Canada: Settlement Of Gene Patent Challenge In Canada

Last Updated: June 1 2016
Article by Kathleen Marsman, Ph.D. and Mhairi Skinner

Most Read Contributor in Canada, September 2016

At the beginning of 2016, Canadians were looking forward with great anticipation to a Federal Court challenge launched by The Children's Hospital of Eastern Ontario (CHEO) against a suite of five patents pertaining to methods of genetic testing. However, in March of 2016, the challenge settled with the negotiation of a royalty-free license agreement between CHEO and the patentee: Transgenomic, Inc. of Omaha Nebraska.

The subject patents claim methods for identifying genetic mutations associated with Long QT Syndrome, a disorder of the heart's electrical activity. CHEO wishes to offer whole genome testing for Ontario children on a not-for-profit basis and wants to include analysis for all validated mutations, including those associated with Long QT syndrome. As the subject patents seemed to present a barrier, the challenge by CHEO sought to invalidate the patents or certain patent claims on a number of grounds including the ineligibility of gene-related subject matter for patenting.

In a press release dated March 9, 2016, CHEO announced the settlement stating that these patents "will no longer stand in the way of diagnosing a life threatening disease". The agreement between CHEO and Transgenomic Inc., as well as a template agreement that Transgenomic Inc. now offers to other Canadian not-for-profit entities wishing to conduct Long QT testing, can be found on the CHEO website ( The agreement is reminiscent of the non-exclusive licensing model established in the late 1980's and early 1990's for gene-related patents directed to CFTR mutations in cystic fibrosis, which permitted genetic testing to be widely accessible to patients by offering reasonable licensing terms to those wishing to conduct laboratory-developed tests. See: Minear et al., Cystic Fibrosis Patents: A Case Study of Successful Licensing. LES Nouv. 2013 Mar 1:21-30.

The CHEO press release states: "While CHEO and Transgenomic were originally going to look to the courts for a resolution on this important health care issue, they were both committed to finding a solution to the issue without the expense and delay of a prolonged court case." While gene-related subject matter is not excluded from patentability under Canadian law, a Court challenge to gene-related patents would have presented an opportunity to either affirm the status quo or to define gene-related subject matter as falling outside of the definition of invention. Absent a Court challenge, there is no change to the law regarding patent eligibility of gene-related subject matter in Canada.

It is worth noting that while gene-related subject matter is not excluded from patent eligibility, the Canadian Patent Office released guidelines in 2015 for examination of diagnostic methods. These guidelines currently impede proper examination of diagnostic inventions. In practical terms, this means that gene-related subject matter presented in diagnostic method claims will be blocked from patentability at the examination level for the foreseeable future, until the examination guidelines can be challenged in court. Had the Court challenge to the Long QT patents proceeded, it may have affirmed the patent-eligibility of diagnostic method claims, whether gene-related or not.

Bringing a gene-related diagnostic technology to market extends well beyond the initial research and discovery stage, requiring years of commercialization efforts. A Court decision to invalidate gene-related patent claims would have called into question the value of the ongoing commercialization efforts taken by publically funded research institutions across the country, typically built on a foundation of patent protection. Would a chill in private investment have been the ultimate result?

Seeking commercialization funding is difficult at the best of times for even the most accomplished of institutional researchers. With the chronic reduction of public funds available for research, institutional researchers often turn to industry partners and investors to help commercialize their products or tests. Without a proprietary position, an investor has little basis to believe that the investment needed for development, validation, and approval of a gene-related technology can be recouped. The choice of whether to offer a patented technology on reasonable terms, such as royalty-free not-for-profit access, resides with the patent holder. Without any patent position, the choice is unlikely to arise for new gene-related technologies: the investment needed to bring such technologies from proof-ofconcept to regulatory approval is unlikely to come knocking.

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