Absence of a Canadian patent leaves the PMPRB powerless to control the price of Cystadrops

By Osman Ismaili, February 4th, 2020

While the Patented Medicines Prices Review Board (“the PMPRB”) polices the prices of patented medicines in Canada, a recent article in The Globe and Mail suggested that a loophole may exist for drug manufacturers that have chosen not to acquire Canadian patent protection.

Cystadrops, a cysteamine hydrochloride-based eye drops formulation is produced by Recordati Rare Diseases Inc. (“Recordati”), and is used to treat a rare disease known as cystinosis. Cystinosis is characterized by the abnormal accumulation of the amino acid cystine in various organs of the body, including crystal build up in the eyes. While about one hundred Canadians suffer from cystinosis, the cost for a year’s supply of Cystadrops is approximately $111,000 per individual.

This price is largely due to the fact that Cystadrops does not fall within the jurisdiction of the Canadian federal regulatory body for medicines pricing. As Recordati chose not to obtain a Canadian patent for its formulation, any price regulation for Cystadrops by the PMPRB would be ultra vires. Compounding pharmacies in Canada largely stopped making cheaper versions of the drug when Recordati’s version was given the green light by Health Canada.

Another interesting aspect to note is that typically data privacy regimes provide innovative drugs with a data protection period of eight or eight and a half years, during the first 6 of which a (typically generic) manufacturer seeking a Notice of Compliance (“NOC”) will be prevented from filing its drug submission.

A search of the Register of Innovative Drugs has revealed that while there is no active data protection over Cystadrops, a related formulation of cysteamine bitartrate is protected and is associated with another company. Whether any patent or NOC links exist between the two formulations, or another third party for that matter, remains unclear. Furthermore, perhaps the very small market of just one hundred people acts a natural barrier to entry for generics or compounding pharmacies to invest in preparing the formulation.

With drug pricing regulations already being a contentious issue in Canada, it will certainly be of interest to see how this particular situation will develop, or if more information will be brought to light. In any case, as a result of the price of Cystadrops, Ontario became the first province to fund the drug, with other provinces expected to follow suit.

Common Patent Misconceptions – Myth #2

By Osman Ismaili, April 14th, 2020

This article is part of a series on commonly held misconceptions about patents. Many prospective patentees often have unfounded reservations about patenting their inventions. The aim of this series of short articles is to debunk these common myths around patent protection.

Patent Myth #2: I don’t need a patent because I’m the only one with this technology, no one else will be able to enter the market.

This surprisingly common belief is in some ways related to Patent Myth #1. Having a quick read of that article may help with understanding the connection to this piece.

Many startups and even some SMEs often hold the view that because they were the first to come up with a particular technology that fact will somehow serve as a natural barrier to entry for others. While this may be true in some rare cases, these companies often fail to realize that other, often larger entities have well-established R&D departments that, among other reasons, are there to understand competing technologies and, in some cases, learn to reverse engineer them.

In Patent Myth #1, we touched on the case of Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. 91 (2011), where the Supreme Court of the United States (“SCOTUS”) found Microsoft to have infringed the patent of a much smaller Toronto-based company. In that case, the Canadian company, i4i was successful first and foremost because it had a patent for its document editing invention. If i4i had instead chosen not to file a patent, there would have been no infringement even if Microsoft used or copied their technology. At the very least i4i would have been gambling with the time and money they invested in developing their software.

This discussion also ties into the law of trade secrets in that a company certainly could choose to maintain its invention as a trade secret, but it may not always be appropriate. The Canadian Intellectual Property Office (“CIPO”) website states: “Trade secrets can be very valuable when you have developed new technology, designed original products, created the perfect recipe, or have a gold mine of customer data. However, it may not be the best choice of intellectual property (IP) protection if your competitors can easily reconstruct your creation.” The last sentence is precisely what companies should be thinking about when considering a patent. Even if you are the first to bring something to market, it is important to keep in mind that someone might still be able to dissect and understand it.

Never forget that maintaining a trade secret as a secret has its own challenges, and even something like a disgruntled former employee can put a trade secret into a risk of being publicized. As CIPO states, “Once a trade secret is made public, it loses its business value and legal remedies are complex.” Even if someone breaches an agreement and has to ultimately pay damages, that trade secret can still never go back to being a secret, so its value is irretrievably lost.

One final note relates to the “on sale bar” in the United States. In January 2019, SCOTUS decided in a landmark decision, Helsinn Healthcare v. Teva Pharma USA, 586 U. S. ____ (2019), that “an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art under §102(a).” This means that even if an invention is sold as a trade secret, it could prevent the inventor from later obtaining a patent for it. Many inventors believe they’ll be able to profit from their invention as a trade secret for some years before they file for patent protection, but this approach may be risky, if not dangerous.

Could someone reverse engineer and/or copy your invention? If you think the answer is yes, then it’s likely you should look into obtaining patent protection. Please feel free to reach out to MBM for a free consultation.

The aftermath of the new Canadian Trademark Legislation

By Kimberly Dunn, March 26th, 2020

On June 17, 2019, Canada’s new Trademarks Act and Trademarks Regulations came into force. The new Act and Regulations introduced significant changes to Canada’s trademark practice. The implementation of the new Act and Regulations has been challenging and a learning experience for everyone, including trademark owners, practitioners and Canadian Examiners.

We dug deeper into some of the more notable changes to give you a little extra insight:

Increased Filing Fees & Nice Classification:

As Canada acceded to the Nice Agreement, Applicants are now required to classify their goods and services according to the Nice Classification system.

The Nice Classification system is an international system, administered by the World Intellectual Property Office (WIPO), for classifying goods and services and is comprised of 45 different classes.

Under Canada’s new trademark regime, trademark filing fees are dependent on the number of classes of goods and services contained in the application.

Applicants must be aware that, unlike in other jurisdictions, a trademark application cannot be filed in multiple classes of goods and services with the intention to re-assess the Nice Classes and associated fees later. The filing fees are based on the number of classes of goods and/or services contained in the application at the time of filing, regardless of whether some of those goods or services are deleted at a later date. For this reason, it is important to carefully assess the goods and services and the Nice classes prior to filing the application to ensure all appropriate fees are paid.

Canada’s new government filing fees are:

• $330 for the first class of goods and/or services; and
• $100 for each additional class of goods and/or services

No “Use” Requirement:

Under the new Act, trademark owners are no longer required to use their trademarks in Canada in order to obtain a registration. In this regard, a “date of first use” is no longer required in an application and applicants do not have to file a Declaration of Use attesting to the fact that use of the trademark has occurred in Canada.

Trademark owners should still be aware that use of a trademark will be an important factor in maintaining protection of the trademark in Canada. If a trademark is not being used in Canada by the third anniversary of the registration date, it can be vulnerable to “non-use cancellation” proceedings.

While the removal of the “use” requirement has simplified the application process, MBM recommends filing for and using your trademark as soon as possible to protect your business and your brand! Trademark owners should also closely monitor the marketplace for any third-party use to proactively safeguard against trademark trolls seeking to register brands that do not belong to them.

Registration Fees:

Under the new Act, trademark owners are no longer required to pay a government registration fee to obtain registration of the trademark. However, trademark owners should be aware that registration fees must still be paid on applications that were filed prior to June 17, 2019.

Renewals:

Under the new Act, a trademark will be valid for a period of 10 years (previously 15 years). Similar to filing fees, the Trademarks Office is now charging renewal fees on a per class basis.

Canada’s new renewal fees are:

• $400 for the first class of goods and/or services; and
• $125 for each additional class of goods and/or services.

In addition to increased renewal fees, there is also now a strict renewal window wherein owners can renew their trademarks. The new renewal window is six-months prior to and six-months after the renewal deadline.

Additionally, trademark owners should be aware that any trademarks registered prior to the coming into force of the new Act will require that the goods and services be classified according to the Nice Classification system.

For any registrations that do not have the goods and services classified according to the Nice Classification system, MBM recommends filing a request to classify the goods and/or services as soon as possible to facilitate the renewal payment process.

If goods and services are not classified prior to paying the renewal fee, the Trademarks Office will issue a notice pursuant to Subsection 44.1(1) of the Act, setting out the requirement to group and class the goods and services and if the request is not filed, the Trademarks Office will issue a second notice stating that the registration may be expunged if the goods and services are not furnished within the set timeframe.

Non-Traditional Trademarks:

Under the new Act, trademark owners can file “non-traditional” trademarks. “Non-traditional” trademarks include: sounds, moving images, holograms, scents, tastes, colour, three-dimensional shapes, textures, modes of packaging goods and positioning of a sign.

Upon a review of the Canadian Trademarks online database, it appears that many brand owners are taking advantage of the ability to file “non-traditional” trademarks, with over 300 “non-traditional” trademarks filed between June 17, 2019 and March 24, 2020.

Dividing and Merging Trademark Applications:

Canada’s new Act allows trademark owners to divide their trademark applications. A divisional application can be filed in order to expedite the registration of the trademark for any goods and services that have not received any objections.

Additionally, owners also now have the ability to merge their trademarks. The new Act states that if a trademark that was previously divided proceeds to registration, this trademark may be merged with the other registration(s) that originated from the initial application.

Inherent Distinctiveness:

Under the new Act, one of the most significant changes to the examination of trademarks is that the Registrar now has the ability to refuse a trademark on the ground that it is not inherently distinctive.

While Section 2 of the Act defines “distinctiveness” in relation to a trademark, there is no statutory definition for “not inherently distinctive”. However, the Canadian Trademarks Examination Manual (TEM) has some guidelines with respect to inherent distinctiveness and when a trademark can be refused because it is not inherently distinctive. Some examples of trademarks listed in the TEM that are considered to be not inherently distinctive include:

• Trademarks which are primarily geographic locations, names, or surnames;
• Trademarks that consist of one- or two-letters or numbers;
• Trademarks that consist of a design common to the trade, unless it is depicted in a special or fanciful manner (i.e. a design of grapes on a vine would not be registrable for use in association with wine);
• Trademarks that are the names of colours in relation to goods that would typically be that colour (i.e. WHITE would not be registrable for use in association with toothpaste);
• Trademarks that are clearly descriptive in English or French (i.e. FURNITURE STORE/MAGASIN DE MEUBLES would not be registrable in association with the retail sale of furniture);
• Trademarks that consist of laudatory words and phrases (i.e. WONDERFUL, WORLD’S BEST, ULTIMATE); and
• Trademarks that serve only to provide general information about the goods or services (i.e. FRAGILE would not be registrable for use in association with labels to be affixed to packages).

Since the new Act came into force, many Examiners are raising objections that, in their preliminary view, trademarks are not inherently distinctive.  The majority of these objections are generally being raised on the basis that the trademark consists of ordinary or generic words and other traders should be able to use these words in the ordinary course of their business.

When issuing a not inherently distinctive objection, Examiners are required to provide evidence to support their objection that the trademark is not inherently distinctive. The evidence provided by the Examiner must be in relation to the goods and services and must be within Canada. In this regard, some issues that are being brought up between practitioners and Examiners is that the trademarks are not always being taken into consideration with the associated goods and services and the Examiner’s evidence is not always within Canada.

Further, while several Examiners are raising objections that trademarks are not inherently distinctive, it may be possible to overcome the objection by either: (1) arguing that the trademark is inherently distinctive (or at least has some degree of inherent distinctiveness); or (2) filing affidavit evidence that the trademark had acquired distinctiveness at the time of filing the application in Canada.

Trademarks can acquire distinctiveness through significant use of the trademark in Canada. When a trademark is said to have acquired distinctiveness it is said to have acquired a secondary meaning and leaves a distinctive impression in the minds of consumers, when considered in association with the goods and/or services. In other words, to establish that the trademark has acquired distinctiveness, the evidence must show that the Canadian public would strongly associate the trademark with the particular goods and services and not any other possible meaning of the word.

At this time, it is difficult to predict when or if an objection that the trademark is not inherently distinctive will be raised, as it appears that this ground of refusal is being interpreted differently. We do note that the Canadian Intellectual Property Office (CIPO) has been in open discussions with trademark practitioners and the Intellectual Property Institute of Canada (IPIC) regarding the frustration and challenges surrounding these objections. Based on the discussions between CIPO, IPIC and trademark practitioners, we anticipate that within the next 1-2 years, there will be some case law, clarification and fine-tuning of the guidelines with respect to these not inherently distinctive objections.

Backlog at Canadian Trademarks Office:

Due to the changes in the Act and many systems at the Canadian Trademarks Office, there is a longer than usual delay in the examination of trademark applications. Currently, it is taking between 17 and 22 months to receive a first action from the Trademarks Office. We understand from the Trademarks Office that they are in the process of hiring several new Examiners and within the next 2-3 years, examination of a trademark application should be more in line with the United States Patent & Trademark Office, approximately 7-10 months to receive a first action.

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