The EU trade agreement

IP practitioners are hoping the newly signed Comprehensive Economic and Trade Agreement will bring a net gain. When Canada and the European Union finally signed the Canada- European Union Comprehensive Economic and Trade Agreement on Oct. 30, it marked what many hoped would be a move toward reducing tariffs and other barriers to trade in an increasingly global economy.

The EU trade agreement
Illustration: Alexi Vella

IP practitioners are hoping the newly signed Comprehensive Economic and Trade Agreement will bring a net gain.

When Canada and the European Union finally signed the Canada- European Union Comprehensive Economic and Trade Agreement on Oct. 30, it marked what many hoped would be a move toward reducing tariffs and other barriers to trade in an increasingly global economy.

For those in the intellectual property bar, it brings several changes that many welcome, but many questions about implementation remain.

“It certainly brings some uniformity with respect to IP protection between Canada and the European Union,” says David Turgeon, partner and patent agent with Fasken Martineau DuMoulin LLP in Montreal. “There are two main changes — the first one is with respect to trademarks and the second is with respect to patents.”

For example, Canada will have a two-year maximum drug patent term extension and drug litigation will be turned into full actions as opposed to being dealt with by way of application.

Trademarks are also addressed. Canada will be asked to make efforts to comply with the Singapore Treaty and Madrid Protocol. Following changes to the Trademarks Act, Canada is on its way to compliance, although some argue it is still lagging in certain areas.

There are also changes to the protection of geographical indications. CETA restricts use of certain European GIs to products associated with coming from certain regions, while other terms and new Canadian product names will have to be paired with words such as “type” or “style.”

Turgeon says he believes the changes will be perceived positively by companies because over the last few years pharmaceutical companies had concerns about the way Canadian laws were applied to utility.

“I think the certificate of supplementary protection will be helpful for the innovative companies in Canada. It brings Canada more in line with what is happening in Europe. I think it will be perceived as a step forward from the Canadian government to encourage innovation and reward innovating companies,” he says.

In some other areas, Turgeon says, because of the political situation with the United States and uncertainty of what will happen with trade agreements in the wake of Donald Trump emerging as president-elect, some companies may find their product is now more competitive in the European market.

Before CETA was signed, just 25 per cent of EU tariff lines where Canadian goods were exported entered the EU duty-free. With CETA coming into force, 98 per cent of EU tariff lines become duty-free for goods that originate in Canada.

“These duty-free tariffs encompass machinery and some clients say maybe that will make them more competitive. They are also starting to look more at the European climate than they might have been inclined to do so in the past,” he says.

“That translates into a change into some company’s strategy in getting patents,” says Turgeon. “Whereas they might have been more focused on the United States and Canada, now they are considering filing their patent application in Europe because it may be a good market.”

Most of Turegon’s practice is in patent litigation, but he also does patent portfolios.

“There is still a lot of work to be done and a lot of uncertainties. We don’t know what changes will be made to the regulations to implement the right of appeal for innovator companies to avoid dual litigation, for example. But I think the objective is there; the question is how we get there,” says Turgeon.

Some IP lawyers see the changes as a positive step forward, while others suggest it only serves to further complicate what has always been a complex system to navigate, especially for clients who do business around the world.

“Any time you change the law, it’s going to cause legal questions that are going to have to be solved, but in terms of whether or not it’s harmonizing things, I think in general it does,” says Mark Biernacki, partner and patent and trademark agent with Smart & Biggar Fetherstonhaugh.

For changes under the Trademarks Act regarding geographical indicators, CETA will aim to harmonize and bring Canada more in line with the EU practice. It also aligns Canada more with Europe and the United States for changes around patent term extension or restoration. Although the regulations haven’t been released yet for the possible changes to notice of compliance, it appears Canada is moving closer to the U.S.-based system.

“In theory, it should be harmonizing us with some of our largest trading partners,” says Biernacki. “On the pharma litigation side, I think there have been complaints from both generics and innovators on how long it takes to get disputes resolved, so I would think streamlining that would be embraced by all parties.”

David Bowden, an associate with Deeth Williams Wall in Toronto, says the changes “clearly limit Canadian trademark rights as they previously existed” and allows strong protections for some geographic indications but exceptions for five or 10 years for others “for reasons that are not totally apparent.”

“They’ve come up with a different confusion analysis and I presume that’s because in trademark practice when we evaluate confusion we consider things such as how inherently distinctive a mark is; how good it is. But that doesn’t really work for things like geographical indications for where things come from. But it’s necessitated a change to things like the confusion analysis and it’s thrown out to private litigants to discover what that will entail and perhaps work that out later,” says Bowden.

“For IP practitioners looking at this deal, we’re having part of our system Europeanized as part of some sort of tit for tat they did,” he said.

As Bowden wrote in a brief, Canada’s Trademarks Act provides for the protections of geographic indications covering wine and spirits. The amendments expand the protection to “agricultural products” and “food” including cheese, sausages and olives. The amendments also create a separate approach for assessing confusion between a trademark and a GI.

The day after CETA was signed, Bill C-30, an Act to implement the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States, was tabled in Parliament. Its goal is to implement portions of CETA and provide authority to replace the current summary Notice of Compliance proceedings with full patent infringement and validity actions.

For trademark law, the legislation expands protections for geographical indications.

It will also provide for a two-year drug patent term extension and drug litigation proceedings will be turned into full actions. Junyi Chen, an associate also at Deeth Williams Wall, says those add up to a “very big deal” in Canada.

Right now, she says, Bill C-30 doesn’t have much detail in it around those issues and she hopes more information comes when the regulations are issued. “I think the meat will be in the regulations. Especially now under the current regulation, the generic company knows it has two years to get to certainty of one kind or another. It’s not clear to me if it’s possible to have a full action in two years,” she says.

It will hopefully mean final determinations on patent infringement and validity issues, which Noel Courage, partner at Bereskin & Parr LLP in Toronto, says will reduce the multiplicity of litigation and improving brand-name companies’ rights to appeal trial decisions.

“They are turning the NOC proceedings from an application into actions, saying instead of being an application procedure or a prohibition order, we’re just going to turn it into a patent infringement action and it will be decided with finality,” Courage says. “We don’t know what that system is going to look like, but they’ve empowered the government to pass regulations to overhaul the NOC proceedings.”

There are two reasons for this move: to reduce multiplicity of litigation and to improve the ability of brand-name companies to appeal these cases.

“With patent infringement you are often suing someone after they are on the market and chasing the horse after the barn door is open,” says Courage. “It can dismantle the brand-name company’s marketplace fairly quickly.”

The new rules are giving pharmaceutical companies two more years of patent room.

“In the pharmaceutical business, the last couple of years in a patent life are usually the most valuable because it takes so long to get through the regulatory system and get approval by Health Canada, get on the market and get awareness amongst physicians,” he says.

Eligible drugs will include human and veterinary drugs. A maximum two years of additional patent rights for an approved drug will be available by a Supplementary Protection Certificate. The Canadian SPC system is based on the European SPC system.

“It’s fairly narrow what they’re doing for the pharmaceutical industry, but it’s something that’s been done in the U.S. for years and in Europe for years, so it’s part of the give and take in the CETA negotiations,” says Courage.

“It definitely makes a difference to pharmaceutical companies being able to have another couple of years of maximum profit,” he says.

Generally, lawyers agree that when an attempt is made to streamline litigation and resolve disputes quicker and less expensively, it is welcomed by the marketplace.

However, Matthew Marquardt, partner with Dickinson Wright LLP in Toronto, argues that while the laws already on the books are “pretty good,” they are not actually used or enforced the way they are written in the Act, making it difficult to advise clients.

“I am pretty active with international clients and deal with many sets of laws. The differences stick out glaringly and it makes it difficult to advise clients,” he says.

He says Bill C-30 is focused on aspects of IP law that are small compared to the things Canada isn’t doing already.

“You wonder why we are throwing more confusion into the mix,” he says. “There are variations in trademark and patent law all around the world. They have been working on harmonization since the late 1800s. But it’s difficult to write a patent application for someone who works for all countries.”

For example, a couple of years ago, Parliament did a revamping of the Trademarks Act and Marquardt says there are large provisions of that that have not been implemented yet. “They talked about implementing them and it’s not even on anyone’s radar to be implemented yet, so it’s difficult to advise clients what the law is going to be,” he says.

Marquardt says the Intellectual Property Office needs to find a mechanism for consulting with the broader IP bar.

“I think this is not helping people who may want to do business here. At some point, people are going to throw their hands up. There are lots of reasons not to come to Canada right now due to the dollar and other reasons,” he says.

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