CETA – what does it mean for Canadian intellectual property?
Almost a year after an agreement in principle between Canada and the European Union, the official full text of the Canada-EU Comprehensive Economic and Trade Agreement (CETA) was released on September 26 2014. The 1,500-page agreement reflects most of what was previously articulated by the Canadian government in a summary produced after the agreement in principle. In the domain of intellectual property, CETA stands to affect pharmaceuticals with respect to patent term restoration, appeal rights and data protection, as well as trademarks with respect to counterfeit goods and EU geographical indications (GIs).
With the text formally released, Canada and the EU member states will now undertake measures to ratify the treaty. This process has become more complex amid media reports that Germany still opposes certain sections of the agreement. Regardless, there remains a long road before CETA is officially ratified, as each party must now undertake the process of passing the agreement through various stages in its individual legislature. It will take still longer to consider how CETA will specifically be implemented, including the nature of amendments to applicable legislation.
Patent term restoration
Patent term restoration is currently available in many industrialised nations, but not Canada. Patent term restoration provides additional incentives to pharmaceutical companies whose new drug approvals are delayed during the health regulatory marketing approval process. In these cases patent protection may be inadequate, as delayed drug approval means that the patent covering a drug may expire on or before the date that approval is granted. CETA aims to mitigate the impact of this problem in Canada by restoring up to two years of patent term.
This change will require an amendment to either the Patent Act or the Food and Drugs Act. The enacting provisions may be embodied in an amendment to a statute and/or by regulation. In the latter case, an amendment to either the Patent Act or the Food and Drugs Act will grant the regulation-making power necessary to create the Patent Term Restoration Regulations.
Appeal rights and duplicative litigation under Patented Medicines (Notice of Compliance) Regulations
At present, within days of an innovator losing an application under the Patented Medicines (Notice of Compliance) Regulations, the generic is often granted a notice of compliance (ie, official approval to sell a copycat drug in Canada). Canadian courts have held that this renders any appeal by the innovator moot. On the other hand, should the generic lose a proceeding under the regulations, the generic may appeal that decision to the Federal Court of Appeal and potentially even to the Supreme Court of Canada (eg, Teva v Pfizer (Viagra), 2012 SCC 60).
CETA will require that both parties under the regulations be granted a right of appeal. The aim of this requirement is to introduce balance and fairness to proceedings under the regulations and permit research-based companies to appeal negative decisions.
However, some issues with proceedings under the regulations will need to be addressed. At present, the regulations prescribe a 24-month window during which the entire application must be resolved. If the innovator decides to appeal a decision, the 24-month period will likely have lapsed. Changes may be required to the regulations to address this issue. Another question is whether the generic’s notice of compliance will be held in abeyance pursuant to a stay pending the outcome on appeal, or whether the generic’s notice of compliance will be revoked should the innovator succeed on appeal.
A further issue that remains in Canada is that it is current practice for an innovator that loses a proceeding under the Patented Medicines (Notice of Compliance) Regulations to launch an action for patent infringement once the generic comes to market. Similarly, if the generic loses a proceeding under the regulations, it can initiate an action to impeach any pertinent patents. Both of these actions proceed under the Patent Act. If the right to appeal is available to both parties, it is questionable whether – and under what circumstances – such duplicate proceedings will be permitted.
To come into line with CETA’s right of appeal for both parties, the government will be required to amend the Patented Medicines (Notice of Compliance) Regulations. Since these regulations were enacted pursuant to a regulation-making power set out in Section 55.2 of the Patent Act, it is unlikely that an amendment to the act will be required.
CETA repeats Canada’s current term of data protection (ie, six years before a generic can file an abbreviated new drug application if it relies on the innovator’s data and eight years before issuance of a notice of compliance to the generic). The eight-year data protection does not differ from current Canadian law. Thus, no changes are required to the Data Protection Regulations.
Investor-state dispute settlement
A contentious issue of CETA has been the investor state dispute settlement chapter. Arbitration clauses are common in trade agreements and they allow companies to sue governments if certain decisions are enacted that run counter to the interests of the company. The EU parties, especially Germany are wary of such arbitration clauses.
This issue is also relevant to intellectual property, as the parties have chosen to include an opt-out clause for arbitration, allowing the domestic authorities full responsibility to determine the existence and validity of IP rights.
The final text of CETA regarding international trademark agreements goes further than was anticipated. Parties are to make “reasonable efforts” to comply with the Singapore Treaty and to accede to the Madrid Protocol. Although CETA has called only for “reasonable efforts” and does not require accession to either treaty, Canada is well on the way to fulfilling its commitment.
In January 2014 the Canadian government tabled three trademark-related international IP agreements, including the Singapore Treaty and the Madrid Protocol. The Canadian government has taken steps to officially ratify and implement these international agreements. Implementation of the Madrid Protocol will bring Canada into line with over 90 countries and facilitate the registration of trademarks in those countries.
CETA also includes several commitments aimed at curtailing trade in counterfeit goods. Civil remedies and border enforcement rights will likely form much of Canada’s obligations. These are consistent with Canada’s anti-counterfeiting regime and are in keeping with the proposals found in pending Bill C-8, the Combating Counterfeit Products Act, introduced to Parliament on October 28 2013. The bill is progressing more slowly than expected and has come under some criticism that its measures do not go far enough to combat counterfeiting. The House of Commons most recently debated Bill C-8 on September 19 2014 and it remains stalled at the third reading stage.
While Bill C-8 is an encouraging development, concerns exist that further amendments to the proposed legislation may be required to enhance the effectiveness of Canada’s anti-counterfeiting and anti-piracy regime, including border enforcement, resource allocation and the bearing of costs related to storage, handling and destruction of counterfeit goods. Additionally, the offences, punishment and remedy provisions may need further revisions if brand owners are to rely on these provisions to enforce their rights in a pragmatic and meaningful manner.
Under CETA, Canada will provide protection for over 170 terms covering various foods and beer, in addition to those EU wine and spirit GIs currently recognised by Canada. The nature and scope of protection will vary depending on the specific GI in question and will not prejudice existing Canadian trademark holders.
A number of exceptions listed in the agreement will allow for different uses of certain GI-protected terms.
For example, CETA preserves the right of Canadian producers to use customary common English and French terms for certain food products, such as the English and French – but not the German – terms for Black Forest ham. Other terms that continue to be free for use in Canada include Valencia orange, Tiroler bacon, Parmesan, St George cheese, Bavarian beer and Munich beer.
The GI rights provided to the European Union with respect to certain cheese products (eg, Asiago, Feta, Fontina, Gorgonzola and Munster) are also limited. While users that pre-date October 18 2013 are unaffected, future users will be able to use the names only when accompanied by expressions such as 'kind', 'type', 'style' or 'imitation'.
CETA also allows Canada to maintain the ability to use components of multi-part terms and customary names of animal and plant varieties. For example, Brie de Meaux will be protected, but the term 'brie' can be used on its own.
GI protection for certain meat and cheese products will also be limited if a person or its successor has previously been using the term commercially for a period of either five or 10 years. If the term has been used for less than the timeframe specified in the agreement, a transitional period will apply, after which use will no longer be permitted.
Ultimately, recognition and protection of GIs is expected to remain under the relevant legislation of each party and a private matter to be determined by the courts. Each party is also expected to adopt procedures for border enforcement to allow authorities to enforce GI-protected terms.
The copyright provisions of CETA reflect already established international standards from the 1996 World Intellectual Property Organisation treaties on copyright and performances and phonograms. Canada’s recent Copyright Modernisation Act brought Canada’s copyright regime into compliance with these international standards. The final draft is reflective of Canadian standards in the areas of protection of technological measures and intermediary service providers. As a result, no amendments to the Copyright Act are anticipated.
CETA calls for all parties to reinforce the protection of plant varieties based on the International Convention for the Protection of New Varieties of Plants. Canada’s existing legal regime is compliant with the convention and CETA will not change farmers’ privilege to save and replant seeds of a protected variety on their own land under the federal Plant Breeders' Rights Act, although there are amendments to the act that are pending in Parliament under Bill C-18 introduced in December 2013. The bill would expand the plant breeders' right to sue for damages those who sell or reproduce their plants or seeds.
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