A Fine Balance: The Intersection Between Canadian Pharmaceutical Patent & Competition Law
This is a guest post by Timothy Dunn, Legal Advisor to Healthcare Companies Doing Business in Canada. You can find Timothy on Twitter here, and here is his website. If you have any questions, or would like to discuss a particular matter, you can contact Timothy at tdunn@canadianhealthcarelaw.com or (450) 951-1335.
Patent law is intended to reward innovation with exclusive commercialization rights. Competition law is intended to do the exact opposite: foster market competition. Managers of healthcare companies doing business in Canada need to know the answer to a very important question: where do the limits of exclusivity granted by a patent end and the limitations of the Competition Act begin?
Pharmaceutical patents enjoy three forms of protection under Canadian law:
- the general patent protection under the Patent Act,
- the supplementary protection under the Patented Medicines (Notice of Compliance Regulations), and
- Data Protection under the Food &Drug Regulations.
However, the conspiracy and abuse of dominance provisions of the Competition Act operate to regulate how these patent rights may be exercised. Indeed, the stakes have never been higher. Not only do these notions have vital implications for the development and management of a firm’s product pipeline and lifecycle management strategies, but recent amendments to the Competition Act have created new causes of action and stiffer penalties ($25 million fine and 14 years imprisonment) for violating the law.
The general principle is that the mere exercise of patent rights does not attract any liability under Canadian competition law. Where a patentee increases its market power beyond the protection afforded by the relevant patent(s), its risk of liability under the Competition Act increases. This can easily occur in the context these common business arrangements for healthcare companies:
- patent infringement litigation settlements,
- restrictive covenants between firms operating in the same product market,
- licensing transactions, and
- acquisition and prosecution of patent rights,
Healthcare companies concerned about compliance should give themselves the benefit of legal counsel who is keenly aware of the nuances of Canadian competition law in the healthcare industry. The financial and reputational risks are too great to go it alone.
About the Author: Timothy Dunn is Managing Director of Canadian Healthcare Law Inc. He is an Ontario-Quebec qualified lawyer and trade-mark agent whose practice relates exclusively to providing legal solutions to managers of healthcare companies doing business in Canada.
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