Canada: Pharma In Brief - Canada: USTR Slams Canada Over The Treatment Of Pharmaceutical Patents

Publication: 2013 Special 301 Report

Author: The Office of the United States Trade Representative  

Nature of Report: Annual Review of the state of intellectual property rights with US trading partners

Date of Report: Released May 1, 2013


On May 1, 2013, the United States Trade Representative ("USTR") released its annual IP report for 2013. Canada has been placed on the "Watch List" for 2013 due to "serious concerns" over the treatment of pharmaceutical patents. These concerns relate to the lack of appeal rights for innovative companies under the Patented Medicines (Notice of Compliance) Regulations (the "PM(NOC) Regulations") and what the USTR describes as "the impact of recently adopted heightened utility requirements". These new requirements are problematic, as they depart from what Canada agreed to implement in NAFTA and TRIPS.

Canada placed on the USTR "Watch List"

The USTR Report raises concerns related to IP protection, enforcement, and market access in forty-one countries.  In placing Canada on the "Watch List", the Report cites Canada's mistreatment of pharmaceutical patents as a principal area of concern:

"With respect to pharmaceuticals, the United States continues to have serious concerns about the availability of rights of appeal in Canada's administrative process for reviewing regulatory approval of pharmaceutical products and also has serious concerns about the impact of the heightened utility requirements for patents that Canadian courts have been adopting recently.  The United States looks forward to continuing its close cooperation with Canada on IPR issues, including through the TPP negotiations."

New Concern over Heightened Utility Requirements

Under the Canadian Patent Act, an "invention" must be new, inventive and "useful" in order to be patentable.  While usefulness is not defined in the Patent Act, Courts held throughout the twentieth century that an invention only needed to have a "scintilla of utility" to be patentable, unless something more was promised.  Utility was examined by the Patent Office and assessed by the Court at the date the patent was challenged.1 This all changed in 2002 in the seminal decision of Apotex Inc. v. Wellcome Foundation.2 In that case, the Supreme Court of Canada held that the utility of a patented invention must be demonstrated or soundly predicted as of the filing date.  While the doctrine of sound prediction was intended to protect new and useful inventions, the doctrine has morphed into a new and often successful ground for attacking pharmaceutical patents.  This has been achieved by requiring that the factual basis and sound line of reasoning to support a sound prediction must be disclosed in the patent application, even if it is based on common general knowledge.  This disclosure requirement is not found in the Patent Act.

In addition, the utility of pharmaceutical inventions in Canada is assessed against the "promise of the patent", a subjective construct that is not based in the Patent Act and is determined by the Court at trial upon reading the patent as a whole, rather than by examining what is claimed. In several cases, the "promise" of pharmaceutical patents has been elevated to a level required for regulatory approval (i.e., clinical evidence of safety and efficacy), even though the Supreme Court held in Wellcome, supra, that this is not appropriate. Determining the promise has become a very contentious and unpredictable issue in Canadian patent litigation.

By adopting this two-pronged approach (i.e., assessing the "promised utility" as of the "filing date"), Canadian courts have struck down a number of pharmaceutical patents in recent years, even though the claimed medicine is clearly useful in fact.  This has led to the approval of generic drug products in Canada many years prior to patent expiry and well-ahead of other countries.

Canada is alone among developed nations in imposing these new utility requirements, which are widely considered to be inconsistent with Canada's obligations under the North American Free Trade Agreement ("NAFTA").  Article 1709(1) of NAFTA states that a party (i.e. the Government of Canada) must grant a patent for inventions that are new, result from an inventive step (i.e. non-obvious), and are capable of industrial application (i.e. useful). Pursuant to NAFTA, Canada is not permitted to add further substantive conditions to the grant of patents.  The USTR's comments come at a time when challenges to Canada's new utility requirements have been raised in a NAFTA Chapter 11 proceeding initiated by Eli Lilly against the Government of Canada and in various scholarly publications.

Continued Concern over Innovators' Lack of Appeal in PM(NOC) Proceedings

The USTR is concerned that innovative pharmaceutical companies do not have an effective right of appeal under the PM(NOC) Regulations. While patentees can file an appeal from the dismissal of an application under the PM(NOC) Regulations, any such appeal is rendered "moot" if the Minister of Health approves the generic product before the appeal is decided, which is usually the case, or if the patent at issue expires. Conversely, generic manufacturers can exercise their rights of appeal without restriction, including to the Supreme Court of Canada. This has led to a situation whereby decisions that are adverse to pharmaceutical patentees are effectively immune from appellate review and can operate as precedents effecting subsequent cases.

The USTR's concerns over the lack of appeal under the PM(NOC) Regulations was raised in the 2012 Special Report justifying Canada's listing on the "Priority Watch List" alongside the USTR's concerns over copyright piracy. While the USTR considered Canada to have made "positive" and "welcome" progress in its efforts to combat pirated and counterfeit goods, no effort has been made to address persistent calls to reform the PM(NOC) Regulations.

A Continued Call for Reform

Canada will remain on the USTR "Watch List" and its reputation for adequate and effective IPR protection and enforcement will continue to wane unless: (a) the Canadian Government addresses the concerms raised by the USTR related to the treatment of pharameutical patents; or (b) the Courts interpret the Patent Act in a manner that is consistent with NAFTA which IP provisions were also included in TRIPS.


1 Apotex v. Wellcome Foundation Ltd. (2000), 10 C.P.R. (4th) 65 at para 51 (F.C.A.).

2 Apotex v. Wellcome Foundation Ltd. (2002), [2002] 4 S.C.R. 153 at para 54.

The USTR 2013 report is available here:

Norton Rose Group

Norton Rose Group is a leading international legal practice. We offer a full business law service to many of the world's pre-eminent financial institutions and corporations from offices in Europe, Asia, Australia, Canada, Africa, the Middle East, Latin America and Central Asia.

Knowing how our clients' businesses work and understanding what drives their industries is fundamental to us. Our lawyers share industry knowledge and sector expertise across borders, enabling us to support our clients anywhere in the world. We are strong in financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and pharmaceuticals and life sciences.

We have more than 2900 lawyers operating from 43 offices in Abu Dhabi, Almaty, Amsterdam, Athens, Bahrain, Bangkok, Beijing, Bogotá, Brisbane, Brussels, Calgary, Canberra, Cape Town, Caracas, Casablanca, Dubai, Durban, Frankfurt, Hamburg, Hong Kong, Johannesburg, London, Melbourne, Milan, Montréal, Moscow, Munich, Ottawa, Paris, Perth, Piraeus, Prague, Québec, Rome, Shanghai, Singapore, Sydney, Tokyo, Toronto and Warsaw; and from associate offices in Dar es Salaam, Ho Chi Minh City and Jakarta.

Norton Rose Group comprises Norton Rose LLP, Norton Rose Australia, Norton Rose Canada LLP, Norton Rose South Africa (incorporated as Deneys Reitz Inc), and their respective affiliates.

On January 1, 2012, Macleod Dixon joined Norton Rose Group adding strength and depth in Canada, Latin America and around the world. For more information please visit

Norton Rose will join forces with Fulbright & Jaworski L.L.P on June 1, 2013, creating Norton Rose Fulbright a global legal practice with significant depth of expertise across the USA, Europe, Asia, Australia, Canada, Africa, the Middle East, Latin America and Central Asia.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.