There were three notable substantive developments arising from last week’s Canadian Bar Association Annual Fall Competition Law Conference and a speech and white paper issued by Canada’s Commissioner of Competition on September 23, 2014.
UPDATES TO INTELLECTUAL PROPERTY ENFORCEMENT GUIDELINES
On September 18, 2014, the Competition Bureau (Bureau) issued an updated version of its Intellectual Property Enforcement Guidelines (IPEG). The IPEGs were originally issued in 2000. This updated version is intended to bring the enforcement guidelines into alignment with the Competition Act (Act), which was subject to significant amendment in 2009. Like the original iteration, the updated IPEGs distinguish between conduct that involves the "mere exercise" of an intellectual property right, and conduct involving an IP right that is something else.
In addition, in a speech delivered on September 23, 2014, Commissioner John Pecman announced that the Bureau intends to issue for public consultation a further update to the IPEGs in the "near future." These further updated IPEGs will reflect the "Bureau's enforcement position with respect to new competition policy and IP issues that have arisen in recent years . . . such as reverse-payment settlements and life-cycle management strategies, as well as the conduct of patent assertion entities and activity related to standard essential patents."
BUREAU POSITION ON REVERSE-PAYMENT SETTLEMENTS IN PHARMA LITIGATION RELEASED
On September 23, 2014, the Bureau issued a white paper setting out how it proposes to enforce Canadian competition law in the context of reverse-payment settlements made between branded and generic pharmaceutical companies. Most importantly, the white paper says that the Bureau will consider using its criminal enforcement powers to prosecute reverse-payment settlements where (i) the agreement is with respect to markets or products that are not the focus of the patent litigation or the conduct is beyond the scope of the patent, or (ii) there is evidence that the agreement "is not implemented in furtherance of a legitimate collaboration," such as where "the evidence suggested that a payment was strictly to delay or prevent entry." The white paper does not explain what "strictly to delay or prevent entry" means, and does not address a number of legal issues that would likely arise in a litigated context (e.g., whether branded and generic firms can be found to be "competitors" under the criminal provision of the Act without examining the validity of the underlying patent). The Bureau also says that it will utilize its enforcement discretion to investigate reverse-payment settlements under the civil provisions – s. 90.1 of the Act and, although less likely, s. 79 of the Act – rather than the criminal provisions.
The white paper indicates the Bureau’s intention to advocate for “better information on patent settlements and the need to explore approaches that could be adapted to Canada’s regulatory framework,” and notes that “Canada’s regulatory framework needs to be strengthened to include a settlement notification system.”
CORPORATE COMPLIANCE PROGRAMS
On September 18, 2014, the Bureau released a draft update to its bulletin on Corporate Compliance Programs and requested feedback from stakeholders. The bulletin sets out recommended steps for Canadian businesses to assess their risk of violating the Act, and establishing and maintaining a corporate compliance program to manage and reduce such risk. The bulletin introduces an incentive program for companies that are alleged to have contravened the criminal provisions of the Act. Where such companies have applied for leniency and possess a credible and effective corporate compliance program, they may receive a discretionary reduction in their fine. The possibility of a fine reduction on account of an effective corporate compliance program would be a departure from the Bureau’s current practices for calculating fines in criminal cases, and would differ from the current practices of the United States Department of Justice and the European Commission.
Parties that wish to provide feedback to the Bureau on this bulletin have until November 17, 2014 to do so.