PATENTED MEDICINES (NOTICE
REGULATIONS UNDER THE PATENT ACT: 1998 AMENDMENTS
Law and Government Division
TABLE OF CONTENTS
REVIEW OF THE PATENT ACT
AMENDMENT ACT, 1992
AMENDMENTS TO THE LINKAGE REGULATIONS
A. Patent List
B. Notice of Allegation
C. Disclosure/Burden of Proof
D. Dismissal of
PATENTED MEDICINES (NOTICE OF
UNDER THE PATENT ACT: 1998 AMENDMENTS
Prior to the passage of the Patent Act
Amendment Act, 1992(1) (Bill C-91), Canadian patent
law permitted the issuance of compulsory licenses(2) in
relation to patents pertaining to pharmaceutical products. This allowed generic drug
manufacturers to produce and sell copies of patented medicines before the expiration of
the relevant patents. The Patent Act Amendment Act, 1992 eliminated compulsory
licensing, thereby ensuring that the owners of pharmaceutical patents would be protected
from generic competition until their patents expired.
A person owing a patent for a product has
the exclusive right to make, use and sell the product for a specified period of time.
Under Canadian law, a patent has a term of 20 years from the date on which the application
for the patent is filed. Anyone who uses a patent or makes a product to which a patent
relates without permission of the patent owner and before the patent expires risks an
action for patent infringement.
Sections 55.2(1) and (2) of the Patent
Act, as enacted by section 4 of the Patent Act Amendment Act, 1992, create an
exception to an action for infringement by permitting generic manufacturers to use a
patented product for certain purposes before the patent expires. Section 55.2(1) provides
that it is not an infringement of a patent for a person to "make, construct, use or
sell the patented invention solely for uses reasonably related to the development and
submission of information" required under federal or provincial law or the law of
another country that regulates the manufacture, use or sale of the product ("early
working"). Thus, generic drug manufacturers are allowed to develop a generic copy of
a patented medicine and to take whatever steps are necessary to meet the regulatory
requirements pertaining to the sale of the medicine before the expiry of the relevant
patents for the brand-name equivalent drug.
Section 55.2(2) provides it is not an
infringement of a patent for a person to use a patented invention during a period
prescribed by regulation in order to manufacture and store a product intended for sale
after the patent expires ("stockpiling").(3)
This permits a manufacturer to make use of a patentees invention to stockpile
generic copies of a patented medicine before a patent expires so that the drug will be
ready for sale immediately after such expiry. Without this provision and section 55.2(1),
a patentee could prevent a generic manufacturer from manufacturing a patented product
until the patent had expired. Such a prohibition would effectively bar the generic
manufacturer from the market for a period beyond the end of the patent term.
These provisions do not, however, give
generic manufacturers a free rein to use a patented product. The Act is clear that they
are limited to the uses outlined in section 55.2(1) and (2). Nevertheless, at the time
Bill C-91 was before the House of Commons, brand-name drug manufacturers expressed
concern that generic producers might abuse these exceptions to patent infringement and
begin to sell generic products before expiry of the relevant patents. Should such a
situation arise, brand-name manufacturers would have to pursue generic manufacturers in
the courts for patent infringement.
Section 55.2(4) of the Patent Act
was enacted to allay these concerns of brand-name manufacturers. It authorizes the
Governor in Council to make regulations to prevent generic drug manufacturers that use a
patented invention in accordance with subsections 55.2(1) and (2) from infringing the
patent. More particularly, such regulations can specify:
(a) the conditions that must
be fulfilled before a notice, certificate or permit pertaining to a patented product can
be issued to a patentee or to any other person pursuant to any Act regulating the product;
(b) the earliest date on which
a notice, certificate or permit issued to a person, other than a patentee, is to take
(c) how disputes between a
patentee and a generic manufacturer as to the issuance or effective date of a notice,
certificate or permit are to be resolved; and
(d) the right of a patentee to
pursue a court action with respect to disputes concerning the effective date of a notice,
certificate or permit.
Before a new drug can be sold to the
Canadian public, the federal Department of Health must approve it. The document evidencing
this approval (a "Notice of Compliance" (NOC)) certifies that the drug meets the
requisite standards for safety, efficacy and quality.
The primary purpose of section 55.2(4) is
to ensure that a generic drug manufacturer is not granted an NOC for a drug by the
Minister of Health (Minister) until it can be shown that the drug does not infringe
existing patent rights. In most cases, an NOC for a generic drug will not be issued until
expiry of the patent or patents for the brand-name equivalent product, thus ensuring that
the issuance of the NOC is linked to a patents expiry.
The Patented Medicines (Notice of
Compliance) Regulations(4) (Linkage Regulations)
establish how the granting of an NOC for a generic version of a patented medicine is to be
linked to the expiration of patent rights. Essentially, these regulations provide that,
unless a patentee consents to the making of a generic drug, the relevant patent is invalid
or there has been no infringement of any patent rights, the Minister cannot issue an NOC
to a generic manufacturer until the patent expires.
Under the Linkage Regulations, patentees
submit to the Minister a patent list that sets out the Canadian patents for a particular
medicine. When a generic manufacturer applies for an NOC for a generic product, it must
certify the status of the patents issued for the brand-name equivalent drug. Under section
5 of the Linkage Regulations, the generic manufacturer must:
(a) accept that the NOC for
the generic drug will not be issued until the relevant patents expire; or
(b) allege that
patentee does not own the patent,
(ii) the patent has expired,
(iii) the patent is not valid, or
(iv) it is not infringing any patent.
A generic manufacturer that makes any of
the allegations listed above must provide a detailed statement of the legal and factual
basis of its allegation and serve notice of the allegation on the patentee.
Within 45 days after being served with a
notice of an allegation, a patentee can apply for a court order prohibiting the Minister
from issuing an NOC for the generic drug until after the expiration of the patent to which
the allegation relates.(5) Among other things, the
Linkage Regulations provide that the Minister cannot issue an NOC to a generic
manufacturer until 30 months after the patentee has applied for a court order, the parties
reach an agreement, the relevant patents expire, or the court renders a decision,
whichever comes first.
The Linkage Regulations give the court the
authority to award damages against a patentee to compensate the generic manufacturer where
the patents have expired; however, the NOC is not issued for some time thereafter.
A contentious aspect of the Regulations is
the 30-month stay that is imposed upon the issuance of an NOC once a patentee commences a
REVIEW OF THE PATENT ACT AMENDMENT
Section 14 of the Patent Act Amendment
Act, 1992 provides for a review of the legislation by a parliamentary committee four
years after the Act received Royal Assent. The House of Commons Standing Committee on
Industry carried out this review in early 1997.
The Linkage Regulations engendered
considerable discussion before the Committee. The Pharmaceutical Manufacturers Association
of Canada (PMAC), which represents the brand-name drug manufacturers, supported the
regulations but suggested a number of amendments. The PMAC asserted that injunctive relief
through the courts was virtually unavailable to patentees because of the difficulty
associated with meeting the criteria required for issuing an injunction. The Canadian Drug
Manufacturers Association (CDMA), representing the generic drug manufacturers, called for
the repeal of the Linkage Regulations. Among other things, the CDMA claimed that the
automatic 30-month prohibition on the issuance of an NOC was tantamount to an injunction
and therefore unfair.
The Committee recommended that the
government re-visit the regulatory regime associated with Bill C-91.(6)
AMENDMENTS TO THE LINKAGE REGULATIONS
Proposed amendments to the Linkage
Regulations were published in the Canada Gazette, Part I, on 24 January 1998.
A 30-day consultation period followed. By order of the Governor in Council, amendments to
the Regulations came into effect on 12 March 1998.(7)
There has been no change to the overall
regime governing patent infringement, early working and stockpiling. The present
exceptions in the Patent Act, which allow for early working and stockpiling by a
generic manufacturer, continue. The link between the regulatory approval of a generic copy
of a drug by Health Canada and the status of the patents pertaining to the brand-name
version of the drug is maintained.
Amendments to the Linkage Regulations
include the following:
A. Patent List
The generic drug companies criticized the
presence on the patent list of patents that are irrelevant to certain medicines. Health
Canada had instituted a policy of auditing the list for process patents, but its authority
to do so was challenged. The amendments give the Minister of Health authority to audit the
list of patents for a drug provided by a patentee. In particular, the Minister can refuse
to add or delete any information that does not meet the requirements of the list.
Patentees will be required to certify that
the patents they submit on the list for a drug are relevant to the dosage form, strength
and route of administration of that drug.
Patentees will continue to have 30 days
after the grant of a Canadian patent to add newly issued patents to the patent list.
B. Notice of
The amendments require generic
manufacturers to be more specific when making an allegation relating to non-infringement.
When a generic manufacturer alleges that the drug it intends to market does not infringe a
particular patent on a patent list, it will be required to include a description of the
dosage form, strength and route of administration of the drug.
The amendments provide that a generic
manufacturer must serve the patentee with a notice of allegation relating to
non-infringement of a patent at the same time as or after it applies for an NOC for the
drug. Thus, a generic manufacturer cannot submit a notice alleging that it is not
infringing a patent before it has filed a submission for an NOC with the Minister of
Disclosure/Burden of Proof
The amendments also deal with the
disclosure of information. The court can order a generic manufacturer to produce any
portion of its submission for an NOC that is relevant to the disposition of the issues
before it. Such documents are to be treated confidentially.
An additional amendment sets out the
burden of proof in cases where non-infringement is alleged. A generic manufacturer that
wishes to produce a version of a patentees drug and that alleges that it will not
thereby infringe a product-by-process patent on the patent list will have the burden of
proving the allegation.
D. Dismissal of
The Regulations have been amended to
provide that the court can dismiss a patentees application for an order prohibiting
the Minister of Health from issuing an NOC if:
(a) the court is satisfied
that the patents at issue should not have been included on the patent list or are
irrelevant to the version of the drug for which the generic manufacturer has filed an NOC
(b) the application is
redundant, scandalous, frivolous, vexatious, or an abuse of process.
The court may order costs, including costs
on a solicitor-and-client basis. When making an order for costs, the court can consider
the diligence with which the parties have pursued the application, the improper inclusion
of a patent on the patent list, and the failure of a patentee to keep the patent list up
The amendments broaden and clarify the
damages provision of the Regulations. If the patentee withdraws or discontinues its
application for an order prohibiting the Minster of Health from issuing an NOC to the
generic manufacturer, or if the application is dismissed by the court, or if the order is
granted but reversed on appeal, the court can order a patentee to compensate a generic
manufacturer for any loss the latter has suffered. Depending on the circumstances of the
case, the court may make an order for relief by way of damages or profits.
The length of the time during which the
Minister of Health is stayed from issuing an NOC to a generic manufacturer is reduced from
30 months to 24 months.
There are changes to the criteria whereby
the court can lengthen or shorten the stay. The court can change the 24-month period if
the parties consent. A patentees failure to cooperate reasonably in expediting its
application can result in a reduction of the 24-month period, while a similar failure by
the generic manufacturer can result in a lengthening of the period.
(1) Statutes of Canada, 1993, c. 2.
compulsory license is a statutory licence that gives the licensee the right to
manufacture, sell or distribute a patented invention.
SOR/93-134, 12 March 1993, Canada Gazette, Part II, Vol. 127 No. 6, p. 1390. The Manufacturing
and Storage of Patented Medicines Regulations provide that the applicable period is
six months immediately prior to the date on which the patent expires.
SOR/93-133, 12 March 1993, Canada Gazette, Part II, Vol. 127, No. 6, p. 1383.
of Commons, Fifth Report of the Standing Committee on Industry, Review of Section 14 of
the Patent Act Amendment Act, 1992, p. 40.
Regulations Amending the Patented Medicines (Notice of Compliance) Regulations, Canada
Gazette, Part II, Vol. 132, No. 7, SOR 98-166, 12 March 1998.