Canada: CETA: Impact On Canada’s IP Regime

Last Updated: November 11 2013
Article by John Norman, Monique M. Couture and James Holtom

Most Read Contributor in Canada, October 2018

Introduction

While the precise terms of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) have not yet been published, on October 29, 2013, the Government of Canada tabled a technical summary of the agreement-in-principle. The summary included details of how CETA would impact Canada's intellectual property regime. Among other things, CETA stands to impact protections for pharmaceuticals with respect to patent term, appeal rights and data protection, as well as for trade-marks with respect to counterfeit goods and EU Geographical Indications. The technical summary assumes that CETA will be ratified in 2015.

Pharmaceutical Patents

Patent Term Restoration

Patent Term Restoration (PTR) is available in many industrialized nations, but not Canada. PTR will provide additional incentives to innovate for those innovative pharmaceutical companies whose drug approvals are "delayed" during the Health Canada regulatory marketing approval process. In those cases, patent protections may not be adequate. In particular, delayed drug approval means that the patent covering a drug may expire around the same time that approval is granted by Health Canada. CETA aims to lessen the impact of this problem by granting up to two additional years of Canadian market exclusivity beyond the expiry of any patents.

Application of PTR will not be retroactive; pharmaceuticals that are already approved for sale in Canada will not receive any additional protection as a result of PTR.

This change will require, minimally, either an amendment to the Patent Act or an amendment to the Food and Drugs Act. The enacting provisions may be embodied in an amendment to either act or, more likely, by Regulations made pursuant to the amendment. In the latter case, an amendment to either the Patent Act or the Food and Drugs Act will grant the regulation-making power necessary to create Patent Term Restoration Regulations.

Appeal Rights and Duplicative Litigation under the PM(NOC) Regulations

At present, within days of an innovator losing an Application under the Patented Medicines (Notice of Compliance) Regulations ("PM(NOC) Application") the generic is granted a Notice of Compliance, i.e., official approval to sell a drug in Canada. Canadian Courts have held that this renders any appeal by the innovative company moot. In short, the innovator may not appeal if it loses a PM(NOC) Application.

On the other hand, should the generic lose a PM(NOC) Application, the generic may appeal that decision to the Federal Court of Appeal and potentially even to the Supreme Court of Canada (for instance, Teva v. Pfizer (Viagra), 2012 SCC 60). CETA strives to introduce balance and fairness to the PM(NOC) Application process by granting the innovator a right of appeal, as similarly granted to the generic.

Currently, if the innovator loses a PM(NOC) Application, the usual course is to launch an action for patent infringement once the generic comes to market. Similarly, if the generic loses during the PM(NOC) Application process, it is open to the generic to initiate an action to impeach any pertinent patents. Both of these  actions proceed under the Patent Act.

The PM(NOC) Regulations currently prescribe a 24-month window during which the entire PM(NOC) Application must take place; after 24 months from the date the Application starts the generic will be issued a NOC. In the case of an appeal by the generic, the Federal Court will have decided that a NOC should not issue. Thus, the 24-month period is not implicated. However, any appeal by the innovator will almost certainly exceed the 24-month window. How CETA will address this issue is currently unknown.

For innovators appealing a PM(NOC) Application decision, the Federal Court will have decided that a NOC should issue to the generic. Another open question is whether the generic's NOC will be held in abeyance pursuant to a stay pending the outcome on appeal or, whether the generic's NOC will be revoked should the innovator succeed on appeal.

A stated goal of CETA is to prevent duplicative litigation, such as a PM(NOC) Application followed by a Patent Act action. While the final form of CETA is unknown, one possible way of preventing duplicative litigation is to require the loser at the PM(NOC) Application stage to elect either an appeal from the PM(NOC) Application or an action under the Patent Act for infringement (or impeachment). In that case, if the innovator loses the PM(NOC) Application, the innovator must elect between appealing that decision and the right to sue for infringement once the generic comes to market. It follows that if the generic loses the PM(NOC) Application, it too must elect between appealing that decision and bringing an action to impeach the relevant patents in rem.  Otherwise, the goal of preventing duplicative may not be achieved.

Another option would be for Canada to follow the U.S.'s lead and require a full action on the merits in lieu of a PM(NOC) Application as a condition for generic market approval. This would require the generic to commence an action to impeach the relevant patents in advance of being issued a NOC. This may require longer than the currently-prescribed 24-months.

These changes will require an amendment to the Patented Medicines (Notice of Compliance) Regulations. Since these regulations were enacted pursuant to a regulation-making power set out in s 55.2 of the Patent Act, no amendment to the Patent Act will likely be required.

Data Protection

CETA will enshrine Canada's current term of data protection (i.e., 6 years before a generic can file an Abbreviated New Drug Submission if it relies on the innovator's data, and 8/8.5 years before issuance of a Notice of Compliance to the generic).

The commitment to providing 8 years of data protection does not differ from current Canadian law. Thus, no changes are required to the Data Protection Regulations (DPR). However, CETA will prevent any amendments to the DPR that would decrease the term of protection to less than 8 years.

Trade-marks

Treaty Compliance

The trade-mark profession had speculated that CETA might require Canada to accede to the Madrid Protocol. However, in light of the technical summary released by the Government of Canada, this requirement does not appear to be part of CETA. In fact, Canada will not be required under CETA to take on any specific trade-mark treaty commitments. Rather, Canada has instead agreed to make "best endeavours" and "all reasonable efforts" to ensure compliance with international trade-mark agreements and standards (including the Singapore Treaty on the Law of Trademarks, and the Madrid Protocol). These "endeavours" have the goal of "encourag[ing] more effective trade-mark procedures".  

Counterfeit Goods

CETA will also include several commitments aimed at curtailing trade in counterfeit goods. Civil remedies and border enforcement rights will likely form much of Canada's obligations. These are already in line with Canada's anti-counterfeiting regime, and are in keeping with the proposals found in pending Bill C-8, the Combating Counterfeit Products Act, introduced to Canadian Parliament on October 28, 2013.

Bill C-8 has passed second reading, and is now before a Committee for review.  While this is an encouraging development in the fight against the counterfeit trade, concerns exist that further amendments to Bill C-8 may be required to enhance the effectiveness of Canada's anti-counterfeiting and anti-piracy regime as it relates to border enforcement, resource allocation, and the bearing of costs related to storage, handling and destruction of counterfeit goods.   Additionally, the offences, punishment and remedy provisions may need further revisions if brand owners are to rely on these provisions to enforce their rights in a pragmatic and meaningful manner.

Geographical Indications (GIs)

Under CETA, Canada will provide protection for 179 terms covering various foods and beer, in addition to those EU wines and spirits GIs currently recognized by Canada. The nature and scope of protection will vary depending upon the specific GI in question. Protection will not prejudice any existing Canadian trade-mark holders and will not impact customary names for plant and animal breeds.

CETA preserves the right to use common English and French names for food products.  For example, Canadian producers would be able to use English and French but not the German language for Black Forest ham. Terms that continue to be free for use in Canada include Valencia orange, Black Forest ham, Tiroler bacon, Parmesan, Bavarian beer, and Munich beer.

CETA also limits the GI rights provided to EU with respect to Asiago, feta, fontina, Gorgonzola and Munster. While current users are unaffected, future users will be able to use the names only when accompanied by expressions such as "kind," "type," style," "imitation" or the like.

CETA also allows Canada to maintain the ability to use components of multi-part terms. For example: "Brie de Meaux" will be protected, but the term "brie" can be used on its own;         "Edam Holland" will be protected, but the term "Edam" can be used on its own.

Ultimately, according to the technical summary of CETA, enforcement of GIs in Canada is expected to remain a private matter to be determined by the Courts. Commitments as to border enforcement of GIs are to be confirmed at a later date.

Copyright

It appears that Canada's copyright regime is compliant with CETA. The Recent Copyright Modernization Act effected significant amendments to the prior version of the Copyright Act and brought Canada into compliance with the 1996 World Intellectual Property Organization treaties: Copyright, and Performances and Phonograms.

Additionally, certain provisions regarding the term of protection, broadcasting, and others have been enshrined in CETA. As a result, no amendments to the Copyright Act are anticipated.

Plants

According to the technical summary of CETA, Canada's existing legal regime is compliant with CETA.  For example, CETA will not change the "farmers' privilege" to save and replant seeds of a protected variety on their own land under the federal Plant Breeders' Rights' Act.

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.

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