Compulsory Licensing Rides Again

On March 25, Canada’s federal government passed Bill C-13 in response to the COVID-19 pandemic. Among the provisions of this bill is a new s. 19.4 of the Patent Act, which provides for emergency compulsory licensing of patents.

Section 19.4 requires the Commissioner of Patents to grant the Government of Canada, and anyone else specified in an application by the Minister of Health, a non-transferable licence to make, construct, use, and sell a patented invention “to the extent necessary to respond to [a] public health emergency”, such as the COVID-19 pandemic. The licence lasts for the lesser of one year or until the Minister notifies the Commissioner that the licence is no longer necessary. No such licence may be granted under s. 19.4 after September 30, 2020.

The licensee (including the government) will have to pay the patentee whatever amount the Commissioner deems to be adequate remuneration, considering the economic value of the licence and the extent to which it was used. The patentee can also apply to the Federal Court to order the licensee to cease activities that exceed the scope of the licence.

It remains to be seen to what extent, if any, this provision will be used. Some pharmaceutical companies whose drugs or drug candidates may be useful in the treatment of COVID-19 have already indicated they will forgo enforcement of related patents in view of the global pandemic. If the new section is used, disputes may arise in the future as to the proper scope of activities covered by the compulsory licence (e.g., manufacture for export). The proper amount of compensation to be fixed by the Commissioner may also become a subject for consideration by the courts.

Should you have any questions about the scope of this new provision or its implications for your business, please contact Zarya Cynader or another member of our Regulatory or Patents teams.