Canada: Government Of Canada Successful In Eli Lilly's NAFTA Challenge On The Promise Of The Patent Doctrine

On March 16, 2017, an arbitral tribunal (the Tribunal) appointed pursuant to the North American Free Trade Agreement (NAFTA), released its final decision in favour of the Government of Canada regarding Eli Lilly's case against the "promise utility doctrine."1 On June 13, 2013, Eli Lilly brought this claim arising from the invalidation of two Canadian patents for Strattera2 (atomoxetine) and Zyprexa3 (olanzapine), on the grounds of inutility.4 Eli Lilly claimed that the Canadian courts' decision to invalidate the two patents was based on the Canadian judiciary's adoption of the "promise utility doctrine," which it alleged was radically new, arbitrary and discriminatory against pharmaceutical companies and products. As such, the promise doctrine contravened Canada's obligations related to patent protection under NAFTA Chapter 17 and the protections against unfair and inequitable treatment, and unlawful expropriation under NAFTA Chapter 11.

On the issue of the promise doctrine, the Tribunal addressed the following two questions: 1) has there been a dramatic change in the utility requirement in Canadian patent law?; and 2) is the utility requirement in Canadian patent law, as applied to the Zyprexa and Strattera Patents, arbitrary and discriminatory?

The Tribunal held that Eli Lilly had failed to demonstrate a fundamental or dramatic change in Canadian patent law and that the evolution of the Canadian legal framework relating to Eli Lilly's patents could not sustain a claim of arbitrariness or discrimination in violation of NAFTA Chapter 11.

Has There Been a Dramatic Change in the Utility Requirement in Canadian Patent Law?

The fundamental question before the Tribunal was whether there was a "dramatic" change in the utility requirement in Canada. Eli Lilly bore the burden of establishing the facts on which they brought the claim, and the Tribunal addressed whether Eli Lilly had adduced sufficient evidence to prove its allegation that "[i]n the mid-2000s, after the patents for Zyprexa and Strattera had been examined and granted, but prior to their invalidation by the courts, Canada's patent utility law underwent a dramatic transformation."5

The Tribunal concluded that it was difficult for Eli Lilly to establish that there had been a dramatic change in Canada's patent utility law where the relevant Canadian judicial decisions were handed down over a period of more than six years, encompassing a range of cases from first instance to appellate tier.6 In reaching such a conclusion, the Tribunal performed careful analysis of each of Eli Lilly's arguments. Three topics of discussion addressed by the Tribunal were: 1) the utility requirement in Canadian jurisprudence; 2) Manual of Patent Office Practice (MOPOP) amendments and Canadian Intellectual Property Office (CIPO) Practice; and 3) statistical evidence.7

  1. The Utility Requirement in Canadian Jurisprudence

The Tribunal addressed the following three elements of the promise doctrine: (i) the identification of a "promise" in the patent disclosure, against which utility is measured; (ii) the prohibition on the use of post-filing evidence to prove utility; and (iii) the requirement that pre-filing evidence to support a sound prediction of utility must be included in the patent.8

In addressing the "promise" standard in which utility is assessed, the Tribunal held that one may look beyond the claims in the patent to the disclosure in order to construe the "promise,"9 and also affirmed the 1981 Consolboard Inc. v. MacMillan Bloedel (Sask) Ltd.10 decision as the authority for the promise standard.11 Furthermore, the Tribunal recognized other Canadian authorities for the promise standard in order to conclude that the promise standard failed to constitute a dramatic change in the law.12

On the issue of post-filing evidence to prove utility, the Tribunal concluded that the Supreme Court of Canada's decision in Apotex Inc. v. Wellcome Foundation Ltd. (AZT)13 to disallow post-filing evidence to demonstrate utility was not a dramatic change from previously well-established law.14 The Tribunal also provided that the disclosure requirement for sound prediction was set forth in AZT and applied in subsequent utility cases, which represented a change that is more incremental and evolutionary than dramatic.15

  1. MOPOP Amendments and CIPO Practice

Eli Lilly claimed that MOPOP amendments in 2009 and 2010 incorporated all three elements of the promise doctrine, illustrating evidence of dramatic changes in Canadian patent law and reflecting CIPO's interpretation of the Patent Act. The Tribunal disagreed with Eli Lilly and provided that MOPOP provides a "high level internal guidance but cannot be considered a complete summation of Canadian patent law."16 Therefore, MOPOP on its own does not represent reliable evidence of a change in the law.

  1. Statistical Evidence

Quantitative evidence put forward by Eli Lilly illustrating (i) the number of successful utility challenges, and (ii) the rate of success of such challenges since 2005 were deemed insufficient evidentiary support of a dramatic change in law. First, Eli Lilly had provided quantitative evidence of utility outcomes from 1980 to 2004 and 2005 to 2016, where January 1, 2005, served as a dividing line between "before" and "after" the adoption of the promise doctrine.17 The Tribunal held that there was insufficient rationale for selecting January 1, 2005, as the cut-off date. Even a slight change to the date resulted in a substantial change in the rate of utility-based invalidations of pharmaceutical patents, which undermined Eli Lilly's position that the spike in utility challenges in the pharmaceutical sector was a direct result of the adoption of the promise doctrine. Second, the Tribunal held that validity challenges of pharmaceutical patents on other grounds such as obviousness and anticipation also increased, suggesting a broader trend of increasing pharmaceutical patent litigation and greater numbers of invalidations. Subsequently, in the absence of evidence that attributes the promise doctrine as being a single factor for the invalidation of pharmaceutical patents, the quantitative data provided was found to be insufficient evidentiary support for illustrating the dramatic change in the law.18

Is the Utility Requirement in Canadian Patent Law, as Applied to the Zyprexa and Strattera Patents, Arbitrary and Discriminatory?

Eli Lilly alleged that the promise doctrine is arbitrary as it (i) is unpredictable and incoherent, (ii) serves no legitimate public purpose, and is discriminatory against pharmaceutical patents as a field of technology.19 The Tribunal addressed the question of whether the promise doctrine in fact was an arbitrary or discriminatory measure; if it was, Canada could be held liable for breach of the fair and equitable treatment standard under Chapter 11 of the NAFTA — even in the absence of a fundamental or dramatic change in the relevant area of law.

The Tribunal held that Eli Lilly could not sustain their claim, having failed to establish the factual premise (i.e. the evolution of the Canadian legal framework relating to Eli Lilly's patents) on which its allegations of arbitrariness and discrimination were based.

  1. Arbitrariness

The Tribunal held that the Canadian courts' interpretation of the promise doctrine was well within the scope of duties that courts are asked to perform every day. Inconsistency in judicial interpretation and some level of unpredictability is present in the application of the law and is to be expected, especially in the adversarial system.20 Further, the Tribunal held that the Canadian courts' application of the promise doctrine was justified by a legitimate public policy as the doctrine helps to ensure the patent bargain, which grants the inventor exclusive rights in a new and useful invention for a limited period, in exchange for disclosure of the invention to the public for their benefit of knowing such information. As such, the Tribunal concluded that the promise doctrine is rationally connected to legitimate policy goals.21

The Tribunal also provided that the non-acceptance of post-filing evidence of utility is not arbitrary, but rather a bright line rule that identifies the date by which patentees must prove utility. Again, such a requirement was identified to be rationally connected to the goal that patents should not be granted on the basis of speculation.22

Lastly, the Tribunal held that the disclosure requirement to support a sound prediction of utility under the promise doctrine was not arbitrary as the sound prediction doctrine allows inventors to obtain a patent before the usefulness of the invention is demonstrated.23

Therefore, the Tribunal found that none of the three elements of the promise doctrine is arbitrary and that the Canadian courts'; application of the doctrine had not demonstrated arbitrariness, including the decisions in the Strattera and Zyprexa cases. The Tribunal concluded in emphasizing that their role is not to question the correctness of the policies or the courts' decisions, but rather to examine if the doctrine and the courts' decisions are coherent and consistent with the policy justifications.

  1. Discrimination

Eli Lilly alleged that the promise doctrine discriminates against pharmaceutical patents (as a field of technology) on the basis of statistical difference between utility-based invalidity rates for pharmaceutical and non-pharmaceutical patents since 2005.24 The Tribunal disagreed and stated that Eli Lilly had failed to establish the crucial link between the higher proportion of utility-based invalidity rates in the pharmaceutical sector and the promise doctrine. In the absence of such a crucial link, it was not feasible to rule out the possibility that alternative factors, such as patenting practices of pharmaceutical companies, gave rise to or contributed to the difference in rates of utility-based invalidity findings.25 The utility-based invalidity rates Eli Lilly had relied on also failed to isolate "promise" cases from all utility cases, including those in which the courts had not applied the promise doctrine.26

Unable to adequately prove the causal link between the promise doctrine and the higher rates of utility-based invalidity decisions in the pharmaceutical sector, Eli Lilly could not establish substantial grounds to confirm discrimination under the doctrine.

What's next

The Tribunal dismissed Eli Lilly's NAFTA Challenge and Eli Lilly is to bear the costs of the arbitration, and 75% of Government of Canada's legal fees and disbursements. Eli Lilly can commence a proceeding before the courts in the District of Columbia (the seat of arbitration) to vacate the award within three months of the date the award was rendered.

Although the Tribunal dismissed Eli Lilly's NAFTA challenge, the promise doctrine as addressed by the Tribunal may not represent the legal standard for addressing utility for much longer. The Supreme Court of Canada will soon be rendering a decision on whether the promise doctrine properly exists and the correct applicable standard for patent utility in Canada in AstraZeneca Canada Inc., et al. v. Apotex Inc., et al.27 This decision is expected in summer 2017 and may have important consequences in interpreting patent validity, especially in the context of pharmaceutical patents.


1 Eli Lilly and Company v Government of Canada, UNCT/14/2 [NAFTA Challenge].

2 Novopharm Ltd. v. Eli Lilly & Co., 2010 FC 915.

3 Eli Lilly Canada Inc. v. Novopharm Ltd., 2009 FC 1018; Eli Lilly Canada Inc. v. Novopharm Ltd., 2011 FC 1288.

4 Eli Lilly delivered its first Notice of Intent to Submit a Claim to Arbitration to the Government of Canada in respect of its patent for Strattera on November 7, 2012. Eli Lilly delivered a second Notice of Intent to Submit a Claim to Arbitration to the Government of Canada on June 13, 2013, which contained claims identical to those raised in the first Notice of Intent, but with additional claims relating to the Zyprexa patent. Eli Lilly later withdrew the first Notice of Arbitration.

5 NAFTA Challenge, supra note 1 at para 308.

6 Ibid at para 309.

7 The Tribunal also addressed arguments on comparison with other jurisdictions and legitimate expectations, which are not addressed in the bulletin.

8 NAFTA Challenge, supra note 1 at para 313.

9 Ibid at para 317.

10 Consolboard Inc. v. MacMillan Bloedel (Sask) Ltd., [1981] 1 SCR 504 [Consolboard].

11 See NAFTA Challenge, supra note 1 at paras 319-321.

12 Ibid at paras 322-324; see in particular Wellcome Foundation Ltd. v Apotex Inc., [1995] F.C.J. No. 226, 60 C.P.R. (3d) 135 at para 50.

13 Apotex Inc. v Wellcome Foundation Ltd., 2002 SCC 77 [AZT].

14 NAFTA Challenge, supra note 1 at paras 326-337.

15 See ibid at paras 338-351.

16 Ibid at para 355.

17 See ibid at para 368.

18 See ibid at paras 368-376.

19 See ibid at paras 419 and 431.

20 Ibid at para 421.

21 See ibid at paras 420-423.

22 See ibid at paras 424-426.

23 See ibid at paras 427-429.

24 Ibid at para 431.

25 Ibid at para 435.

26 See ibid at paras 431-439.

27 Leave to appeal from the judgment of the Federal Court of Appeal, Number A-420-14, 2015 FCA 158, dated July 6, 2015.

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 Topics
Related Articles
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
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 (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

To Use 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.


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.


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