Eli Lilly and Company v. Canada (ICSID Case No. UNCT/14/2), Respondent's Statement of Defence (June 30, 2014)
I. PRELIMINARY STATEMENT
1. Eli Lilly and Company (“Lilly” or “Claimant”) is a disappointed litigant. Having lost two patent cases before the Canadian courts, it now seeks to have this Tribunal misapply NAFTA Chapter Eleven and transform itself into a supranational court of appeal from reasoned, principled, and procedurally just domestic court decisions. Claimant argues that the domestic court decisions invalidating its patents are measures that violate NAFTA Chapter Eleven. Claimant does this on the basis of misstatements of the content of Canadian law and of Canada’s international obligations. Its claim is wholly without merit and should be dismissed, with full costs to Canada.
2. Claimant sought patents in Canada in the 1990s for the pharmaceutical use of two known chemical compounds, olanzapine and atomoxetine.1 Canada’s Patent Office granted the patents on the basis of the representations made by Claimant in its applications. In accordance with Canada’s Patent Act 2, this initial administrative grant was only presumptively valid. It remained subject to challenge, review and potential invalidation by Canada’s Federal Court through private-party litigation. The two patents were challenged in court. Exercising its statutory mandate, the Federal Court determined that both were invalid.
3. Claimant filed its 1991 patent application for olanzapine despite already holding a prior patent for this compound, as part of a larger group (or “genus”) of related compounds. To warrant a second monopoly, Claimant asserted that olanzapine provided marked superiority in the treatment of schizophrenia compared with other members of the same genus and other unrelated compounds. The trial judge reasonably and in accordance with Canadian law sought to determine whether, at the time of filing, Claimant had proved (or “demonstrated”) that olanzapine had the asserted utility, or at least could soundly predict that utility based upon its then-current research. Evidence at trial revealed that Claimant had claimed the second monopoly on the basis of studies which failed to establish any particular treatment advantage of olanzapine over the already-patented class to which it belonged. Allowing patent protection on this basis would encourage speculative over-patenting. Claimant’s olanzapine patent was reasonably invalidated by the Federal Court.