Canada: Experimental Use Exception To Patent Infringement In Canada

Last Updated: November 2 2005

Article by Sheldon Burshtein, ©2005 Blake, Cassels & Graydon LLP

This article was originally published in Blakes Bulletin on Intellectual Property, October 2005.

Significant research and development is conducted in Canada, especially in the biotechnology and pharmaceutical industries. Therefore, there has been much interest in a recent United States decision on experimental activity in the context of potential liability for patent infringement and the corresponding position in Canada.

United States Decision

In a much anticipated decision, the United States Supreme Court held that the use of a patented compound in preclinical studies is exempt from patent infringement where there is a reasonable basis for believing that the compound could be the subject of a regulatory filing to the United States Food and Drug Administration (USFDA) or where the experiment may produce information for use in a USFDA submission: Merck v. Integra Lifesciences. Merck funded research by the Scripps Research Institute on potential anti-cancer drugs, some of the most promising of which made use of a peptide sequence that Merck supplied but which had been patented by Integra. Tests identified one of these drugs as a useful anti-cancer medicine that appeared to be worth testing on humans. When Merck sought approval from the USFDA, Integra sued Merck and the researchers for patent infringement.

Under United States law, any person who makes, uses or sells a patented product without authorization is ordinarily liable for infringement, but it is not infringement to make or use a patented invention "solely for uses reasonably related to the development and submission of information under a federal law which regulates the manufacture, use or sale of drugs or veterinary biological products". A person who conducts research on new drugs must provide experimental data to the USFDA to obtain approval to perform clinical tests of the drug on humans. If such clinical tests are successful, approval must then be sought from the USFDA to make and market the drug in the United States.

The United States Supreme Court held that use of a patented compound in research does not constitute patent infringement, at least where the researcher has a reasonable basis for believing that the compound may work, through a particular biological process, to produce a particular physiological effect, and uses the compound in research that, if successful, would be appropriate to include in a submission to the USFDA. The exempt activity need not be related to safety, but may also be directed to other areas of inquiry, such as efficacy, toxicology or pharmacological, pharmacokinetic or biological properties. The activity may be exempt even if the results of the research are never included in a USFDA submission. The ruling creates a fact-based standard that requires courts to determine whether a person reasonably believes that its research is relevant to seeking USFDA approval. The Court remanded the case for a determination of whether the research in this case satisfied the legal standard.

However, the Court said that the exemption does not apply to all experimental activity. Specifically, the Court held that basic research on a compound, performed without a particular reasonable belief that the compound will cause a particular physiological effect that the research is meant to induce, is not necessarily related to the development and submission of information to the USFDA. The Court expressly declined to express a view as to whether the exemption applies to the use of patented research tools in the development of information for the regulatory process.

Canadian Position

In 1993, the Canadian Patent Act (the Act) was amended to include a statutory exemption from infringement which is almost identical to that of the United States law. The Act provides that it is not infringement to make, use or sell a patented invention "solely for uses reasonably related to the development and submission of information required under the law of Canada, a province or a country other than Canada that regulates the manufacture, construction, use or sale of any product". The wording "solely for uses reasonably related to the development and submission of information under ... law" is identical to that in the United States legislation, so the holding and other comments in the Merck decision may be equally applicable in Canada. It is worth noting that, unlike the United States exemption, the Canadian exemption is not limited to drugs and is also available for research in Canada for a submission to a foreign regulatory agency, such as the USFDA.

The Canadian provision goes on to say that the statutory exemption does not affect any exception to a patent right that exists at law in respect of acts done: (i) privately and on a non-commercial scale; (ii) for a non-commercial purpose; or (iii) in respect of any use, manufacture or sale of the patented invention solely for the purpose of experiments that relate to the subject matter of the patent. This merely codifies the pre-existing judicial exception for experimental use.

The leading decision on the judicial exemption is that of the Supreme Court of Canada in Micro Chemicals v. Smith Kline & French Inter-American Corp. Micro Chemicals arose in the context of an application for a compulsory licence under a drug patent. Prior to the grant of the license, Micro made a small amount of the drug to enable it to state in its compulsory license application that it had made, and was capable of making, the product by the patented process, as was then required by the Act. Then, Micro made several batches of the product to explore the procedure and conditions of manufacture, to get increased yields, and to establish that it could produce the product economically.

The Supreme Court of Canada held that, in this activity, Micro’s activities during both of these periods were within the judicial experimental use exception. Even though Micro’s experiments were carried out, not for the purpose of improving the process, but to enable Micro to produce the patented substance commercially as soon as the compulsory license could be obtained, they did not constitute infringement. The use Micro made of the patented substance was not for profit, but to establish that it could manufacture a quality product in accordance with the specification. Such experimentation and preparation is not an infringement.

The Supreme Court focused on the fact that, in this activity, Micro was not making the patented substance for commercial production and sale, but rather was acting prudently to establish whether it could manufacture a quality product in accordance with the specification of the patent. Consequently, it appears that, to qualify under the common law experimental use doctrine in Canada, it is the purpose for which the experimental use is conducted that is determinative. Micro’s subsequent commercial activities conducted prior to settlement of the terms of the license were not exempt.

In more recent decisions, it has been held that, where use of the invention does not proceed beyond the experimental and testing phrase, the activity is not an infringing use. Until a person, at some stage of its product development, decides to finalize a particular product and takes steps to manufacture, promote and sell it, use of a patented invention does not constitute patent infringement.

Therefore, in Canada, neither the use of a patented product or process to obtain information to be used for a regulatory approval process, nor the use, manufacture or sale of a patented product or process solely for the purpose of experimental or testing activity prior to finalization of a commercial product for manufacture, promotion or sale is an infringing use. The Canadian exemption appears to extend to basic research.

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 Mondaq.com.

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

Events from this Firm
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions