The Incentive Effect of Patents in Pharmaceutical Research

Astrazeneca Canada Inc. v. Apotex Inc. / esomeprazole 2011 FC 505 Crampton J affm’d 2011 FCA 211 

The third part of the Cyanamid test for an interlocutory injunction requires the court to consider the balance of convenience, including the public interest, if relevant.

The patentee, AstraZeneca argued that the assessment of the balance of convenience “should take into account the harm to the public interest in patent rights and the promotion of innovation and drug discovery” [155] (and see also [65]). Crampton J agreed that this “may well be a legitimate consideration” [156, 65], but declined to give it weight on the basis that “in this particular case, this claim is nothing more than a bald assertion. AstraZeneca has provided no evidence whatsoever of any adverse impact that would result from a decision not to grant the requested injunction” [156]. He did note that “counsel would be well advised to provide evidentiary support for this type of submission in future cases” [65].

It is interesting that Crampton J declined to give weight to the incentive effect of patents without evidence on the point. It has long been established that the purpose of the Patent Act is to provide incentives for useful innovations by providing the inventor with a limited term monopoly for that which he has invented and disclosed: Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd., [1981] 1 S.C.R. 504 at 517; Whirlpool Corp. v. Camco Inc. 2000 SCC 67 at [42]. It might seem natural to presume that a granted patent achieves that goal. The role of the non-obviousness requirement in particular is to ensure that patents are granted only for those inventions “which would not be disclosed or devised but for the inducement of a patent” Graham v John Deere (1966) 383 U.S. 1 at 11. If a granted patent is presumed to be valid, and therefore presumed to be non-obvious, it would seem to follow that it should be presumed that the patent incentive was necessary – unless the court were willing to undertake an assessment of the merits, which Crampton J declined to do.

The issue of whether there should be a presumption should be of little consequence to pharmaceutical patentees. As Rothstein J stated for the Court in Sanofi 2008 SCC 61 at [64] “The patent system is intended to provide an economic encouragement for research and development. It is well known that this is particularly important in the field of pharmaceuticals and biotechnology.” While Rothstein J did not cite any authorities, the empirical evidence is entirely uniform in showing that patents are crucial to innovation in the pharmaceutical industry: see my review of the research in Part 3 of my article The Structure of the Law of Patentable Subject Matter, 23(2) IPJ 167 (2011) (draft here).