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01 December 2008
The federal Competition Act establishes both criminal and civil liability for anti-competitive acts. In Les Laboratoires Servier v Apotex Inc the Federal Court revisited and clarified the interface between competition law and patent law in Canada.(1)
In Laboratoires Servier the plaintiffs alleged infringement of a patent for perindopril, a drug that is part of a class of angiotensin-converting enzyme (ACE) inhibitors used primarily for the treatment of hypertension and cardiac insufficiency. While the patent application was pending, it had been placed in conflict with other patent applications for ACE inhibitors. Canadian conflict proceedings, which are similar to US interference proceedings, are increasingly infrequent because they are applicable only to patent applications filed before October 1 1989. However, the principles that the Federal Court articulated in Laboratoires Servier are likely to be of interest to patent holders generally.
The various parties to the conflict proceeding settled their dispute and the settlement led to the patent rights that the plaintiffs asserted in Laboratoires Servier. Apotex, the defendant generic drug manufacturer, alleged that the patentee conspired with the parties of the settlement agreement to limit competition unduly (contrary to the Competition Act) by ensuring that the parties to that agreement gained effective control over the manufacture and supply of a number of ACE inhibitors. More particularly, Apotex alleged that the settlement agreement enabled its participants to control the commencement and duration of monopoly periods to control the relevant market and limit competition.
In considering Apotex’s submission the court reviewed the jurisprudence in this area. In 1991 the Federal Court of Appeal held that the exercise of rights expressly provided by the Patent Act would not unduly impair competition contrary to the Competition Act. However, the Federal Court of Appeal later acknowledged in 2004 and 2005 that where an assignment of a patent increases the assignee’s market power beyond what is inherent in the assigned patent, the assignment could be contrary to the Competition Act. For example, assignment of a patent may offend the Competition Act if the assigned patent unduly impairs competition when combined with other patents owned by the assignee. The court concluded that a Competition Act violation requires “something more” than the mere existence or assertion of statutory patent rights.
Applying these principles to the present case, the court found no basis for a Competition Act violation. The court emphasized that the conflict settlement agreement had been entered into while the patent applications were still pending and held that until the patents issued, they could not confer market power or impair competition. The patentee’s actions in settling the conflict proceeding were nothing more than the exercise of the patentee’s statutory rights under the Patent Act and the Federal Court Rules. Thus, Apotex had failed to establish something more than the mere existence or exercise of statutory patent rights.
The court commented in passing that if the patentee had already held other patent rights for perindopril, or even for other ACE inhibitors, such a settlement agreement would have arguably amounted to something more than mere statutory patent rights, because it would have effectively conferred more market power upon the patentee than that inherent in the patent itself.
The Federal Court’s decision in Laboratoires Servier is slated for review by the Federal Court of Appeal.
For further information on this topic please contact Jonas H Gifford at Smart & Biggar/Fetherstonhaugh by telephone (+1 604 682 7780) or by fax (+1 604 682 0274) or by email (firstname.lastname@example.org).
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