T-1220-82
American Home Products Corporation (Appli-
cant)
v.
Commissioner of Patents and ICN Canada Lim
ited (Respondents)
Trial Division, Jerome A.C.J.—Toronto, April 5;
Ottawa, November 12, 1982.
Judicial review — Prerogative writs — Prohibition —
Application to prohibit Commissioner of Patents from grant
ing compulsory licence under s. 41(4) of Patent Act to
respondent ICN — Section intra vires Parliament and not
inoperative as conflicting with Canadian Bill of Rights —
Parliament possesses authority to impose special restrictions
upon rights of owners respecting medicinal patents in support
of valid federal objective of ensuring reasonable access to
products by Canadian consumers — Lack of guarantee of oral
hearing prior to determination of rights of owner does not
offend standard of fairness under Canadian Bill of Rights —
Opportunity to present written submissions and seek oral
hearing is provided consistent with desire to reconcile rights of
owner with public interest — No subsequent interference with
title as patent granted subject to restrictions — Application
dismissed — Federal Court Act, R.S.C. 1970 (2nd Supp.), c.
10, s. 18 — Patent Act, R.S.C. 1970, c. P-4, s. 41(4) — Patent
Rules, C.R.C., c. 1250, ss. 123(2), 126(1) — Canadian Bill of
Rights, S.C. 1960, c. 44 (R.S.C. 1970, Appendix 1111. ss. 1,
2(e).
CASES JUDICIALLY CONSIDERED
FOLLOWED:
Eli Lilly & Co. v. S & U Chemicals Ltd. (1973), 9
C.P.R. (2d) 17 (F.C.A.); affirmed [1977] 1 S.C.R. 536;
26 C.P.R. (2d) 141.
APPLIED:
American Home Products Corp. v. Commissioner of
Patents (1970), 62 C.P.R. 155 (Ont. H.C.); affirmed 62
C.P.R. 161 (Ont. C.A.); Hoffmann-LaRoche Ltd. v.
Frank W. Horner Ltd. et al. (1970), 64 C.P.R. 93 (Ex.
Ct.).
REFERRED TO:
Smith-Kline & French Laboratories Ltd. et al. v. Com
missioner of Patents (1982), 61 C.P.R. (2d) 65
(F.C.T.D.).
COUNSEL:
I. Goldsmith, Q.C. for applicant.
D. H. Aylen, Q.C. and L. Holland for
respondent Commissioner of Patents.
I. Hughes for respondent ICN Canada
Limited.
SOLICITORS:
I. Goldsmith, Q.C., Toronto, for applicant.
Deputy Attorney General of Canada for
respondent Commissioner of Patents.
I. Hughes, Concord, for respondent ICN
Canada Limited.
The following are the reasons for order ren
dered in English by
JEROME A.C.J.: This is an application for a writ
of prohibition pursuant to section 18 of the Feder
al Court Act' prohibiting the respondent, the
Commissioner of Patents, from:
(a) considering further or determining the
application by the respondent ICN Canada
Limited dated November 10, 1980, being
application No. 534, for the grant of a compul
sory licence under Canadian Patents Nos.
722,692 dated November 30, 1965; 755,634
dated March 28, 1967; 759,982 dated May 30,
1967 and 963,004 dated February 18, 1975,
owned by the applicant; and
(b) granting a compulsory licence to the
respondent ICN Canada Limited under any of
the said patents;
on the ground that the respondent, the Commis
sioner of Patents, has no jurisdiction to hear or
determine the said application, or to grant any
such licence, by reason of the fact that subsection
41(4) of the Patent Act, R.S.C. 1970, c. P-4, is
either ultra vires the Parliament of Canada, or, in
the alternative, is in conflict with the Canadian
Bill of Rights 2 and therefore inoperative.
Subsection 41(4) is as follows:
41....
(4) Where, in the case of any patent for an invention
intended or capable of being used for medicine or for the
preparation or production of medicine, an application is made
by any person for a licence to do one or more of the following
things as specified in the application, namely:
R.S.C. 1970 (2nd Supp.), c. 10.
2 S.C. 1960, c. 44 [R.S.C. 1970, Appendix III].
(a) where the invention is a process, to use the invention for
the preparation or production of medicine, import any medi
cine in the preparation or production of which the invention
has been used or sell any medicine in the preparation or
production of which the invention has been used, or
(b) where the invention is other than a process, to import,
make, use or sell the invention for medicine or for the
preparation or production of medicine,
the Commissioner shall grant to the applicant a licence to do
the things specified in the application except such, if any, of
those things in respect of which he sees good reason not to
grant such a licence; and, in settling the terms of the licence
and fixing the amount of royalty or other consideration pay
able, the Commissioner shall have regard to the desirability of
making the medicine available to the public at the lowest
possible price consistent with giving to the patentee due reward
for the research leading to the invention and for such other
factors as may be prescribed.
The basis for the attack on the authority of
Parliament to enact subsection 41(4) is that it
constitutes unwarranted discrimination against
owners of medicinal patents by imposing upon
them a licencee not of their choosing in a way
which does not occur with the ownership of other
kinds of patents.
Parliament obviously possesses the authority to
impose special restrictions upon distribution of
selected products if it does so in support of a valid
federal objective in the public interest. The direc
tion given to the Commissioner to have regard to
the desirability of making the medicine available
at the lowest possible price consistent with due
reward to the patentee, constitutes clear justifica
tion for the compulsory licensing provisions. It can
also leave no doubt that Parliament enacted sub
section 41(4) to answer those very concerns and
was therefore not engaging in unwarranted dis
crimination. Furthermore, in Eli Lilly & Co. v. S
& U Chemicals Ltd.', the Federal Court of Appeal
concluded that the provisions of subsection 41(4)
constitute a valid exercise of Parliament's legisla
tive authority. Finally, in an earlier judgment on
this section, Smith-Kline & French Laboratories
Ltd. et al. v. Commissioner of Patents 4 , I made
reference to the judgment of King J. in American
Home Products Corp. v. Commissioner of
(1973), 9 C.P.R. (2d) 17 (F.C.A.); affirmed [1977] 1
S.C.R. 536; 26 C.P.R. (2d) 141.
4 (1982), 61 C.P.R. (2d) 65 (F.C.T.D.).
Patents', setting aside the argument that subsec
tion 41(4) was ultra vires the Parliament of
Canada. Accordingly, I must set aside the submis
sion that Parliament exceeded its authority in
enacting subsection 41(4).
The relevant sections of the Canadian Bill of
Rights are as follows:
PART I
BILL OF RIGHTS
1. It is hereby recognized and declared that in Canada there
have existed and shall continue to exist without discrimination
by reason of race, national origin, colour, religion or sex, the
following human rights and fundamental freedoms, namely,
(a) the right of the individual to life, liberty, security of the
person and enjoyment of property, and the right not to be
deprived thereof except by due process of law;
(b) the right of the individual to equality before the law and
the protection of the law;
(c) freedom of religion;
(d) freedom of speech;
(e) freedom of assembly and association; and
(/) freedom of the press.
2. Every law of Canada shall, unless it is expressly declared
by an Act of the Parliament of Canada that it shall operate
notwithstanding the Canadian Bill of Rights, be so construed
and applied as not to abrogate, abridge or infringe or to
authorize the abrogation, abridgment or infringement of any of
the rights or freedoms herein recognized and declared, and in
particular, no law of Canada shall be construed or applied so as
to
(e) deprive a person of the right to a fair hearing in accord
ance with the principles of fundamental justice for the deter
mination of his rights and obligations;
The basis of the applicant's submission that
compulsory licensing is in conflict with the
Canadian Bill of Rights is twofold: first, that it
constitutes a denial of the applicant's normal
rights of ownership; second, that if the applicant's
rights to ownership of this patent can be subject to
interference, it is only upon a fair hearing, and
since the procedures related to compulsory licens
ing applications do not guarantee the owner an
oral hearing, they are in conflict with the clear
provisions of the Canadian Bill of Rights in para
graph 2(e).
5 (1970), 62 C.P.R. 155 (Ont. H.C.); affirmed 62 C.P.R. 161
(Ont. C.A.).
Having already expressed the view that the
imposition of these special conditions flows from
Parliament's legitimate concern for the consumer,
I must also conclude that title to a Canadian
patent for medicinal products is granted subject to
the restrictions contained in subsection 41(4).
Once again, the clear precedent is precisely to that
effect 6 . Compulsory licensing does not therefore
constitute subsequent interference with title. It is a
qualification of the title as and when granted
pursuant to the Patent Act.
Turning then to the applicant's final submission,
the procedural rules governing any hearing to be
conducted by the Commissioner are contained in
subsections 123(2) and 126(1) [of the Patent
Rules, C.R.C., c. 1250]:
123. .. .
(2) Subject to subsection (1) and to sections 124, 125 and
126, the Commissioner shall dispose of an application in
accordance with subsection 41(4) of the Act as soon as possible
after the expiration of two weeks from the day after which no
further steps may be taken with respect to the application by
the applicant or patentee pursuant to sections 119 to 122.
126. (1) At any time not earlier than two weeks after the
first day on which no further steps may be taken with respect to
an application by the applicant or patentee pursuant to sections
119 to 122, the Commissioner may, if in his opinion a hearing
is necessary or desirable, by written notice to
(a) the applicant,
(b) the patentee,
(c) the Minister of National Health and Welfare, if he has
given written notice to the Commissioner pursuant to subsec
tion 124(2), and
(d) any minister to whom the Commissioner has given
written notice of the application pursuant to subsection
125(1),
designate a day for the commencement of a hearing at which
evidence or representations or evidence and representations, as
the notice specifies, may be adduced or made by or on behalf of
any person to whom the notice is sent, at a time and place
specified in the notice.
I accept the submission of counsel for the appli
cant that since the choice concerning an oral hear
ing is left entirely with the Commissioner, these
sections are not capable of any interpretation
which guarantees to the owner of a medicinal
patent an oral hearing before compulsory licensing
6 See Hoffmann-LaRoche Ltd. v. Frank W. Horner Ltd. et
al. (1970), 64 C.P.R. 93 at p. 107 (Ex. Ct.).
is ordered. I am not satisfied, however, that a
decision under the compulsory licensing provisions
without guarantee of oral hearing can be equated
to a determination of the owner's rights without a
fair hearing. Acting in the public interest, Parlia
ment has declared that inventors of medicinal
products are granted patent rights in Canada,
subject to the compulsory licensing provisions.
Consistent with those priorities, Parliament has set
out procedures which afford the owner of the
patent the opportunity to make written submis
sions to the Commissioner and to seek an oral
hearing. There is, of course, no suggestion by
counsel that a hearing cannot be fair unless it is
oral. In assessing the fairness of the hearing given
to the applicant in this matter, 1 must bear in mind
the justification on the part of Parliament for
causing the title to patent for medicinal products
to be subservient to the assurance of reasonable
access to the products by the Canadian consumer.
These two legitimate interests must be reconciled
and Parliament has authorized the Commissioner
to do so under the directions contained in the last
paragraph of subsection 41(4). The applicant has
not persuaded me that the opportunity given to the
owner to present submissions, whether written or
oral, falls below the standard of fairness to which
owners of patents for medicinal products are en
titled in this process of reconciliation of their
rights with those of the public.
Accordingly, this application must be dismissed
with costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.