infoJustice

Author: James Damian Hakert

Abstract: On September 12, 2013, Eli Lilly & Co., in filing its Notice of Arbitration with the North American Free Trade Agreement against the Government of Canada, became the first private investor to contest a national patent regime through arbitral means. In the Notice, Lilly alleges that Canada violated NAFTA Articles 1110 (covering expropriation) and 1105 (covering mini- mum standards of treatment) by allowing Canada Federal Courts to unlawfully invalidate two of Lilly’s patents, CA 2,041,113 and CA 2,209,735, protecting the compounds comprising Zyprexa and Strattera, respectively, through application of its controversial “promise doctrine.” Whether arbitration through NAFTA is an appropriate way to contest a NAFTA member state’s patent regime is hotly contested. But Canada Federal Courts have invalidated an increasing number of pharmaceutical patents for failing to meet the promise doctrine, leaving pharmaceutical companies in Canada uncertain as to the extent of their patent rights. Still, NAFTA allowing pharmaceutical companies to successfully dispute national patent laws could have significant future consequences. This note outlines the circumstances surrounding Lilly’s dispute, analyzes the dispute’s viability, and explores various potential implications of the dispute going forward.

Citation: Hakert, James Damian, A Hard Pill to Swallow: A Critical Look at Eli Lilly & Co.’s NAFTA Challenge of the Canadian Patent Regime, and Its Potential Side Effects (Winter 2013). Available at SSRN: https://ssrn.com/abstract=3340188