The outline of CETA has arrived – but its full text is still in transit. On what we know of the intellectual property aspects of CETA, Canada got the short end of the proverbial stick.

The Pharmaceutical Patent Regime

Several changes to Canada’s pharmaceutical patent regime were desired by Europe, and two will be implemented. Canada has agreed to allow a patent term extension (PTE) of up to two years. Additionally, the dual proceedings for patents – prohibition applications under the Patented Medicine (Notice Of Compliance) Regulations 1993 (as amended) for regulatory matters, followed by a court determination of patent validity or infringement – will likely be reformed. This second change is coupled with the newly acquired ability of brand companies to appeal an adverse PM(NOC) decision. However, the Canadian data and marketing exclusivity periods will remain at six and eight years, respectively, rather than move to the European period of 10 years. (To see past IPilogue coverage on this topic, click here.)

These changes have predictably elicited polarized viewpoints. The Canadian Generic Pharmaceutical Association (CGPA) commended some aspects, but voiced their disappointment of others, including the PTE. The CGPA is pleased with the expected discontinuation of the dual litigation practice, the recognition of the generic pharmaceutical industry’s importance in Canada, and the limitations placed on the use of the PTE. Notably, a recent report suggests that the PTE’s annual increased cost, even with the two year maximum, will range from $850 million to $1.65 billion.

By contrast, it was alleged in January 2013 that better patent protection equals more brand research and development in Canada. Opinions nonetheless differ on whether brand companies have or have not met previous promises to increase R&D in Canada in exchange for improved patent protection.

Whether these two changes are good for Canadians or not remains to be seen. Can the predicted annual cost of the PTE to Canadians be offset? The federal government’s promise to reimburse provinces will not help those paying for prescriptions out of their own pocket, and lacked any assurance that reimbursement will continue in the long term. Pharmaceutical companies may perhaps decrease their product costs in response to lower litigation costs, or may conduct more research in Canada – but probably not sufficient to offset the high PTE cost.

Geographical Indications

Protecting Geographical Indications (GIs) was another important aspect of CETA. Until now, the only GI protection in Canada has been for wines and spirits. Otherwise, GIs are protected under the extended law of passing-off or as certification marks under the Trade-marks Act. These laws have not always protected European GI producers against prior Canadian users, as occurred with the Parma ham GI in Consorzio del Proscuitto di Parma v Maple Leaf Meats Inc. In Europe, GI protection is largely sui generis and is potentially available for any foodstuff or beverage, although some countries such as the UK have also long had a certification mark scheme like Canada’s and have also protected GIs under the law of unfair competition or false marketing.

Under CETA, Canada has agreed to increase the scope of GI protection to include food and beer. Areas that will remain unchanged in Canada include: words commonly used to describe items (Black Forest ham), generic plant names (kalamata olives), and components of longer terms, which can all still be used in association with wares. For other items, such as Asiago cheese, current users can continue to use the term, but future users are prohibited. It has not been indicated whether Canadian GIs can be protected in Europe. However, even if this protection is reciprocal, the limited use of GIs by Canadian producers suggests Europe will receive the maximum benefit from the additional protection.

While existing Canadian trade-marks will not be revoked, it seems that previously blocked European GIs, even if potentially confusing with Canadian trade-marks, may now be used in Canada. Thus, the European Commission has claimed that Prosciutto di Parma can now be used in Canada. The possibility of harm to existing Canadian trade-mark owners and consumer confusion over the source of the two products becomes quite real. Consumer impact can of course be viewed as either a benefit (increased choice) or a detriment (confusion) but the potential harm to Canadian producers with valid trade-marks, coupled with the limited GI use by Canadian producers, suggests a clear victory for Europe in this sector.

Conclusion

In light of CETA’s impact on patent law and GIs, Canada appears to have lost the IP game to Europe. Whether this preliminary assessment holds true once the full text of CETA is released, and is applied in Canada, remains to be seen.