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Can a 400 Year Old Statute Disrupt Canadian Patent Law?

In Apotex Inc v Eli Lilly 2015 ONSC 5396, Dunphy J began his decision by asking, “[c]an a case brought under a nearly four hundred year old statute be considered ‘novel’?”[1] The statute Dunphy J is referring to is the Statute of Monopolies, 1624 (UK), 21 Jac 1, c 3, an historic English statute that prohibits all monopolies granted through letters patent.[2] Although this statute was enacted in seventeenth-century England, a functionally identical act was passed in Ontario.[3] These acts will be referred to collectively as the Monopolies Acts.

 

Whether the Monopolies Acts apply to patents in Canada remains a contentious issue. Patents, by definition, grant time-limited monopoly rights to inventors over the making, using, constructing, and selling of their inventions.[4] If the Monopolies Acts apply, parties who have been “hindered, grieved, disturbed, or disquieted” by these monopolies may claim treble damages and double costs.[5] However, the most recent examination of this matter in Apotex Inc v Eli Lilly has left the question of whether the Monopolies Acts apply unanswered.

 

Facts

 

The factual background of the Eli Lilly decision involves a patent obtained by the defendant, Eli Lilly, in 2001 for a new use of an existing drug over the treatment of ADHD. Eli Lilly began to exercise its patented monopoly in 2004 and sold the drug under the trade name “Strattera” at monopoly prices. Eli Lilly’s monopoly persisted until their patent was deemed void ab initio in 2010. During this time, however, Apotex developed their own generic version of the drug in 2008, which they were prohibited from selling due to Lilly’s patent. Apotex proceeded to bring an action, inter alia, for treble damages and double costs pursuant to the Monopolies Acts. In the current Notice of Motion under Rule 21.01(1) of the Rules of Civil Procedure, Eli Lilly sought to strike out the claims under the Monopolies Acts.

 

Eli Lilly argued that because patents are entirely the statutory creation of the Patent Act, any remedy or action must be found within that legislative scheme. This argument follows the maxim expressio unius,[6] which assumes that Parliament considered all subject matter for the statute and intended to exclude unmentioned items.[7] This parallels Canadian copyright law, which the Supreme Court of Canada held is also “a creature of statute and the rights and remedies it provides are exhaustive”.[8] Justice Dunphy ultimately held in Eli Lilly that the Patent Act “hardly looks like a complete code” and refused the motion to strike a cause of action under the Monopolies Acts.[9] However, the threshold for a Rule 21.01(1) motion is high and the decision was determined primarily on the lack of consensus within the law.[10] Whether or not the Monopolies Acts are held to apply in Canada will therefore be determined in the proceeding decisions.

 

Commentary

 

To determine whether the Monopolies Acts apply to patents in Canada, it is necessary to analyze the Canadian Patent Act.[11] This is because patents are an entirely statutory creation in Canada.[12] This is clarified in Section 27(1) of the Patent Act, which states that patents shall only be approved if filed “in accordance with this Act.”[13] Parliament enacted the Patent Act for a specific policy purpose: to foster technological progress by incentivizing the disclosure of inventors’ ideas.[14] This is accomplished through the “patent bargain”, which the Supreme Court of Canada articulated in Teva Canada: “in return for a patent, the inventor discloses the invention so that society may benefit from it”.[15] Inventors applying for a patent are required under Section 10 of the Patent Act to disclose their invention to the public.[16] Once the inventor’s monopoly expires, society may benefit from access to the inventor’s ideas. In order for the “patent bargain” to be realized, inventors must be able to exercise their time-limited monopoly rights, despite prohibitions in other statutes. The Monopolies Acts, therefore, should likely not apply to patents under the Patent Act.

 

Even if the Monopolies Acts do not apply to valid patents in Canada, this does not necessarily mean that patentees are entirely safeguarded. This is because an interested party may apply at any time to invalidate an approved patent.[17] If successful, the patent will be deemed void ab initio, meaning the patentee never held monopoly rights over their invention.[18] Without statutory protection, any monopolistic exploitation of the invention could be considered unlawful under the Monopolies Acts. However, allowing the Monopolies Acts to apply in these situations would disrupt the balance achieved in the “patent bargain”. The reason an inventor applies for a patent is to enjoy the exclusive right to make, use, construct, and sell their invention. If an inventor knows that their patent may become void and subject to the Monopolies Acts, the risk of treble damages and double costs may be too large to justify exercising their monopoly. This would discourage inventors from patenting their inventions. As a consequence, inventors may choose to withhold their ideas from the public. It would therefore be contrary to the purpose of the Patent Act to allow the Monopolies Acts to apply to patents void ab initio.

 

            A further consideration is whether the Monopolies Acts are in force in Canada. While the Ontario Statute of Monopolies has not been repealed, it may be struck down for being ultra vires the provincial government. This is because patents are exclusively federal jurisdiction under Section 91(22) of the Constitution Act, 1867.[19] In contrast, the UK Statute of Monopolies may never have become law in Canada. To be valid, it must have been imported to Canadian law by the Property and Civil Rights Act, RSO 1990, c P 29, which imported all English legislation relating to “property and civil rights” into Upper Canada.[20] Since the UK Statute of Monopolies relates to intellectual property, it may have been considered a “property” matter under the PCRA. Intellectual property mechanisms, such as patents, are similar to property, as both can be bought, sold, licensed, and inherited. However, it is equally possible that intellectual property was not considered “property” under the PCRA. This is because property rights concern the allocation of scarcity, whereas intellectual property is not naturally scarce, and is only artificially limited by laws. The fact that the statute was subsequently re-enacted in Ontario (as opposed to federally) supports the latter conclusion. It is therefore possible that neither of the Monopolies Acts are, or will not be, valid in Canada.

 

Conclusion

 

            The decision in Apotex v Eli Lilly did not definitively answer whether a cause of action under the Monopolies Acts can be brought for Canadian patents. However, if either of the Monopolies Acts remain in force in Canada, it is unlikely that either would apply to patents. By enacting the Patent Act, Parliament deliberately authorized monopolistic practices in order to foster technological progress. These monopolies are protected by statute and grieved parties cannot claim damages through other conflicting legislation. It is less clear whether patents void ab initio are subject to the Monopolies Acts. However, this is unlikely due to the increased risk it would add to exercising monopoly rights.

 

 

[1] Apotex Inc v Eli Lilly and Company et al, 2015 ONSC 5396 [Eli Lilly].

 

[2] Statute of Monopolies, 1624 (UK), 21 Jac 1, c 3 [UK Statute of Monopolies]

 

[3] Statute of Monopolies, RSO 1897, c 323 [Ontario Statute of Monopolies].

 

[4] Patent Act, RSC 1985, c P-4, s 21.04 (1) [Patent Act]

 

[5] Supra note 1, s 4.                                                                                                  

 

[6] The Latin maxim expressio unius est exclusio alterius means “expression of the one is exclusion of the other”. 

 

[7] Gregory Hagen, Cameron Hutchison, David Lametti, Graham Reynolds, Teresa Scassa, and Margaret Ann Wilkinson, Canadian Intellectual Property Law, (Toronto: Emond Montgomery Publications, 2013) at 29.

 

[8] Théberge v Galerie d’Art du Petit Champlain inc, 2002 SCC 34, at para 5 [Théberge].

 

[9] Supra note 13 at para 35 [Emphasis in original].

 

[10] Ibid at paras 33, 39.

 

[11] Supra note 3.

 

[12] Supra note 6 at 628.

 

[13] Supra note 3, s 27(1) [emphasis added].                                   

 

[14] Teva Canada Ltd v Pfizer Canada Inc, 2012 SCC 60, para 32 [Teva Canada].

 

[15] Ibid at para 32.

 

[16] Supra note 3, s 10.

 

[17] Ibid, s 60.

 

[18] Ibid, s 63.

 

[19] Constitution Act, 1867 (UK), 30 & 31 Vict, c 3, reprinted in RSC 1985, Appendix II, No 5, s 91(22).

 

[20] Property and Civil Rights Act, RSO 1990, c P 29, s 1 [CPRA].

 

About the Author

 

Sam Sokoloff is a 2L at Western University’s Faculty of Law and a Managing Editor for the Western Journal of Legal Studies. He graduated from Western University with a Bachelor of Management, Honours Specialization in Consumer Behaviour. He will be working this summer at Cassels, Brock, and Blackwell LLP and has previously held digital marketing positions with the BMW Group Canada and MasterCard Canada.

 

Suggested Citation

Sam Sokoloff, "Apotex Inc v Eli Lilly: Can a 400 Year Old Statute Disrupt Canadian Patent Law?" (2016) eDiscoveries, online: <http://www.ediscoveries.org/#!Apotex-Inc-v-Eli-Lilly-Can-a-400-Year-Old-Statute-Disrupt-Canadian-Patent-Law/cjds/569fe3540cf2bfd5cce99c26>.

 

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