The Competition Bureau's new draft Intellectual Property
Recognize that IP and competition laws are complementary
Provide that "in the vast majority of cases" the
Bureau will review settlements of pharmaceutical patent litigation
as a civil matter, not as a criminal matter
Give insight into how the Bureau intends to apply Canadian abuse
of dominance rules to conduct involving standard essential patents
Are subject to a public consultation period; interested parties
are to submit comments on the draft IP Enforcement Guidelines by
August 10, 2015
On June 9, 2015, the Canadian Competition Bureau (Bureau)
released its draft
Intellectual Property Enforcement Guidelines (Guidelines) for
public comment. The Guidelines set out how the Bureau will assess
conduct concerning IP under the Competition Act (Act). The
Guidelines are the Bureau's first major revision to its
substantive enforcement policies in the IP area since 2000 and
reflect many of the developments that have occurred in the area of
IP and competition law these past 15 years.
According to the Guidelines, where conduct constitutes the
"mere exercise" of IP rights, the Bureau will only
scrutinize conduct under a special section of the Act if certain
conditions are met; otherwise it will not scrutinize the conduct.
That section permits the Bureau to refer a case to the Attorney
General, who is permitted to seek an order from the Federal Court
for, among other things, the voiding of a licence and the mandating
of a licence.
However, many types of conduct, including different forms of
licensing, the transfer of rights, and even the non-use of IP
rights may not constitute a "mere exercise" of IP under
the Guidelines. Where conduct constitutes "something
more" than the "mere exercise" of IP rights, the
Bureau will scrutinize conduct under the general provisions of the
Act, i.e., the substantive provisions that apply generally to
commercial activity. Depending on the conduct, this scrutiny could
take the form of a pre- or post-closing merger investigation, a
civil investigation where unilateral conduct or agreements among
competitors prevent or lessen competition substantially, or a
criminal investigation on a per se standard of evidence.
The Guidelines contain many illustrative examples of how the
Bureau will enforce the Act in the IP context. Examples concerning
settlements of pharmaceutical patent litigation and the licensing
of SEPs are particularly interesting.
PHARMACEUTICAL PATENT LITIGATION SETTLEMENTS
The Guidelines provide:
"In the vast majority of cases" the Bureau will review
pharmaceutical patent litigation settlements as a civil competitor
collaboration section of the Act. The examples suggest that the
Bureau will only review settlements as a criminal matter where, for
example, a settlement precludes a generic manufacturer from
entering until an additional period after the expiry of the patent,
or where the Bureau uncovers "convincing documentary evidence
that both [the innovator manufacturer and the generic manufacturer]
recognized that the patent was not valid."
A safe-haven for settlements that do not involve the transfer of
value from an innovator manufacturer to a generic manufacturer and
that leave the generic to enter upon the expiry of the patent or at
an earlier time.
The Bureau will look at the size of any payment by an innovator
manufacturer to determine whether a payment was made for the
purpose of settling litigation or delaying the generic
STANDARD ESSENTIAL PATENTS
The Guidelines describe how the Bureau will apply the Act to
conduct that takes place within the context of standard setting
organizations (SSOs) and involving SEPs.
The Guidelines recognize that the work of SSOs can be
pro-competitive and provide that the Bureau will not investigate as
a criminal matter any SSOs that obligate their members during the
standardization process to disclose ownership of patents that are
essential to a standard or future maximum royalty rates.
Examples in the Guidelines explain how the Act will apply to the
licensing of SEPs. For example, the Bureau would review as an abuse
of dominance: a patent owner's non-disclosure of patents to an
SSO and subsequent requests for licences; breach of a commitment to
license at no more than a previously disclosed maximum royalty rate
by the original patent owner or a subsequent transferee of the
patent rights; and a patent owner seeking an injunction against a
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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