Compulsory licensing

As a part of its sprawling emergency legislation passed on March 25th, Parliament made changes to both the Food and Drugs Act and the Patent Act to make it easier to produce new medical supplies in the face of the global COVID-19 pandemic.

But the bill was put together quickly and possibly lacks nuance, says Daphne Lainson, a partner with Smart & Biggar LLP in Ottawa.

"Canada may have been ahead of some other countries, so there was not necessarily the benefit of looking to other jurisdictions to see how they have handled these issues," she says. "I understand why they wouldn't have consulted as they normally would have done."

Concerning the Food and Drugs Act changes, which grant pharmaceutical authorizations for up to one year, Lainson says it's likely Health Canada needed to be nimbler and felt constrained within the existing framework around interim orders.

According to Lainson, the emergency legislation also doesn't define what constitutes a public health emergency. Though it's predicated on the COVID-19 pandemic, the provisions could have broader application.

"If you search through the legislation, [public health emergency] is only coming up within the context of the Patent Act, which I do think is a little odd," says Lainson.

Junyi Chen, a partner at Blaney McMurtry LLP in Toronto, says there are already provisions in the Patent Act that allow governments to use patents during emergency situations. But the provisions in this bill give them the right without notifying the patentee. What's more, the bill changed the language around the Commissioner of Patents’ power to grant patent use from “may” to “shall,” seemingly eliminating any discretion in the existing provisions.

It removes any obligation on the part of the government "to show that they took steps to negotiate," says Chen. The new provisions require the government to specify who can construct, use, and sell the patented invention as part of the response to the public health emergency, she says.

But by not reaching out to patentees first, the government risks creating a situation where the Minister of Health is missing the full picture, particularly if there are patentees who are already fully supplying the market, says Lainson. By not first negotiating with patentees, the minister may be unaware that other relevant patents may not be properly addressed, thereby creating logistical challenges.

She says that it would have been helpful to include a notice requirement in the new Patent Act provisions, albeit a short one. That way, there would be some minimal incentive to consider solutions other than trumping existing statutory rights. Lainson acknowledges that the government may nevertheless decide, in practice, to notify patentees when invoking the legislation.

According to Chen, the government should recognize that patentees are already acting out of a sense of corporate social responsibility by allowing others to manufacture medical devices. The bill is therefore likely a backstop in the event that a patentee is reluctant to step forward.

Lainson says that the bill reads like each section was drafted separately, and points to how the sunset clauses in the Patent Act and Food and Drug Act provisions are written differently for no apparent reasons. The provisions in the former expire on September 30th, and in the latter on October 1st.

Chen further notes that the bill offers a safeguard. The Federal Court can step in if the patents are ever used for purposes other than the public health emergency.

With regards to remuneration to patentees, she says, the new provisions stipulate that both the government and the person authorized to use the patent must pay the royalty. That differs from the previous legislation, under which only the government was required to do so.

Chen also questions who gets to determine what constitutes "adequate remuneration," which is a question that CBA National put to the minister's office. "The amendments provide that affected patent holders are entitled to receive 'adequate remuneration' and the amount would be set by the Commissioner of Patents," says Veronique Simard, spokesperson for Minister for Innovation, Science, and Industry.

The question for Lainson is how it would assess the "economic value" as stipulated in the Act.

"Who knows how the Commissioner of Patents was involved in this discussion," says Lainson. "We just haven't seen any guidance from the Patent Office."

Chen says that while the bill strikes a good balance in the face of a global pandemic, the real question is whether it will ever be used.

As Lainson points out, "the pharma industry as a whole has come together."

"You're seeing tremendous collaboration between companies in terms of trying to bring a vaccine to market," she says. "You're seeing sharing of information that we haven't seen before. Everyone is really invested in trying to develop a vaccine, because we're all dependent upon it. It's really quite extraordinary."

Lainson adds that technology companies have been offering up their technology so that other companies can manufacture ventilators.

"Obviously, the government thought this legislation was an important step to take, and I completely understand why they may have made the decision they did," says Lainson. "On the flip side, the clients that we serve have definitely been working in a collaborative fashion with government to try and address this public health crisis."