Friday, February 19, 2021

Whether Public Viewing Amounts to Enabling Disclosure is Context Dependent

Betser-Zilevitch v PetroChina Canada Ltd 2021 FC 85 Manson J

            2,584,627 / Steam-Assisted Gravity Drainage

In this decision, that turned primarily on claim construction, Manson J held the 627 patent to be valid but not infringed. There is no new law, but the decision illustrates that the claims may be construed with reference to the function of the invention, and that whether public viewing of the prior art amounts to prior disclosure is context dependent.

The 627 Patent generally relates to a modularized (Steam-Assisted Gravity Drainage) SAGD well pad for heavy oil (bitumen) production [10]. A “well pad” is a collection of well pairs used in extraction of heavy oil production. “Modularized” means that the well pad is made off-site in modules that are then transported to the well site and assembled. This is in contrast to “stick built” well pads that are entirely constructed on-site. Construction of a well pad is a major undertaking that takes months. The main advantage of modularization is reduced reduced costs flowing from reduced on-site construction costs [7]. The well pad has several levels, which, as I understand it, are like floors in a building, except that the levels are open. The key aspect of the 627 patent was that the main flow lines were on the “first level” [12], [116], [117].

In the defendant’s allegedly infringing well pads the production flow lines were located on a higher level, which requires scaffolding for workers in the field to access, and not on the lowest level [135]. The key claim construction issue was therefore as to the meaning of “first level” in the claim. The experts disagreed as to the meaning of the term. In light of the “ambiguity” in the claims, Manson J held that the term “would be understood with reference to its functions and objects, as provided in 627 Patent specification” [116]. The object was to constrain the placement of the flow lines at a level such that they would be connected without the need for scaffolding, thus improving safety and reducing costs [116]–[118]. This illustrates that reference to objective of the invention may be useful to construe the claims.

Because Manson J held that there was ambiguity, he didn’t need to address the question of whether recourse to the disclosure is appropriate even in the absence of a finding that the claims are ambiguous. I can’t resist digressing on this point. In my view, recourse to claims is always appropriate: as Lord Hoffmann pointed out in Kirin-Amgen [2004] UKHL 46 [33], the skilled person “reads the specification on the assumption that its purpose is both to describe and to demarcate an invention.” Words take their meaning in part from the context in which they are used; the common general knowledge is part of the context, and I can’t think of any reason why the disclosure should not also be considered part of the relevant context. Since the disclosure and claims are both part of the specification, a skilled person reading the claims would have to make an effort to avoid seeing the disclosure, and I can’t think of any justification for such an artificial approach. In this case, Manson J found an ambiguity allowing recourse to the specification on the basis of a disagreement between the experts as to the meaning of the terms. If that is all it takes, then we might as well just recognize that consideration of the disclosure is always appropriate in claim construction.

An issue that arose in respect of obviousness was the relevance of prior art modularized well pads that had been transported on public roads and parked uncovered in a public parking lot [159]. The patentee argued that that “[m]erely viewing, without more” is not enough [164] relying on Bombardier 2017 FC 207 [490]. Manson J noted that “The degree of scrutiny required upon visual inspection is context specific. The level of scrutiny required to discern the external elements of a skate in a public arena, as in Bauer Hockey FC [2010 FC 361], above is evidently higher than the scrutiny required to view the components of a large SAGD module” [165]. The point, as I understand it, is that in order to be set up in an anticipation or obviousness attack, the prior art must have been become “available to the public” before the relevant date, and the information which is the quid pro quo for the patent is made available only if the requirements for enabling disclosure are satisfied. A view from a distance of a well pad in which flow lines are visible may be an enabling disclosure, even though a view from a distance of hockey skates does not provide an enabling disclosure of the details of the fabrication method.

Thursday, February 18, 2021

PM(NOC) Related Rights of Action not Subject to Limitation Period

Merck Sharp & Dohme Corp v Sandoz Canada Inc 2020 FC 1180 Southcott J

2,518,435 / sitagliptin / JANUVIA

I believe this is the first decision addressing s 8.2 of the PM(NOC) Regulations, which provide for “Related rights of action,” as described by the RIAS. In particular, s 8.2 provides that “[o]n receipt of a notice of allegation” the patentee may bring an action for infringement of a patent, other than the patents that are set out in the NOA, that could result from the grant of an NOC. The RIAS explains that “Such patents can create legal uncertainty if there is risk that they could be infringed by the generic product. To facilitate legal consideration of such patents without expanding the scope of proceedings under the proposed Regulations, related rights of action are proposed.” The RIAS refers by way of example to patents claiming chemical intermediates or processes for making a drug, which may be infringed by the sale of a particular drug but which are not eligible for listing. A quick look at the patent at issue in this case suggests that it falls into both these categories, as being a process for making intermediates.

The question raised in on this motion is whether s 8.2 is subject to a limitation period, in the same manner as the primary provision, s 6, which requires the patentee to bring an action respecting the patents that are set out in the NOA within 45 days. The parties and Southcott J all agreed that the matter was appropriate for determination by summary judgment [20], [22].

Southcott J held that there is no limitation period applicable to actions brought under s 8.2 [77]. The first point, and a very powerful one, is that there is nothing in the text of s 8.2 suggesting that there is a limitation period, in contrast to the clear limitation period set out expressly in s 6 [41]–[42]. As the FCA has noted, “the clearer the ‘ordinary meaning’ of the text, the more compelling the contextual considerations must be in order to warrant a different reading of it, especially when that involves adding words to those used by the legislator” Biolyse Pharma 2003 FCA 180 [13].

The role of the text is “dominant” (Canada Trustco 2005 SCC 54 [10]), but not absolute, and accordingly Southcott J went on to consider a variety of purposive and contextual arguments made by the parties. The defendants’ basic argument was that the purpose of the Regulations generally and s 8.2 in particular is to reduce the legal uncertainty associated with generic entry [38], [46]. The plaintiffs’ argued that the purpose of s 8.2 in particular is to remove the previously existing barriers to bringing a quia timet action, but not necessarily to eliminate legal risks prior to generic product launch [46]. (And see [35], explaining the prior hurdles to a quia timet action.)

After canvassing the general principles of statutory interpretation, Southcott J considered the specific arguments made by the parties. The defendants generally relied on the RIAS and a high level assessment of the legislative purpose. The plaintiffs responded directly to this by noting that even if the we were to accept that s 8.2 incorporated a limitation period, the defendants acknowledged this would only apply to an action brought under that provision, ie a statutory quia timet action. A patentee who missed the deadline would still be free to sue on an unlisted patent following market entry, when it is no longer necessary to bring the aciton quia timet. This is in contrast to an action related to the patents that are the subject of an NOA, which, pursuant to s 6.01 cannot normally be the basis for a subsequent action [64]. The defendants did not go so far as to argue that a parallel finality provision should be read in along with the limitation provision. Consequently, it is difficult to conclude that the purpose of the provision is to eliminate the generic’s legal risk [69]. If anything, incorporating a limitation period in s 8.2 without the accompanying principle of finality would increase risk and expense, as the patentee would simply wait until launch to bring its action.

The plaintiffs also relied on several arguments turning on the way s 8.2 and a putative limitation period would interact with the Regulations as a whole. For example, the plaintiffs noted that the NOA provides the first person with sufficient information to be able to decide whether to bring an action quickly enough to meet the 45 day deadline, but the “as the NOA is not directed to unlisted patents, the first person would not be similarly equipped to commence a s 8.2 action within the same 45 days” [66]. The patentee made several other arguments of a similar nature, which Southcott J generally accepted. It would take me as much time to summarize them as the original decision, so I’ll just say that I found Southcott J’s analysis to be careful and convincing.

The cumulative weight of these contextual and purposive arguments, combined with the clear textual argument, is inescapable. Southcott J therefore concluded that there is no limitation period applicable to the actions brought under s 8.2 [78]. (Perhaps it is more accurate to say that s 8.2 does not incorporate any limitation period, as the actions brought under that provision are no doubt subject to the general limitation periods under the Act.)

Given Southcott J’s careful consideration of the provision, his statement of its purpose will be helpful if it requires interpretation on some other point in the future:

[71] I accept that the legislative purpose of s 8.2 is the removal of previously existing barriers to quia timet actions, so as to facilitate legal consideration of unlisted patents and thereby address uncertainty resulting from the risks associated with such patents. However, this purpose does not require the elimination of such uncertainty within any particular timeframe, as no interpretation of s 8.2 can eliminate the uncertainty that the potential for post-launch litigation of unlisted patents will continue to present. Rather, the elimination of the common law barrier achieved by s 8.2 permits earlier access to legal consideration, and therefore earlier resolution, of unlisted patent infringement claims. This result is in keeping with the overall objective of striking a balance between effective patent enforcement and timely generic market entry.

Wednesday, February 17, 2021

Caution in Following UK Caselaw Regarding Added Matter

Western Oilfield Equipment Rentals Ltd v M-I LLC 2021 FCA 24 Locke JA: Gleason, Mactavish JJA affg 2019 FC 1606 O'Reilly J

            2,664,173 / Shaker and Degasser Combination

Previous posts have provided some background on this case and addressed reasonable compensation, the Gillette defence and the “best mode” requirement. This post turns to Locke JA’s comments regarding added matter.

Section 38.2(2) of the Act provides that an application cannot be amended to add matter “that cannot reasonably be inferred” from the specification as it was on its filing date. This provision broadly corresponds to Art 123(2) of the EPC, which provides that the application or patent may not be amended to add matter “which extends beyond the content of the application as filed.” As previously noted, the claims that were infringed had been introduced during prosecution, after the patentee became aware of the appellants’ product. The appellants argued that these claims were invalid for added matter [138]. There is little Canadian caselaw dealing with our provision, and the appellants had therefore relied on UK caselaw as support for a “strict” test that “subject matter should be considered to have been added unless such matter is clearly and unambiguously disclosed in the original application either explicitly or implicitly” [140]. (See here for my discussion of O’Reilly J’s decision on this point.)

Locke JA remarked that we should be “wary” of following the UK approach, for three reasons. First, “it presumes that matter has been improperly added, and places the burden on the respondent to establish otherwise,” whereas in Canadian law a patent is presumed to be valid (s 43(2)) and accordingly the burden is on the party attacking the patent. Second, the text of the provision is different, and in particular the EPC provision* does not have any kind of “reasonableness” language: [142]. Third, the UK provision provides explicitly for patent revocation, while s 38.2 does not [143]. Accordingly, Locke JA simply applied the statutory “cannot reasonably be inferred” test and held that the feature in question was “at least reasonably inferable” from the original specification [147].

I agree with Locke JA we should not adopt the UK approach uncritically, for all the reasons he gives. On the other hand, comparative law can potentially be very useful, particularly when, as in this case, there little Canadian caselaw and a great deal of UK caselaw; the foreign caselaw can help illustrate the kinds of problems that may arise and that need to be taken into consideration, even if we do not adopt the same solutions as foreign law. For example, the problem of “intermediate generalization” arises when the specification provides a number of specific examples and the patentee seeks to claim a broader class which is said to be exemplified by those examples. This has caused considerable difficulty and has been addressed in a number of EPO Board decisions and UK cases: see eg Nokia v IPCom [2013] RPC 5 [56]ff. While the problem does not arise in this case, the European jurisprudence is likely to be useful in illuminating the issues when it does arise, even if the Canadian courts choose not to adopt the European solution.

In my view, Phelan J struck exactly the right note in 2010 FC 1011 [32] when he observed that it can be useful to look to other regimes when faced with a question that is novel in Canadian law, but this must be done “mindfully” [32].

A “mindful” consideration of foreign law means that we should not simply pluck a test from foreign jurisprudence. It is important to get the foreign law right before we decide whether to adapt it to the Canadian context. In the UK approach, added matter is permisible if it can be “implicitly” inferred from the original specification, and this may soften the apparently strict nature of the test. So, another articulation provided by Jacob LJ in Vector Corp [2007] EWCA Civ 805 [4] is that:

[T]he test of added matter is whether a skilled man would, upon looking at the amended specification, learn anything about the invention which he could not learn from the unamended specification.

Given that a skilled person approaches the specification with “a mind willing to understand,” it may be that the test is not so strict after all. On the one hand this suggests that UK law may provide some helpful guidance despite the differences in the text; but on the other hand, the need to understand the subtleties of foreign law is another reason to be “wary” of it.

Another point is that it may be helpful to look to the purposive considerations adverted to in foreign law. To the extent the purpose of the Canadian and UK provisions are different, that is additional reason to be wary of the same test, but to the extent the purpose is the same, that is a reason to consider the foreign test more closely, always subject to the text of the provision.

This is perhaps most relevant to Locke JA’s third point, that the UK Act provides explicitly for patent revocation while s 38.2 does not [143]. This raises the question of whether added matter contrary to s 38.2 is a basis for invalidating a claim in a granted patent, or whether it is only ground for refusing an amendment during prosetution. Some of the purposive considerations discussed by Jacob LJ in Vector Corp are potentially relevant to this issue:

[5] The reason for the rule was explained by the Enlarged Board of Appeal of the EPO in G1/93 ADVANCED SEMICONDUCTOR PRODUCTS/Limiting feature [1995] EPOR 97 at [Reasons 9]:

"With regard to Article 123(2) EPC, the underlying idea is clearly that an applicant shall not be allowed to improve his position by adding subject-matter not disclosed in the application as filed, which would give him an unwarranted advantage and could be damaging to the legal security of third parties relying upon the content of the original application."

[6] Mr Richard Arnold QC provided a clear articulation as to how the legal security of third parties would be affected if this were not the rule:

The applicant or patentee could gain an unwarranted advantage in two ways if subject-matter could be added: first, he could circumvent the "first-to-file" rule, namely that the first person to apply to patent an invention is entitled to the resulting patent; and secondly, he could gain a different monopoly to that which the originally filed subject-matter justified.

These considerations seems to me to also be relevant in the interpretation of the Canadian provision, always subject to the text.

*Note that the UK courts rely directly on Art 123(2) rather than on the somewhat differently worded s 76(3) of the Patent Act 1977, which was a “cack-handed” implementation of the EPC provision: Napp Pharma [2009] EWCA Civ 252 [69].

Tuesday, February 16, 2021

Is the Best Mode Requirement Restricted to Machines?

Western Oilfield Equipment Rentals Ltd v M-I LLC 2021 FCA 24 Locke JA: Gleason, Mactavish JJA affg 2019 FC 1606 O'Reilly J

            2,664,173 / Shaker and Degasser Combination

Previous posts have provided some background on this case and addressed reasonable compensation and the Gillette defence. Locke JA also made two noteworthy points with respect to the best-mode requirement set out in s 27(3)(c), which requires that the specification must “in the case of a machine,” explain the best mode of practising the invention. As discussed here, O’Reilly J had dismissed this argument on the basis that it “relates solely to machines and, as I understand the patent, it claims a method and a system, not a machine” [FC 146], [118]. Locke JA remarked that the mere fact that the claim at issue was phrased as being to “a system” did not in itself establish that it is not to a machine [119]. This makes sense to me; the question of whether the claim is to a machine should be a matter of the substance of the claim and not its form.

More importantly, Locke JA stated that “there is considerable doubt as to whether, despite the wording of paragraph 27(3)(c), the best-mode requirement is limited to machines,” citing various commentators [119]. This is interesting given that the FCA in Pfizer v. Novopharm / sildenafil (NOC) 2010 FCA 242 [72] approved Snider J’s holding in Ramipril FC 2009 FC 676 [329] that “the ‘best mode’ obligation only arises in the case of a patent to a machine.” I must say that Snider J’s textual analysis strikes me as fairly compelling, but far be it for me to dissuade the FCA from relying on commentators. Locke JA’s observation was expressly obiter, and the point made no difference to the outcome, but nonetheless the point can no longer be considered settled.

Monday, February 15, 2021

The Gillette Defence Is Typically Unhelpful

Western Oilfield Equipment Rentals Ltd v M-I LLC 2021 FCA 24 Locke JA: Gleason, Mactavish JJA affg 2019 FC 1606 O'Reilly J

            2,664,173 / Shaker and Degasser Combination

Friday’s post provided some background on this case and addressed the issue of reasonable compensation. Today’s post reviews Locke JA’s very helpful discussion of the Gillette defence. (The discussion did not turn on the way the issue arose on the facts and the issue did not affect the result.)

Locke JA began by reiterating the classic understanding of the Gillette defence, which permits a defence based on establishing that its allegedly infringing product is the same as, or not patentably distinct from, the prior art; if that can be established on the facts, the asserted claims must necessarily be invalid or not infringed: [75]–[76] citing Gillette (1913) 30 RPC 465 (HL) and JK Smit [1940] SCR 279. While this is not new law, it is important nonetheless, as Locke JA emphasized that “contrary to some of the jurisprudence of the Federal Court, the success of a Gillette defence does not depend on a conclusion that the claim in question is invalid for anticipation or obviousness. Quite the contrary, the principal benefit of a Gillette defence is to avoid the need to construe the claims and reach a conclusion on validity and infringement issues.” [79]. Locke JA noted that the FCA itself in Eurocopter had skirted with a similar misunderstanding [80]

The theory of the Gillette defence is that it permits “a shortcut around the often difficult and time-consuming process of construing the claims of a patent, and then determining whether those claims are valid and whether they have been infringed” [77]. Unfortunately, in practice the Gillette defence has often complicated rather than simplified the proceedings. The defendant will rarely risk everything on the Gillette defence, but will typically assert it as an alternative to the analysis of claim construction and validity [78]–[79]. This means that even when the Gillette defence is raised, the court will normally have to construe the claims and assess validity and infringement, in order to address the other anticipation and infringement arguments. In that case, the Gillette defence is superfluous; rather than simplifying proceedings, by obviating the need to consider infringement and validity, it complicates matters by introducing an extra and unnecessary argument, which may lead to confusion [79].

The general message is that when claim construction, validity and infringement are fully argued, it is probably preferable to avoid the Gillette defence entirely.

Friday, February 12, 2021

Questions on Reasonable Compensation Answered — and Left Open

Western Oilfield Equipment Rentals Ltd v M-I LLC 2021 FCA 24 Locke JA: Gleason, Mactavish JJA affg 2019 FC 1606 O'Reilly J

            2,664,173 / Shaker and Degasser Combination

In this decision Locke JA for the FCA affirmed O'Reilly J’s holding that certain claims of M-I’s 173 were valid and had been infringed by Western Oilfield Eqpt. The decision turned largely on the deferential standard of review applicable to questions of fact, and Locke JA pointedly remarked that the appellants had not paid sufficient attention to the standard of review [10]. The appellants raised approximately two dozen issues on appeal [7]. Locke JA was not impressed. He remarked on “the lack of wisdom of raising so many issues on appeal,” noting that this undermined the appellant’s case by obscuring the real issues and wasted the Court’s time [9]. As a result of the appellants’ “failure to reasonably limit the issues before the Court, and the respondent’s success on each argument raised,” costs were awarded at the top of Column V of the Tariff [162].

Despite the largely factual nature of the issues, the FCA did address a number of legal points. I’ll provide background and address reasonable compensation in this post, and subsequent posts will look at the Gillette defence, best mode and added matter. In addition, Locke JA reaffirmed the well-established law that the four-step Sanofi test for obviousness is not mandatory [109] and the fact that the embodiment disclosed in the specification is not commercializable does not mean that it lacks the necessary scintilla of utility needed to support a patent [124].


As discussed here, the 173 patent relates to a machine called a “shale shaker,” used in the oil and gas industry to remove solids from the slurry that emerges from an active well in order to separate the drilling fluid for reuse. A shale shaker shakes the slurry over a screen to allow the fluid to fall through while the rock cuttings are carried away. Shaking alone does not remove all of the fluid, and the cuttings remain wet after passing through a standard shaker. The invention consisted of a method and system for applying a vacuum (“pressure differential generator”) to the cuttings to recover more of the drilling fluid. One point that underlay several of the appellants’ objection was that the patent was laid open on April 10, 2008, and the appellants’ activities did not infringe the claims as they were drafted at that time. The claims that were infringed were introduced during prosecution, on October 2, 2013, after the patentee became aware of the appellants’ product [53], [FC 14], [FC 89].

There were a number of contentious issues on claim construction, but these turned on the evidence and, unsurprisingly—given that the claims were added to capture the appellants’ product—O'Reilly J ultimately construed the claims in favour of the patentee. The finding on infringement followed directly. The appellant raised the motivation of the patentee in amending the claims in a couple of ways [22], [144], but Locke JA noted that the respondent’s motivation in amending the claims is in itself irrelevant to either claim construction or validity [22]. As he observed at [21], quoting his own prior decision in Camso 2019 FC 255 [197] aff’d 2020 FCA 183:

A patent applicant is perfectly entitled, and indeed is well-advised, to draft patent claims with an eye on competitors’ products. The limitation is that the applicant must respect all of the requirements for valid claims.

Reasonable Compensation

The decision raised three issues in the interpretation of s 55(2), which provides that the patentee is entitled to “reasonable compensation” for any damage sustained by the patentee after the specification was laid open and before the grant, “that would have constituted an infringement of the patent if the patent had been granted on the day the specification became open to public inspection.” For simplicity, Locke JA referred to this as “pre-issuance infringement” [52].

There were two main issues on appeal. One of the appellants, FPM, had apparently stopped doing business in 2014, prior to the issuance of the 173 patent in 2015. The first question was whether a party who engages in pre-issuance infringement “can avoid liability under subsection 55(2) by discontinuing the activities in question prior to issuance of the patent.” That is, must a party be engaged in infringing activity as of the date of issuance in order to be liable for pre-issuance infringement? The answer is no. There is nothing in the text of the provision to suggest that result [59]. Further, the purpose of s 55(2) is “to compensate inventors whose published inventions are used without permission before they can enforce their rights,” [63] and “it would defeat the purpose of the provision if the pre-issuance infringer could continue its activities, possibly for many years, and then avoid all liability by discontinuing those activities just before the patent issues” [63].

The second question was whether a party can be liable for inducement of pre-issuance infringement. The answer is yes. Inducement is “merely a form of patent infringement, not a distinct tort” [60]; there is nothing in the text to suggest liability for inducement is excluded [62]; and it would “defeat the purpose of the provision if one could avoid liability by inducing another to directly infringe. The reasons for imposing liability for infringement on one who knowingly induces a third party to infringe after a patent has issued apply equally before issuance” [63].

Neither of these issues strikes me as particularly difficult, and I agree entirely with Locke JA’s analysis.

The more difficult issue, to my mind, concerns the timing of the liability. As noted above, the appellants’ activities did not infringe the claims as they were drafted at the time the patent was laid open. The claims that were infringed were introduced five years later during prosecution, after the patentee became aware of the appellants’ product [53], [FC 240]. It was common ground on appeal, and, as I understand it, also at trial, that the appellants’ could not be liable for any of its activities prior to 2 October 2013, when the infringed claims were introduced [53]. O'Reilly J held that reasonable compensation should be awarded for the period starting 2 October 2013, and this was affirmed on appeal [66].

The difficulty is that s 55(2) makes a party liable for activity “that would have constituted an infringement of the patent if the patent had been granted on the day the specification became open to public inspection.” It was common ground that the appellants’ activities would not have constituted an infringement of the claims as of the date the patent was laid open, and it would seem to follow on a straightforward reading of the text that the appellants are therefore not liable for reasonable compensation for any part of the period prior to issuance—not even for the period after 2 October 2015 when the claims were amended to catch the appellants product. The rule applied in this case is that a party will be liable for activities that would have constituted an infringement if the patent had been granted at any time subsequent to the date the patent was laid open, which does not seem to me to be entirely consistent with the text. That is not conclusive, of course; as discussed here, there might be contextual or purposive considerations that are also relevant one way or the other.

This point does not seem to have been argued either at trial or on appeal, and it would appear to remain open. Locke JA noted that FPM stopped doing business in 2014 which was after the claims had been amended to encompass its activities. He stated that this means that FPM could not avoid liability based on its activities being entirely prior to the amendment, “even if that were a basis for avoiding liability. I express no opinion here as to whether that would be a basis for avoiding liability” [56]. I take this to mean that the timing issue remains open. Locke JA did also state that the facts are not in dispute, “and there is no argument that either of the appellants is liable for any of its activities prior to October 2, 2013" [53]. I take this to mean simply that there was no argument, and not that Locke JA was necessarily endorsing this position as a matter of law.

Friday, February 5, 2021

Skepticism Regarding I G Farbenindustrie Test for Selection Patents

Bristol-Myers Squibb Canada Co v Pharmascience Inc 2021 FC 1 Zinn J

2,461,202 / 2,791,171 / apixaban / ELIQUIS

This decision consolidated four actions concerning the 202 patent, which claims the compound apixaban and its use in treating thromboembolic disorder, including stroke [2], [27], and the 171 patent, which claims various formulations of apixaban[2], [114]. The decision raises several legal issues, though largely as a result of some “creative” submissions by the defendants [125]. The most important point is that Zinn J expressed considerable skepticism regarding the continued vitality of the I G Farbenindustrie test for selection patents. Zinn J addressed the 202 patent first and then the 171 patent. I won’t cover every issue, but only those that caught my eye.

Date for assessing sufficiency

The first attack on the 202 patent was based on insufficiency. There was some discussion of whether the date for assessing sufficiency is the date of filing or the date of publication [36]–[42]. I’ll note that there has indeed been some debate in the case law on this issue, but the point was settled in Idenix v Gilead 2017 FCA 161 [46], holding that the correct date is the filing date, in a case that was crucial to the result. (I’d suggest that while Idenix ruled out the publication date, there remains an open question as to whether it should be the claim or the filing date, as that distinction was not at issue in Idenix—I’d argue that it should be the claim date, but that’s for another day.) Idenix was not cited by Zinn J, presumably because it was not cited to him, and consequently he appears to have considered the publication date to be the relevant date [49].

In any event, so far as I can tell, nothing turned on this point. As both filed and published the application claimed 10100 compounds, and it was only just before issuance that the claims were narrowed to one compound, namely apixaban [37]. The defendants apparently argued the patent was insufficient because it did not enable all 10100 compounds to be made [37]. That is, sufficiency had to be assessed in terms of the document as it existed at the relevant date (whatever that date might be). That is certainly a very creative argument, but. . . no, “The test for sufficiency is whether [the skilled person] is in a position to work the invention. The invention is that claimed in the patent, and until it is issued, there is no patent” [49]. That must be right — if it weren’t almost every granted patent would be invalid, because claims are routinely amended during prosecution in response to objections by the examiner, which necessarily takes place after filing. If anticipation, utility and obviousness all had to be assessed as of the claim date or filing date, then amendments to the claims could never cure any objection.

Studies demonstrating utility need not be referenced in the patent

The defendants also argued that the patent was invalid for lack of utility because the study demonstrating utility must be referenced in the patent. Zinn J rejected this proposition, relying primarily on statements by the SCC in Sildenafil 2012 SCC 60 [39]–[40] and AstraZeneca 2017 SCC 36 [58]. I’ll add that Gleason J (as she then was) reviewed the authorities in Lilly v Apotex 2015 FC 1016 [138]–[141]. She pointed out that the FCA authorities supporting such a requirement were obiter, and there are many cases to the contrary, and she therefore concluding that “the weight of authority is to the effect that the evidence of demonstrated utility need not be referenced in the patent for the patentee to rely on it” [142]. I think this point can now be considered settled, though it would certainly be desirable to have it addressed by the FCA to remove any lingering doubt.

A genus too large to think about does not anticipate

The most interesting issue was an anticipation attack based on 2,349,330, which disclosed and claimed a large class of compounds that were potentially useful in the treatment and prevention of thromboembolic disorders [79]. The class is very large. One of the experts for Sandoz did a calculation of the number of compounds disclosed and came up with “Some number that is just larger than I can think about.” He agreed that it was “more possibilities than stars in the universe” [80]. On the evidence provided by Sandoz’s experts, the class encompassed apixaban [77], but did not specifically disclose it, or describe how to make it [82]. On this evidence, Zinn J had no difficulty in concluding that the 330 patent did not anticipate apixaban [83].

Nor was apixaban obvious over the 330 patent, as only a small percentage of the disclosed compounds would actually be effective in treating thromboembolic disorders, and identifying which would involve “complex, time-consuming, unpredictable research” [87]. Obviousness-type double patenting failed for the same reason: [96]–[97].

IG Farbenindustrie test doubted

Apixaban is therefore a classic selection over the 330 patent. Significantly, it was only after finding that apixaban was neither anticipated nor obvious over the 330 patent that Zinn J turned to question of selection patents as such and the three-part test set out in IG Farbenindustrie (1930), 47 RPC 289 (Ch) 322-23, that was approved in Sanofi 2008 SCC 61 [9]-[11]. The factors, in summary, are: (1) a valid selection must possess some substantive advantage over the genus; (2) all of the selected members must possess the advantage; (3) the advantage must be peculiar to the selected group. Zinn J held that these three propositions are “not a stand-alone basis to find a selection patent invalid,” relying on the express holding to that effect in Olanzapine 2010 FCA 197 [33] where the FCA stated that an assessment of whether the IG Farbenindustrie conditions has been met “does not constitute an independent basis upon which to attack the validity of a patent” [104]. Despite this holding by the FCA, the IG Farbenindustrie conditions continue to resurface as an independent ground of attack, most recently in Lilly v Mylan 2020 FC 816, discussed here.

Zinn J’s contribution to this debate was to go back and quote from the explanation for these factors given by Maugham J in IG Farbenindustrie itself [100]. In the passage quoted by Zinn J, Maugham J specifically connected the first and second factors to standard grounds of attack, namely utility and insufficiency. The explanation given by Maugham J for the third factor is somewhat more obscure, and also more controversial, as it was specifically criticized in Dr Reddy’s [2009] EWCA Civ 1362 [39]. I suspect that the third factor was an imperfect attempt to avoid the problem of arbitrary selection, which is properly treated as an aspect of non-obviousness. I might also add that I am not at all convinced that the first and second factors are properly related to utility, as Maugham J indicated. But the important point here is that Maugham J did explain the factors he set out in terms of the traditional grounds of invalidity. As I read it, Maugham J considered these factors to be a helpful way of stating the standard principles in the context of a selection patent, and not as an entirely new ground of attack. I agree therefore, with Zinn J’s observation that for Maugham J, and for Rothstein J in Sanofi referencing Maugham J’s analysis, “a failure to meet his three propositions regarding selection patents does not invalidate the patent; rather its validity is subject to the usual grounds relevant to any patent” [101]. I am very pleased to note that Zinn J also cited my blog post, Time to Relegate IG Farbenindustrie to the Dustbin of History, in which I pointed out that the SCC in Sanofi did not apply the IG Farbenindustrie as an independent ground of invalidity on the facts, but rather relied on the standard grounds of anticipation and obviousness, as Zinn J did in this case. That is why it is significant that Zinn J addressed anticipation and obviousness before turning to the IG Farbenindustrie factors; having decided that the 202 patent was valid on the standard principles, there was no more role for the IG Farbenindustrie factors to play. Out of an abundance of caution, Zinn J nonetheless went on to hold that in any event, the 202 patent met the IG Farbenindustrie test [106]–[108].

Friday, January 29, 2021

Prior Art Teaching Away from the Invention: Anticipated but Not Obvious

Swist v MEG Energy Corp 2021 FC 10 Fothergill J

2,800,746 / Pressure Assisted Oil Recovery

In this decision Fothergill J held Swist’s 746 patent was not infringed by MEG. He also held it to be invalid for anticipation and lack of utility, though the obviousness attack failed. The decision turns largely on the facts and on claim construction, except for the holding regarding utility. One curious aspect of the decision is that the 746 patent was anticipated by one piece of prior art, but not obvious over the same prior art. That is quite unusual, but the holding strikes me as sound on the particular facts. I am not so sure about the utility holding though.

The 746 patent relates to a method of extracting oil from oil sands. The oil contained in the oil sands, often referred to as bitumen, is too thick to be pumped out of the ground directly [2]. One standard technique is steam assisted gravity drainage [SAGD]. In SAGD, a pair of parallel horizontal wells are vertically separated by a distance of roughly four to eight metres. Steam is injected in the top “injector” well, forming a “steam chamber” that heats the oil and reduces its viscosity. The now mobile oil drains down by gravity into the bottom “production” well of the pair, and can then be pumped to the surface [15]–[16]. Several well pairs are often used in parallel for recovery from the entire reservoir. The steam chamber from adjacent well pairs will eventually merge as the reservoir is depleted.


There are a number of modifications of the basic SAGD method. The claimed invention is one such variant, which uses a third injector well placed between the adjacent SAGD well pairs [5].


The claimed invention also specified the timing of when the steam is injected into the third well [34]. In particular, the 746 patent claim a method where steam is injected into the third well prior to the merger of the steam chambers from the adjacent well pairs. 

There were several terms that required construction, but this turned on the expert evidence and I didn’t see anything noteworthy in this part of the decision. Infringement turned partly on the facts and partly on claim construction, and again I didn’t see anything of particular interest. (Which, by the way, I view as a good thing: new legal points are fun, but it's a sign that the legal system is working smoothly when a decision involves nothing more than the application of settled law to the facts at hand.)

Anticipation also turned largely on the facts, but one interesting point did arise. One piece of prior art, the “Arthur Patent” disclosed adjacent SAGD well pairs with an injection well between them [145].

Swist sought to distinguish the Arthur Patent on the basis of the timing of injection of steam into the third well [148]. In particular, while the 746 patent claimed a method with injection prior to the merger of the adjacent steam chambers, the Arthur Patent recommended injection into the third well after that merger, noting that premature injection might compromise production [153], [156]. Thus the Arthur Patent taught away from the 746 patent. However, while the Arthur Patent recommended late injection, it acknowledged that activation of the third well may occur at a “distinctly earlier stage” [154].

Fothergill J held that the Arthur Patent was anticipatory, as it disclosed all the essential elements of the relevant claims [159]. This is notwithstanding that it taught away from the 746 patent:

[151] The fact that prior art “teaches away” from an impugned patent, while potentially relevant to an obviousness allegation, is irrelevant to the anticipation analysis. The fact that a piece of prior art discloses formulations that would not infringe a patent, as well as formulations that do infringe, is irrelevant to assessing anticipation.

The point is not completely novel, but it seems the caselaw is limited. Fothergill J cited Valence v Phostech 2011 FC 174 [228], which directly supports the proposition, but with very little discussion. He also cited Aux Sable 2019 FC 581 [97]–[98] and Schering-Plough 2009 FC 1128 [86]–[90], which both support a slightly weaker proposition, that “the fact that a piece of prior art teaches formulations that would not infringe a patent, as well as formulation that do infringe, is irrelevant to assessing anticipation.” So, Fothergill J’s holding does have support, but it perhaps not well-established in the Canadian jurisprudence. (Though it does appear to be well-established in the US caselaw, as Fothergill J noted [152].)

Aside from the caselaw, it strikes me that Fothergill J’s holding is sound as a matter of principle. It is now well-established that a genus claim to a large group of chemical compounds does not in itself anticipate the species within that claim, except for those species that are specifically described. The specific identification of a species constitutes the disclosure part of the novelty requirement—planting the flag on the precise destination—and, so long as it is also enabled, it doesn’t generally matter whether the skilled person would actually choose to practice that particular species. A genus patent will often specify several especially preferred compounds, and it is clear that they will all be anticipated even if, as a practical matter, a skilled person would only actually want to make one or two of those, perhaps for manufacturability or regulatory reasons. I don’t see why it should make any difference why the skilled person would choose not to make a particular embodiment.

The fact that the Arthur Patent specifically described the method claimed in the 746 patent, yet taught away from it, led to the counter-intuitive conclusion that even though the 746 patent was anticipated by the Arthur Patent, it was not obvious over the Arthur Patent [214]. This is quite ususal, but nonetheless seems right on the unusual facts.

Fothergill J also held that the 746 patent lacked utility, essentially on the basis that the 746 patent was not in fact an improvement over the prior art SAGD method: “the claims lack utility because the subject mater of the invention is enhancement of traditional SAGD, and Swist’s invention does not provide this” [226]. This is even though the claims themselves do not specify that the claimed method is an improvement. This holding seems wrong to me. Every inventor hopes that their invention will be an improvement over the state of the art, but whether that is true in fact has long been held to be irrelevant to utility:

As Lord Herschell explained over a century ago, in BASF v Levinstein (1887) 4 RPC 449 (HL) at 466 (HL) a case dealing with a patent for a red dye:

The demand for a particular colour depends upon changing fashion and passing moods of fancy. The one which to-day may be in large demand may to-morrow be a drug in the market. Again, a process which at one time could not be worked at a profit on account of the expense of the materials employed may shortly afterwards be so worked by reason of a diminution in the cost of these materials. Is the person who patents such a process to be deprived of all benefit of his invention when it becomes a commercial success, because at the time the patent was granted it could not be worked at a profit?

And as the Supreme Court noted in Consolboard [1981] 1 SCR 504, it is enough that the invention “affords the public a useful choice.” See also Lowell v Lewis 15 F Cas 1018, 1019 (CCD Mass 1817), per Story J (rejecting the proposition that to satisfy the utility requirement the invention must supersede those in common use); Purdue Pharma v Pharmascience Inc 2009 FC 726 [8] (noting that “The inventor of a new pain killer will not be denied a patent simply because it is only half as effective as aspirin and twice as expensive”); Astrazeneca Canada Inc v Mylan Pharmaceuticals ULC / anastrozole (NOC) 2012 FCA 109 [37] (noting that a compound that is no better than existing alternatives nonetheless has patentable utility); Pfizer Canada Inc v Mylan Pharmaceuticals ULC (NOC) 2014 FC 38 [66] (“ It would not matter if other pain relievers were far more effective.”)

Wednesday, January 27, 2021

Limits on Use of Foreign Prosecution History

Canmar Foods Ltd v TA Foods Ltd 2021 FCA 7 de Montigny JA: Pelletier JA, Rivoalen JJA affg 2019 FC 1233 Manson J

            2,582,376 / method for roasting oil seed

Yesterday’s post the summary judgment aspects of the Canmar appeal; this post turns to the issue of s 53.1, which permits the use of prosecution history to aid in claim construction in certain circumstances. Justice Manson’s decision at first instance was the first to interpret s 53.1, and a difficult issue was raised right off the bat. The defendant, TA Foods, wanted to refer to the US prosecution history, while s 53.1 on its face only permits use of communications between the patentee and “an officer or employee of the Patent Office”—which is to say, the Canadian prosecution history. As discussed here, Manson J held that foreign prosecution history should be admissible to aid in a construction of Canadian claims only in “extraordinary circumstances” [73], [74], [77]. In general, this means that “prosecution of the foreign application is made part of the prosecution history of the Canadian patent” [77, original emphasis]. While Manson J did consider the foreign prosecution history [85]–[90], he expressly stated that he would have come to the same conclusion in any event [79].

Justice de Montigny ultimately held that Manson J should not have referred to the foreign prosecution history on the facts in this case [77]. The FCA’s restrictive approach to the use of foreign prosecution history reflects the text of s 53.1, but at this point we cannot rule out the possibility that foreign prosecution history might be admissible if made part of the Canadian prosecution history with sufficient particularity. That is a question “left for another day” [74], and de Montigny JA emphasized that “I wish to express no firm views on the matter” [77].

More generally, de Montigny JA’s decision for the FCA provides a useful discussion of a number of issues, but ultimately refrained from deciding most of them, on the view that “courts [should] refrain from deciding beyond what is strictly necessary for the resolution of the case of which they are seized” [74]. In my view this is a salutary principle—I often wish the SCC would pay more heed to it. The result is that the decision illuminates the FCA’s thinking on this issue, while leaving the specifics to be developed in future cases that raise them more directly. This is the way the law should develop.

Value of foreign jurisprudence

Justice de Montigny noted that s 53.1 appeared to respond in part to disquiet expressed in some FC decisions about always excluding consideration of prosecution history, especially in some particularly egregious cases [51]–[53], and he also noted that “it can also be perceived as a step to better align Canadian law with its British and American counterparts” [53]. That is true in broad strokes—as de Montigny JA noted, US law of course has a well-developed doctrine of prosecution history estoppel [54]–[56], and even the UK has made some steps in that direction [57]–[62]. With that said, I do not see this as an invitation to draw detailed guidance from US or UK law (which are very different from each other), as de Montigny JA noted that s 53.1 “is carefully tailored, and it would go against statutory interpretation principles to try to go beyond its original intent” [70]. Our law relating to prosecution history will therefore turn on the interpretation s 53.1.

Need there be a specific representation?

Part of that careful tailoring is that prosecution history may be admitted “to rebut any representation” made by the patentee in the action. Justice de Montigny noted that a question has arisen as to whether there must be some specific representation as to the construction of the claim [65], or whether the emphasis “is not so much on the rebuttal of a particular representation, but rather on the interpretive process itself,” as suggested in Bauer Hockey 2020 FC 624 (discussed here): [66]. Justice de Montigny left this question for another day, as it was not necessary to decide the case at hand [67]. My impression is that he was leaning to the latter interpretation, but I can’t point to anything specific in the reasons to support that view, and in any event he expressly left the matter open.

Foreign prosecution history

The main issue raised on the facts was the use of foreign prosecution history. Justice de Montigny emphasized the need to adhere to the text of the provision [70], which suggests a very limited role, if any, for foreign prosecution history. Further, he noted that “There are also public policy reasons for treading carefully in allowing extrinsic evidence” [70]. Allowing foreign patent prosecution history into the analysis “might lead to overly contentious and expensive litigation,” given different law, differences in language potentially requiring translation, and differences in the registration system. He noted that “in this case, the patent application in the United States was eventually dropped, while registration in Canada was completed” [71]. Thus both textual and purposive considerations support a restrictive approach to the use of foreign prosecution history. At the same time he acknowledged the force of the argument for “keeping those who have previously disclaimed elements from their patent from re-claiming them in future infringement cases,” both in general [72] and on the facts of this case [73].

In this case, Manson J held that foreign prosecution history would be admissible in “extraordinary circumstances” [FC 73, 74, 77]. As noted above, Manson J described such circumstances as being where “that prosecution of the foreign application is made part of the prosecution history of the Canadian patent” [FC 77, original emphasis]; Canmar referred to this as an “incorporation by reference” theory [69]. On the facts of the case, “the patentee specifically referred to the corresponding US Application prosecution history and acknowledged that the amendments to the claims in the ‘376 file history were made to overcome novelty and obviousness concerns as raised in the US Application prosecution history” [FC 70], [68].

Justice de Montigny did not dismiss the possibility that some form of incorporation by reference doctrine might permit foreign prosecution history to be used under s 53.1, but he left this question “for another day,” as he was of the view that the facts at hand “do not lend themselves to a proper finding of incorporation by reference” [74]. Justice de Montigny noted that “There is nothing in the prosecution file of the ‘376 Patent that identifies with any detailed particularity what specific ‘written communication’ from the US prosecution history is incorporated and where that written communication can be found” [75]. The only mention is a response to the Examiner stating that the new claims correspond to those submitted during prosecution “of a related United States application” [75], and he remarked that “It is a stretch to say that the prosecution of the US Application is incorporated by reference when the specific application is not even cited within the document” [76]. There is some suggestion in the decision that US doctrine of incorporation by reference might provide some guidance [76], though it remains to be seen how influential this will be, as the matter will ultimately turn on the interpretation of s 53.1.

The FCA decision in Canmar therefore establishes that the foreign prosecution history cannot be used unless the Canadian prosecution history contains some fairly specific reference to the foreign prosecution history. It should be emphasized, however, that the converse is not necessarily true: this does not mean that the foreign prosecution history will be considered if there is a sufficiently specific reference in the Canadian file. Whether foreign prosecution history will be admissible at all, and if so, exactly what kind of reference is needed, is a question left for another day [74[.

In my view the FCA was entirely right to confine itself to the holding necessary to dispose of the appeal, while leaving other questions for another day. Section 53.1 is novel—it does not appear to reflect any particular foreign jurisprudence—and it is detailed. Accordingly it will be best for the law to develop incrementally, at least for a period as we get a better understanding of the issues that will be raised by s 53.1 in different factual contexts.

Tuesday, January 26, 2021

Ten Year Anniversary

The first post on this blog went up ten years ago today. Blogger tells me I’ve had just over one million page views since then, and lately it’s running around 30k views per month. What’s far more satisfying than the numbers is the engagement. Thank you for making this project worthwhile!

Monday, January 25, 2021

Landmark FCA Decision on Summary Judgment

Canmar Foods Ltd v TA Foods Ltd 2021 FCA 7 de Montigny JA: Pelletier JA, Rivoalen JJA affg 2019 FC 1233 Manson J

            2,582,376 / method for roasting oil seed

This landmark decision from the FCA, affirming Manson J’s use of summary judgment, is a very welcome development that will improve the operation of the patent system by permitting expeditious disposition of patent cases in appropriate circumstances. The decision is also notable for its considered discussion of the interpretation of s 53.1, which permits the use of summary judgment in certain circumstances. I’ll discuss that issue in my next post.

At trial, Manson J granted summary judgment on the basis of non-infringement in a decision which turned on claim construction, and particularly whether two claim elements were essential. This was the first decision in many years to grant summary judgment on substantive grounds in a patent matter. As discussed here, Manson J was critical of the FCA decision in MacNeil Estate 2004 FCA 50, which, in his view, resulted in an approach in which “summary judgment as a just, efficient and expeditious means to resolve disputes on a proportionate basis was lost” [45]. He described the SCC decision in Hryniak v Mauldin 2014 SCC 7 as resulting in “a culture shift” that “opened the door for a more reasoned approach to the use of summary judgment motions” [46]. After Manson J’s decision, three more FC decisions granted summary judgement: see here, here and here.

In his decision for the FCA, affirming Manson J, de Montigny JA did not comment on whether there has been a “culture shift”—indeed, he did not mention MacNeil Estate at all, which may be significant in itself. Nonetheless, the fact that the FCA approved the use of summary judgment on the facts of this case sends an important message to the FC judges, who will evidently be receptive to it judging from the spate of recent decisions.

On the facts, two issues were raised in respect of summary judgment. The first is whether Manson J erred in granting summary judgment on the basis of non-infringement before any discovery had taken place [19]. Justice de Montigny noted that this was clearly permitted by Rule 213: “Whether or not discovery had taken place at this stage is not a factor contemplated by Rule 213, and ought not to be regarded as such” [26, my emphasis]. Moreover, notwithstanding the absence of discovery, the patentee in this case had sufficient information as to the defendant’s method to allow it to marshal the relevant evidence [28].

The second question was whether Manson J erred in making a determination that the two contentious elements were not essential in the absence of any expert evidence on the issue. In effect, the patentee argued that expert evidence is required for claim construction, and that it is necessarily an error of law for the Court to construe a patent in its absence [31], [33]. Justice de Montigny rejected this proposition, both because of a lack of authority to that effect [34], and as a matter of principle: “If the construction of a claim is a matter of law and the judge is entitled to adopt a construction different from that put forward by the parties and their experts, surely the judge can also construe a claim without relying on such evidence in appropriate circumstances” [36].

While de Montigny JA also held that this was an appropriate case to do so, there was an important caveat:

[37] Claims must always be construed in an informed and purposive way, and it is only in the clearest of cases that judges should feel confident enough to construe the claims of a patent as they would be understood by a skilled person, without the help of any expert evidence.

In this case, the invention is a simple mechanical system and the key terms—”stream of air” and “insulated”—and the claim construction exercise was quite straightforward [38]–[47]. This might be taken to suggest that claim construction in the absence of expert evidence is only appropriate in cases in which the claim terms are themselves easy to interpret.

But that suggestion was certainly not explicit and I don’t think it is what was intended. Justice de Montigny continued by saying, in the same paragraph:

[37] In the case at bar, the appellant had the obligation to put its best foot forward. However, it made the strategic decision not to present expert evidence on the summary judgment motion, thereby foregoing the possibility to impress upon the Judge the need to rely on such expertise to construe the patent. Be that as it may, what matters at the end of the day is not so much how and on what basis the judge came to his or her interpretation of a claim, but whether such interpretation is correct or flawed.

This indicates that it is the nature of the evidence, not the nature of the invention, that is important in determining whether a judge should feel confident enough to construe the claims. That seems right to me; even ordinary English words can take on a technical meaning when used in a patent, so it must be the evidence that is key.

I’m sure Canmar will not be the last word on summary judgment, focusing as it did on the facts of the case, but it is the first words in a promising new chapter.

Friday, January 22, 2021

Clarification of Federal Court Jurisdiction over Patent-related Contractual Matters

McCain Foods Limited v JR Simplot Company 2021 FCA 4 Locke JA: Near, Mactavish JJA varg 2019 FC 1635 McVeigh J

2,412,841 / Process for Treating Vegetables and Fruit Before Cooking

The Federal Court’s jurisdiction over patent-related contractual matters was recently expanded in Salt v Baker 2020 FCA 127 (here). This FCA decision on a motion to add a third-party claim clarifies the limits of that jurisdiction. As discussed here, in the action underlying this motion, McCain sued Simplot, one of its competitors, for infringement of McCain’s 841 patent which relates to a system that uses a pulsed electric field (“PEF”) to facilitate cutting of frozen fruits and vegetables [1]. Simplot implemented the system using a PEF system manufactured by Elea, a German company [FC 3]-[5]. Simplot’s contract with Elea specified that Elea would “defend, save harmless, and indemnify Simplot” for patent infringement cases arising from products supplied by Elea to Simplot [FC 74]. Accordingly, when Simplot was sued by McCain, it requested an indemnity from Elea [FC 8, 74]. Elea refused [FC 9].

Rather than bringing an action against Elea on the contract, in the motion under appeal Simplot sought to bring Elea into the infringement action with a third party claim. This was allowed by Aylen J at first instance and by McVeigh J on appeal to the FC. Locke JA’s decision for the FCA, reversed on this point and refused to allow the third party claim. The bottom line is that for the Federal Court to have jurisdiction, it is not enough that the claim relates to a patent: the claim must have a basis in federal law, which as a practical matter means a basis in a federal Act.

A third party claim must stand on its own as an independent proceeding [26]. The question therefore is whether the Federal Court would have jurisdiction over Simplot’s claim against Elea if brought as an independent action. Because the Federal Court is a statutory court, its jurisdiction must be founded on some statutory grant of jurisdiction by Parliament [58].

Of course the Federal Court has jurisdiction over patent infringement [62]. Simplot therefore argued that Elea had induced Simplot to infringe the 841 patent. Locke JA disposed of this with a neat logical point:

[69] either Simplot does not infringe McCain’s patent (in which case it will have no liability to McCain that could ground a claim against Elea), or Simplot does infringe (in which case it cannot claim to be a person claiming under the patentee, and hence lacks standing to sue).

So, Elea may indeed be an infringer by inducement; if McCain had brought an action against Elea for inducing Simplot to infringe, this would be a classic inducement scenario and there would be no question that the Federal Court would have jurisdiction. But the question is not whether McCain can bring an infringement action against Elea, but whether Simplot can. Elea can only be liable for inducement (to anyone) if Simplot is an infringer [70]. But if Simplot is an infringer, it can’t be the plaintiff in a patent action; under s 55(1) only a “person claiming under the patentee” has standing to bring an infringement action, and an infringer is not a person claiming under the patentee [73]–[80]. This analysis provides a clear and logical legal foundation to support the intuition that a direct infringer can’t sue the party who induced it to infringe (at least not for infringement). This means this argument was disposed of not as a matter of Federal Court jurisdiction, but as a matter of standing. This seems right to me: the question isn’t whether Elea is inducing infringement, but whether Simplot can bring the action.

Simplot’s next argument was that the Federal Court has jurisdiction pursuant to s 20(2) of the Federal Courts Act:

20(2) The Federal Court has concurrent jurisdiction in all cases, other than those mentioned in subsection (1), in which a remedy is sought under the authority of an Act of Parliament or at law or in equity respecting any patent of invention, certificate of supplementary protection issued under the Patent Act, copyright, trademark, industrial design or topography referred to in paragraph (1)(a).

Under this provision the party has to be (1) seeking a remedy (2) under an Act of Parliament or at law or in equity (3) respecting any patent of invention. It’s not entirely clear from this portion of the decision, but I take it that the remedy sought by Simplot was indemnification under its contract with Elea [90], [91], and that Simplot argued that this was a remedy “respecting any patent of invention.” These points were not elaborated as the matter was disposed of on the basis of element (2), requiring an “Act of Parliament or at law or in equity.”

Locke JA rejected this argument on the basis that “Act of Parliament” in this provision cannot refer to the Federal Courts Act itself, as this would be impermissibly self-referential [86]. In so holding, he followed Windsor Bridge 2016 SCC 54 [52] on the interpretation of s 23, which deals with different subject matter (eg bills of exchange), but is otherwise similarly worded [85]. Section 20(2) gives jurisdiction when the party is seeking a remedy under an Act of Parliament, but the Federal Courts Act does not confer rights for which a remedy might be sought, so it cannot be the requisite “Act of Parliament.” That is, the Federal Courts Act “it is not itself a federal law under which the Company can seek relief, however ‘relief’ is defined”: Windsor Bridge [52].

This provides a good basis for distinguishing Salt v Baker, which expanded the previous understanding of the Federal Court’s jurisdiction. Locke JA noted that “Salt concerned an application under section 52 of the Patent Act to vary an entry in the records of the Patent Office. Section 52 of the Patent Act therefore constituted a specific statutory grant of jurisdiction to the Federal Court” [63]. That strikes me as an entirely sound distinction. It is not merely technical. Section 52 gives the Federal Court jurisdiction to vary records relating to title. Determining who actually has title will normally require interpretation of the relevant assignments, but also application of the Patent Act priority rules which are set out in what is now s 49 of the Act. Thus, varying the title records is almost always closely entwined with application of substantive provisions of the Act.

Turning back to the jurisdiction conferred by s 20(2), what about focusing on a remedy “at law”? If Simplot is seeking to enforce its contractual right to indemnity, that looks like a remedy “at law.” Locke JA rejected this argument, saying “Because both the jurisdiction of the Federal Court and patent law in general must be based on statute, Simplot must nevertheless base its argument on a federal statute” [88], and moreover, a federal statute other than the Federal Courts Act [88]. This remark doesn’t directly address the “at law” phrase, but Windsor Bridge 2016 SCC 54 and especially Quebec North Shore Paper [1977] 2 SCR 1054, 1058, 1065-66, make it clear that “at law” or “or otherwise” must refer to federal law, which is to say either a statute or federal common law (if the latter exists).

So, Locke JA’s decision is solidly based in the SCC jurisprudence he relies on. My difficulty with all this is that the SCC in Kellogg [1941] SCR 242 held that the Exchequer Court had jurisdiction to determine ownership of a patent based on the “in equity” phrase of s 22(c) of the Exchequer Court Act, which is the same as s 20(2) in relevant respects. The appellant in that case sought a declaration that it was the owner of a patent by virtue of the fact that the inventor was an employee and consequently a trustee of the invention for the company [p246]. The SCC noted that the provision gave the Exchequer Court jurisdiction “in all cases where a ‘remedy is sought’ ‘respecting any patent of invention’ ‘under the authority of any Act of the Parliament of Canada or at Common Law or in Equity.’ The remedy sought by the appellant . . . is evidently a remedy in Equity respecting a patent of invention” [p250]. Now, I can readily see how Kellogg might be distinguished on the basis that a claim respecting ownership of a patent is more closely connected to patent law than a claim under the indemnity provision at issue in this case. But that distinction would presumably turn on the phrase ““respecting any patent of invention,” and the question at hand is the interpretation of the “at law or in equity / or otherwise” phrase in s 20 and 23. On that point I’m having a hard time reconciling Kellogg with Quebec North Shore Paper and Windsor Bridge. Though I don’t want to express a firm opinion, so far as I can tell, Kellogg is probably no longer good law on this point. And after all, that provision was only a alternative basis for jurisdiction, which was founded primarily on the statutory conflict provisions of the Patent Act. This aspect of Kellogg does seem to be universally ignored. (I'm not sure I'm persuaded by the SCC interpretation of s 23 in Quebec North Shore Paper and Windsor Bridge, but that's beside the point.)

Finally, “Simplot argues that it would be put in an absurd position of having to prove infringement in a separate provincial court proceeding in order claim its indemnity” [90]. Locke JA was expressly sympathetic to Simplot’s situation “of having to commence separate legal proceedings in a different court to enforce its claims in warranty and indemnity against Elea” [91]. But as he noted, “concerns about a multiplicity of proceedings and/or inconsistent results cannot justify finding that the Federal Court has jurisdiction where no federal statute grants it jurisdiction” [90] I have to quibble a bit; while it is of course true that such concerns alone cannot be the basis for Federal Court jurisdiction, they may be relevant to a purposive interpretation of the relevant provisions. For example, the FCA in Salt v Baker [40]–[44] relied on such considerations in interpreting s 52. With that said, I have to agree that such purposive considerations cannot overcome the authorities relied on by Locke JA. So far as I can see, while there may be a real problem here, it will need some statutory fix to extend the Federal Court’s jurisdiction in order to solve it, assuming that is constitutionality possible.

I must say that it’s not clear to me that there will necessarily be duplication on the particular facts of this case, as we have been given very little of the contractual terms. To the extent that the contract requires Elea to indemnify Simplit for infringement, then once infringement is established in this action, it is not clear to me why non-infringement would need to be re-litigated in an action on the indemnity claim. To the extent that the contract requires Elea to defend the action, then I don’t see how the indemnity claim on that point would turn on whether Simplot actually infringed.

To summarize, while Simplot had a convoluted infringement argument that failed, at the end of the day, Simplot was essentially trying to bring an action against Elea in Federal Court to enforce the contractual indemnification provision. It is perfectly clear that the Federal Court does not have jurisdiction in a case “purely and simply concerning a contract between subject and subject”: Kellogg 249. The issue is whether the fact that the contractual provision at issue is in respect of an indemnity related to patent infringement is sufficient to bring it within the jurisdiction of the Federal Court. The answer is no. It is not enough that the claim relate to “any patent of invention,” the claim must have a basis in federal law.

A final point on this topic is that in Libbey-Owens-Ford Glass Co v Ford Motor Co (1968), 55 CPR165 (Ex Ct), the Exchequer Court held that there was a “good arguable case” that a claim against a third party for indemnity based on contract by a defendant in the context of a patent infringement action fell within the jurisdiction of the Exchequer Court [92]. Locke JA held it cannot be reconciled with the SCC jurisprudence he relied on and it can no longer be considered good law.

To wrap this all up, Simplot also sought to amend its statement of defence to allege a defence based on an implied licence or acquiescence, flowing ultimately from the fact (as alleged) that Elea sold its systems worldwide with McCain’s knowledge. This was permitted by Aylen J and McVeigh J. As discussed here, I found that aspect of McVeigh J’s decision a bit difficult to follow, but Locke JA has clarified that it really just turns on the facts, and while “Simplot’s implicit license defence is light on details, and it may prove difficult for it to adduce evidence sufficient to prove the existence of a license that would benefit it” [32], this is not enough to refuse it to go forward. (And see similarly [53] regarding the acquiescence defence.)

Wednesday, January 20, 2021

Reasonable Expectation of Success: Between Boston College Doug Flutie “Hail Mary” and Wayne Gretsky “Open Net Shot”

Janssen Inc v Apotex Inc 2021 FC 7 Phelan J

            2,661,422 / abiraterone acetate & prednisone / ZYTIGA / NOC

In this decision Phelan held Janssen’s 422 patent to be invalid for obviousness in a textbook example of the obvious-to-try analysis [198]. He held that it was not invalid for lack of utility, and that it would have been infringed by inducement if it had been valid.

The main argument was focused on obviousness and specifically the obvious-to-try analysis. The 422 patent related to the combination of abiraterone acetate (AA) and prednisone (PN) for the treatment of a prostate cancer. Both of these were known to be useful in treating prostate cancer (with PN being used for palliation rather than treatment as such) [27], [28], and the key question was whether it would have been obvious to try the combination. Phelan J held that it was obvious to try [161] and the effort needed to achieve success did not rise to the level of inventiveness [193]. Consequently, the 422 patent was invalid for obviousness [198].

In a prior decision under the old NOC regulations, 2019 FC 1355 (see here and here) rejected the invalidity attacks and granted an order of prohibition. Phelan J noted that in this action, brought under new Regulations, he had new and better evidence, and consequently his findings and analysis in that decision were irrelevant to this action: [9]–[11] and see eg [123], [161].

Phelan J’s holding turned largely on the facts, with a particularly nice application of the obvious-to-try analysis, so I’ll just note a few points that caught my eye.

Obvious to try is a factor, not the test

In the obvious-to-try analysis [134]:

whereas being “more or less self-evident to try to obtain the invention” is a requirement for obviousness to try, being “more or less self-evident that what is being tried ought to work” is not a requirement but a factor to be considered.

That is, the claims are not non-obvious merely because success was not self-evident. That is because the obvious-to-try analysis is used precisely in areas where advances are won by experiment, so that success cannot be guaranteed before trying. This point is now well-established, but it is good to see it reaffirmed.

Reasonable expectation of success is somewhere between Doug Flutie and Wayne Gretsky

In particular, the fact that clinical trials are necessary to establish that the invention will work is not determinative.

[191] It would be a concern to courts if the normal work of a clinical trial was held out to be the effort that would bar an “obvious to try” analysis. It would mean that no pharmaceutical treatment which would otherwise be obvious to try would ever meet the Supreme Court of Canada’s fourth step because regulatory approval would trump patent law.

On the expectation of success, Phelan J remarked:

[135] As to “ought to work”, it is clear that certainty of success is not required otherwise there would be no point in describing it as something “to try”. “Trying” implies the possibility of failure but with the expectation of success. While never easy to define on a spectrum of likely success, it is neither a Boston College Doug Flutie “Hail Mary” pass nor a Wayne Gretsky “open net shot”. Some limited experimentation is permitted in the context of the second factor. It is not to be arduous, inventive or unusual.

Not new law, but a fun way to state the test.

Golden bonus

The “golden bonus” principle was also raised, albeit indirectly. The ultimate goal of any cancer treatment is to improve survival, but that is difficult to measure directly in research because the only way to determine survival benefit is for the patient to die [23]. Presumably, gathering statistics on that basis would take too long. So a surrogate in the form of some anti-tumour or anti-cancer activity is used. Janssen argued that the combination of AA and PN was not obvious because there was no evidence of survival benefit for either individually. Phelan J rejected this in part because (my emphasis):

[179] If the search for survival benefits was as important as suggested, the positive anti-cancer effects of each drug outlined above in conjunction with O’Donnell 2004 provided good reason for a POS to combine AA and PN. The inventors do not have to be seeking the same solution as the eventual patent discloses (Hospira FCA [2020 FCA 30], para 94).

I take it that this is related to the “golden bonus” point noted in last Friday’s post: if an invention is obvious to try for one reason, it does not become less obvious because it turns out to have some unexpected advantage.

Apotex got caught in a squeeze in its utility attack, as “much of the evidence on which it relies for Obvious to Try supports the utility of the Patent” [203]. That’s not a bad squeeze to be in, given that they succeeded on obviousness. In holding the invention to be useufl Phelan J noted that “ For purposes of utility, it is not necessary to meet Guidelines or FDA approvals. Utility is met if some patients, even if only those in dire circumstances, respond” [209].

Courts should be cautious on patentability of methods of medical treatment

Apotex also raised an attack based on patentable subject matter. Phelan J noted that “The arguments of both parties on this issue of unpatentable subject matters are confusing and difficult to consider” [216]. Perhaps this is because the law itself is confusing, as the FCA recently recognized in Hospira. Accordingly, Phelan J noted that “The issue of method of medical treatment is not a settled one and therefore a court should be cautious in striking down claims on this basis” [223]. This strikes me as salutary advice.

Product Monograph important in establishing inducement

Given his holding on validity, it was unnecessary for Phelan J to consider infringement, but he did so nonetheless, in order to facilitate the inevitable appeal [19]. He found that if the patent were valid, Apotex would infringe by inducement by the sale of their AA product “indicated in combination with prednisone for the treatment of metastatic prostate cancer” [246]. This finding was based in large part on Apotex’s draft Product Monograph, which directed use in a manner consistent with the asserted claims [245]–[260]. This is consistent with many prior cases, but it is nonetheless worth reiterating the importance of the PM in respect of inducement.

Do physicians read the PM?

Apotex apparently tried to get around this by arguing that their product would not be used for anti-cancer treatment, as specified in some of the asserted claims, but for other purposes, such as controlling side effects. Phelan J rejected this, in part because (my emphasis):

[250] In their draft Product Monographs the Defendants cite a number of References (publications such as de Bono 2011, the Attard Reports) which address PN contributing to anti-cancer effects of the combination with AA. PN’s role in mitigating side effects is also contained in the References. It is no answer to say that although the Defendants put the References in the Product Monograph, they do not expect the doctors or pharmacists to consider them.

Despite Phelan J’s apparently rhetorical point, I’ll note that there are a number of cases calling into doubt whether doctors or pharmacists consider the PM itself, particularly the generic PM, much less the references found in it: see Solvay 2008 FC 308 [192]; Aventis 2006 FC 861 [44]; Abbot 2006 FC 1411 [40] affd 2007 FCA 251 [26]; Allergan 2011 FC 1316 [161]. Of course, these cases can be distinguished because there was evidence on this issue, and there does not appear to have been similar evidence in this case. Nonetheless, Phelan J’s remark does make the point that it is very counter-intuitive to argue that while the PM directs infringement, that’s permissible, because no one reads it anyway. On that note, I’ll plug my draft article “Is 'But For' Causation Necessary to Establish Inducement?” which argues that the way to resolve this difficulty is to recognize that “but for” causation is not required in the second stage of the inducement test. This article has been on the back burner for too long, and I hope to return to it soon. Here’s the abstract:

The established Weatherford test for inducing patent infringement requires, as its second branch, that inducement by the indirect party be the “but for” cause of the direct infringement. This article shows that such a requirement of “but for” causation leads to problematic results, particularly when the evidence indicates that the direct infringers do not heed the encouragement provided by the indirect party. The article argues that while the “but for” causation requirement is often stated, it has rarely actually been applied, and there are several cases which suggest a less stringent requirement. This article argues that the best way to reconcile the cases is to recognize that causation in the second branch of the inducement test may be established on the basis of material contribution, rather than “but for” causation, while also recognizing that “but for” causation remains necessary for an award of any monetary remedy. This approach, combining material contribution as the substantive causation requirement at the second stage of the inducement test, with “but for” causation in awarding monetary remedies, also appropriately balances the policy concerns of ensuring effective enforcement of the patentee’s rights while avoiding the problem of overbroad enforcement.

Open question whether claim of invalidity can be consolidated with a NOC action

Finally, Phelan J noted an unsettled procedural point. Apotex has alleged in a counterclaim that claims that were not asserted by Janssen were also invalid. Section 6(3)(a) of the Regulations allows the second person to bring a counterclaim for a declaration of invalidity “in respect of any patent claim asserted in the action.” A counterclaim is a separate action, and while s 6(3) “allows a party the convenience of bringing a challenge to a patent in the context of an NOC action in respect of asserted claims,” it is restricted to the claims asserted in the action [234]. “Whether a separate claim of invalidity could be consolidated with a NOC action remains an open question” [234].