Canadian Biotechnology & Pharmaceutical Law Bulletin

Volume 3 - October, 1996

This newsletter is not intended to constitute a legal opinion on any of the issues discussed. Readers should seek professional legal advice on issues of concern to them - we would be pleased to elaborate on any of the articles herein and discuss how it might apply to specific problems. Contact us for more information.

NEW PATENT RULES:

Revision of Patent Rules led to significant changes in Canadian Patent Law

On May 6, 1993, the Intellectual Property Improvement Act was given Royal Assent. Significant changes to the Patent Act were expected pending revision of the Patent Rules.

The changes to the Patent Act and the new Rules entered into force on October 1, 1996 and apply mainly to applications filed on or after October 1, 1996. The most significant changes to the Rules are summarized below. The spirit of the new rules strongly parallels the PCT requirements and regulations.

A Canadian “Provisional” is now possible: One may be obtained upon submission of an indication that a patent is sought; the applicant’s name; the applicant’s address or agent’s address; an invention description; and an application fee. Neither a petition or an abstract are required. The new Rules remove the requirement for the presence of a claim in order to obtain a filing date. The requirements are similar to the U.S. Provisional. The applicant, however, has 15 months from the filing date to "complete" the application.

Small entity status: Under the new Rules, a university will be able to pay reduced fees as a small entity. Previously, the small entity definition did not include non-profit organizations.

Claims Dependency: The Canadian claim drafting nightmare has ended. Multiple dependent claims can now refer to other multiple dependent claims and the "in the alternative rule" has been dropped.

Priority claims: Applications filed under the new Rules must make Paris Convention priority claims within four months of the filing date. Previously, priority claims, if not made at the time of filing, had to be made within six months of the filing date.

Requests for Examination: Under the new Rules, requests for examination must be made within five years of the filing date. Previously, requests for examination of applications filed after October 1, 1989, had to be made within seven years of the filing date. Applications filed after October 1, 1989, and before the new Rules came into force may still request examination within seven years of the filing date.

Accelerated Examination: Under the new Rules, accelerated examination can only commence once an application has been laid open. In cases when the application has not been laid open, a request for accelerated publication must accompany the request for accelerated examination.

Maintenance Fees: Under the new Rules, the full amount of the maintenance fees on applications may be paid in advance. Also, applications abandoned by failure to pay a maintenance fee will have 12 months instead of six to be reinstated. Under the new Rules, payment of maintenance fees on patents may be made either prior to or during each one-year period. However, payment after the commencement and before the expiry of the one-year period is subject to a higher fee. No grace period for late payment of the maintenance fee on patents will be available. If the maintenance fee is not paid before the expiry of each one year period, the patent will be deemed to have expired.

Documents of Title: Under the new Rules, subject to ss. 49 and 50 of the Patent Act, the Commissioner shall, upon request and payment of a fee, register any document relating to a patent or to an application. Formalities requirements have been removed from the Rules. Therefore, the Patent Office may accept non-notarized copies of documents for registration. Photocopies of assignments will now be accepted. However, the requirement that signatures on the original documents still be authenticated remains (i.e. witnessed or notarized).

Biotechnology Patent Applications: The new Rules include provisions detailing requirements for the deposit of biological material and for the submission of a sequence listing for applications containing amino acid and nucleotide sequences. Requisitions: Actions issued by the Patent Office will no longer be referred to as Office Actions. They will be formally referred to as Requisitions.

Time Extensions: Extensions of time will now be available for responding to requisitions and assignment due dates.

Description: Under the new Rules, the Description (formerly known as the Disclosure) cannot refer to documents not available to the public (i.e. pending unpublished patent applications).

Drawings: Drawing requirements have been broadened. Under the new Rules, photos can now be submitted for drawings.

Abandonment: Applications which have become abandoned inadvertently may be reinstated within one year of the date of abandonment upon payment of a fee and completing the action required by the Patent Office. Canadian National Phases: National entry into Canada may be delayed by 12 months for both Chapters 1 and 2 applications provided that an additional $200.00 Government fee is submitted upon entry into Canada.

Upholding Ontario’s pharmaceutical price freeze:

Apotex v. Ontario (Minister of Health) - Ontario Divisional Court, General Division, February 20, 1996

The Ontario Divisional Court has upheld the price freeze on interchangeable pharmaceuticals implemented by that province’s Minister of Health. In their ruling, the panel of three judges found that it was within the jurisdiction of the Minister of Health to refuse to consider Apotex’s proposed price increases in setting the prices which the government would pay for those drugs. The Ontario government have, in the form of the Prescription Drug Costs Regulation Act and the Ontario Drug Benefit Act, implemented a system providing for the interchangeability and substitution of equivalent generic drugs with and for their higher-priced ‘innovative’ competitors. Pursuant to that scheme, a generic drug company can apply to have their drugs designated as therapeutically equivalent and sold alongside or in place of the patented or original products. The pricing of such drugs, regulated by another aspect of the scheme called “75/90", is determined by the Minister of Health and is then used to determine the best available price (“BAP”) for that drug for sale in Ontario - and that BAP is that the pharmacist may charge the consumer and receive reimbursement from the government drug plan. The BAP was to be established by the Minister either by sampling or by estimation - in order to maintain the currency of the BAP figures, manufacturers were originally asked to provide updated pricing to the Health Ministry twice each year. This reporting frequency was reduced to once each year in 1991 until in May, 1993, the Ontario Ministry advised manufacturers that a price freeze was in effect, no price increases would be considered, and if any drug companies selling interchangeable drugs chose not to adhere to the price freeze and raised their Ontario prices anyhow they risked having the ‘interchangeable’ designation of their products revoked.

The applicant in this case, Apotex Inc., is a manufacturer of designated generic drugs. Apotex advised the Ontario Ministry in June of 1994 of a proposed increase in the price of certain of their designated drugs. The Ontario Minister of Health responded to the effect that Apotex’s proposed price increase was unacceptable in light of the freeze, and that BAP would not be increased if Apotex increased their pricing. In addition Apotex were advised that the designations of their drugs might be removed if they went ahead and increased their prices in any event of the Minister’s position with respect to the proposed increase. Apotex made this application for judicial review of the Minister’s decision disallowing the proposed price increase on the basis that the Minister acted excessively or unlawfully in refusing to list their drugs at the increased prices and that secondly the Minister acted in an arbitrary manner. The Court rejected Apotex’s application on the first ground. They found that the formula for calculation of BAP was based on prices actually charged in the marketplace, rather than prices proposed to be charged. As a result of this, Apotex needed to actually change their market prices before the Minister would be obliged to do anything to change or re-assess BAP.

At such point as actual market prices were changed, the Lieutenant-Governor-in-Council could re-evaluate the BAP and increase it, could prescribe BAP, or could de-list the drugs in question having regard to the public interest. The Court goes on to state that the Minister would actually have been in contravention of her duties under the Prescription Drugs Costs Regulation Act if she had acceded to Apotex’s “proposed” prices - the Minister was only empowered to act in any fashion once the actual market prices were changed.

The Court distinguished the decision in Apotex Inc. v. Minister of Health released January 11, 1995, on the facts - that decision dealt solely with interpretation of the “75/90" pricing formula. In light of their decision on the jurisdictional question, the Court did not deal with the second question of whether or not the Minister acted arbitrarily.

Notice of Compliance applicant not required to answer process questions:

Merck Frosst Canada Inc. v. Minister of National Health and Welfare (1995), 62 C.P.R. (3d) 553, Federal Court Trial Division

The applicant, Merck, alleged the making and selling of their own drug would not infringe a plaintiff’s patents, and claimed that they were not required to answer questions as to manufacturing yield, experimentation and mutant results. Held, that Merck were not obligated to answer those questions nor were they required to answer any questions relating to the credibility of their position. They were, however, required to provide answers to a question regarding the covering letter which had been produced with working notes.

New Commissioner of Patents

Sheila Batchelor has been appointed as Commissioner of Patents and Registrar of Trade-marks. The appointment, announced on July 31, 1996, was made by the Governor in Council and effective September 1, 1996.

Canada accedes to Budapest Treaty

Canada has acceded to the Budapest Treaty which entered into force in Canada on September 21, 1996. Accordingly, Canada became a member country as of October 1, 1996, when the new Patent Rules came into effect. Accordingly the Canadian government has adopted a new set of guidelines for the deposit of biological materials

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