Eli Lilly sues Canadian government for “unfair” patent rulings
Eli Lilly has filed a Notice of Arbitration (NOA) against the Canadian government, alleging recent decisions that invalidated patents covering its Zyprexa and Strattera drugs were in breach of the North American Free Trade Agreement (NAFTA).
The US-based pharmaceutical company claims that the courts’ decisions violate Chapter 11 of NAFTA, which is intended to protect foreign investors, and seeks CDN $500 million ($485 million) in damages.
Lilly filed a Notice of Intent to submit an arbitration claim to Canada in June this year; the parties failed to settle the dispute through negotiation. It issued its NOA on September 12.
According to the NOA, the Canadian Patent Office granted patents for attention deficit hyperactivity disorder drug Strattera and antipsychotic medicine Zyprexa in the 1990s.
The Canadian courts invalidated the patents in the grounds that they were not “useful”, “notwithstanding that Strattera and Zyprexa were approved as safe and effective by Health Canada and were used by hundreds of thousands of patients in Canada, and despite the fact that Lilly’s competitors sought to replicate Lilly’s commercial success by selling copies of the very same medicines,” the NOA said.
The courts took away the patents applying the ‘promise utility doctrine’, where the judge determines whether the utility of the patent ‘promised’ in the application has been fulfilled.
Lilly said the doctrine is “contrary to Canada’s treaty obligations to protect patent rights.”
Doug Norman, general patent counsel of Eli Lilly, said: “Patent decisions in Canada over the last decade not only fly in the face of long-established international standards, but they’re subjective and completely unpredictable. The standard seems to be that there is no standard.
“The promise doctrine is a creation woven from federal court decisions made since 2005. It’s impossible to know what specific ‘promise’ can be implied from an application, and how much data are needed to support it. If this pattern persists, the already challenging business of medical innovation will become all the more difficult in Canada.”
Noel Courage, partner at Bereskin & Parr in Toronto, said that Canadian courts are “finding their way” with the doctrine, and that “there has been an element of inconsistency” in patent cases.
He said: “In recent years Canadian courts have been relying on the promise doctrine, and the standard for utility in Canada has become different than in other countries of the world.”
He added that while some patent case decisions “have not been so good”, with time they will become “more moderate.”
