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Canada’s Recent Supreme Court Decision Supports Innovation

As the Supreme Court's decision concluded, "the Promise Doctrine is incongruent with both the words and the scheme of the Patent Act."

07/21/2017 17:03 EDT | Updated 07/21/2017 17:03 EDT

By Declan Hamill, Vice President, Legal, Regulatory & Policy of Innovative Medicines Canada

On June 30th, the Supreme Court of Canada released a Judgment that is good news for innovators. In a unanimous decision in the case of AstraZeneca vs. Apotex, the Court rejected a legal theory known as the "Promise Doctrine" which had been used by generic drug manufacturers to challenge patents held by innovative pharmaceutical companies. As the Supreme Court's decision concluded, "the Promise Doctrine is incongruent with both the words and the scheme of the Patent Act."

Dennis Macdonald via Getty Images
The Supreme Court building in Ottawa.

The doctrine itself was not the result of any federal law or regulation - rather, numerous lower court challenges led to its development. Given that the Promise Doctrine was created by interpretations handed down by judges, the conventional remedy was for the Supreme Court to fix the problem, and the Court rose to the occasion.

The Promise Doctrine allowed parties to challenge the validity of an innovative medicine patent if the original patent filing failed to predict or live up to the "promises" made in the application. Since 2005, 28 patents have been invalidated in cases involving the Promise Doctrine. The legal challenges were almost exclusively launched by generic drug companies with a financial stake in the outcome. They argued that another company's patent should be invalidated because it failed to meet the "promise" set out in a patent filing drafted many years earlier by someone with no possible knowledge of the Promise Doctrine.

While the Court's recent decision will not bring back the previously invalidated patents, it will make future utility-based attacks on patents far more difficult, since it restores the previous "mere scintilla" of utility standard and notes that the policy purpose of the requirement is "to prevent the patenting of fanciful, speculative or inoperable inventions."

The irony at the heart of the Promise Doctrine is that the companies challenging the pharmaceutical patents of others were motivated by the opportunity to make profits by copying and then selling medicines based upon allegedly "useless" patents. Meanwhile in the real world, the evidence of their usefulness was overwhelming: the medicines had been approved as safe and effective by Health Canada, deemed valuable compared against existing treatments by health technology organizations such as the Canadian Agency for Drugs and Technologies in Health, listed on government and private sector drug formularies, and finally prescribed by healthcare professionals and relied upon by patients. It is perhaps not surprising that the criticism of the doctrine both at home and abroad has been withering, with one recent commentator referring to it as "Canada's long running patent fiasco".

This Supreme Court of Canada decision is being well received by innovators. Certainty and predictability are important to companies making substantial investment decisions based on time limited patents. Certainty and predictability are even more prized in the pharmaceutical world, where a primary patent often underpins an approximately one billion dollar investment made over the course of a complex, multi-year research and regulatory process, which often leaves the company with between 6 and 8 years to both recoup its investment and to make enough to support further research and development of new medicines. If the already limited time on the market is shortened due to a legal challenge based upon a flawed legal theory, the effect can be devastating to the innovative company. It also sends an unfortunate signal to others that Canada may not be an environment that respects and protects life sciences innovation. In a competitive market for global investment, high profile reputational issues detract from Canada's other internationally recognized life sciences strengths, especially when one country's legal system substantially deviates from the practices of other developed countries - as was the situation here.

By invalidating the patent protecting what is clearly a useful medicine, the original innovator company is being deprived of its investment and the fruits of its labour. This cannot possibly be good for life sciences innovation.

An argument has been made that strong intellectual property protection is an obstacle to innovation by smaller Canadian companies. This runs counter to the research that shows that strong intellectual property protection actually incentivizes investments, helps smaller businesses, and brings new technologies to Canada. That's why so many Canadian business groups and life sciences organizations have consistently backed competitive and reliable intellectual property protection.

Navdeep Bains, Canada's Minister of Innovation, Science and Economic Development, recently identified innovation as a national priority, and the health/biosciences sector was flagged as an important economic sector for Canada in the 2017 Federal Budget. Life sciences investments will help grow our economy, provide opportunities for our young people, generate more clinical trials, and improve health outcomes. And with respect to the looming renegotiation of NAFTA, the timely demise of the promise doctrine has substantially removed a major irritant in Canada's trade discussions with the United States.

Canada brings many strengths to the table when it comes to life sciences: a strong talent base, an internationally respected public health system, and great universities and research hospitals. In this context, the Supreme Court's complete rejection of the Promise Doctrine is good news, since it will bring more stability to our life sciences environment to the benefit of innovators, and sends a signal internationally that Canada's judicial system, at the highest level, recognizes that innovation deserves reasonable and equitable protection.

Declan Hamill is Vice President, Legal, Regulatory & Policy of Innovative Medicines Canada, the national association representing the voice of Canada's innovative pharmaceutical industry. Innovative Medicines Canada was a co-intervener in support of AstraZeneca Canada in the case discussed in this article. He is a graduate of National Program of the McGill University Faculty of Law, and also holds degrees from York University and from the University of Toronto.