The Importance Of A Canadian Biotech Patent Strategy

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By Adrian Zahl and Dennis S.K. Leung

While many have traditionally seen the U.S. as the most important filing jurisdiction, differences between Canadian and U.S. patent laws, and the size of the Canadian biotech industry, make it important for biotech organizations to develop a Canadian-specific patent strategy. Canada’s biotechnology industry, the second largest in the world, includes strong pharmaceutical and agriculture components. The latter has particular importance because of the high level of agricultural research in Canada and the Canadian agricultural sector’s acceptance of biotechnology.

Patent laws in the U.S. and Canada have generally evolved along parallel paths but important differences exist, especially for biotechnology. These include differences in patent statutes, different legal interpretations by courts and different administrative practices.

Different patentable subject matter

The United States permits a wider scope of patentable inventions than Canada. Most significantly, Canada does not permit patenting of higher life forms, unlike the United States and many other jurisdictions. However, this has been largely mitigated by the Supreme Court of Canada in Monsanto Canada Inc. v. Schmeiser1, which upheld the patentability of the genes and cells that make up a genetically modified plant, even though the plant as whole could not be patented. The court also ruled that such a patent is infringed by growing a plant that contains infringing genes and cells. As a result, essentially the same level of protection may be obtained in Canada as elsewhere for most genetically modified organisms.

The Canadian Patent Office also applies the prohibition on patenting higher life forms to embryonic ’totipotent‘ stem cells, which are the most basic (least differentiated) form of stem cell. It is not clear whether this prohibition will have a significant impact on the industry, since relatively few inventions in this field relate this type of stem cell.

However, this aspect bares close watching. Conventionally-bred plants, such as hybrid plants, cannot be patented in Canada due to the strict requirement for a complete description of the invention. Canada does not have a special plant patent regime, although in some cases protection is available through the Plant Breeders Rights Act.

Methods of medical treatment cannot be patented. However, essentially the same protection can usually be obtained by defining the invention as a use patent. However, in some rare cases a medical treatment invention may be unpatentable in Canada even though it is patentable in the United States.

Diagnostic and non-therapeutic inventions are patentable. Canada provides a broader measure of protection in this area than is available in many other countries.

Written description/enablement differences

Both Canada and the United States require that an invention be ‘enabled’: the inventor must provide sufficient information to permit others to reproduce the invention. A related requirement is that the invention must be fully described in the patent specification. These requirements have followed slightly different paths in the two countries. In Canada, these have led to difficulties in patenting monoclonal antibodies, when based solely upon a discovery or isolation of a new antigen. However, in most cases, biotech patents may have a similar scope in Canada as in the United States.

A legal principle has evolved in Canada which requires the inventor to provide sufficient information to permit a ‘sound prediction’ that the invention will provide the function or utility described by the inventor. It is not sufficient to provide verification after the application date that the invention will achieve the promised result. This requirement elevates the importance of ensuring that sufficient information has been generated (and described) prior to filing a Canadian patent application.

Canada does not have a counterpart to the strict U.S. ‘utility guidelines’. In principle it is easier to obtain a patent on a novel DNA or amino acid sequence even if its use is not entirely certain.

‘Biogeneric’ drugs

Canada and the United States are the only countries to link generic drug approval to an originator’s patents. These rules elevate the value of originators filing multiple patent applications in a strategic fashion. Although Canada has not yet approved any generic biotech drugs (known as ‘subsequent entry biologic’ drugs, or ‘SEB’s’), such drugs will eventually be approved.

Draft guidelines for SEB’s have recently been published. These contemplate significant hurdles for approval of SEB’s, which may slow their introduction. Because of this (coupled with the high level of public financing of drugs), the draft regulations may be amended. Despite the uncertainties surrounding the ‘linkage’ rules, it is important to take them into account when developing a patent strategy for Canada.

Patent prosecution strategies

In the U.S., biotech inventors can take advantage of (so far) generous continuation and divisional rules. Canada has no counterpart to the U.S. continuation practice, and divisional applications are subject to strict ‘double patenting’ rules. On the other hand, one may maintain a Canadian patent application in ‘pending’ status for many years. This can provide a significant strategic advantage in biotechnology, where the pace of competitive product introduction often occurs slowly. Canadian examiners rarely issue final actions and the appeals process, used only rarely, is generally ad hoc and relatively inexpensive. Examiner interviews usually leave no record on the patent file.

In addition, ‘restriction’ practice is more relaxed in Canada, often making it possible to include a relatively large number of DNA or amino acid sequences within a single patent.

Research/regulatory exemptions from infringement

Unlike the U.S., Canada provides no statutory exemption from infringement for use of a patented invention for research purposes. It is possible that the common law provides an exemption but there has been no binding court decision one way or the other. The absence of any clear exemption strengthens the case for filing patents for research tools, biological or chemical processes, and the like.

A ‘safe harbour’ from patent infringement is available in Canada for activities relating to the development and submission of information for obtaining a regulatory approval of a product. This applies to any type of regulatory approval, including for pharmaceutical or agricultural products.

It also applies to approvals sought anywhere in the world, and to this extent is broader than the counterpart American rule. Thus far, Canada has not had any court decisions to test the reach of this exemption into basic research. The lack of clarity in this respect suggests that it is a good strategy to ensure that Canada is included in any patent filing strategy for ‘research tools’ and other basic science inventions.

A coming wave of Canadian biotech patents

Many patent applications were filed during the first wave of biotech innovation in the 1980s. These applications are still governed in key respects by the patent law as it existed prior to its substantial change on Oct. 1, 19892. These applications will have a patent life of 17 years from their date of issue, and they remain confidential until the patents issue.

There are still more than 100 of these applications still pending, essentially all of which are biotechnology inventions.

The Patent Office has stated that these applications have been held up in prosecution by complex ‘conflict’ proceedings between multiple parties. It is assumed that these applications relate to basic aspects of biotechnology (due to confidentiality, we cannot know this for certain).

When patents finally issue from these older applications, they will potentially remain in force for 17 years, and the biotech industry in Canada could be disrupted as a result. As a defensive measure, prudent biotech companies are filing large numbers of patent applications, in part to initiate a cross-licensing strategy.

As can be seen, biotech patenting in Canada requires its own strategies, and the jurisdiction should not be seen as secondary to the U.S. There are many reasons why a specific, and reasoned, Canadian biotech patent filing strategy should play a key role in the IP management scheme of any company.

References
1      (2004), 2004 SCC 34, [2004] 1 S.C.R. 902.
2     Another significant change was moving from a “first to invent” rule similar to the U.S. model, to a ‘first to file’ system.

Adrian Zahl is a partner and Dennis S.K. Leung an associate with the Canadian intellectual property law firm Ridout & Maybee LLP.