On May 27, 2014, the Federal Court released two related
decisions, Sandoz Canada Inc. v. Canada (Sandoz) and
Ratiopharm Inc. (now Teva Canada Limited) v. Canada
(Ratiopharm) dealing with the jurisdiction of the Patented
Medicine Prices Review Board (PMPRB) over generic drugs and,
arguably, any genericized drug.
Under section 2 of the Patent Act (Act), a patentee is
a person entitled to the benefit of a patent. Similarly, a
"patentee" under section 79(1), in respect of an
invention pertaining to a medicine, "includes, where any other
person is entitled to exercise any rights in relation to that
patent . . . that other person in respect of those rights."
The PMPRB decided in each of the two decisions that its
jurisdiction extended to generic manufacturers. Each of Sandoz and
Ratiopharm appealed the Board's decision to the Federal
The decisions of the Federal Court overruled the PMPRB's
finding that Sandoz and Ratiopharm each fell within the scope of a
patentee, and were therefore subject to the PMPRB's pricing
control regime. The Court also held that the definition of
patentee, were it to extend to generic companies, would exceed the
limits of federal jurisdiction over pricing of medicines and expose
the legislation to a constitutional attack. In the decision in
Sandoz, this concept was explained as follows:
In my view, the mere fact that a
subsidiary generic company sells a version of a patented medicine
is insufficient to bring it within the definition of a patentee.
Usually, a generic company is not entitled to the principal benefit
of a patent—an exclusive monopoly to make, use, or sell the
patented product. Nor can a generic company typically exercise
rights in relation to a patent held by another company. Before the
patent expires, a generic company can enter the market with a
license from the patent holder, or with the patent holder's
permission, or by successfully challenging the patent. In none of
these scenarios does the generic company receive the exclusive
benefits and rights that inure to patent holders.
On the definition of patentee, Justice O'Reilly appears to
have distinguished entities who are able to assert a monopoly due
to the patent and those who are able to benefit from the patent. On
a broad reading, this finding indicates that once an innovative
"brand" drug has been genericized, the brand manufacturer
would no longer be under PMPRB jurisdiction as there is no longer a
monopoly on the drug.
On June 25, 2014, the Attorney General of Canada (on behalf of
the PMPRB) filed notices of appeal from the decisions of Justice
O'Reilly. We will keep you apprised of developments as these
cases move forward.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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