Academic journal article Canada-United States Law Journal

Promise Utility Doctrine and Compatibility under NAFTA: Expropriation and Chapter 11 Considerations

Academic journal article Canada-United States Law Journal

Promise Utility Doctrine and Compatibility under NAFTA: Expropriation and Chapter 11 Considerations

Article excerpt

ABSTRACT: The 2013 filing by Eli Lilly of a notice of arbitration under Chapter 11 of NAFTA relating to the application of the promise utility doctrine in Canadian jurisprudence brought to light latent tensions relating to domestic patent standards, perceived barriers to innovation, and international investment standards. This paper explores applicable NAFTA obligations and patent regimes in an effort to identify points of convergence and divergence, and argues that the promise utility doctrine while differentiated on procedural grounds domestically has significant substantive alignment across jurisdictions, and is overall consistent with the standard of treatment established under NAFTA. The promise utility doctrine, which is grounded in a harmonized view of the theoretical underpinnings of the patent bargain, progressively articulates the enduring need to maintain highly-specific disclosure standards to support sound patent practices, maintain ongoing innovation, and dissuade otherwise speculative or suppressive practices.


I.   Introduction
II.  Background
     A. Patent History: Zyprexa and Strattera
     B. Procedural History: Zyprexa and Strattera
III. Applicable Obligations under NAFTA
     A. Standard of Treatment
     B. Expropriation
     C. Intellectual Property
IV.  Patent Standards across NAFTA Jurisdictions
     A. Patent Law of Canada and the Patent Utility Doctrine
     B. Patent Law of the United States and the Enablement and Written
     Description Doctrines
     C. Patent Law of Mexico
V.   Compatibility of the Promise Utility Doctrine and Obligations
     under NAFTA
     A. An Inquiry into the Standard of Treatment
     B. An Inquiry into the Expropriation
     C. An Inquiry into Intellectual Property
VI.  Concluding Thoughts


Invalidation of a patent for lack of utility based on the promise utility doctrine identifies important questions pertaining to the compatibility of such an approach with pre-existing trade obligations, particularly those established under the North American Free Trade Agreement ("NAFTA"). (1) In 2013, Eli Lilly & Company ("Eli Lilly") filed a notice of arbitration under NAFTA claiming that the recent invalidation of two patents based on the application of the promise doctrine was tantamount to direct or indirect expropriation. (2) This paper will explore the validity and compatibility of the promise utility doctrine as articulated in Canadian jurisprudence with investor-state protections as established under NAFTA through a review of the current Chapter 11 dispute initiated by Eli Lilly over the invalidation of patents for Zyprexa and Strattera. First, a brief outline of the Chapter 11 dispute will be offered as background, including both patent and procedural historical summaries. Second, applicable investor-state protections as established under NAFTA are summarized. Third, patent standards across NAFTA jurisdictions are discussed with particular emphasis on highlighting the evolution and alignment of the promise utility doctrine. Fourth, the promise utility doctrine is critically appraised to assess consistency with established NAFTA obligations, with specific emphasis on direct and in-direct expropriation. Finally, concluding thoughts are offered, highlighting points of convergence and divergence. The promise utility doctrine marks a progressive evolution in the assessment of a patent's utility which, while initially raising prima facie concerns over incompatibility, remains consistent with NAFTA obligations.

While consistent with the position of the Government of Canada in the dispute overall, it is on the scope of Intellectual Property ("IP") system alignment and the applicability of the police powers exception to expropriation where our positions slightly diverge. I assert that IP regimes under NAFTA jurisdictions are far more harmonized theoretically and substantively than previously recognized, with mechanical deviation relating to the operative components of the regime to address a utility inquiry acknowledged. …

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