Last year promised significant changes in Canadian IP law; some of which will be realized in 2015. As the first quarter draws to a close, this year’s trends in IP law are emerging. Canada’s international trade negotiations will have a major impact on trademark, copyright and patent law. The focus on the interaction between competition law and intellectual property settlement agreements is sharpening. Pharmaceutical litigation is entering a new, biological age. Drug prices, ever an issue in Canada, may face heightened scrutiny. We see the following as the top five emerging trends.
1. Trade-driven Changes to Trademarks Practice
In response to Canada’s trade negotiations with the European Union, the Federal Government introduced major changes to Canada’s Trade-marks Act. These amendmentsare expected to come into force in late 2015 or early 2016. Among these amendments, the most important is likely to be the removal of the requirement in a trademark application that the applicant state whether its mark has been used in Canada, or whether the use is proposed. The amendments will not eliminate the requirement that a trademark be used to maintain a registration, but the change is nevertheless dramatic. We anticipate that trademark owners will need to ramp up their policing efforts and we may see an increase in opposition and cancellation proceedings to clear the path of marks that are not in fact in use.
These changes follow amendments to the Trade-marks Act, Copyright Act and Customs Act to create new border enforcement measures to help combat the importation or exportation of counterfeit goods into or out of Canada. Enacted through the Combating Counterfeit Products Act (CCPA), these amendments are intended to fulfill Canada’s obligations under the Canada-Korea Free Trade Agreement. The CCPA introduced a Request for Assistance program that allows copyright and trademark owners to formally request the assistance of the Canada Border Services Agency in enforcing their rights. The use of this program is a trend to watch.
2. Others Have Taken Notice: Copyright’s Notice and Notice Regime
To discourage online copyright infringement, a notice and notice regime came into force on January 2, 2015, under the Copyright Act. This regime allows copyright owners to send notices of alleged copyright infringement to Internet users through Internet Service Providers (ISPs) and website hosts. This regime is considerably different from its American counterpart, the notice and takedown system. Under the American Digital Millennium Copyright Act, an online service provider must remove or disable access to the allegedly infringing material. The gentler, Canadian approach does not require ISPs, website hosts or search engine providers to remove infringing content.
This limitation has not gone unnoticed by the International Intellectual Property Allowance (IIPA). The IIPA is a private sector coalition that submits reports to the U.S. Trade Representative, including the Special 301 Report which identifies countries that do not adequately and effectively protect intellectual property rights. Canada remains on the Special 301 Watch List in 2015. The IIPA has noted that Canada’s regime does not adequately address the issue of copyright infringement.
In the context of Canada’s ongoing international trade negotiations, there may be a move toward strengthening Canada’s copyright law against online infringers.
3. Unsettling: The Competition Bureau’s Review of Pharma Agreements
In September 2014, the Competition Bureau published the white paper “Patent Litigation Settlement Agreements: A Canadian Perspective”. It documents the Bureau’s interest in preventing patent litigation settlement agreements such as, “pay-for-delay” or “reverse payment” settlements between brand name and generic pharmaceutical manufacturers that would improperly delay generic entry into the Canadian market. The Bureau views such settlements as more than a mere exercise of a patent right, and potentially reviewable under the civil and criminal provisions of the Competition Act.
The release of the white paper reminds the industry that IP owners must be alert to Canadian competition issues when entering into settlement agreements involving their intellectual property rights. Given the Competition Bureau’s greater interest in intellectual property settlements, we anticipate competition issues will increasingly be a focus when negotiating settlement agreements.
4. Bio-dominance: Blurred Lines and the New Wave of Pharma Litigation
In recent years, patents covering many major small-drug molecule pharmaceuticals have expired. Pharmaceutical companies prepared and responded by diversifying their portfolios and developing new products, such as biologics and biosimilars or, as they are known in Canada, subsequent entry biologics (SEBs). As a result, we anticipate a rise in litigation over these products.
A biologic is a protein-based therapy that is derived from, or produced using, a living organism. Biologics are used to treat a range of conditions and diseases such as cancer, rheumatoid arthritis, rare blood disorders, multiple sclerosis, diabetes and HIV/AIDS. While biologic drugs are in frequent use in Canada, they have seldom been the subject of patent litigation.
The only case in the last 15 years litigated to a decision (now vacated, and never to be heard again) isAbbvie Corp v Janssen Inc, 2014 FC 55 rev’d 2014 FCA 242. Abbvie owns a patent pertaining to human antibodies and their use in treating autoimmune diseases. Janssen produces a human monoclonal antibody marketed in Canada to treat psoriasis symptoms. The Trial Judge found that Abbott’s patent was valid and infringed by Janssen’s product. This decision was overturned by the Federal Court of Appeal and returned to the Trial Judge for a new decision. While this matter has settled out of court and no further decision on the merits will be released, it remains the harbinger of the future of pharmaceutical litigation.
The decision in Abbvie v Janssen also exemplifies the blurring of the traditional distinction between brand and generic manufacturers in biologics litigation. This phenomenon is also observed in the context of SEBs. SEBs are biologic drugs that enter the Canadian market with a demonstrated similarity to a reference biologic drug. Manufacturers of SEBs are considered second persons under the Patented Medicines (Notice of Compliance) Regulations. However, SEBs are not considered identical to biologic drugs and submissions to Health Canada for SEBs are akin to new drug submissions, requiring more detailed information than is typically required for small-molecule generics.
As a number of patents covering biologic drugs are set to expire in the next few years, we anticipate an increase in litigation over biologics in Canada.
5. Ramped-up Pricing Review by the Patented Medicines Prices Review Board
On January 22, 2015, the Patented Medicines Prices Review Board (PMPRB) issued a Notice of Hearing alleging Alexion Pharmaceuticals Inc. excessively priced its patented medicine Soliris (eculizumab) in Canada. Soliris (eculizumab), a biologic, is the first and only treatment for patients with Paroxysmal Nocturnal Hemoglobia (PNH), a rare and life-threatening blood disorder, and Atypical Hemolytic Uremic Syndrome (aHUS), a rare and life-threatening genetic disorder. The PMPRB alleges that the annual cost of treatment for this drug in Canada is excessive and higher than in the United States, France, Germany, Italy, Sweden, Switzerland and the United Kingdom. Alexion refutes all of the allegations in their entirety.
A decision in this case will be noteworthy. This is the first case initiated by the PMPRB since 2012 alleging excessive pricing of a patented medicine. If a board adjudication panel finds the price is excessive at a hearing to be held no later than March 6, 2015, it could order that the cost of Soliris (eculizumab) be reduced and that Alexion repay a surplus income.
As IP law protects innovation and creativity, it should evolve with the times. In 2015, it may do so at an accelerated rate. While it is impossible to predict precisely how all will unfold, 2015 is trending toward an eventful year.