Patents, Copyrights and Trademarks -- 2017

Eli Lilly and Co. v. Canada   (ICSID)

NAFTA challenge of Canada’s promise-utility doctrine for patents

Eli Lilly brought an investment treaty dispute against the Government of Canada pursuant to the North American Free Trade Agreement (NAFTA) before the International Centre for the Settlement of Investment Disputes (ICSID). Lilly’s claims relate to the expropriation of its property, namely Lilly’s patent rights, as a result of the application of a new patentability requirement under Canadian law (the promise utility doctrine) that is inconsistent with Canada’s international obligation s in NAFTA and is out of step with the practices of its NAFTA partners. As a result of the application of the promise utility doctrine, Canada has revoked over 22 pharmaceutical patents in 25 cases over the past decade on the ground that these patents lack utility. Canada’s additional utility requirement undermines the predictability of intellectual property rights and discriminates against the innovative pharmaceutical industry.

The NAM filed a brief in support of Eli Lilly’s challenge to Canada’s promise utility doctrine. Out of the many groups that asked to file a brief, the NAM was one of only a handful, and the only U.S. association, to have a brief accepted by the ICSID tribunal. Manufacturers of all sizes depend on patents to spur investment and foster innovation, and the NAM will continue to fight policies that unfairly deprive manufacturers of longstanding and basic intellectual property rights through all available channels, including domestic courts and international arbitration tribunals. Canada’s patent invalidations discourage innovation and investment in pharmaceuticals and potentially many other industries. Canada is one of the United States’ largest trading partners, and adequate protection of intellectual property is critical to ensuring the success of that relationship. The success of U.S.-Canada trade relations is a model for the rest of the world, and no party wants to see that relationship weakened through the disregard of a fundamental right of patent protection.

The tribunal unfortunately ruled in Canada’s favor purely on a threshold issue, sidestepping core investment and intellectual property (IP) issues at the heart of the case. In so doing, the tribunal failed to provide relief from Canada’s actions that undermine innovation and IP protection to the detriment of U.S. manufacturing and jobs. This decision does not resolve the significant uncertainty for investors in Canada, which has chilled Canada’s ability to promote growth and investment for innovative manufacturers that rely on strong IP protections. The NAM is continuing to examine other avenues to address this significant challenge, including through the Special 301 process and direct engagement with the Canadian government.

Related Documents:
NAM press release  (February 24, 2016)
NAM amicus brief  (February 12, 2016)


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