Law Times

Law timeS • September 21, 2009 FOCUS PAGE 11 Clashes between IP and competition rules growing I BY JULIUS MELNITZER For Law Times ntellectual property law is about the protection of exclu- sive rights. Competition law is aimed at monopolies in one form or another. But in the in- formation age, where intellectual property has become the "bricks and mortar" of the 21st century, the two are bound to interact more intensely. So they have, fi nally clashing head-on in the Federal Court of Appeal recently in Apotex Inc. v. ADIR and Servier Canada Inc. "Apotex v. Servier is the fi rst patent case in which a Canadi- an court has made a substantive decision on IP-related compe- tition claims," says Ogilvy Re- nault LLP's Judith Robinson, who represented ADIR Insur- ance and Servier. Th e case arose when Servier initiated an infringement ac- tion against Apotex on vari- ous grounds. Apotex counter- claimed, alleging that Servier had obtained the rights to perin- dopril, the drug in dispute, in vi- olation of the Competition Act. In the meantime, Schering- Plough Corp., Hoechst Canada Inc., and ADIR came up with other drugs that became the sub- ject of patent confl ict proceedings in the Federal Court. Th e parties settled the litigation, which cul- minated in a consent order al- locating the claims among the parties and left Servier with the exclusive rights to perindopril. Servier was an ADIR licensee for perindopril. Since 2006, however, Apotex had been sell- ing perindopril products. At trial, the Federal Court found that ADIR's patent was val- id and that Apotex had infringed it. She dismissed the Apotex claim, concluding that the mere assertion of patent rights wasn't a violation of the Competition Act without "something more." Because each step in the proceedings was in accordance with the Patent Act or Federal Court rules, the "something more" was not present. On appeal, Harry Radom- ski of Goodmans LLP, acting for Apotex, argued ADIR had con- travened the Competition Act by entering into the settlement agreement and thereby unduly lessening competition. "Apotex asserts that the settle- ment agreement ensuring that each of the parties would obtain patents covering commercialized ACE [angiotensin-converting enzyme] inhibitors was unlawful as being anti-competitive," wrote Justice Carolyn Layden-Steven- son for a unanimous bench. "Apotex alleges that ADIR entered the agreement to avoid the result that either no claims covering perindopril would issue or there would be overlapping claims encompassing perindopril awarded to multiple parties." Radomski argued that had the confl ict proceedings gone to trial rather than settlement, ADIR may not have received ex- clusive patent rights, which gave rise to the "probability" that "the MacGillivray_Parallel Importation (LT 1-3x4).indd 1 before the court for its approval could constitute an off ence un- der the Competition Act." For Brian Facey of Blake Cassels & Graydon LLP, the de- cision mirrors developments in the United States. "Th e U.S. government has been challenging patent settle- ments for years, claiming they are uncompetitive," he says. "But the courts have always concluded that patent settlements were about patent law, not antitrust law, and that even if a monopoly ensued, the judiciary wouldn't interfere." Th e question remains, how- ever, as to what rights patentees LT Recent judgment is the first major Canadian decision on IP-related competition claims, says Judith Robinson. exclusive acquisition of the pat- ent rights provided ADIR with greater market power than it would otherwise have had." But Layden-Stevenson dis- missed the argument. "Apotex's arguments are based on speculation," she wrote. "[Th ey provide] no evidence of the alleged 'probability' of greater market power and no evidence of the alleged 'probability' that the parties to the confl ict proceedings would have been granted overlap- ping [claims] to perindopril." As a result, the trial judge had been correct in her conclusion that ADIR did "nothing more" than assert its patent rights. But that's not to suggest there might never be cases where a settlement agreement could amount to something more. "It is not the situation here," Layden-Stevenson concluded. "I have some diffi culty conceptual- izing that an agreement eff ecting a remedy that was open to the court to grant and was placed Crawford_Law of Banking (CongratsV3).indd 1 9/16/09 10:01:17 AM Canada Law Book congratulates our author Bradley Crawford, Q.C., on being awarded the 2009 Walter Owen Book Prize for The Law of Banking and Payment in Canada. Mr. Crawford's award-winning text was described by the jury as the authoritative text on the topic of regulatory policies, key institutions, payment systems, statutes and judicial decisions related to banking and payment law in Canada. Mr. Crawford has enjoyed a highly distinguished career of teaching and practice as a participant in the development of Canada's banking and payment law, over the past 45 years. He is at present counsel to the financial services group of McCarthy Tétrault LLP in Toronto. He has acted in the past as senior outside counsel to The Canadian Bankers' Association and as an advisor to a large number of individual Canadian and foreign banks, central banks and payment and settlement systems. He represented Canada at the United Nations from 1975 to 2000 on matters related to international payments, and has also advised the federal government with respect to the enactment of the and in the revision of the and . Awarded by the Canadian Bar Association and funded by the Foundation for Legal Research, The Walter Owen Book Prize recognizes excellent legal writing and rewards outstanding new contributions to Canadian legal literature. can exercise without unduly limiting competition. "In a general way, our courts have distinguished be- tween doing what patentees normally do or doing some- thing beyond the norm," says Borden Ladner Gervais LLP's Gordon Zimmerman. Parallel Importation A controversial subject touching on international trade policy, competition law and intellectual property rights This unique and comprehensive resource for identifying and litigating parallel import cases uses an unbiased, multi-disciplinary approach to exploring the tensions, issues and arguments. Use it to negotiate the boundaries of intellectual property, competition and international trade law. Parallel Importation incorporates both practical and theoretical perspectives. Key cases are summarized and discussed with reference to relevant legislation from Canada, the United States and the European Union. Expand your clients' opportunities with the only resource that deals with parallel importation from a Canadian perspective. This often murky area of law is addressed with reference to law, economics and business to provide a clear, incisive analysis. 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