Government Of Canada brings Patent Act into conformity with obligations under the World Trade Organization

OTTAWA, July 12, 2001 – The Honourable Brian Tobin, Minister of Industry, today announced the coming into force of Bill S-17, An Act to Amend the Patent Act. Bill S-17 brings the Patent Act into conformity with Canada's obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO).

On September 18, 2000, the WTO ruled that Canada's term of protection for certain patents based on applications filed before October 1, 1989, was inconsistent with TRIPS. As of July 12, 2001, non-expired patents with terms of less than 20 years, counted from the date of filing in Canada, are automatically extended to the minimum 20-year standard as required by the TRIPS Agreement.

"This legislation implements the World Trade Organization ruling on patent term and brings the Patent Act into conformity with our international obligations," said Minister Tobin.

"The amendments to the Patent Act demonstrate our commitment to the international rules-based trade system," said the Honourable Pierre Pettigrew, Minister for International Trade.

Bill S-17 is in keeping with the Government of Canada's commitment, as outlined in the Speech from the Throne, to ensure that Canadian intellectual property laws and regulations remain among the most modern and progressive in the world. It does not undermine Canada's drug patent regime, which seeks to balance effective patent protection while fostering early and effective competition to ensure that Canadians have access to drugs at reasonable prices.

For more information, please contact:

Heidi Bonnell
Director of Communications
Office of the Minister of Industry
( 613) 995-9001

Susan Bincoletto
Director, Special Projects Directorate Industry Canada
(613) 952-2118

Sébastien Théberge
Press Secretary
Office of the Minister of International Trade
(613) 992-7332

Pierre Trépanier
Director, Patent Branch
Canadian Intellectual Property Office
(613) 997-1947

BACKGROUNDER

World Trade Organization Ruling on Patent Term

Issue

On September 18, 2000, the World Trade Organization ruled that Canada's term of protection for certain patents based on applications filed before October 1, 1989 ("Old Act" patents) was inconsistent with the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The World Trade Organization ruling pertained to patents across all fields of technology.

The World Trade Organization ruling flowed from a decision of a World Trade Organization Panel that was established in September 1999 at the request of the United States. The decision of the World Trade Organization Panel was appealed by Canada but was subsequently upheld by the World Trade Organization Appellate Body.

Patent Term Before Bill S-17 Amendments

Canada's Patent Act contained two different terms of protection for patents, depending on the date the application was filed.

• "Old Act" patents benefited from a term of 17 years counted from the date the patent was granted (based on applications filed before October 1, 1989 - former Section 45 of the Act).
• "New Act" patents benefited from a term of 20 years from the date the patent application was filed (based on applications filed on or after October 1, 1989 - Section 44 of the Act).

The patent term of 20 years from the date of filing was introduced into Canadian law effective October 1, 1989 as part of Bill C-22 (1987). Previously, all patents had a term of protection of 17 years from the date of grant.

The World Trade Organization found that the term of protection of 17 years from the date of grant for "Old Act" patents was inconsistent with the TRIPS Agreement, in instances where the patent was granted within three years from the date the application was filed.

Patent Term After Bill S-17 Amendments

Amendments have been made to the Patent Act in order to provide a minimum patent term of 20 years counted from the date of filing to all non-expired patents granted under the "Old Act". As of July 12, 2001, non-expired "Old Act" patents with terms less than 20 years, counted from the date of filing in Canada, are automatically extended to the minimum 20-year standard as required by the TRIPS Agreement.

The term of patents granted under the "New Act" remains unchanged and is not affected by the Bill S-17 amendments.

Number of Patents at Issue

There are approximately 129,000 "Old Act" patents currently in force. Of these, about 45,000 patents have a term of protection of less than 20 years from the date of filing of the patent application. The remaining 84,000 patents already benefit from a TRIPS-consistent term of 20 years from the date of filing.

Not all patents have commercial value. In the course of consultations on this issue, attention has focussed on pharmaceutical patents that cover drugs sold by brand-name companies.

Impact on the Pharmaceutical Sector

There are 25 commercially significant drugs with patents that benefit from a term extension. The number of affected drugs is relatively insignificant when compared to the 5,200 patented and non-patented prescription drugs available to Canadians. The average term extension for the patents on the 25 drugs is less than six months.

The maximum amount of lost savings resulting from these patent term extensions has been estimated at less than one tenth of 1 per cent of drug sales over the eight-year period during which affected "Old Act" patents expire.

The Patented Medicine Prices Review Board, an independent quasi-judicial body, has the mandate to ensure that prices of patented medicines for sale in Canada are not excessive. In their 2000 report, the Patented Medicine Prices Review Board found that patented drugs in Canada are, on average, priced 8 per cent below international median prices and about 40 per cent below those in the United States. . . ..