In July 2017, the Bank of Canada released a discussion paper outlining a framework for the assessment of risks and opportunities for central banks in connection with Fintech. This paper also more generally explores potential implications of Fintech for central banks, given their mandate over monetary policy, the design and distribution of currency and/or financial stability. Continue Reading
The context of de-risking
In the past decade, the financial services sector across the globe has experienced increased regulatory scrutiny, particularly in the areas of financial crimes, anti-money laundering (AML) and anti-terrorist financing (ATF) regulation.
Financial institutions have generally reacted to the new regulatory environment by bolstering their compliance and risk management divisions with increased budgets and headcounts.[i] However, as the price and regulatory risk of banking increases, some financial institutions are assessing the cost-benefit analysis of certain activities and are opting, simply, to exit entire product lines or customer segments. This phenomenon is one aspect of what is known as “de-risking”. Continue Reading
In their decision reported as 2017 FCA 161, the Federal Court of Appeal says s. 27(3) of the Patent Act requires the patent to disclose both the invention, and how to make the invention. Further, that a patent will not lack sufficient disclosure where routine experimentation is required of a skilled person. However, disclosure is insufficient if the specification “necessitates the working out of a problem”.
In this case, the patent did not teach a step necessary to synthesize the claimed compound. The issue was whether this gap could be filled by the common general knowledge of the skilled person or routine experimentation. Continue Reading
On 22 May 2017, the Financial Stability Board (FSB) and the Committee on the Global Financial System (CGFS) released a report entitled “FinTech credit: Market Structure, Business Models and Financial Stability Implications” (the “Report”). The Report aims to provide an accurate picture of the extent and nature of Fintech credit activity by analysing the functioning of Fintech credit markets, including the size, growth, and nature of such activities, and the benefits and risks of Fintech credit platforms. Continue Reading
As a part of its obligations under CETA, Canada plans to introduce patent term restoration for up to two years when research or regulatory delays have consumed part of the 20-year term of a pharmaceutical patent. Patent term restoration will occur via the grant of a so-called certificate of supplementary protection (“CSP”).
On July 15, 2017, the government of Canada published its proposed Certificate of Supplementary Protection Regulations (“CSP Regulations”) which, in conjunction with amendments to the Patent Act, will create the framework for the issuance of CSPs which will be administered by Canada’s Minister of Health. The government announced a 15-day consultation period with the release of the proposed CSP Regulations “to facilitate broader engagement on the proposed regulatory measures”.
The CSP regime will come into force concurrently with section 59 of CETA, which is tentatively expected on or around September 21, 2017. Continue Reading
On July 15, 2017, the Canadian government published (link) its proposed amendments to the NOC Regulations. These amendments will implement sweeping changes to pharmaceutical patent litigation in Canada pursuant to obligations imposed under CETA. There will be a 15-day comment period, after which, the amendments will be published in final form. The finalized amendments are expected to be in force around late September 2017. These revamped NOC Regulations will apply to Notices of Allegation (“NOAs”) served on or after the date the revamped NOC Regulations come into force.
Overall, the revamped NOC Regulations make amendments that were sought after by both sides of the Canadian pharmaceutical industry. For innovators the NOC Regulations provide appeal rights, allow for the early adjudication of additional patent claims and patents not eligble for listing on the Patent Register prior to generic launch, and give effect to patent term restoration. For generics the NOC Regulations limit or prevent follow-on litigation, expand potential section 8 damages and grant expanded standing to sue for impeachment. These and other changes are described in more detail below. Continue Reading
In March 2017, the European Commission (EC) issued a public consultation document on Fintech. Cloud computing is a major area covered by the EC request for comment and requires delicate balancing between innovation and risk minimization. On one hand, cloud is an easily scalable and cost effective way for financial institutions to manage their data storage and processing. However, cloud also presents major banks with increased cybersecurity and compliance risk. The topic of cloud is particularly relevant because certain Fintech enterprises may not be subject to the same regulatory constraints as major financial institutions.
The European Banking Authority (EBA) published its response to the public consultation in June 2017. Continue Reading
Venture Capital firms (or VC’s) often invest in early-stage start-ups with uncertain valuations. The terms of a VC’s investment will often be heavily weighted in favour of the VC and may include downside protection. This means that the VC’s investment will be protected in the event that the valuation of your start-up decreases in subsequent financings. One common method used by VC’s for downside protection is known as a “ratchet” clause. A “ratchet” clause is an anti-dilution clause that works to protect, and in some circumstances can even increase, the VC’s proportionate ownership of your start-up, if the value of your start-up diminishes over time.
A ratchet clause is often included in the terms of the convertible securities (such as preferred shares or convertible debt) that the VC is acquiring in connection with its investment. The clause operates by adjusting the conversion rate of the securities that the VC receives to reflect the issue price per share of subsequent financings.
There are a number of different types of ratchet clauses, including “weighted ratchets”, “half ratchets”, “two-thirds ratchets” and “full ratchets”. A “full ratchet” clause operates by ensuring that the conversion price of the convertible securities held by the VC is adjusted to be the same as the issue price of securities issued in a later financing if the price per share has decreased. A “full ratchet” offers the most downside protection for the VC and is the most dilutive for the start-up. The other types of ratchet clauses provided lesser degrees of downside protection and dilution. Continue Reading
Canadian hydraulic fracturing technology (“fracking”) is at the center of a controversial US case about inter partes review (“IPR”) of patents. The IPR procedure can be a useful defense against patent infringement actions brought by non-practicing entities or “patent trolls.” However, on June 12, the United States Supreme Court agreed to hear the case challenging the constitutionality of the IPR procedure. A SCOTUS decision abolishing or curtailing the IPR procedure, and the ensuing patent troll activity, could have ramifications for Canadian business, including in the fracking industry. Continue Reading
On June 30, 2017, the Supreme Court of Canada, released a landmark patent decision (2017 SCC 36) abolishing Canada’s so-called ‘Promise Doctrine’ by finding it “unsound”, “not good law” and “incongruent with the both the words and scheme of the Patent Act.”