Canada: Competition Bureau Issues Draft Updated IP Enforcement Guidelines Addressing Pharma Patent Litigation Settlements, Standard Setting And Patent Trolls

Following an initial consultation process concluded last year, the Competition Bureau (Bureau) released draft revised Intellectual Property Enforcement Guidelines (IPEGs) for public consultation on June 9, 2015. These new draft IPEGs will not change the Bureau's general enforcement policy with respect to IP rights, but do provide additional guidance on its approach to: (i) pharmaceutical patent litigation settlements, (ii) standard essential patents, and (iii) patent assertion entities.

Pharmaceutical Patent Litigation Settlements

Last year, the Bureau released a controversial white paper, Patent Litigation Settlement Agreements: A Canadian Perspective, that outlined its preliminary views, which we analyzed. In a step in the right direction, the Bureau now confirms that, absent extraordinary circumstances, it will not pursue criminal investigations in regard to such settlements. Further, the Bureau provides more guidance on how it will evaluate such settlements under the civil provisions of the Competition Act (Act).

The Bureau divides pharmaceutical patent litigation settlements into three categories:

  1. "Entry-split" settlements with no payment to the generic: The Bureau says it will not review settlements where the parties agree to generic entry on a date before the expiry of the patent, provided that there is no other consideration paid or otherwise offered by the brand-name company to the generic.
  2. Settlements which include a payment to the generic: In such settlements, also euphemistically referred to as "reverse payment" or "pay for delay" settlements, the parties agree to generic entry on a date before the expiry of the patent, and the brand-name company also provides cash or other consideration to the generic.

    The Bureau says it will review such settlements under the civil provision for agreements between competitors, section 90.1, but may also investigate for joint dominance under section 79 which allows it to request an administrative monetary penalty of up to $10 million. In both cases, the Bureau will seek to determine whether the settlement will result in a substantial lessening of competition. In that regard, the Bureau says it will engage in the difficult task of assessing whether, "but-for" the settlement, the brand and generic products would have competed earlier than the generic entry date agreed upon under the settlement. This analysis will consider whether the payment from the brand-name, including in exchange for goods or services from the generic, is excessive and therefore likely for the purpose of delaying the generic's entry. In the most helpful part of the draft IPEGs, the Bureau confirms that it will likely not take action if the payment from the brand-name company is within a reasonable estimate of:

    • the fair market value of any goods or services provided by the generic firm;
    • the magnitude of the brand company's section 8 damages exposure under the Patented Medicines (Notice Of Compliance) Regulations; and
    • the brand company's expected remaining litigation costs absent settlement.
    The Bureau's analysis will also consider the likely impact on prices that would have resulted from earlier entry by the generic, and whether other potential generic suppliers were likely to enter the market.
  3. Settlements which could be subject to criminal review: The draft IPEGs indicate that the Bureau will crim inally investigate such settlements only "in limited circumstances":

    • First, the Bureau may conduct a criminal investigation when the parties agree that the generic will only enter beyond the expiry date of the brand-name's patent rights.
    • The Bureau says it would also conduct a criminal inquiry where it discovers evidence that the parties "nakedly" conspired to restrain trade (i.e., the settlement is a "sham"): for example, where the Bureau finds "convincing evidence" that both parties knew the patent was invalid, but nevertheless reached a settlement to allocate monopoly profits by delaying generic entry.

We encourage the Bureau to continue along this path to recognizing that bona fide settlements of patent litigation should never be the subject of criminal investigation. Overall, the draft IPEGs do provide more guidance to assess whether a settlement could be challenged by the Bureau. Given the Bureau's high level of interest in these settlements, it is likely to be only a matter of time before it takes some enforcement action in this area.

Standard Essential Patents

The Bureau recognizes the value of industry standards in setting benchmarks for performance and safety and to allow for the interoperability of devices made by different manufacturers. Once a standard is set, companies often make significant investments to comply, which can be undermined by patent holders of essential technology refusing to licence their patents. The Bureau says it will investigate the following conduct under the civil abuse of dominance provisions (section 79):

  • Patent "hold-up" or "patent ambush": The Bureau will investigate where a patent holder purposely conceals its patent to a Standard Development Organization (SDO) during the formation process of the industry standard, and then later asserts the undisclosed patent when access to its technology is required to implement the standard.
  • Reneging on a licensing commitment: A patent holder's decision to renege on a commitment to licence a patent under fair, reasonable and non-discriminatory (FRAND) terms could also be reviewed.
  • Seeking an injunction after making a licensing commitment: The Bureau may investigate where a patent holder makes a licensing commitment before its technology is adopted in a standard, and then seeks injunctions against firms that are "locked-in" to the standard. The IPEGs indicate that the Bureau will likely conclude that the seeking of an injunction is appropriate: (i) when a prospective licensee refuses to pay a royalty that is determined to be FRAND by a court or arbitrator; or (ii) when the prospective licensee does not engage in licensing negotiations.

The draft IPEGs take the position that such conduct amounts to "something more" than the mere exercise of patent rights, which may be pursued for abuse of dominance. The Bureau's reasoning is that these practices enable patent holders to enhance their market power beyond what is conferred on them by the patent by behaving dishonestly with SDOs, and then use that power to raise rivals' costs and exclude competitors that use the standard.

The Bureau also cautions competitors on the competition risks associated with the formation of SDOs at the "front end". In addition to warning about criminal price-fixing, the Bureau goes on to discuss concerns that may arise from the sharing of sensitive information and the joint setting of actual licensing terms. If a standard setting organization does not have strict controls on how such information is used and kept confidential from other members, it may risk a civil investigation under section 90.1 of the Act.

Patent Assertion Entities

Patent assertion entities (PAEs) acquire patents from innovating companies and then demand licensing fees from companies that are allegedly infringing their patents.

The draft revised IPEGs indicate that the Bureau may take action against PAEs under the civil or criminal misleading advertising provisions of the Act, including the new provisions introduced following the adoption of Canada's anti-spam legislation (CASL) for representations contained in emails or other electronic messages. The included example refers to a PAE sending thousands of notices to businesses demanding licensing fees and alleging it has poof of infringement. The Bureau says it would review such conduct to determine whether the PAE has, in fact, proof of infringement or is rather sending notices indiscriminately. In addition, the Bureau would have to be able to convince the Competition Tribunal or a court that these notices are representations "made to the public" within the meaning of sections 52 or 74.01(1)(a) of the Act.

* * * * *

The public consultation period on the draft IPEGs will end on August 10, 2015.

For more information on the evolution of the IPEGs, please see our articles discussing last year's release for public consultation (the first update to the IPEGs since 2000) and the results of that public consultation.

To view original article, please click here.

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

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

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.