Legal disputes, but not clarity in the law, are an inescapable reality in the life sciences sector
Enforcing and maintaining patents is crucial in the life science sector; in the drug sector, brand pharmaceutical and generic companies spar frequently and repeatedly over them. “I would estimate pharma patent litigation, whether by number of cases, number of lawyers involved and/or amount of money involved, is one of the largest categories of commercial litigation in Canada,” says Gunars Gaikis, a partner at Smart & Biggar/Fetherstonhaugh in Toronto.
Patent litigation “is a reality of business life in the pharmaceutical sector,” given there’s so much at stake, says Gaikis, whose practice focuses on pharma patent litigation on behalf of the brand companies. According to Industry Canada, pharmaceutical sales in Canada have a 2.6 per cent share of the global market, making Canada the eighth-largest world market. Its 6.4 per cent average annual growth over the period 2006–2010 makes Canada the fourth-fastest-growing market globally, after Brazil, China and Spain.
It’s also a practice area where never the twain shall meet; lawyers line up on one side or the other: brand name pharmaceutical or generic companies, and there’s nary agreement on anything.
So what is the state of pharmaceutical patent litigation today and where may it be headed?
“We don’t seem to have a problem in getting patents issued in Canada because the rules at the patent office are clear,” says Andy Shaughnessy, a Toronto partner focused almost exclusively on intellectual property in the litigation department at Torys LLP. “The issue is when the patents are then scrutinized by the courts.”
Shaughnessy, who represents brand pharmaceutical clients, says, “we lack in Canada clarity in our law in respect of the rules the judges have to apply to determine whether a patent is valid or not. Americans talk to us about their ‘bright line rules.’ They know what their rules look like and they can predict an outcome based on whether or not their patent does or does not meet those rules.”
Not so in Canada, he says. “There’s an utter lack of predictability as to whether a patent will remain valid through to the end of its term of exclusivity. Every time the client says to us, ‘are we going to win or are we going to lose?’ lawyers are in a tough position. We say ‘you should win, but you may not.’” And that, he says, has led to the rather incongruous situation where a patent that may be valid in the US and UK, for example, may not be valid in Canada.
One issue ripe for disagreement is “the promise of the patent.” To have an invention, says Don Cameron, a partner and intellectual property litigator at Bereskin & Parr LLP in Toronto, “it has to be new, useful and inventive. For the longest time, ‘useful’ just meant it worked. Utility was never a big deal; the case law always said a scintilla of utility is enough. But there’s been a shift over the past five years when the utility standards effectively were raised by the court to the level where if your invention doesn’t do everything you promised, your whole patent is invalid, even though your invention has some amount of utility.”
Another evolving issue, says Cameron, “is the extent to which – or when – you can get a patent for something you’ve never made, but are confident will work. Often only one drug is tested and proven to work, but pharma companies try to patent that drug and many others that are chemically similar, and which have never been tested. In the last decade, the courts have said that if you are predicting that something will work, you must set out in the patent the data you have to support your prediction and the theory behind your prediction. And if you didn’t do that many years ago when you applied for your patent, then your patent doesn’t satisfy the new standard of ‘sound prediction.’ Since they never anticipated this requirement, many patents lack these.”
As a result, says Cameron, “this has triggered a lot of litigation and there have been a number of patents that have been declared invalid as a result of the patents not having the data and the theory of prediction as to why it will work built into the patent.”
Jonathan Stainsby, partner and head of the intellectual property litigation team at Heenan Blaikie LLP in Toronto, sees through a totally different lens. “The whole suggestion of unpredictability in Canadian patent law arising from the so-called ‘promise doctrine,’ or otherwise for that matter, is a red herring,” says Stainsby, who represents generic drug companies. “It’s all a matter of looking at the patent and seeing what the patentee has said the invention will do; part of what judges do in patent law, and every other area of law, is read and interpret documents and decide what in fact they say. [Judges are] not doing it any differently than they are in contracts, insurance, actual statutes and regulations. I think this is a manufactured issue that was raised in order to try to change the law in some way that would benefit brand pharma.”
“Promise of the patent to my mind makes a lot of sense,” says Carol Hitchman, partner and head of the IP Group at Gardiner Roberts LLP in Toronto, who works for the generic drug companies. “We don’t have file wrapper estoppel as they do in the US, where as a patent is percolating along through the patent office the patentee makes representations to the office and says ‘well, I’ve drafted my claim this way because I want to get around a piece of prior art,’ and the patentee is then bound by that later on.”
In contrast, “in Canada patents are treated more like contracts in the sense that all the negotiations leading up to the patent aren’t pertinent, as all you look at is the patent itself,” she says. “So I believe that if what you said in your patent is ‘this invention will work for this disease,’ for example, then you should be bound by that because that is the basis on which you got your patent.”
But whichever way you see the promise of the patent argument, “if you have anything to do with drafting patents, you’ve got to pay more attention to them,” says Shaughnessy. “I think we are moving from a world of many, many patents to a world of fewer higher-quality patents. Canadian courts seem to want to see higher-quality patents.”
Brand/generic pharmaceutical litigation is rooted in legal argument, but also economic realities. Traditionally, brands and generics battle it out over the drugs familiar to the general public. But as competitive and litigious as the pharma sector has become, Hitchman says the number of new cases being litigated is dropping. “The provinces have clamped down on the amount the generics can charge for their drugs and drastically reduced their prices,” says Hitchman, whose practice focuses on pharmaceutical litigation in both the patent and trade-mark areas. “Consequently, they are not as keen to challenge the patents.”
Any slowdown in litigation may also be a result of brand pharma’s current “pipeline,” says Stainsby. “It’s not so much about the law,” says Stainsby, “but rather the small number of branded pharmaceuticals remaining under patent protection whose sales are significant enough to justify the expense by the generics of fighting the patent.”
The pipeline is not as full as it used to be, he says, “since the sales of many of the products that remain under patent aren’t as significant as those of the blockbuster drugs, the kind that sell hundreds of millions of dollars a year, that have already been litigated. In comparison, if a drug sells $10 million a year in Canada and the generic is going to make $2 million a year selling it, then it’s hard to justify spending $2 million litigating it.”
Gaikis travels a lot in Europe where the pharma company executives he meets with “all seem to have heard that not only is Canada very litigious, but things are not going well for pharmaceutical patent owners in litigation. So not only is there uncertainty, but it’s uncertainty combined with ‘our chances are not good in Canada to have our patent survive a legal challenge.’ So that kind of a general image and understanding means that if you’re calling the shots at a large company in terms of where you are going to invest, then Canada is not going to be high on your list.”
Still, domestically and globally, companies of both stripes and their lawyers are watching nascent litigation over “biologics” that may have the potential to spell a new wave of litigation. “Typically, the drugs we take are relatively simple chemical compounds, the products over which the battles historically take place,” says Cameron. “The new generation of pharmaceuticals called biologics, the product of bio-technology, very complicated products made by organisms, are turning into big dollar products in the pharmaceutical area, so we’re in the early stages of the generics taking a run at some of these biologics patents. We’re also starting to see in the industry that companies are trying to get as much protection as they can for these products in anticipation of the litigation that is around the corner.”
But here again there’s disagreement. “It remains to be seen whether biologics are going to be as fertile an area of litigation as other pharmaceuticals have been because of the complexity and the difficulty in developing generic equivalents,” says Stainsby.
Still, there’s one area where there seems to be some sense of agreement among lawyers on both sides of the divide: the war between brand pharma and the generics, says Gaikis, “is one of the most active and high-profile areas of intellectual property litigation in Canada.”
Bev Cline is a freelance business and legal-affairs writer and editor in Toronto.