Thomas E. Clarke, M.Sc., M.B.A.

Stargate Consultants Limited

January 2001

This is an excerpt from a larger study conducted by Stargate Consultants Limited in January 2001 on the impact of Canada's patent rules and processes on the ability of Canada's biotechnology firms to grow and prosper in a global environment.

The complete study entitled, "Impact of Canada's Patent System and Public Sector Technology Transfer System on the Growth of the Biotechnology Industry in Canada", can be found on this web-site.



Canada does not grant patents on higher life forms, including plants and animals although most of our competitors do. A recent case before the Federal Court of Canada dealt with the patentability of the "Harvard Mouse"(a higher lifeform). The Court ruled that the mouse was patentable in Canada. For some unknown reason, the Commissioner of Patents decided to appeal the ruling to the Supreme Court of Canada. As of today, the Supreme Court has not decided whether it will hear the appeal. At present, the Canadian Intellectual Property Office (CIPO) is not issuing patents on higher life forms.

This part of the overall study that dealt with the impact of the differences between what is patentable in Canada vs. other patent jurisdictions, identified two schools of thought on the effect of these differences on the growth of the biotechnology industry in Canada.


Insidious Effect

One school believes that Canada's stance on the patenting of higher life forms (HLF) is having a long-term deleterious effect on the ability of Canadian companies and government laboratories to attract investment and R&D dollars. Some felt that the lack of HLF protection was making it difficult to do business across the Canada-U.S. border while others felt it was undermining Canada's ability to be a world leader in biotechnology. Some of the quotes from interviewees were, "The Harvard Mouse controversy is real show stopper" and "What technology are we not getting access to because we do not provide patent protection for it?"

The fact that the Commissioner of Patents was fighting the Federal Court decision in the Harvard Mouse case was felt by some as signaling to the world that Canada is hostile to biotechnological inventions. One government scientist stated that the Commissioner's actions "send a signal to the international research community that if you are doing research in genetically modified higher organisms, Canada may not be the place to do it".

One government technology transfer officer thought that Canada's unwillingness to harmonize its patent rules with other jurisdictions was making Canada look "parochial" and forcing Canadian biotechnology organizations, including government laboratories, to patent their work outside Canada.

Several respondents were concerned that the lack of protection for transgenic animals, especially for non-food uses (e.g., xenotransplants) was discouraging the development of the industry in Canada despite the ability for firms conducting transgenic research to patent elsewhere. The lack of HLF protection was also seen as discouraging R&D investment in plant research.

Another respondent pointed out that our unwillingness to move quickly on the patent protection scene was going to have an adverse effect on the emerging area of bioinformatics. "It is not clear that the computer models developed can be protected under our existing patent rules". This person believed that this uncertainty would drive this branch of biotechnology outside Canada into a patent jurisdiction that offers solid patent protection.


Little Direct Economic Impact

The other school of thought, while not dismissing the concerns mentioned above, believed that the economic effects of the differences in what is patentable subject matter were not major. "Patenting in other jurisdictions gives us the patent protection we need".

The refusal of the CIPO to provide patent protection similar to that provided by other jurisdictions has made Canada's patent system irrelevant in the strategic planning of many, if not most, Canadian biotechnological firms and government laboratories. "People will do what they have to do to commercialize their inventions in other jurisdictions based on the law that is in place in those other jurisdictions".

The bottom line for these interviewees was that Canada was a relatively small market for biotechnological products and processes and it was much more important to protect inventions in the larger markets. As most of those markets allow for the patenting of higher life forms, companies, universities and government laboratories generally file patent applications first in those jurisdictions for economic reasons, and file in Canada for patriotic reasons.

The reality is that everyone interviewed for this study had no qualms about patenting HLFs and did so whenever and wherever necessary to protect their inventions. What then is driving the Commissioner of Patents and the government to drag their feet on this important issue and, in doing so, making the Canadian patent system even more irrelevant on the world stage?

When asked why they thought the government and CIPO were not moving quickly enough to harmonize what is patentable subject matter with the patent systems of our competitors, most thought it was for reasons of sovereignty. The sovereignty issue raises the following question, "How can we, as Canadians, claim pride in our sovereignty when we force our citizens to obtain the patent protection they need to build a strong biotechnology industry for the benefit of Canadians, from foreigners? This is the height of hypocrisy!

In summary, the impact on Canadian biotechnology firms of the differences between what is patentable in Canada vs. other jurisdictions is having a long-term negative impact on Canada's image as an advanced nation interested in growing a strong biotechnology industry. In day-to-day operations, however, the effect at present is relatively minor given that most organizations patent first in countries with larger markets (e.g., U.S., Europe, and Japan). Most only patent in Canada for patriotic, not economic reasons. This will change quickly if these other jurisdictions close their patent systems to Canadians because of lack of reciprocity.

Stargate Consultants Limited
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Tel: (250) 755-3066