There were three notable substantive developments arising from
last week's Canadian Bar Association Annual Fall Competition
Law Conference and a speech and white paper issued by Canada's
Commissioner of Competition on September 23, 2014.
UPDATES TO INTELLECTUAL PROPERTY ENFORCEMENT GUIDELINES
On September 18, 2014, the Competition Bureau (Bureau) issued an
updated version of its Intellectual Property Enforcement
Guidelines (IPEG). The IPEGs were originally issued in
2000. This updated version is intended to bring the enforcement
guidelines into alignment with the Competition Act (Act),
which was subject to significant amendment in 2009. Like the
original iteration, the updated IPEGs distinguish between conduct
that involves the "mere exercise" of an intellectual
property right, and conduct involving an IP right that is something
In addition, in a speech delivered on September 23, 2014,
Commissioner John Pecman announced that the Bureau intends to issue
for public consultation a further update to the IPEGs in the
"near future." These further updated IPEGs will reflect
the "Bureau's enforcement position with respect to new
competition policy and IP issues that have arisen in recent years .
. . such as reverse-payment settlements and life-cycle management
strategies, as well as the conduct of patent assertion entities and
activity related to standard essential patents."
BUREAU POSITION ON REVERSE-PAYMENT SETTLEMENTS IN PHARMA
On September 23, 2014, the Bureau issued a white paper setting out how it proposes to
enforce Canadian competition law in the context of reverse-payment
settlements made between branded and generic pharmaceutical
companies. Most importantly, the white paper says that the Bureau
will consider using its criminal enforcement powers to prosecute
reverse-payment settlements where (i) the agreement is with respect
to markets or products that are not the focus of the patent
litigation or the conduct is beyond the scope of the patent, or
(ii) there is evidence that the agreement "is not implemented
in furtherance of a legitimate collaboration," such as where
"the evidence suggested that a payment was strictly to delay
or prevent entry." The white paper does not explain what
"strictly to delay or prevent entry" means, and does not
address a number of legal issues that would likely arise in a
litigated context (e.g., whether branded and generic firms can be
found to be "competitors" under the criminal provision of
the Act without examining the validity of the underlying patent).
The Bureau also says that it will utilize its enforcement
discretion to investigate reverse-payment settlements under the
civil provisions – s. 90.1 of the Act and, although less
likely, s. 79 of the Act – rather than the criminal
The white paper indicates the Bureau's intention to advocate
for "better information on patent settlements and the need to
explore approaches that could be adapted to Canada's regulatory
framework," and notes that "Canada's regulatory
framework needs to be strengthened to include a settlement
CORPORATE COMPLIANCE PROGRAMS
On September 18, 2014, the Bureau released a draft update to its bulletin on Corporate
Compliance Programs and requested feedback from stakeholders. The
bulletin sets out recommended steps for Canadian businesses to
assess their risk of violating the Act, and establishing and
maintaining a corporate compliance program to manage and reduce
such risk. The bulletin introduces an incentive program for
companies that are alleged to have contravened the criminal
provisions of the Act. Where such companies have applied for
leniency and possess a credible and effective corporate compliance
program, they may receive a discretionary reduction in their fine.
The possibility of a fine reduction on account of an effective
corporate compliance program would be a departure from the
Bureau's current practices for calculating fines in criminal
cases, and would differ from the current practices of the United
States Department of Justice and the European Commission.
Parties that wish to provide feedback to the Bureau on this
bulletin have until November 17, 2014 to do so.
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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