| REPORT OF THE COMMITTEE | THURSDAY, April 5, 2001 |
The Standing Senate Committee on Banking Trade and Commerce
has the honour to present its
THIRD REPORT
Your Committee, to which was referred Bill S-17, An Act to Amend the Patent Act, has, in obedience to the Order of Reference of Monday, March 12, 2001, examined the said Bill and now reports the same without amendment, but with observations, which are appended to this report.
Respectfully submitted,
LEO KOLBER
Chairman
APPENDIX
Observations on Bill S-17
The Committee recognizes that these observations are outside the purview of S-17. However, the Minister, in his appearance before the Committee, indicated his intention to review the Patent Act at a future date in this Parliament. Any future review should consider the issues that follow.
The Committee recognizes that framework laws, such as intellectual property, must remain modern and progressive, and play an important role in the promotion of an innovative economy.
The Committee heard testimony suggesting that aspects of the present regulations may not be working in the way that Parliament originally anticipated. This may be leading to an increase in costly litigation. Such costs are normally passed on to the consumer through higher prices.
These regulations essentially superimpose special rules on court procedures. Testimony by government officials indicated that the regulations in question were a trade-off in exchange for the "early working" exception, which permits the generic manufacturers to begin work on the product before the expiry of a patent. The Patent Act created this legislative exception, which would otherwise be a violation of the patent holder’s rights.
The case that witnesses raised is one in which an existing patent on a drug is coming to an end and a manufacturer is planning to create a generic edition. If one or more other patents related to the same drug have been issued, a claim by the original patent holder that the generic copy will infringe these other patents automatically prevents the Minister of Health from issuing a notice of Compliance for up to two years.
The Committee was told the result is that the generic product cannot be marketed for a longer period of time than would otherwise be the case, and that this use of the regulations is tantamount to an abuse of process.
In general, it is the Committee’s view that the courts are fully capable of determining appropriate procedures, which should not differ substantially from one industry to another. Regulatory interference carries a risk that an unfair advantage may inadvertently be provided to one side or the other.
Given the testimony suggesting that the cost and volume of related litigation was high, that a significant majority of the cases were ultimately lost by the patent holders, and that the patent holders gain an unintended benefit from the delay created, modifications of the regulations could be in order.
Indeed, the Minister of Industry agreed that "the intention should be to avoid things which would allow abuse to unnecessarily and, in an unearned way, extend that period of patent protection."
The Committee, therefore, strongly urges that the Minister, in a future review of the legislation and regulations in question, ensure that they do not provide any of the parties implicated in patent protection with an advantage unintended by Parliament.
In addition, the Committee strongly urges any future proposed changes to regulations made under the Patent Act be tabled in both Houses of Parliament and automatically referred to appropriate committees for study and report within 30 sitting days of their being referred to Committee.