Eli Lilly Officially Sues Canada For 'Lost Profits' Because Canada Rejected Eli Lilly's Patents

from the incredible dept

Fri, Sep 13th 2013 7:39pm — Mike Masnick

A few years ago, we noted that Eli Lilly was facing some hard times, in large part because it had focused its entire business model around getting patents, and many of those patents were expiring, and very few new ones were in the pipeline. Even so, it was still rather surprising earlier this year to see Eli Lilly claim that Canada owed it $100 million for undermining the company's "expected future profits" by rejecting an Eli Lilly patent. The Canadian court reasonably felt that it shouldn't give Eli Lilly a patent on something that wasn't determined to be useful. Normally, if a country doesn't give you a patent, you move on. However, Eli Lilly used a questionable part of NAFTA, the so-called investor-state dispute resolution mechanism, to argue that Canada was "expropriating its property," and thus demanded compensation -- starting at $100 million, which it then raised to $500 million.

A few weeks ago, Eli Lilly's CEO wrote an op-ed piece, claiming that by not granting his company a monopoly, Canada was "suffocating life-saving innovation." That's wrong. And it's obnoxious. For years we've covered how the pharmaceutical industry has actually used patents to hold back life-saving innovations by locking them up, blocking advances, jacking up the price to absolutely insane rates, and by using a variety of other questionable practices (including patenting historical folk medicines). But, more importantly, every country gets to determine what is and what is not patentable. For Eli Lilly to use trade policies to effectively try to negate Canada's patent validity standards is a blatant attack on Canadian sovereignty.

And now the official case has been filed and Eli Lilly is basically demanding that $500 million because Canada decided that an Eli Lilly drug wasn't worth a patent.

Keep this in mind as we discuss the Trans Pacific Partnership (TPP) agreement and the upcoming EU-US trade agreement TTIP/TAFTA, because companies are asking for similar dispute resolution mechanisms, and this could become a big, big deal. Remember how New Zealand recently has put in a law that should mostly ban software patents? Imagine if Microsoft and others suddenly started trying to sue that country for "lost profits" because it won't give them patents on their software.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: canada, investor-state dispute resolution, nafta, patents, tafta, tpp, trade agreements, ttip
Companies: eli lilly

34 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

That One Guy (profile), 13 Sep 2013 @ 7:45pm

This could be good actually
If canada loses here, or even has to fight hard, it would hopefully make other countries take a good, long look at any treaty/trade agreement that includes similar investor-state dispute language, as something like this makes it very clear such 'deals' make it so the profits of companies are considered to be of higher importance than laws or even sovereignty of countries.
[ link to this | view in thread ]
sorrykb (profile), 13 Sep 2013 @ 8:01pm

For Eli Lilly to use trade policies to effectively try to negate Canada's patent validity standards is a blatant attack on Canadian sovereignty.

Remember 1812!
[ link to this | view in thread ]
Anonymous Coward, 13 Sep 2013 @ 8:33pm

Canada pissed away
Canada pissed away their sovereignty when they signed the treaty, and they don't have the guts to stand up and take it back.
[ link to this | view in thread ]
Anonymous Coward, 13 Sep 2013 @ 9:04pm

I thought this was what NAFTA was all about - big companies screwing over national sovereignty in the name of investors.

They're certainly not about consumers, or even the average voter. Which is why many countries see riots when new "free trade" agreements are proposed.
[ link to this | view in thread ]
AC, 13 Sep 2013 @ 9:17pm

If Lily does win this by some miracle, we the Canadian People will never buy another of their products. Also their big wigs should be careful when entering the country, they may never leave.
[ link to this | view in thread ]
Anonymous Coward, 13 Sep 2013 @ 10:13pm

Neither 1984 nor Brave New World are the blueprints of the future, Jennifer Government is. Corporations will become their own states soon enough.
[ link to this | view in thread ]
Anonymous Coward, 13 Sep 2013 @ 10:36pm

Eli Lilly didn't think this through
'cause Canada is part of Five Eyes....
[ link to this | view in thread ]
Corporate Takeover, 13 Sep 2013 @ 11:16pm

Refuse to recognize the court's authority over patents
If the court were to decide against Canada, the latter should tell the former to fuck off and refuse to recognize the judgment as valid. Don't make the same mistake as US Supreme Court when it decided to extend copyrights on public domain content just to honor trade agreements.
[ link to this | view in thread ]
Anonymous Coward, 14 Sep 2013 @ 12:26am

Re: This could be good actually
Since politicians live or die by lobbyists and the lobbyists represent people who already know that profit is above national laws, it is not so cut and dry.

No matter the result of the case, there will be more push on ISD since it can now be claimed to be necessary. The only question is if the fight is for harsher language (Lilly loses the case) or forcing the provisions on every future deal (Lilly wins the case).
[ link to this | view in thread ]
Anonymous Coward, 14 Sep 2013 @ 5:21am

Why not?

Downloading a movie off the internet starves the cameraman industry, after all. Those guys totally deseve millions from Canada.
[ link to this | view in thread ]
Crusty the Ex-Clown, 14 Sep 2013 @ 6:02am

Yawn
This is merely the latest attempt by Corporatism to drive a stake through the heart of Democracy. My brokers have been instructed to maintain their long position on tar, feathers, and rails. I expect to see a huge upswing in demand for these staples over the next five-ten years.
[ link to this | view in thread ]
Anonymous Coward, 14 Sep 2013 @ 6:10am

more than anything, this begs the question, 'Where did this dispute resolution mechanism' originate? who thought of it first? who tried to get it incorporated into these totally false but always billed as vital 'Trade Negotiations'? on top of that, how long will it be before some companies then take this to the next level and completely cease to do anything except sue countries and governments for 'lost profits? how long before we start seeing countries go completely bankrupt because they are forced to pay out exorbitant amounts of money to companies over these type of ludicrous law suits? how long before there are millions more on the poverty ladder because countries have had to increase taxes to such ridiculously high levels, no one other than the mega rich or very successful companies can pay the rates? how long before countries have to stop innovating and advancing because they simply cant afford to pay the sums expected in these type of law suits?
i hope that the various courts see sense here before there are some extremely serious back lashes and that these particular 'additions' present atm in the un-public TPP and similar Trade Negotiations are REMOVED NOW and FOR GOOD!
[ link to this | view in thread ]
Shon Gale, 14 Sep 2013 @ 7:28am

Went to the doctor recently to hear some nurse exclaim how wonderful gene therapy was and how great it was for everyone. Sorry to take the wind out of your sails nurse lady but my insurance doesn't pay for gene therapy. So what good is it? Same with most of the drugs made.
[ link to this | view in thread ]
Togashi (profile), 14 Sep 2013 @ 7:29am

If they win, I should start a company whose sole business model is to ask Eli Lilly for money. My expected future profits will be the $100 million that I will ask for from them. By not giving me that money, they are undermining my expected future profits, so I will sue them. When it gets to court, how can I lose when they won with the exact same argument?
[ link to this | view in thread ]
Shah zaib, 14 Sep 2013 @ 7:57am

The company being the large Canadian taxpayer, might have rightly sued Govt. for its lost profits. Is it not a positive reaction. When it comes to taxing company, the govt. is helping. When it says for granting patent rights, it rejects.
[ link to this | view in thread ]
Anonymous Coward, 14 Sep 2013 @ 8:20am

It's pretty ironic to see companies that produce products meant to benefit everyone pulling shit that's hurting everyone..
[ link to this | view in thread ]
Anonymous Coward, 14 Sep 2013 @ 8:23am

How many times do they need to be told ....
- never go full retard -
[ link to this | view in thread ]
johnny canada, 14 Sep 2013 @ 8:27am

If Lilly win Canada should just pull a US (reaction) and ignore the running.

Like the US did with all the softwood lumber ruling against them.

Or basically like they way the US reacts to any ruling against them.
[ link to this | view in thread ]
artp (profile), 14 Sep 2013 @ 8:27am

Eli Lilly has a problem with authority
They have been smacked down by the FDA so many times I lost count. The FDA has even taken over their QA Department at times because Eli Lilly can't get it right.

It helps to read the regulations and apply them. But they only do that when trying to get around laws, not when they should be trying to obey them.
[ link to this | view in thread ]
New Mexico Mark, 14 Sep 2013 @ 9:13am

Hostile takeover of governments by corporations
Time travel gimmick aside, actions like this are why I find the Canadian science fiction TV series "Continuum" to be so prescient.
[ link to this | view in thread ]
ricebowl (profile), 14 Sep 2013 @ 10:14am

An horrific basis for litigation
Eli Lilly claim that Canada owed it $100 million for undermining the company's "expected future profits"

Do they also feel they have the right to sue hospitals, or clinics, if their physicians choose not to prescribe their drugs?
[ link to this | view in thread ]
Anonymous Coward, 14 Sep 2013 @ 11:08am

No wait, this is great, this might set a precedent for the end of NAFTA/TPP.

No country is going to want a law that's interpreted as "You have to approve patents or you'll get sued".
[ link to this | view in thread ]
bigpicture, 14 Sep 2013 @ 11:49am

Re: This could be good actually
Since when did the US government or its Corporations ever respect the sovereignty rights of other nations. Especially where there are greed interests such as oil etc.

The US is not a nation that is self reflective, no more than playground bullies are self reflective. The ploy is self righteousness, the end justifies the means is the spin. We are special and the other guys are the villains who are victimizing us. OH WAIT, that was also Hitlers message "we are a pure and special race and these Jews are villains who are hurting us" So that gives us the right to invade and pillage.

This is what Putin is trying to point out if anybody is listening, be self reflective and ask the question why does the rest of the world see the US as a bully? Why does the US have to protect itself from terrorism in the first place, why is it always a threatened victim?
[ link to this | view in thread ]
solidyote (profile), 14 Sep 2013 @ 2:32pm

Re:
That might be hard to do for some.. Given that Lily has monopoly on some drugs that were allowed in Canada for treating some illnesses.

If there aren't alternatives, or if alternative drugs don't work for some, it could hurt a lot of people.

That's a really nasty business..

We allowed them patents and enforced them on our people for their own benefits. And then they use it to create something we need, and begin bossing us around with legal threats..
[ link to this | view in thread ]
Anonymous Coward, 14 Sep 2013 @ 5:47pm

The government refused to grant me the patent on breathing that I am rightfully entitled to. I am rightfully entitled to any patent I ask for and the government is rightfully obligated to grant me patents. I am going to sue it for lost profits.
[ link to this | view in thread ]
That One Guy (profile), 14 Sep 2013 @ 8:17pm

Re: Re:
Hmm, actually, that brings up a possibility, win or lose a way for Canada to show that companies can't just order it around would be to do something similar to India, where they have mandatory licensing for knock-off and generic versions of much more expensive drugs.

Drug companies hate it for obvious reasons, the public loves it, also for obvious reasons, so that would probably be a great way to send a message to any other companies that feel like they are 'owed' profits in a country and try to enforce their entitlement through a broken system.
[ link to this | view in thread ]
Anonymous Coward, 15 Sep 2013 @ 11:52am

Re:
Watch Alien and Aliens: the corporation is all. The hidden motivation for the plot of both movies is that the corporation wants a live alien in order to study, then weaponize it, and I'm guessing getting a patent on it. It puts profits above the deaths of a cargo ship full of employees and a colony of settlers.
[ link to this | view in thread ]
Anonymous Coward, 15 Sep 2013 @ 11:54am

Re:
How long before countries start saying, "Yeah, I ain't signing that!"
[ link to this | view in thread ]
Matt, 15 Sep 2013 @ 3:25pm

New Canadian tax
I can see a new Canadian tax being introduced on a new class of income. The tax rate of 99.99% on all proceeds of NAFTA compensation paid in Canada.
[ link to this | view in thread ]
Anonymous Coward, 15 Sep 2013 @ 6:06pm

not soon enuf
[ link to this | view in thread ]
Anonymous Coward, 15 Sep 2013 @ 9:55pm

Re:
1812 was an entirely different time.

The same rules no longer apply and there is 0 (ZERO) chance of a repeat should a repeat not be desired...
[ link to this | view in thread ]
Ninja (profile), 16 Sep 2013 @ 4:27am

At the very least locking culture behind copyrights still leaves a wealth of public domain behind and doesn't threaten lives. Now preventing people from getting access to stuff that would mean the difference between life and death is despicable. Suing a country that did it right? Well, they can go rot in hell as far as I'm concerned. Chris Dodd almost looks like a selfless, devoted to charity man running an organization of saints.
[ link to this | view in thread ]
Brazilian Guy, 16 Sep 2013 @ 6:24am

Re: Re:
Over ten years ago, as most of Latin America decided they would not sign the American Free Trade Zone deal.
[ link to this | view in thread ]
DB Cooper, 16 Sep 2013 @ 10:19am

Canada deserves this. They refuse to pay fair market prices for drugs so the US consumer is forced to pay a higher price for drugs.
[ link to this | view in thread ]