Good Faith Clause
The legislation establishing Canada's
Access to Medicines Regime contains a "Good
Faith Clause" that provides patent holders with the right to
challenge a compulsory licence
in the Federal Court of Canada. A challenge can be mounted if the
patent holder believes the licence is being used for predominantly
commercial rather than humanitarian purposes. The patent holder must
establish that the average price of the licensed drug or medical
device is 25 percent or more of the average price of the equivalent
patented product in Canada. The licence holder has an absolute defence
if the licence holder can establish that the average price of the drug
or medical device remains less than its direct supply cost, plus 15
percent.
The
August 2003 World
Trade Organization Decision was adopted by the General Council in light of the
General Council
Chairperson's statement stipulating that it must be used in good faith in order to deal with public
health problems and not for commercial policy objectives. The good faith clause is intended to give effect
to Canada's obligation to implement the Decision in keeping with the Chairperson's statement by providing a
patent holder with the right to challenge a licence in Court where there is good cause to believe the
licence is commercial in nature.
For more information on the factors that the Federal Court of Canada will consider in determining whether a
compulsory licence has been used for commercial purposes, and the types of orders it may issue, refer
to Section 21.17
of the Patent Act.
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