On September 26, 2014, after five years of negotiations, the Comprehensive Economic and Trade Agreement (CETA) consolidated text was finally released to the public. The consolidated text confirms improvements to Canadian patent protection, as previously signalled in the October 2013 Agreement-in-Principle, and unofficial leaked text released in August of 2014. Chapter 22 of the consolidated CETA text addresses the following key reforms impacting the innovative pharmaceutical industry, which Canada has stated it intends to implement:
- Patent term restoration capped at a maximum of two years for eligible "basic patents"; and
- Equal access to effective appeal rights in court proceedings under the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations).
CETA is expected to be ratified by Canada and the European Union (EU) in 2016. Additional steps will be required to implement CETA into national legislation.
Patent term restoration
The consolidated CETA text provides greater official insight into the introduction of patent term restoration in Canada.
- Patent term restoration will be available to eligible "basic patents" (defined as patents which protect a product, a process to obtain a product, or an application of a product). In the case where a product is protected by more than one patent, patent term restoration will only apply to a single patent selected by the person requesting the patent term restoration or by agreement between the patent holders (where the patents are not owned by the same person).
- A "product" means the active ingredient(s) of a "pharmaceutical product", which is defined to include: a chemical drug, biologic drug, vaccine or radiopharmaceutical. An eligible "product" protected by a "basic patent" must hold the Party's first marketing authorisation for the product. A "product" is not eligible if it has already been the subject of a period of patent term restoration.
- The patent restoration term will be calculated as the difference between the filing date of the patent application and the date of product market approval, minus five years, to a maximum of two years. Canada did not adopt the longer five year maximum term available under the EU regime (and permitted under CETA).1
- The patent restoration term will take effect at the end of the lawful patent term. There is discretion to decrease the term based on "unjustified delays" in pursuing product market authorization.
- A time limit of no less than 60 days may be applied to the submission of requests for patent term restoration. This time limit will commence from the date of the first product marketing authorisation, or the date of the grant of the patent if the patent has not yet issued at the date of marketing authorisation.
- There is also discretion to limit the scope of patent term restoration protection by adopting export exemptions.This provision is intended to permit the possibility of Canadian-made generic drug exports during the patent restoration period in order to "temper the impact on the generic industry and its competitiveness in the important United States market".2
Patent term restoration is not expected to be applied retroactively to pharmaceutical products that are already approved and on the Canadian market.3
Effective right of appeal
Court proceedings under the PM(NOC) Regulations are intended to summarily resolve patent disputes between innovative and generic drug manufacturers in advance of generic drug market entry. As the law presently stands, only generic drug manufacturers have an effective right to appeal an adverse decision. When a PM(NOC) proceeding is dismissed against an innovator, the innovator's appeal becomes moot once the impugned generic product is issued a notice of compliance, which invariably occurs within a matter of days.
The CETA text provides that "all litigants are afforded equivalent and effective rights of appeal" in the context of "patent linkage" mechanisms such as the PM(NOC) Regulations. It remains to be seen how the right of appeal will be provided in practice.
CETA negotiations were launched in May of 2009 at the EU-Canada Summit. In October of 2013, we reported that Canada and the EU reached an Agreement-in-Principle on improvements in patent protection including addressing unequal appeal rights for innovators under the PM(NOC) Regulations and the introduction of a maximum two year term of patent term exclusivity for eligible patents. The possibility of extending the scope and term of data protection available for pharmaceutical products in Canada to mirror the more extensive EU regime was also explored in negotiations, but ultimately rejected by the Canadian Government.
1 CETA Agreement-in-Principle (October 18, 2013) at p. 19 at http://www.actionplan.gc.ca/sites/default/files/pdfs/ceta-technicalsummary.pdf.
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