The Supreme Court of Canada heard oral arguments today on Eli Lilly’s application for leave to appeal in its olanzapine patent infringement proceeding where its selection patent was found invalid for lacking utility under the ‘promise doctrine’ by the lower courts, with a decision expected this Thursday. US recently listed Canada on its IP ‘watch list’, highlighting concern with Canada’s “heightened utility requirements for patents that Canadian courts have been adopting recently.”
Late last year, Eli Lilly also filed of “Notice of Intent” against Canada under NAFTA for failure to establish suitable patent laws.
Eli Lilly’s application for leave to appeal (SCC #35067) is from the Federal Court of Appeal (Eli Lilly Canada Inc. v. Novopharm Limited – Olanzapine, 2012 FCA 232) which upheld Justice O’Reilly’s decision (2011 FC 1288). In a rare decision, the Supreme Court ordered an oral hearing to hear the leave application. As identified by the Supreme Court, the issue at the hearing was:
Whether the creation by the Federal Court of Appeal of a new non-statutory test for “utility”, the so-called “Promise Doctrine”, is a matter of public importance.
The oral hearing was webcast and a recording of the hearing will be made available on the Supreme Court of Canada’s website (webcast). The Supreme Court announced that a decision on the leave application will be released on Thursday at 9:45 am.
Jusice Layden-Stevenson at the Federal Court of Appeal had allowed (2010 FCA 197) the appeal from Justice O’Reilly’s first trial judgment in the proceeding (2009 FC 1018). In the trial decision under appeal, Justice O’Reilly summarized the ‘promise doctrine’ as follows (at 84):
Regarding the requirement of utility for selection patents, Justice Layden-Stevenson set out the usual requirement – the patent holder need only show a scintilla of utility for the patent to be valid. But, where a patent makes an explicit promise, “[t]he question is whether the invention does what the patent promises it will do” (para 76, citing Consolboard Inc v MacMillan Bloedel (Saskatchewan) Ltd,  1 SCR 504, and Pfizer Canada Inc v Canada (Minister of Health), 2008 FCA 108).
More information on this and other intellectual property proceedings at the Supreme Court are available on my Supreme Court litigation page.
Chapter 11 Challenge
As I wrote in December, Eli Lilly has filed a “Notice of Intent” to challenge the ‘promise doctrine’ in Canadian patent law through Chapter 11 of NAFTA. In its submissions, Eli Lilly wrote (at page 47) regarding the ‘113 olanzapine patent:
The Court nonetheless invalidated the patent, not because it failed to meet the statutory requirement to be “useful”, but because it failed to meet an elevated standard of utility of “marked superiority” over other known antipsychotic agents – a standard that was derived by reference to “promises” made within the patent disclosure. According to the Court, “marked superiority” was determined to include an implied promise of superiority over the longer term because schizophrenia is a chronic condition. The Court implied this promise notwithstanding that Health Canada had approved the drug for acute use. The Court then concluded that Lilly had not done enough work to obtain the patent because it failed to fulfill Canada’s unique “promise doctrine” by which utility was assessed. This decision was absurd in light of the fact that Lilly had conducted extensive pre-clinical and clinical tests prior to filing its patent application and notwithstanding that olanzapine is in fact useful (it was approved by Health Canada as safe and effective and used by patients in Canada and other jurisdictions).
No developments in the Chapter 11 proceeding are noted on the Foreign Affairs and International Trade Canada’s website since the filing of the Notice of Intent.
U.S. Trade Representative’s “301 Report”
Earlier this month, the Office of the United States Trade Representative issued its annual “Special 301 Report”. The Report, best known in Canada for its criticism of Canada’s former copyright laws, has identified patent law as an area of concern (see page 47 of the Report):
With respect to pharmaceuticals, the United States continues to have serious concerns about the availability of rights of appeal in Canada’s administrative process for reviewing regulatory approval of pharmaceutical products and also has serious concerns about the impact of the heightened utility requirements for patents that Canadian courts have been adopting recently.
The 2012 Report, which listed Canada on its “Priority Watch List”, only identified concerns with the right of appeal in the PM(NOC) proceedings in the area of patents. Norton Rose published a comment on this year’s 301 Report.
Will these developments and the issues in the olanzapine proceeding rise to the level of “national importance” required by the Supreme Court to grant leave? A lot of pharmaceutical companies (and their lawyers) will be watching the Supreme Court closely for developments.