Richard Lloyd

It’s not often that Canada is put on the map in IP value creation terms. Last month’s highly successful IPBC Global in Ottawa certainly helped, as have two recent court decisions, which should catch the eye of patent owners everywhere.

Late last week in a dispute between pharma giant AstraZeneca and local player Apotex, Canada’s Supreme Court did away with the so called “promise doctrine” in a ruling that has been characterised by some as friendly to patent owners. The doctrine in question, relating to patent eligible subject matter, added an extra hurdle for a patent owner to prove the utility of an invention, and had been used to invalidate 26 patents since it was introduced in 2005.

According to one view of the decision it brings Canada back in line with other jurisdictions. But what makes it particularly interesting is that it stands in sharp contrast to many of the recent changes to the US patent system which have been particularly hostile to patent owners.

Such was the significance of the court’s ruling that it won strong backing from the US Chamber of Commerce’s Global IP Center. “We welcome today’s ruling that upholds AstraZeneca’s patent rights and rebuffs Canada’s so-called “promise doctrine”,” Patrick Kilbride, its vice president of international IP policy said in a statement. “The doctrine’s extremely restrictive approach has created harmful instability and uncertainty for medical innovators by making it difficult to obtain or defend a life science patent in Canada. Today the Supreme Court has begun to restore much-needed clarity and confidence that biopharmaceutical innovators will be afforded equal protections under the law.”

That should resonate in particular with an American biotech community that has been sharply critical of changes in US law around patent eligible subject matter and the introduction of inter partes reviews.

But the Supreme Court’s ruling is not the only recent Canadian court decision to draw a sharp contrast with the situation in the US. On Monday, in the largest patent award in Canadian history, Dow Chemical was awarded damages of C$645 million ($498 million) in its infringement suit with NOVA Chemicals Corporation. The patent in question relates to polymers used in packaging.

The record-breaking award follows a seven-year courtroom tussle through the Canadian courts and was calculated based on the defendant’s profits rather than the plaintiff’s losses. As Steven Garland a partner at Smart & Biggar, the firm which represented Dow in the case (and was also victorious for AstraZeneca in the Supreme Court case), points out doing it that way “can be very attractive to a patent owner”. 

However, Dow will not be celebrating too hard just yet, as events may not have reached a complete conclusion. A separate decision in the case from April is already being appealed and NOVA can also look to overturn the C$645 million award in whole or in part.

Even so, the decision offered another interesting contrast with the US. In the corresponding litigation there, Dow was initially successful in proving that its IP was valid and infringed. Ultimately, though, the company lost at the Court of Appeals for the Federal Circuit when the patent claims were ruled indefinite based on the Supreme Court’s 2014 ruling in Nautilus v Biosig Instruments.

A blockbuster payout like Dow’s is still a rare event in Canada and given the comparative size of the two markets, damages awards will usually be higher in the US however they are calculated. But as the assertion climate has become much tougher south of the border and more patent owners look for different jurisdictions in which to bring infringement suits, an award of just under $500 million may cause some to take a closer look at a jurisdiction that is as close to home as it is possible to get.