Fixing Canada’s Patent Law, and Washing Dirty Dishes: Just Do It

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Owen Lippert

When we came home from school, my brothers and I had a list of chores to do. Inevitably we would quarrel over whose turn it was to wash the dishes. I would tell Drew, "Mum told you it was your turn this morning. She’s going to say the same thing this evening. Why don’t you do them now and spare her getting mad." He would refuse, saying, "I’ll do the dishes when Mum tells me I have to." Mum would get home and shout, "I work all day; why do I have to tell you twice to do something that you should have done without having been asked in first place?"

Basically, that’s what’s going on with the latest Canada-US trade dispute before the World Trade Organization, set to start in late September. Imagine Mum is the WTO, and washing the dishes is fixing Canada’s Patent Act to adhere to the promises made by Canada in signing the 1995 international treaty on Trade Related Aspects of Intellectual Property Rights (TRIPS).

The shortcoming in Canada’s Patent Act raised in this dispute might seem small, but it affects up to 67,000 patents relating to inventions in all business sectors. That means that if it is not fixed, thousands of companies and individuals will not receive the full patent protection they should have. Some will lose millions of dollars in sales. Even more seriously, Canada’s reputation as a country that honours its promises will be further eroded.

What’s missing in the Patent Act dates from 1987, when Canada amended the law (Bill C-22) to provide 20-year protection from the date of filing for all patent applications filed on or after October 1, 1989. Prior to that, Canada had provided 17 years of patent protection from the date of the patent being issued. Keep in mind that the time between the filing and the issuance of a patent can sometimes take up to five years or more.

Bill C-22 created the situation that if you had filed a patent application in, say, January 1989 and the patent office took three years or more to issue the patent, then you had a patent life of 17 years from the date the patent was issued that was as good as a patent life of 20 years from filing. However, if you filed a patent application in January 1989 and the patent office took less than three years to issue it to you, then you would have had a patent life that was shorter than 20 years from the filing date of the patent application. Ideally, Bill C-22 just should have said to the patent owners and patent applicants in the system at the time: you have a patent life that is 20 years from filing your application, or 17 years from the date the patent issued, whichever is better in your case. The solution to the current mess is still to say so to approximately 67,000 owners of affected patents.

The next step in this story comes when Canada signed the TRIPS agreement negotiated as part of the Uruguay Round of world trade talks. Article 33 of the TRIPS agreement obligated Canada to provide a minimum 20-year term of protection for all patents, counted from the time of filing. Article 70.2 established that the 20-year term of protection applies to all patents that existed at the time that the TRIPs agreement had to be implemented by developed countries, that is, by January 1, 1996.

All of sudden, the simple transition between one set of rules and another under Bill C-22 became a violation of our obligations under a major international treaty. Canada was not alone in all this. TRIPS had the same effect in other countries. Their responses are instructive. Seven developed countries, including Canada, had patent regimes with patent terms that were in all or some cases less than 20 years from filing. Six countries - Australia, Germany (for East German patents), Greece, Portugal, New Zealand and the United States - fixed their patent laws to allow affected patent holders to have terms of 20 years from filing or to keep their existing patent terms where these worked out to be terms greater than 20 years from filing.

Which country failed to amend its patent act? You guessed it: Canada. In implementing the TRIPS agreement in 1995, the government had an opportunity to correct the matter. It chose not to. Instead, it is sticking to the line best summarized as "Problem? There’s no problem."

Well, there’s a problem now. Last July, the United States Trade Representative (USTR) requested a WTO Dispute Resolution panel be struck to examine Canada’s failure to uphold the patent term obligations of the TRIPS agreement. Canada, rather than just fixing the problem, responded by objecting to a panel. Predictably, the USTR pursued its request. On Wednesday, September 22, the WTO approved the formation of a dispute resolution panel on the "17-20" issue.

Canada now finds itself in the too-familiar position of fighting, at no small cost, a WTO dispute it has no realistic chance of winning. Consider this the patent equivalent of the magazine dispute. One can, I suppose, appreciate the government’s strategy of "do nothing." Re-opening the Patent Act, even for small technical amendments, may re-ignite the battle over patent rights. Doing nothing until instructed to by the WTO allows the government to blame the inevitable amendments to the Act on the demands of global capitalism.

That strategy, if politically convenient, has deep flaws. First, the WTO was not set up to get the Government of Canada off the hook of having to make tough decisions. Second, by doing something only after an order from the WTO, Canada has chosen to let many affected patent holders lose their rights during the next 2 years or so. More importantly, Canada should actually live up to its own rhetoric. We constantly say a rule-based international trade regime benefits all countries, and in particular smaller economies such as our own. We tell other countries to obey trade rules. Isn’t it time Canada did the same? Isn’t it time we did the dishes before mum has to come home and yell at us?

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Last Modified: Friday, October 22, 1999.