NAFTA’s bad promise

Canadian taxpayers will be thankful that a sympathetic NAFTA tribunal recently saved them a $500-million-plus-costs haircut. The tribunal’s decision would have attracted a good deal more attention had Canada lost. As it is, the government can continue ignoring the problems created by a bit of Canadian law called the “promise doctrine.”

In patent law, every patent must be “useful” to be issued, even if for only a “mere scintilla” of usefulness. A drug patent, for instance, must be said to effectively treat some condition, or improve on such treatment. But the promise doctrine takes this much further. If a patent is challenged, the court will read it for “promises” of utility — inferences of utility that can be very broad, perhaps, for instance, for greater therapeutic effect. If the patent is proven not to have lived up to this expanded promise, it is invalidated.

Drug maker Eli Lilly had sued Canada for the invalidation of patents for two drugs, Strattera and Zyprexa, commonly used to treat ADHD and mental illness. It lost. Few Canadians will cry for Big Pharma being denied a payout from their government, but here’s what should worry them.

Since the “promise doctrine” was introduced in roughly 2005, nearly 30 Canadian drug patents have been invalidated. The promise doctrine has helped make Canada a bit of a rogue state in the intellectual-property community. The 2016 Special 301 Report of the Office of the U.S. Trade Representative has Canada on its watch list. The promise doctrine ranks high among its concerns. This doctrine has sapped billions of dollars in drug sales from the Canadian market.

Eli Lilly patented Strattera in 81 jurisdictions. Only in Canada was the patent invalidated for lacking “utility.” Most people would find this odd given that enough people find the drug useful that global sales are around Drug maker Eli Lilly had sued Canada for the invalidation of patents for two drugs commonly used to treat ADHD and mental illness. It lost. US$700 million.

In its ruling, the NAFTA tribunal found that the promise doctrine didn’ t amount to a large-enough or sudden-enough change in Canadian patent law to qualify Eli Lilly for compensation under NAFTA’s investment protection provisions. The tribunal didn’t cesses. Moreover, as Canada again tries to promote an innovation agenda, nothing is more important than strong, clear intellectual property rights.

How to break the promise doctrine? Perhaps by clarifying the Patent Act by amending legislation. No doubt that would create further in-