Canadian Perspectives on Competition Law and Reverse Payments Following FTC v. Actavis

David Rosner, Navin Joneja, Joshua Krane, Sep 30, 2013

The Canadian Competition Bureau, pharmaceutical companies operating in Canada, and Canadian lawyers have been following the U.S. Supreme Court proceedings in FTC v. Actavis, Inc. et al. with some interest. In its June 2013 decision, the Court ruled on how so-called “reverse payments” by originator pharmaceutical companies to generic pharmaceutical companies in settlement of patent infringement litigation will be assessed under U.S. antitrust law. This note considers how reverse payments might be analyzed under the Canadian Competition Act in light of Canada’s regulatory and statutory framework and enforcement approach towards intellectual property rights and competition law. While the Actavis case is interesting in a number of respects, it does not account for the unique Canadian statutory and regulatory environment, thus limiting its applicability to the Canadian context.

Among the notable implications are the following:

  • Actavis holds that U.S. antitrust law can apply to reverse payments. However, since most reverse payments do not provide the patent holder with any market power that exceeds that conferred by the grant of the patent, under existing Canadian jurisprudence Canadian competition law ought not to apply to such agreements.
  • To the extent scrutiny of reverse payments under the Competition Act is allowed, such scrutiny should only occur under Section 90.1 of the Act (the civil competitor collaboration provision).
  • The requirements under Section 90.1 of the Act may very well require proof of the invalidity or non-infringement of a patent to establish that a reverse payment violates the statutory provision.

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