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.