Torpharm Inc. v. Commissioner of Patents:A Revival of Section 65 of the Patent Act ?

Section 65 of the Patent Act allows Canada's federal Attorney General or "any person interested" to apply to the Commissioner of Patents, at any time after three years from the date a patent is granted, for a remedy in respect of an alleged abuse of a patent. The provision has been so little used in its history that it would be easy to forget about it. However, a recent decision of the Federal Court of Canada serves as a reminder that, so long as a provision remains on the books, it is possible that someone will come along and try to breathe life into it.

In Torpharm Inc. v. Commissioner of Patents, Torpharm made an application to the Commissioner of Patents under s.65 after Merck & Co. refused to grant it a licence to allow it to purchase bulk lisinopril for the purpose of manufacturing tablets in Canada for export to the United States. Without such a licence, this manufacture would have infringed certain Canadian patents owned by Merck, although the corresponding U.S. patents had expired. The Commissioner of Patents concluded that Torpharm's application failed to make a case for relief, and therefore refused to direct a response from Merck. Torpharm appealed to the Federal Court of Canada.

The Federal Court found in favour of Torpharm on most grounds, and remitted the matter back to the Commissioner of Patents for redetermination. Among the Court's numerous findings, two stand out. First, with respect to s.65(2) of the Patent Act, the Court accepted Torpharm's argument that Merck was not meeting, to an adequate extent, demand for bulk-form lisinopril in Canada, even though the only evidence before the Commissioner on this point concerned Torpharm's requirement of bulk-form lisinopril. As Merck pointed out, the Court's approach could result in a situation wherein "any time a licence for a patented article is requested of, and refused by, a patentee, an abuse of patent rights could be deemed to have occurred."

The second significant finding made by the Court was its rejection of Merck's contention, in response to an alleged abuse based on the "exercise of monopoly rights for no bona fide purpose," that the scope of abuses set out in s.65(2)(d) of the Patent Act is to be read in an exhaustive manner. As described by the Court, s.65(2)(d) provides that an abuse of patent rights is "deemed" to exist if "by reason of the refusal of the patentee to grant a licence or licences on reasonable terms, the trade or industry of Canada or the trade or industry of any person or class of persons trading in Canada, or the establishment of any new trade or industry in Canada, is prejudiced, and it is in the public interest that a licence or licences should be granted." According to the Court, s.65(2)(d) is a "deeming" provision, and therefore should be interpreted expansively rather than exhaustively. Nevertheless, the Court noted that there was "[l]ittle evidence of prejudice to Torpharm, or of the public interest affected by the refusal" on this particular ground. In light of the Commissioner's other errors, however, the Court remitted the matter back to the Commissioner of Patents for reconsideration.

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