Bill S-232

Patent Act

Clause 1: Existing text of section 21.01:

21.01 The purpose of sections 21.02 to 21.2 is to give effect to Canada’s and Jean Chrétien’s pledge to Africa by facilitating access to pharmaceutical products to address public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.

Clause 2: Existing text of section 21.02:

21.02 The definitions in this section apply in this section and in sections 21.03 to 21.19.

“authorization” means an authorization granted under subsection 21.04(1), and includes an authorization renewed under subsection 21.12(1).

“General Council” means the General Council of the WTO established by paragraph 2 of Article IV of the Agreement Establishing the World Trade Organization, signed at Marrakesh on April 15, 1994.

“General Council Decision” means the decision of the General Council of August 30, 2003 respecting Article 31 of the TRIPS Agreement, including the interpretation of that decision in the General Council Chairperson’s statement of that date.

“patented product” means a product the making, constructing, using or selling of which in Canada would infringe a patent in the absence of the consent of the patentee.

“pharmaceutical product” means any patented product listed in Schedule 1 in, if applicable, the dosage form, the strength and the route of administration specified in that Schedule in relation to the product.

“TRIPS Agreement” means the Agreement on Trade-Related Aspects of Intellectual Property Rights, being Annex 1C of the Agreement Establishing the World Trade Organization, signed at Marrakesh on April 15, 1994.

“TRIPS Council” means the council referred to in the TRIPS Agreement.

“WTO” means the World Trade Organization established by Article I of the Agreement Establishing the World Trade Organization, signed at Marrakesh on April 15, 1994.

Clause 3: Existing text of subsections 21.03(1) to (3):

21.03 (1) The Governor in Council may, by order,

(a) on the recommendation of the Minister and the Minister of Health, amend Schedule 1

(i) by adding the name of any patented product that may be used to address public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics and, if the Governor in Council considers it appropriate to do so, by adding one or more of the following in respect of the patented product, namely, a dosage form, a strength and a route of administration, and

(ii) by removing any entry listed in it;

(b) on the recommendation of the Minister of Foreign Affairs, the Minister for International Trade and the Minister for International Cooperation, amend Schedule 2 by adding the name of any country recognized by the United Nations as being a least-developed country that has,

(i) if it is a WTO Member, provided the TRIPS Council with a notice in writing stating that the country intends to import, in accordance with the General Council Decision, pharmaceutical products, as defined in paragraph 1(a) of that decision, and

(ii) if it is not a WTO Member, provided the Government of Canada with a notice in writing through diplomatic channels stating that the country intends to import pharmaceutical products, as defined in paragraph 1(a) of the General Council Decision, that it agrees that those products will not be used for commercial purposes and that it undertakes to adopt the measures referred to in Article 4 of that decision;

(c) on the recommendation of the Minister of Foreign Affairs, the Minister for International Trade and the Minister for International Cooperation, amend Schedule 3 by adding the name of any WTO Member not listed in Schedule 2 that has provided the TRIPS Council with a notice in writing stating that the WTO Member intends to import, in accordance with the General Council Decision, pharmaceutical products, as defined in paragraph 1(a) of that decision; and

(d) on the recommendation of the Minister of Foreign Affairs, the Minister for International Trade and the Minister for International Cooperation, amend Schedule 4 by adding the name of

(i) any WTO Member not listed in Schedule 2 or 3 that has provided the TRIPS Council with a notice in writing stating that the WTO Member intends to import, in accordance with the General Council Decision, pharmaceutical products, as defined in paragraph 1(a) of that decision, or

(ii) any country that is not a WTO Member and that is named on the Organization for Economic Co-operation and Development’s list of countries that are eligible for official development assistance and that has provided the Government of Canada with a notice in writing through diplomatic channels

(A) stating that it is faced with a national emergency or other circumstances of extreme urgency,

(B) specifying the name of the pharmaceutical product, as defined in paragraph 1(a) of the General Council Decision, and the quantity of that product, needed by the country to deal with the emergency or other urgency,

(C) stating that it has no, or insufficient, pharmaceutical capacity to manufacture that product, and

(D) stating that it agrees that that product will not be used for commercial purposes and that it undertakes to adopt the measures referred to in Article 4 of the General Council Decision.

(2) The Governor in Council may not add to Schedule 3 the name of any WTO Member that has notified the TRIPS Council that it will import, in accordance with the General Council Decision, pharmaceutical products, as defined in paragraph 1(a) of that decision, only if faced with a national emergency or other circumstances of extreme urgency.

(3) The Governor in Council may, by order, on the recommendation of the Minister of Foreign Affairs, the Minister for International Trade and the Minister for International Cooperation, amend any of Schedules 2 to 4 to remove the name of any country or WTO Member if

(a) in the case of a country or WTO Member listed in Schedule 2, the country or WTO Member has ceased to be recognized by the United Nations as being a least-developed country or, in the case of a country that is not a WTO Member, the country has permitted any product imported into that country under an authorization to be used for commercial purposes or has failed to adopt the measures referred to in Article 4 of the General Council Decision;

(b) in the case of a WTO Member listed in Schedule 3, the WTO Member has notified the TRIPS Council that it will import, in accordance with the General Council Decision, pharmaceutical products, as defined in paragraph 1(a) of that decision, only if faced with a national emergency or other circumstances of extreme urgency;

(c) in the case of a WTO Member listed in Schedule 4, the WTO Member has revoked any notification it has given to the TRIPS Council that it will import pharmaceutical products, as defined in paragraph 1(a) of the General Council Decision, only if faced with a national emergency or other circumstances of extreme urgency;

(d) in the case of a country listed in Schedule 4 that is not a WTO Member,

(i) the name of the country is no longer on the Organization for Economic Co-operation and Development’s list of countries that are eligible for official development assistance,

(ii) the country no longer faces a national emergency or other circumstances of extreme urgency,

(iii) the country has permitted any product imported into that country under an authorization to be used for commercial purposes, or

(iv) the country has failed to adopt the measures referred to in Article 4 of the General Council Decision;

(e) in the case of any country or WTO Member listed in Schedule 3 or 4, the country or WTO Member has become recognized by the United Nations as a least-developed country; and

(f) in the case of any country or WTO Member listed in any of Schedules 2 to 4, the country has notified the Government of Canada, or the WTO Member has notified the TRIPS Council, that it will not import pharmaceutical products, as defined in paragraph 1(a) of the General Council Decision.

Clause 4: Existing text of section 21.04:

21.04 (1) Subject to subsection (3), the Commissioner shall, on the application of any person and on the payment of the prescribed fee, authorize the person to make, construct and use a patented invention solely for purposes directly related to the manufacture of the pharmaceutical product named in the application and to sell it for export to a country or WTO Member that is listed in any of Schedules 2 to 4 and that is named in the application.

(2) The application must be in the prescribed form and set out

(a) the name of the pharmaceutical product to be manufactured and sold for export under the authorization;

(b) prescribed information in respect of the version of the pharmaceutical product to be manufactured and sold for export under the authorization;

(c) the maximum quantity of the pharmaceutical product to be manufactured and sold for export under the authorization;

(d) for each patented invention to which the application relates, the name of the patentee of the invention and the number, as recorded in the Patent Office, of the patent issued in respect of that invention;

(e) the name of the country or WTO Member to which the pharmaceutical product is to be exported;

(f) the name of the governmental person or entity, or the person or entity permitted by the government of the importing country, to which the product is to be sold, and prescribed information, if any, concerning that person or entity; and

(g) any other information that may be prescribed.

(3) The Commissioner shall authorize the use of the patented invention only if

(a) the applicant has complied with the prescribed requirements, if any;

(b) the Minister of Health has notified the Commissioner that the version of the pharmaceutical product that is named in the application meets the requirements of the Food and Drugs Act and its regulations, including the requirements under those regulations relating to the marking, embossing, labelling and packaging that identify that version of the product as having been manufactured

(i) in Canada as permitted by the General Council Decision, and

(ii) in a manner that distinguishes it from the version of the pharmaceutical product sold in Canada by, or with the consent of, the patentee or patentees, as the case may be;

(c) the applicant provides the Commissioner with a solemn or statutory declaration in the prescribed form stating that the applicant had, at least thirty days before filing the application,

(i) sought from the patentee or, if there is more than one, from each of the patentees, by certified or registered mail, a licence to manufacture and sell the pharmaceutical product for export to the country or WTO Member named in the application on reasonable terms and conditions and that such efforts have not been successful, and

(ii) provided the patentee, or each of the patentees, as the case may be, by certified or registered mail, in the written request for a licence, with the information that is in all material respects identical to the information referred to in paragraphs (2)(a) to (g); and

(d) the applicant also provides the Commissioner with

(i) if the application relates to a WTO Member listed in Schedule 2, a certified copy of the notice in writing that the WTO Member has provided to the TRIPS Council specifying the name of the pharmaceutical product, as defined in paragraph 1(a) of the General Council Decision, and the quantity of that product, needed by the WTO Member, and

(A) a solemn or statutory declaration in the prescribed form by the person filing the application stating that the product to which the application relates is the product specified in the notice and that the product is not patented in that WTO Member, or

(B) a solemn or statutory declaration in the prescribed form by the person filing the application stating that the product to which the application relates is the product specified in the notice and a certified copy of the notice in writing that the WTO Member has provided to the TRIPS Council confirming that the WTO Member has, in accordance with Article 31 of the TRIPS Agreement and the provisions of the General Council Decision, granted or intends to grant a compulsory licence to use the invention pertaining to the product,

(ii) if the application relates to a country listed in Schedule 2 that is not a WTO Member, a certified copy of the notice in writing that the country has provided to the Government of Canada through diplomatic channels specifying the name of the pharmaceutical product, as defined in paragraph 1(a) of the General Council Decision, and the quantity of that product, needed by the country, and

(A) a solemn or statutory declaration in the prescribed form by the person filing the application stating that the product to which the application relates is the product specified in the notice and that the product is not patented in that country, or

(B) a solemn or statutory declaration in the prescribed form by the person filing the application stating that the product to which the application relates is the product specified in the notice and a certified copy of the notice in writing that the country has provided to the Government of Canada through diplomatic channels confirming that the country has granted or intends to grant a compulsory licence to use the invention pertaining to the product,

(iii) if the application relates to a WTO Member listed in Schedule 3, a certified copy of the notice in writing that the WTO Member has provided to the TRIPS Council specifying the name of the pharmaceutical product, as defined in paragraph 1(a) of the General Council Decision, and the quantity of that product, needed by the WTO Member, and stating that the WTO Member has insufficient or no pharmaceutical manufacturing capacity for the production of the product to which the application relates, and

(A) a solemn or statutory declaration in the prescribed form by the person filing the application stating that the product to which the application relates is not patented in that WTO Member, or

(B) a certified copy of the notice in writing that the WTO Member has provided to the TRIPS Council confirming that the WTO Member has, in accordance with Article 31 of the TRIPS Agreement and the provisions of the General Council Decision, granted or intends to grant a compulsory licence to use the invention pertaining to the product,

(iv) if the application relates to a WTO Member listed in Schedule 4, a certified copy of the notice in writing that the WTO Member has provided to the TRIPS Council specifying the name of the pharmaceutical product, as defined in paragraph 1(a) of the General Council Decision,and the quantity of that product, needed by the WTO Member, and stating that the WTO Member is faced with a national emergency or other circumstances of extreme urgency and that it has insufficient or no pharmaceutical manufacturing capacity for the production of the product to which the application relates, and

(A) a solemn or statutory declaration in the prescribed form by the person filing the application stating that the product to which the application relates is not patented in that WTO Member, or

(B) a certified copy of the notice in writing that the WTO Member has provided to the TRIPS Council confirming that the WTO Member has, in accordance with Article 31 of the TRIPS Agreement and the provisions of the General Council Decision, granted or intends to grant a compulsory licence to use the invention pertaining to the product, or

(v) if the application relates to a country listed in Schedule 4 that is not a WTO Member, a certified copy of the notice in writing that the country has provided to the Government of Canada through diplomatic channels specifying the name of the pharmaceutical product, as defined in paragraph 1(a) of the General Council Decision, and the quantity of that product, needed by the country, and stating that it is faced with a national emergency or other circumstances of extreme urgency, that it has insufficient or no pharmaceutical manufacturing capacity for the production of the product to which the application relates, that it agrees that product will not be used for commercial purposes and that it undertakes to adopt the measures referred to in Article 4 of the General Council Decision, and

(A) a solemn or statutory declaration in the prescribed form by the person filing the application stating that the product to which the application relates is not patented in that country, or

(B) a certified copy of the notice in writing that the country has provided to the Government of Canada through diplomatic channels confirming that the country has granted or intends to grant a compulsory licence to use the invention pertaining to the product.

Clause 5: Existing text of section 21.05:

21.05 (1) The authorization must be in the prescribed form and, subject to subsection (2), contain the prescribed information.

(2) The quantity of the product authorized to be manufactured by an authorization may not be more than the lesser of

(a) the maximum quantity set out in the application for the authorization, and

(b) the quantity set out in the notice referred to in any of subparagraphs 21.04(3)(d)(i) to (v), whichever is applicable.

Clause 6: Existing text of subsection 21.06(1):

21.06 (1) Before exporting a product manufactured under an authorization, the holder of the authorization must establish a website on which is disclosed the prescribed information respecting the name of the product, the name of the country or WTO Member to which it is to be exported, the quantity that is authorized to be manufactured and sold for export and the distinguishing features of the product, and of its label and packaging, as required by regulations made under the Food and Drugs Act, as well as information identifying every known party that will be handling the product while it is in transit from Canada to the country or WTO Member to which it is to be exported.

Clause 7: Existing text of section 21.07:

21.07 Before each shipment of any quantity of a product manufactured under an authorization, the holder of the authorization must, within fifteen days before the product is exported, provide to each of the following a notice, by certified or registered mail, specifying the quantity to be exported, as well as every known party that will be handling the product while it is in transit from Canada to the country or WTO Member to which it is to be exported:

(a) the patentee or each of the patentees, as the case may be;

(b) the country or WTO Member named in the authorization; and

(c) the person or entity that purchased the product to which the authorization relates.

Clause 8: Relevant portion of section 21.08:

21.08 (1) Subject to subsections (3) and (4), on the occurrence of a prescribed event, the holder of an authorization is required to pay to the patentee or each patentee, as the case may be, a royalty determined in the prescribed manner.

(2) In making regulations for the purposes of subsection (1), the Governor in Council must consider the humanitarian and non-commercial reasons underlying the issuance of authorizations under subsection 21.04(1).

. . .

(4) The Federal Court may, in relation to any authorization, make an order providing for the payment of a royalty that is greater than the royalty that would otherwise be required to be paid under subsection (1).

(5) An order may be made only on the application of the patentee, or one of the patentees, as the case may be, and on notice of the application being given by the applicant to the holder of the authorization.

(6) An order may provide for a royalty of a fixed amount or for a royalty to be determined as specified in the order, and the order may be subject to any terms that the Federal Court considers appropriate.

(7) The Federal Court may make an order only if it is satisfied that the royalty otherwise required to be paid is not adequate remuneration for the use of the invention or inventions to which the authorization relates, taking into account

(a) the humanitarian and non-commercial reasons underlying the issuance of the authorization; and

(b) the economic value of the use of the invention or inventions to the country or WTO Member.

Clause 9: Existing text of section 21.09:

21.09 An authorization granted under subsection 21.04(1) is valid for a period of two years beginning on the day on which the authorization is granted.

Clause 10: Existing text of section 21.12:

21.12 (1) The Commissioner shall, on the application of the person to whom an authorization was granted and on the payment of the prescribed fee, renew the authorization if the person certifies under oath in the renewal application that the quantities of the pharmaceutical product authorized to be exported were not exported before the authorization ceases to be valid and that the person has complied with the terms of the authorization and the requirements of sections 21.06 to 21.08.

(2) An authorization may be renewed only once.

(3) The application for renewal must be made within the 30 days immediately before the authorization ceases to be valid.

(4) An authorization that is renewed is valid for a period of two years beginning on the day immediately following the day of the expiry of the period referred to in section 21.09 in respect of the authorization.

(5) Applications for renewal and renewed authorizations issued under subsection (1) must be in the prescribed form.

Clause 11: Existing text of section 21.13:

21.13 Subject to section 21.14, an authorization ceases to be valid on the earliest of

(a) the expiry of the period referred to in section 21.09 in respect of the authorization, or the expiry of the period referred to in subsection 21.12(4) if the authorization has been renewed, as the case may be,

(b) the day on which the Commissioner sends, by registered mail, to the holder of the authorization a copy of a notice sent by the Minister of Health notifying the Commissioner that the Minister of Health is of the opinion that the pharmaceutical product referred to in paragraph 21.04(3)(b) has ceased to meet the requirements of the Food and Drugs Act and its regulations,

(c) the day on which the last of the pharmaceutical product authorized by the authorization to be exported is actually exported,

(d) thirty days after the day on which

(i) the name of the pharmaceutical product authorized to be exported by the authorization is removed from Schedule 1, or

(ii) the name of the country or WTO Member to which the pharmaceutical product was, or is to be, exported is removed from Schedule 2, 3 or 4, as the case may be, and not added to any other of those Schedules, and

(e) on any other day that is prescribed.

Clause 12: (1) to (3) Relevant portion of section 21.14:

21.14 On the application of a patentee, and on notice given by the patentee to the person to whom an authorization was granted, the Federal Court may make an order, on any terms that it considers appropriate, terminating the authorization if the patentee establishes that

(a) the application for the authorization or any of the documents provided to the Commissioner in relation to the application contained any material information that is inaccurate;

. . .

(c) the holder of the authorization has failed to provide a notice required to be given under section 21.07;

. . .

(f) the product exported to the country or WTO Member, as the case may be, under the authorization has been, with the knowledge of the holder of the authorization, re-exported in a manner that is contrary to the General Council Decision;

(g) the product was exported, other than in the normal course of transit, to a country or WTO Member other than the country or WTO Member named in the authorization;

(h) the product was exported in a quantity greater than the quantity authorized to be manufactured; or

(i) if the product was exported to a country that is not a WTO Member, the country has permitted the product to be used for commercial purposes or has failed to adopt the measures referred to in Article 4 of the General Council Decision.

(4) New.

Clause 13: Relevant portion of subsection 21.16(1):

21.16 (1) Within fifteen days after the later of the day on which the authorization was granted and the day on which the agreement for the sale of the product to which the authorization relates was entered into, the holder of an authorization must provide by certified or registered mail, the Commissioner and the patentee, or each patentee, as the case may be, with

(a) a copy of the agreement it has reached with the person or entity referred to in paragraph 21.04(2)(f) for the supply of the product authorized to be manufactured and sold, which agreement must incorporate information that is in all material respects identical to the information referred to in paragraphs 21.04(2)(a), (b), (e) and (f); and

Clause 14: Existing text of sections 21.17 to 21.2:

21.17 (1) If the average price of the product to be manufactured under an authorization is equal to or greater than 25 per cent of the average price in Canada of the equivalent product sold by or with the consent of the patentee, the patentee may, on notice given by the patentee to the person to whom an authorization was granted, apply to the Federal Court for an order under subsection (3) on the grounds that the essence of the agreement under which the product is to be sold is commercial in nature.

(2) In determining whether the agreement is commercial in nature, the Federal Court must take into account

(a) the need for the holder of the authorization to make a reasonable return sufficient to sustain a continued participation in humanitarian initiatives;

(b) the ordinary levels of profitability, in Canada, of commercial agreements involving pharmaceutical products, as defined in paragraph 1(a) of the General Council Decision; and

(c) international trends in prices as reported by the United Nations for the supply of such products for humanitarian purposes.

(3) If the Federal Court determines that the agreement is commercial in nature, it may make an order, on any terms that it considers appropriate,

(a) terminating the authorization; or

(b) requiring the holder to pay, in addition to the royalty otherwise required to be paid, an amount that the Federal Court considers adequate to compensate the patentee for the commercial use of the patent.

(4) If the Federal Court makes an order terminating the authorization, the Federal Court may also, if it considers it appropriate to do so, make an order, on any terms that it considers appropriate,

(a) requiring the holder to deliver to the patentee any of the product to which the authorization relates remaining in the holder’s possession as though the holder had been determined to have been infringing a patent; or

(b) with the consent of the patentee, requiring the holder to export any of the product to which the authorization relates remaining in the holder’s possession to the country or WTO Member named in the authorization.

(5) The Federal Court may not make an order under subsection (3) if, under the protection of a confidentiality order made by the Court, the holder of the authorization submits to a Court-supervised audit and that audit establishes that the average price of the product manufactured under the authorization does not exceed an amount equal to the direct supply cost of the product plus 15 per cent of that direct supply cost.

(6) The following definitions apply in this section.

“average price” means

(a) in relation to a product to be manufactured under an authorization, the total monetary value of the agreement under which the product is to be sold, expressed in Canadian currency, divided by the number of units of the product to be sold under the terms of the agreement; and

(b) in relation to an equivalent product sold by or with the consent of the patentee, the average of the prices in Canada of that product as those prices are reported in prescribed publications on the day on which the application for the authorization was filed.

“direct supply cost”, in relation to a product to be manufactured under an authorization, means the cost of the materials and of the labour, and any other manufacturing costs, directly related to the production of the quantity of the product that is to be manufactured under the authorization.

“unit”, in relation to any product, means a single tablet, capsule or other individual dosage form of the product, and if applicable, in a particular strength.

21.18 (1) The Minister and the Minister of Health shall establish, within three years after the day this section comes into force, an advisory committee to advise them on the recommendations that they may make to the Governor in Council respecting the amendment of Schedule 1.

(2) The standing committee of each House of Parliament that normally considers matters related to industry shall assess all candidates for appointment to the advisory committee and make recommendations to the Minister and the Minister of Health on the eligibility and qualifications of those candidates.

21.19 The person designated by the Governor in Council for the purpose of this section must maintain a website on which is set out a copy of every notice referred to in subparagraphs 21.04(3)(d)(ii) and (v) that is provided to the Government of Canada through diplomatic channels by a country that is not a WTO Member. The copy must be added to the website as soon as possible after the notice has been provided to the Government of Canada.

21.2 (1) A review of sections 21.01 to 21.19 and their application must be completed by the Minister two years after this section comes into force.

(2) The Minister must cause a report of the results of the review to be laid before each House of Parliament on any of the first fifteen days on which that House is sitting after the report has been completed.

Food and Drugs Act

Clause 16: Relevant portion of subsection 37(2):

(2) Despite subsection (1), this Act applies in respect of any drug or device to be manufactured for the purpose of being exported in accordance with the General Council Decision, as defined in subsection 30(6), and the requirements of the Act and the regulations apply to the drug or device as though it were a drug or device to be manufactured and sold for consumption in Canada, unless the regulations provide otherwise.

Clause 17: New.