Eli Lilly Files Notice of Arbitration

Eli Lilly has filed a Notice of Arbitration in its NAFTA claim against Canada stating: “Canada’s ‘promise utility doctrine,’ applied by Canadian courts to invalidate the Strattera and Zyprexa patents, is contrary to Canada’s treaty obligations to protect patent rights and has resulted in the unlawful expropriation of Lilly’s intellectual property.”

The Notice of Arbitration (PDF – h/t Inside U.S. Trade) sets out the scope of possible arbitration under NAFTA’s Chapter 11 regime and is the next step towards arbitration following the Notices of Intent was filed last spring and winter. Eli Lilly alleges that invalidation is an unlawful expropriation and the application of the promise utility doctrine to Eli Lilly’s patents contravenes the minimum standard of treatment.

Eli Lilly specifically takes issue with Canada’s obligation to provide patents that have industrial application:

7. Specifically at issue here is the requirement that inventions be “capable of industrial application.” This concept, synonymous with the term “useful” in the Canadian Patent Act and often referred to as the “utility” requirement, is normally easily met by pharmaceutical inventions, which are capable of industrial applicability in that they treat illness and disease.

In its Notice, Eli Lilly indicates that “The parties consulted on the matters herein on several occasions and were unable to resolve this dispute.” [19]

The decisions at issue are:

As a result of the claimed breaches of Canada’s obligations under NAFTA to a) not expropriate an investment; and b) provide minimum standards of treatment, Eli Lilly is claiming damages, “estimated in an amount not less than CDN $500 million” [85(i)].

(Also see my earlier posts on a) the filing of the Notice of Intent to Arbitration in December 2012; and b) on Canada’s “Promise Doctrine” from May 2013.)

[Update: The Canadian government’s website listing NAFTA proceedings against Canada has been updated with Eli Lilly’s Notice of Arbitration, along with the earlier Notice of Intents.]