Strengthened IP protection under the USMCA: Extensions to data protection and patent-term restoration headline forthcoming changes to Canadian law

Global Publication November 2018

As a party to the United States-Mexico-Canada Agreement (USMCA), Canada has agreed to adopt important new protections for biologic and other pharmaceutical innovation, as well as other changes to strengthen its patent system and harmonise certain IP laws with its trading partners.

The USMCA will come into force after it has been signed and ratified by the member states. Signature is anticipated before the end of 2018, but dates for its ratification and the expiry of its predecessor, the North American Free Trade Agreement (NAFTA), have yet to be determined.

Data protection. Canada has long been regarded as having relatively weak protection for pharmaceutical and biologic innovation. In that context, perhaps the most significant change introduced by the USMCA is an additional two years of “data protection” for new biologics. Data protection is a feature of the Food and Drug Regulations and provides market exclusivity for “innovative drugs,” independent of any protection that may exist through the patent system.

Canada currently provides data protection for all innovative drugs, including biologics, for a period of eight years from the day they are first approved. Although 10 years is an improvement, it still falls short of the 12 years of equivalent protection for biologics in the United States. Two additional years will nonetheless provide increased opportunities to offset the high cost and risk associated with the development, regulatory approval, and commercialisation of biologics.

While details are scarce regarding Canada’s plans to implement its new data-protection commitments, a five-year transition period to complete implementation provides ample time for policy development.

Patent-term restoration (PTR). The USMCA also requires Canada to adopt a system that reduces the risk of patent-term erosion during prosecution. Once implemented, patentees will be able to access PTR by applying for additional protection when they have experienced “unreasonable delays” in issuance of a patent.

The USMCA contains two non-limiting examples of what constitutes unreasonable delay: (1) more than five years elapsing from the filing date in Canada; or (2) more than three years elapsing after a request for examination. The USMCA also avoids rewarding patentees for delays of their own making: in determining the duration of a delay, periods of time may be excluded, e.g., if they are attributable to the applicant.

In addition to PTR, the USMCA also includes separate provisions regarding patent-term extension specific to the pharmaceutical industry. It appears Canada’s commitments under these provisions are already satisfied by the introduction of Certificates of Supplementary Protection (CSPs) in 2017 pursuant to the Comprehensive Economic and Trade Agreement with the European Union.

While CSPs are already available, Canada is not required to implement its new PTR commitments until 4.5 years after the USMCA comes into force. However, PTR applies to all patent applications filed after the USMCA’s date of entry into force, or the date two years after the signing of the USMCA — whichever is later.

Other IP changes in the USMCA. The USMCA also includes updates to Canada’s IP commitments in other areas previously covered by the NAFTA, such as copyright and trade-marks. Among them, the banner change is a 20-year extension to copyright protection, for a total of 70 years after the death of the author. Canada has 2.5 years to implement this change from the date the USMCA comes into force.

* This article was first published in MIP magazine November 2018

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