‘Bombshell’ patent ruling seen favouring foreign firms

OTTAWA • A Supreme Court ruling Friday that overhauls patent law will largely favour multinational patent-holders over the country’s own startups and may ease NAFTA talks due to begin with the U.S. this year, observers say.

The decision, the latest from a Canadian court to reshape intellectual property rights, effectively lowers the bar to receive and defend a patent in the country, tilting the playing field in favour of existing holders. It threatens to upend the domestic technology sector and undercut Prime Minister Justin Trudeau’s aims of reshaping Canada as a leader in innovative and next-generation industries.

“It’s a bombshell of a decision,” said Richard Gold, a law professor at Montreal’s McGill University who studies intellectual property. He’s a member of the university’s Centre For Intellectual Property Policy, which intervened in the case. “We’re now the only country in the developed world that when an inventor says, ‘my invention does X,’ it doesn’t actually have to do X.”

The top court ruled that a current standard, known as the Promise Doctrine, goes too far, because it allows for patents to be invalidated if an invention doesn’t do any of the things it promised.

The decision removes a potential spur in NAFTA talks, due to begin as early as August, by resolving an issue the U.S. had already flagged. It follows another ruling this week that ordered Alphabet Inc.’s Google to remove search results from websites offering goods that infringe on intellectual property.

Friday’s ruling “removes a key irritant,” Michael Geist, a law professor at the University of Ottawa, said. “Combined with the Google case from earlier this week, Canada is now home to some of the toughest anti-piracy laws in the world along with some of the friendliest patent rules for patent-holders.”

While Canadian patents will now be easier to get for domestic and foreign firms alike, the vast majority of existing patents in Canada are foreign-held — and emboldened multinationals will probably now be able to gum up the system to the disadvantage of Canadian firms, Gold said. “The effect is we’re making it harder for the smaller players to come up with the invention,” Gold said.

Friday’s ruling specifically allowed an appeal from the Canadian unit of U.K.based pharmaceutical giant AstraZeneca PLC, maker of a drug called nexium. The dispute with Apotex Inc., a closely held Toronto-based firm that bills itself as the largest Canadian-owned pharmaceutical company, is over a generic version of the drug.

The ruling “obliterates” the Canadian patent law principle known as the “Promise Doctrine,” Gold said. With its ruling, the court made Canadian patents much easier to get and hold than, for instance, in the U.S. It gives large holders of intellectual property — such as those in the pharmaceutical sector or giants like Microsoft Corp. and Alphabet Inc. — the upper hand in Canada, Gold said.

Courts in Canada had previously ruled patents are only valid if the invention does what the patent says it will do and the courts had generally been strict in their application, said Florian MartinBariteau, director of the University of Ottawa’s Centre for Law, Technology and Society.

Friday’s ruling means a patent is still valid if it’s useful for some purposes, even if it wasn’t able to do what was described in the patent, he said.