Monday, February 7, 2011

What is a “patent”? Constitutionality of the Data Protection Regulations.

Apotex Inc. v. Canada (Health) 2010 FCA 334, Nadon JA: Sharlow, Layden-Stevenson JJA affm’g 2009 FC 725 Mandamin J

This case was a challenge to the validity of the Data Protection Regulations, on the basis, inter alia, of federalism. The heads of power advanced in support of validity were the criminal law power, trade and commerce, and POGG. Mandamin J held that the DPR is intra vires under the trade and commerce power [107], but not under the criminal law power [85]. The Court of Appeal held that it was valid under the criminal law power, and did not address whether it also fell under trade and commerce [132]. Neither addressed POGG [FC 110] [FCA 132].

I don't have the expertise to comment on the courts’ interpretation of the criminal law and trade and commerce powers. What puzzles me is that subsection 91(22) “Patents of Invention and Discovery,” was not even argued, though it seems to be the most natural head of power. Patents, after all, “are essentially about information as to what to make or do.”1 It is knowledge, not some physical thing, that provides the quid pro quo for which the patent is granted.2 A patentable invention is “the practical embodiment of the new knowledge.”3 All these descriptions of patents are equally applicable to the data at issue under the DPR, which is information as to the safety and efficacy of a particular drug. More generally, the purpose of patent law is to provide an incentive to disclose valuable new information that is costly to develop but easy to copy, by providing the patentee with a monopoly period at which its product can be priced above marginal cost, so allowing it to recoup development costs. Both the FCA at [109] and Mandamin J at [78], [83] agree that this is the purpose of the DPR. All this suggests to me that the DPR is a form of patent.

Of course, the DPR is not exactly like a modern patent granted under the Patent Act. Most obviously, there is no non-obviousness requirement. Protection under the DPR is most important precisely when the new drug is not innovative enough to be patentable under the Patent Act, and yet it is new enough to require new clinical testing prior to approval by the Department of Health. That the DPR does not require inventive ingenuity is irrelevant to whether it is a valid exercise of the patent power. Quite apart from any notion of the constitution as a “living tree,” at the time of confederation there was no requirement of non-obviousness recognized as such in patent law. The requirement for inventive ingenuity emerged gradually in the mid-to-late 19th century out of the novelty requirement. At the time of confederation the leading case was the decision of the House of Lords in Harwood v Great Northern Railway (1865) 11 E.R. 1488 holding at 1501 that “mere application of an old contrivance in the old way to an analogous subject [is] without novelty in the application.” Though this doctrine of analogous use eventually matured into the modern inventive step requirement, it was at that time still conceived of as an aspect of the novelty requirement. The exercise of inventive ingenuity as a separate requirement was not established as a distinct requirement until the 1880s.4 Even so, as late as the 5th edition in 1909, Terrell still referred to the issue as being one of novelty (at 37), and as late as 1947, in tracing the historical origins of the rquirement of inventive ingenuity, Dr. Fox argued that the whole doctrine was ill-advised and developed in error, and that the law should never have moved beyond the novelty requirements.5 Of course, Dr. Fox lost the day on this point, as he well knew, but his argument does show that inventive ingenuity cannot be considered to be a defining characteristic of patent law, either historically or normatively.

The core of the patent power, I would suggest, is to provide an incentive to the development of practical new knowledge that is difficult to develop and easy to copy, by providing a period of monopoly over the exploitation of that knowledge. Whether that definition is roughly correct, it is historically clear that non-obviousness is a relatively recent appendage, that must itself be justified by the living tree doctrine, not a central part of the concept. If anything, the protection provided by the DPR is closer to the conception of a patent that was current in 1867 than is our modern approach. Perhaps it might be said that the “living tree” metaphor works both ways, and though the DPR would have been within the patent power in 1867, it is no longer; the more obvious conclusion is simply that the DPR is valid under subsection 91(22).

1 Aerotel Ltd v Telco Ltd [2006] EWCA Civ 1371 [32] Jacob LJ.
2 Consolboard Inc v MacMillan Bloedel (Sask) Ltd, [1981] 1 SCR 504 at 517.
3 Shell Oil Co v Canada (Commissioner of Patents), [1982] 2 SCR 536 at 549.
4 See Hayward v Hamilton (1881) Griffin’s Patent Cases 115; Morgan v Windover (1887) 4 RPC 417 at 425 (Ch.D.);  Gadd & Mason v Mayor etc. of Manchester (1892) 9 RPC 516 at 425-26 (CA).
5 Harold G. Fox, Monopolies and Patents: A Study of the History and Future of the Patent Monopoly (1947 Toronto, U of T Press), generally Ch. XVII and esp 237.

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