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The New NAFTA: Patent Changes Under the United States-Mexico-Canada Agreement

Mexico, the United States and Canada have agreed on the text of a new trade agreement, known as the United States-Mexico-Canada Agreement (“USMCA”), to replace NAFTA. The USMCA remains subject to final review, but the full text of the agreement is now available online.

Chapter 20 of the USMCA addresses intellectual property. The chapter is substantially longer and more detailed than the predecessor intellectual property chapter in NAFTA, a copy of which can be found here.

There are a number of changes affecting patent law. The main changes are as follows.

The USMCA allows countries to revoke patents in additional circumstances. NAFTA permitted a party to revoke a patent only on grounds that would have justified refusal to grant the patent or where the grant of a compulsory license has not remedied the lack of exploitation of the patent. The USMCA further permits parties to revoke, nullify or hold a patent unenforceable for “fraud, misrepresentation or inequitable conduct” (Art. 20.F.3)

The USMCA states (Art. 20.F.6) that each party (i.e. signatory country) shall provide a patent applicant with at least one opportunity to make amendments, corrections and observations in connection with its application (with the proviso that a party may provide that such amendments or corrections shall not exceed the scope of the disclosure of the invention, as of the filing date). This language was not in NAFTA.

NAFTA permitted parties to provide patent term adjustments for delays. These adjustments are now mandatory under the USMCA . An applicant will be permitted to request (and such requests must be honoured) adjustments to the term of a patent to compensate for “unreasonable delays” in patent approval process. An unreasonable delay is one where a patent does not issue until at least five years after the date of filing or three years after a request for examination of the application has been made, whichever is later. Certain delays, such as those attributable to the applicant, can be excluded from the delay period (Art. 20.F.9). Canada does not presently have patent term adjustments so this is a significant change.

The USMCA also mandates a patent term extension, or alternatively a period of additional sui generis protection, for pharmaceutical products where there is unreasonable curtailment of the effective patent term as a result of the marketing approval process by the governing regulatory body (Art, 20.F.11(2)). We do not anticipate that this will have a major impact in Canada, since there are already certificates of supplemental protection available in relation to pharmaceutical products.

NAFTA previously provided that parties could exclude “plants” from being patentable. The USMCA confirms this exclusion but clarifies that “patents are available at least for inventions that are derived from plants” (Art. 20.F.1(4)).

Data Protection

The USMCA retains the data protection provision with respect to new pharmaceutical products (at a minimum of 5 years) but adds a new requirement to provide at least 3 years data protection in relation to new indications, formulations or methods of administration of a previously approved product (Art. 20.F.13(2)). This additional 3 year exclusivity requirement should not affect Canada, however, since it does not apply where a country gives at least 8 years of protection, as Canada already does.

The USMCA has a section dedicated to biologics. Of note, it provides that data protection for biologics shall be at least ten years from the date of first marketing approval (Art. 20.F.14(1)), which is greater than the 8 year data exclusivity currently provided for innovative biologic drugs. Canada is required to implement this change within five years after the USMCA comes into force.