Strengthening Intellectual Property Protection in Canada

Takeaway: Through rejection of the “Promise Doctrine” and other recent rulings by the Supreme Court of Canada, there appears to be a new trend of increasing intellectual property protection in Canada, which suggests increasing confidence in R&D and IP investment in Canada.

There has been concern in recent years about the strength of IP protection in Canada. Much of this concern has been directed at the “Promise Doctrine.” A recent series of holdings in the federal courts of Canada suggest a reversal of the “Promise Doctrine” and that an overall increase in intellectual property protection in Canada could be a continuing trend. The “Promise Doctrine,” practiced in Canadian courts in past years, holds that a patented invention must hold up to its “promise” of utility, object, goal, or intended utility, in a somewhat specific manner or risk invalidation. A realistic scenario that has impacted pharmaceutical companies involves patents on investigational drugs. If a patented drug intended to treat a certain illness does not in fact treat that illness effectively, but rather is seen to be effective in treating a separate illness, the drug would not be fulfilling its exact “promise” and is at risk of invalidation. Such uncertainty of intellectual property protection and a string of invalidations of patents held by U.S. companies has led to increasing concern for the safety of R&D investment and overall intellectual property investment in Canada.

This concern can be seen in the 301 Report of the Office of the United States Trade Representative (UCTR) for 2017. The 301 Report identifies barriers to trade with the United States resulting from IP laws and regulations, usually from inadequate protection of IP or from limited fair access of U.S. companies that heavily rely on IP to the foreign market. It expresses concerns for invalidations of “valuable patents held by U.S. pharmaceutical companies on utility grounds by interpreting the ‘promise’ of the patent and finding that insufficient information has been provided in the application to substantiate that promise.” It is unclear how applicants and patent holders can meet that standard, and it is reported that unpredictability in the “Promise Doctrine” severely harms incentive for investment.

In June, the Supreme Court of Canada (SCC) evaluated and clarified the “Promise Doctrine,” in AstraZeneca Canada Inc. v. Apotex Inc. (2017 SCC 36). The court recognized that “[the] Promise Doctrine risks, as was the case here, for an otherwise useful invention to be deprived of patent protection because not every promised use was sufficiently demonstrated or soundly predicted by the filing date.” The SCC ultimately determined that the “Promise Doctrine” was not appropriate for evaluating patents. Such a decision removes the importance of promised and demonstrated utility in enforcing patents, which decreases the likelihood of patent invalidation given utility issues and strengthens IP protection in Canada.

Additionally, the SCC had the recent opportunity to further strengthen IP protection in Canada in the June 2017 decision in Google Inc. v. Equustek Solutions Inc. (2017 SCC 34). As a part of the remedy, the court granted a worldwide interlocutory injunction against Google, preventing Google from displaying certain material from Equustek Solutions on their websites internationally. While Google argued that the injunction should have only applied in Canada, the strength of the decision further demonstrates the increase in IP protection through issuance of a worldwide interlocutory injunction.

Another recent example of an increase in IP protection comes from the Dow Chemical Company v. Nova Chemicals Corporation (2017 FC 637). In this case, over $644 million in damages was granted, which is by far the largest award in the history of patent infringement in Canada. The award included pre-grant and post-grant damages as well as “springboard profits.” Springboard profits are meant to compensate for the advantage an infringer may receive by entering the market before the expiration of the patent, an advantage that would not have occurred had the infringer not infringed on the patent. It is assumed that the patent holder would otherwise have been more dominant in the market. Overall, the case shows the flexibility in how Canadian courts will punish an infringer and are trying to strengthen IP protection in Canada.

Taken together, these recent examples have supplied Canadian courts with precedent increasing patent strength and strengthening the enforcement of intellectual property rights. If this trend continues, increased confidence for R&D investment is expected.