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Canada: Tribunal dismisses Eli Lilly’s NAFTA challenge

Following the invalidation of its patents for Strattera (atomoxetine) and Zyprexa (olanzapine), Eli Lilly and Company submitted claims to international arbitration under the North American Free Trade Agreement (NAFTA). On March 1, 2017, the Tribunal issued its final award dismissing Eli Lilly's claims.

Eli Lilly's patents were invalidated on the basis of the so-called "promise of the patent" doctrine; namely, that the claims of the patent failed to deliver utility promised by statements in the specification. Eli Lilly argued that Canadian courts had dramatically changed the application of the utility requirement through a series of cases that adopted the promise doctrine and that the retroactive application of this doctrine to Eli Lilly's patents resulted in a breach of Canada's obligations under NAFTA.

The Tribunal, however, found that Canada's utility requirement underwent incremental and evolutionary changes between the grant of the patents and their subsequent invalidation. Moreover, it found that the promise standard has a "strong foundation" in earlier jurisprudence of the Supreme Court of Canada. Further, the Tribunal found that the doctrine was neither arbitrary nor discriminatory. In summary, the government of Canada was not found to have violated its obligations under NAFTA.

The NAFTA decision further supports the application of the heightened utility requirement that may arise under Canadian law through application of the promise doctrine. Those interested in the issue, however, eagerly await a decision from the Supreme Court of Canada in the case of AstraZeneca Canada Inc v Apotex Inc. In that case, which was heard in November 2016, the promise doctrine was directly before the Supreme Court. A decision, which may bring some clarity on the issue, is expected soon.

Neil Padgett

Smart & Biggar/ Fetherstonhaugh

55 Metcalfe Street Suite 900

PO Box 2999 Station D

Ottawa ON  K1P 5Y6

Tel: 613 232 2486

Fax: 613 232 8440 

ottawa@smart-biggar.ca

www.smart-biggar.ca

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