In 2013, an agreement in principle was reached between Canada and the European Union - the Canada-European Union Comprehensive Economic and Trade Agreement (“CETA”). An official text was released on September 26, 2014, subject to legal review. On February 29, 2016, the federal government announced that a legal review of the English text of CETA is now complete, and published the text of the final agreement. International Trade Minister Chrystia Freeland has said she hopes the deal will be ratified later this year and come into force some time in 2017.
We have reviewed the final text with a view to commenting on how it might affect intellectual property rights in Canada in the future.
Patent term restoration for pharmaceutical products
Patent term restoration provides additional incentives to pharmaceutical companies whose new drug approvals are delayed during the health regulatory marketing approval process. Marketing approval delays could result in a patent covering a drug expiring shortly after or even before approval is granted. Thus, for some pharmaceutical products the term of patent protection may be inadequate; as has been recognized in many industrialised nations (see for example the Supplementary Protection Certificate available in Europe), but not in Canada.
CETA aims to mitigate the impact of this problem in Canada by restoring up to two years of patent term as a sui generis right (i.e. a standalone legal right). CETA requires that Canada provide a sui generis period of patent term restoration should it take longer than five years from the filing date of a “basic patent” to receipt of marketing authorization for the pharmaceutical product covered by the patent. The sui generis right confers additional patent protection only to the pharmaceutical product covered by the marketing authorization. Under CETA, the maximum additional period of protection is to be between 2 and 5 years. The Canadian government has publicly suggested that it intends to set the maximum time available at 2 years. In contrast, in Europe the maximum extension allowed to innovators is 5 years.
The implementation of this protection to comply with obligations under CETA could also have the ancillary benefit of pre-emptive compliance with the Trans-Pacific Partnership Agreement (“TPP”). Currently, the TPP requires a period of protection to compensate for “for unreasonable curtailment of the effective patent term as a result of the marketing approval process”. Given that both CETA and the TPP make similar requirements, there is a high likelihood that patent term restoration will be implemented in Canada in the future.
Patent linkage mechanisms and the Patented Medicines (Notice of Compliance) Regulations (“PM(NOC) Regulations”)
If Canada is to fully implement CETA with regards to the patent linkage mechanism, changes can be expected to the current mechanisms by which generic companies seek approval to sell their copy of an innovative drug. The European Union sought these changes due to the unique nature of the PM(NOC) Regulations, which does not grant an innovator an effective right of appeal for adverse rulings. In proceedings under the PM(NOC) Regulations, should the innovator be unsuccessful and the generic’s drug approval submission be considered approvable, the Minister of Health is mandated to issue a Notice of Compliance. Under such circumstances, any appeal by the innovator in PM(NOC) Regulations is considered moot as the generic company is already approved. Implementation of CETA would require that “all litigants [be] afforded equivalent and effective rights of appeal” in linkage proceedings. Thus, CETA, which aims to allow the innovator a right of appeal, will most likely require amendments to the PM(NOC) Regulations.
For innovative companies, CETA is unlikely to result in changes to the current data protection regime in Canada. The agreement confirms that, following marketing authorisation, a generic may not rely on undisclosed regulatory data when seeking marketing authorisation of its copy drug for a period of six years, and Health Canada cannot grant such an authorisation for a period of eight years. This is consistent with current Canadian law. It is also longer than what would be required of Canada under the TPP.
The final text of CETA regarding international trade-mark agreements requires Canada to make “all reasonable efforts” to comply with the Singapore Treaty and to accede to the Madrid Protocol. In this manner, the obligation is very similar to the obligations under TPP. Canada is well on the way to fulfilling its commitment. In January 2014, the Canadian government tabled various IP-related international agreements including the Singapore Treaty and the Madrid Protocol. The Canadian government has already taken steps to officially ratify and implement these international agreements. Implementation of the Madrid Protocol, for example, will bring Canada into line with over 90 countries and facilitate the registration of trademarks in those countries. The implementation of the international registration system in Canada is expected to occur in 2018.
CETA also includes several obligations aimed at curtailing trade in counterfeit goods; including enhanced border enforcement rights and more severe remedies and penalties. Canada has already implemented the enhanced border measures when it passed the Combating Counterfeit Products Act amending the Copyright Act, the Trade-marks Act and the Customs Act to provide the Canada Border Services Agency and rights holders with tools to help limit the flow of counterfeit goods in or out of Canada. These provisions came into force on January 1, 2015, and are commonly referred to as the Request for Assistance Program. The Copyright Act was also amended by the Combating Counterfeit Products Act to contain provisions that criminalize the possession, sale or distribution of infringing works. New Prohibitions also apply to those importing products which violate trade-mark rights, and these prohibitions have been incorporated into the Trade-marks Act. Persons found to contravene these provisions are subject to fines of up to $1 million and imprisonment for up to five years. Further information can be found in earlier Gowling WLG newsletters.
A geographical indication (“GI”) is currently defined in the Trade-marks Act as an indication that identifies the wine or spirit as originating in the territory, region or locality of a member of the World Trade Organization, where a quality, reputation or other characteristic of the wine or spirit is essentially attributable to its geographical origin. Under CETA, Canada will provide protection for over 173 additional terms covering various agricultural products and foodstuffs. CETA requires Canada to set up a means for rights holders to block unauthorised parties from using protected GIs and to allow rights holders to block registration by third parties of marks that are protected as GIs. A number of exceptions listed in Part A of Annex 20-A of CETA allow for different uses of certain GI-protected terms.
The copyright provisions of CETA reflect already established international standards from the 1996 World Intellectual Property Organisation treaties on copyright, performances, and phonograms (WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty). Canada’s Copyright Modernisation Act brought Canada’s copyright regime into compliance with these international standards. The final draft of CETA is also reflective of Canadian standards in the areas of protection of technological measures, rights management information, and intermediary service providers (which were also introduced by the Copyright Modernisation Act). As a result, no amendments to the Copyright Act are expected to arise from the legal text.
Under CETA, each Party shall make all reasonable efforts to accede to the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs. A similar provision was included in the TPP. The changes are, generally speaking, to simplify the industrial design system in Canada and harmonize it with other countries. One important change is to change the originality test (when deciding whether a design is registrable) to one of novelty. Canada has already made the necessary legislative changes: the Economic Action Plan 2014 Act, No. 2 received royal assent on December 16, 2014. However, the relevant sections are not yet in force.
It is therefore likely, that as a result of the ratification of CETA, some aspects of Canada’s intellectual property laws and systems will need to change.