Competition law issuesRestrictions on trade
Are practices that potentially restrict trade prohibited or otherwise regulated in your jurisdiction?
In general, there are both civil and criminal sanctions for such conduct under the Competition Act, RSC 1985, c C-34. The civil branch of the Competition Bureau deals with issues relating to abuse of dominance, refusal to deal, exclusive dealing, tied selling and price maintenance.
The criminal branch of the Competition Bureau deals with cartels, conspiracies, agreements between competitors to fix prices, market allocation, supply restriction and bid rigging.
Section 32 of the Competition Act includes specific restrictions on the exercise of intellectual property rights.Legal restrictions
Are there any legal restrictions in respect of the following provisions in licence agreements: duration, exclusivity, internet sales prohibitions, non-competition restrictions and grant-back provisions?
There are no restrictions on duration. The Competition Bureau may review the exclusivity or non-competition terms of a licence agreement if they involve a refusal to deal, exclusive dealing, tied selling or terms that otherwise fall within its purview. The Competition Bureau released the IPEGs that indicate the direction the Bureau may take in various licensing situations.IP-related court rulings
Have courts in your jurisdiction held that certain uses (or abuses) of intellectual property rights have been anticompetitive?
The Competition Bureau has indicated that something more than the mere exercise of an intellectual property right is required to trigger an investigation of alleged anticompetitive behaviour.
In Toronto Real Estate Board v Commissioner of Competition, 2017 FCA 236, the Federal Court of Appeal dismissed an appeal by the appellant Toronto Real Estate Board over the use of data from their Multiple Listing Service. The Commissioner applied to the Competition Tribunal under section 79(1) of the Competition Act RSC 1985, c C-34, the abuse of dominance portions of the Act.
Pay-for-delay contracts involving pharma products may attract Competition Bureau scrutiny. Understandably, the situation is highly fact-driven. The following is stated in a 2014 Bureau publication entitled Patent Litigation Settlement Agreements: A Canadian Perspective:
When a brand pays more than the generic could have obtained from PM(NOC) Regulation proceedings, such payments are less likely to be justified. In contrast, more nuanced analysis is called for when the payment falls within the realm of what could be expected in PM(NOC) Regulation litigation, such as where the brand faces section 8 damages liability and makes a modest payment that is less than the expected damages the brand would owe the generic.
This does not provide free rein for brands to make whatever payments they wish. For example, the amount of section 8 damages could be low when there is generic competition, as generic prices tend to fall with more generics on the market. One commentator has explained that the presence of authorised generics ‘significantly reduces the size of the market available to other generic competitors’ and ‘drastically reduces the amount of damages that are possibly recoverable under section 8.’ In fact, the court, in Teva Canada Limited v Sanofi-Aventis Canada Inc made clear that authorised generics can be considered in determining the generic’s likely profits. In short, as a result of authorised generics and other entrants, the amount of section 8 damages for which the brand would be responsible could be significantly reduced, which would increase the concern with large payments to generics.