A precedent-setting decision was handed down last month that could result in Canadian innovation and foreign investment in research and development being severely damaged, the CATA Alliance claims.

Last month, a federal improvement/selection patent case involving a pharmaceutical company (Eli Lilly Canada Inc. vs. Novopharm Limited et al) resulted in Justice Roger Hughes’ decision that the patent required comparative data to better prove the advantages of the product. According to John Reid, president of the CATA Alliance, this could have some very serious ramifications for the IT industry.

“This does affect all of the advanced technology sector, when it comes to patent protection—it affects any product that requires patent protection, which is everything,” said Reid. “We’re trying to attract new research investment and products made in Canada, but when companies are looking at their investment capital, it will prevent them from choosing Canadian companies.” Reid said that the decision has been appealed in October.

David Fewer, staff lawyer with the Ottawa-based Canadian Internet Policy and Public Interest Clinic, said that he believes that the CATA Alliance is overstating what the decision had to say. He said, “It’s a particular kind of patent—a selection, or second-generation, patent. It’s a brand new patent for something that’s already been invented or disclosed. It identifies parts of the composition that has particular or unexpected properties.

This is not related to IT people or new IT innovation—it’d be like discovering your word processor can do spreadsheets twenty years after the fact.”

The amount of research capital required up-front could be raised substantially, if increased documentation was needed come patent time, Reid said. “Now you require detailed comparative analysis and intensive validation. Most people are not able to produce thousands of pages of documentation—instead of a patent costing x amount, it will cost two to three times as much,” said Reid.

David French, an intellectual property lawyer and patent agent with the Toronto-based law firm of Heydary and Hamilton, said that CATA Alliance’s claims “all have the sense that they border on panic.”

Fewer said that this new precedent is “not changing the face of patent law,” and merely addresses adequacy of disclosure in that particular case. The case had, he said, an inadequate amount of supporting data, which resulted in the judge’s request for more disclosure—not a new requirement for extensive comparative data in all selection patent cases.

Reid, though, is concerned about the effect this could have on the current IT landscape. “With outsourcing and the restructuring of many businesses, we don’t want the balance to tip in the wrong direction. The IT industry is especially exposed,” he said.

This is not an issue, according to Fewer, who said there is, however, an industry that does frequently deal in selection patents. Said Fewer: “The only people this may have an impact on are the large pharmaceutical companies.” They are, he said, stakeholders in the CATA Alliance.

Other objections that CATA Alliance plans to bring to the appeal include the precedent’s clashing with existing Canadian law. Canada is a member of the Patent Cooperation Treaty, which states that the patent should “disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art.” This, said Reid, does not require the extensive analysis and documentation he said is called for in the decision, and thus actually goes against Canadian law and its treaty obligations.

And now, said Reid, Canada is also the only country with a similar requirement.

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