[Ip-health] Michael Geist in the Tyee: Patent Complaint May Upend Canada's Biggest Trade Deal

Thiru Balasubramaniam thiru at keionline.org
Fri Aug 8 03:31:44 PDT 2014


*Patent Complaint May Upend Canada's Biggest Trade Deal*

NAFTA case hints how CETA's investor-state settlement scheme gouges

*By **Michael Geist* <http://thetyee.ca/Bios/Michael_Geist/>*, 5 Aug 2014,

In the early 1990s, pharmaceutical giant Eli Lilly applied for patent
protection in Canada for two chemical compounds: olanzapine and atomoxetine.

The company had already obtained patents over the compounds, but asserted
that it had evidence to support new uses for the compounds that merited
further protection. The Canadian patent office granted the patents based on
the content in the applications, but they remained subject to challenge.

Both patents ultimately were challenged on the grounds that there was
insufficient evidence at the time of the applications to support the
company's claims. The Federal Court of Canada agreed, invalidating both
patents. Eli Lilly proceeded to appeal the decision to the Federal Court of
Appeal and later to the Supreme Court of Canada. The company lost the
appeals, as the courts upheld the decision to invalidate the patents.

Under most circumstances, that would conclude the legal story as nine
Canadian judges reviewed Eli Lilly's patent applications and ruled that
they failed to meet the standards for patentability. Yet in June 2013, the
company served notice that it planned to file a complaint
under the North American Free Trade Agreement (NAFTA) claiming that in
light of the decisions, Canada is not compliant with its patent law
obligations under the treaty.

As compensation, Eli Lilly is now seeking $500 million in damages.

*Billions more at risk under CETA*

The Eli Lilly claim is winding its way through the legal process -- the
Canadian government filed its defence
several weeks ago -- but the implications are being felt far beyond the
specifics of the case.

If the pharmaceutical giant succeeds, it will have effectively found a
mechanism to override the Supreme Court of Canada and hold Canadian
taxpayers liable for hundreds of millions in damages in the process. The
cost to the health care system could be enormous as the two Eli Lilly
patents may be the proverbial tip of the iceberg and claims from other
pharmaceutical companies could soon follow.

Indeed, it appears that the Canadian government has awoken to the danger
associated with dispute resolution systems that risk trumping domestic
regulations and place billions of dollars at risk.

Last week, reports out of Germany indicated
that the German government might not support the Canada-European Union
Trade Agreement (CETA) if it includes such a system (referred to as an
investor-state dispute settlement or ISDS). ISDS has attracted considerable
attention there, due to concerns over a multi-billion dollar claim
involving Germany's decision to phase-out nuclear power.

*Canada stalls on intellectual property fine print*

While the ISDS concerns have centred on Germany, the reality is that the
Canadian government has been holding up finalizing the agreement in part
due to fears of more Eli Lilly-style cases. The pharmaceutical industry is
a powerful lobby group in Europe and some may be willing to pursue similar
litigation over Canadian patent law.

According to leaked versions of CETA texts, Canada is requesting that court
decisions and administrative tribunal rulings involving the creation or
limitation of intellectual property rights be carved out of the treaty's
ISDS provisions.

The European Union has thus far rejected the Canadian proposal. However,
given the mounting opposition to ISDS in Europe, it may be willing to shift
its position.

>From a Canadian perspective, the Eli Lilly case has provided a powerful
reminder that the risks associated with ISDS may outweigh the benefits with
legal cases that can take decades to resolve.

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