As a further concession, the province’s nearly 1,100 drug stores will receive government funding to help them provide new pharmacy services, including medication therapy for customers, the sources said.

According to the article, the B.C. government has no stomach to get into a fight with their pharmacists, so these moves are relatively mild compared to Ontario.

Saturday, July 3, 2010

Quebec moves to reduce generic drug prices; the "patent cliff"

Two interesting articles. First, Quebec has applied its regulations requiring it to pay the lowest price available in the other provinces for generic drugs, slashing to 25% of the brand price to match Ontario regulations.

Quebec's rules have always struck me as a bit "beggar-thy-neighbour". In any case, analysts are questioning how this will affect the profitability of Jean Coutu, and Pharmascience is musing about cutting jobs in Quebec.

Here's a column that has a discussion of the "patent cliff" - when many patents for blockbuster drugs will expire around the same time, slashing their companies' revenues. The article specifically discusses Lipitor/Atorvastatin

Friday, June 11, 2010

ON Government seems to have "won" pharmacy war

This Globe and Mail article has a pretty good summary of where things have ended up in the generic drug/pharmacy conflict with the ON government.

"Ontario outplayed the pharmacies in game of hardball."

The Adam Radwanski lead:

They spent millions upon millions of dollars mailing flyers, commissioning polls, buying up ad space and busing protesters around the province.

For their trouble, Ontario’s pharmacies might have emerged in even worse shape than they appeared to be in two months ago.

Few insiders seriously expected that the provincial Liberals would back down on the basics of their plan to cut generic drug prices in half by eliminating the “professional allowances” – the large sums paid by manufacturers to retailers in return for selling their products, which is where pharmacies have until now made much of their money. But there was speculation that the government would offer concessions aimed at increasing other forms of revenues.

Instead, with the revised reforms announced Monday, Health Minister Deb Matthews barely conceded anything at all.

A quick review of the legislation (which will go into effect July 1) suggests the columnist is right. In particular, there is a section clarifying that the ban on rebates does not include benefits provided with ordinary commercial terms (such as a discount for promptly paying your bill or a discount for large orders). This is potentially a huge loophole for pharmacies to re-institute huge rebates, but the OBDA regulations will now cap this at 10% of the of the value of the produces based on the drug benefit price in the formulary.

Regulations on prices reducing the price of generics to 25% on the public side (i.e. paid by the ON government through various programs) take effect on July 1; the private prices (paid by the public, often the public's insurers) are to be introduced in phases culminating in 2013.

There has been some increase in the dispensing reimbursement aimed at assisting pharmacies in rural/under-serviced areas.

An interesting question is how much other provincial governments react to this. Ontario and Quebec have put in very aggressive regimes - and there is some concern that national-chain pharmacies may try to recoup losses in Ontario by increasing their reimbursement elsewhere. And of course, why would provincial government X want to pay twice as much for generic drugs than the Ontario and Quebec governments? I would imagine health ministries in other provinces have already considered their positions and are busy implementing their reaction.

Thursday, June 10, 2010

Another tidbit on IP and trade deals

A footnote from my book:

Braithwaite and Drahos state that business regulatory contests are fought at the level of principles rather than details because “the informational demands of rule systems would make any contest at this level intolerably complex. Trade negotiators cannot, for example, walk into rooms in Geneva armed with their respective Telecommunications Acts under their arms and say to their counterparts ‘this is what we want.’ Often they will have very little idea about the details of their domestic systems. (One US trade negotiator told us that US trade people were ‘ignorant’ of intellectual property law. The US overcame this by sending several intellectual property specialists as part of its negotiating team on TRIPS.)”. Braithwaite and Drahos, GBR, supra note 13 at 527. Without the knowledge and detailed pre-existing discussions in the WIPO and other contexts, the TRIPs Agreement could not have achieved its high level of detail

In other words, Braithwaite and Drahos state that trade negotiators can't get too detailed in their negotiations... and then immediately note that Intellectual Property is an exception.

Assuming you agree with that... the next question is why is IP different?

One answer may be the presence of WIPO, where detailed international discussions do take place. In other words, there is intellectual capital - a consideration of the details of possible international IP agreements - present in another international institution that the WTO or other trade negotiators can draw on.

Another answer may be that since international cooperation in IP is driven by private interests who have an interest in their governments cooperating... the governments are forced down the path of a more detailed consideration of IP than in other areas.

This doesn't strike me as persuasive. There are lots of other areas in international economic agreements where governments are pushed towards cooperation by their national industries, but as noted by Braithwaite and Drahos they don't lead to considerations of the details of Telecom law, or whatever. If its in the interests of industry to have detailed IP treaties, I don't see why its not also in their interest to have detailed treaties in other areas.

Another answer - the one I like right now, though ask me again tomorrow ;) - is that it has to do with the inherent nature/history of the subject matter of the agreement - intellectual property. Its not the same as negotiating international agreements in Telecom, or the postal service, or tariffs, or ozone depleting chemicals or competition law (though its closer to that) or ... (you get the idea :) )

OK, but can I be more specific? and doesn't this just overlap with the first two suggestions anyway?

- IP is the subject-area with perhaps the longest history of international cooperation - unsurprisingly, it has developed the greatest detail in its consideration

- the nature of IP is such that general agreements are meaningless without the details

- in the absence of the ability to meaningfully write down core patent law principles, countries are forced to overly-detail the edges? (that doesn't strike me as right)

- a lack of trust between countries on IP matters? (but why more in IP than other areas?)

- very different domestic understandings of IP imply that detailed international agreements have to be concluded for everyone to understand (and accept) what they are agreeing to?

- some sort of capture of the USTR story?