Safe Gaming System Inc v Atlantic Lottery Corp 2018 FCA 180 Woods JA
2,331,238
Patent assertion entities, often pejoratively referred as patent trolls, are prominent in the US
patent litigation landscape, but they have been less prominent in Canada and Europe, at least in
terms of cases litigated to judgment. It is often suggested that one reason for this difference is
that in the US each party normally bears its own costs, while we follow the English rule for costs.
This motion for costs on appeal touches on some of these issues.
Safe Gaming System Inc is “a Wyoming corporation that does not carry on any business and
appears not to have assets of material value” [11]. It is therefore a non-practicing entity (NPE), and
given that it appears not to have substantial assets, it would appear to be a patent assertion entity
(PAE). (NPEs also include entities such as universities, which develop new technology with the intent of licensing it to another for commercialization, but such research organizations typically have substantial assets.) Safe Gaming System brought an action against the Atlantic Lottery Corporation and
others alleging infringement of the 238 patent in respect of Nova Scotia's Responsible Gaming
technology known as "My-Play”: 2018 FC 542 (blogged here). Safe Gaming System lost, and
lump sum costs of $1,175,000 were awarded to the defendants, “payable forthwith”: 2018 FC
871.
Safe Gaming System has now appealed, and Atlantic Lottery Corporation brought this motion
seeking security for costs for the trial judgment, plus security for costs on appeal, both to be
provided by payment into court, with the appeal to be stayed until such security is provided [5].
The FCA granted the motion [13].
Woods JA held that payment for security for costs at trial is not premature because it has been
over a month since the Federal Court fixed costs payable forthwith [9]. Nor was it premature on
the basis that Safe Gaming System has appealed the costs award [10].
Safe Gaming System also argued that “the respondents are inappropriately using section 416 of
the Rules as an alternative to enforcement under Part 12 of the Rules” [11]. This is the only point
where Woods JA referred to Safe Gaming System’s status as an apparent PAE: “it is appropriate to
use section 416 in these particular circumstances. The appellant is a Wyoming corporation that
does not carry on any business and appears not to have assets of material value” [11].
Finally, Safe Gaming System suggested that it did not have the resources to pay security in the
near term. Woods JA dismissed this argument: "I would comment that the appellant had the resources to
prosecute lengthy and complex litigation and the Federal Court ordered that the costs be paid
forthwith. In these circumstances, greater evidence is needed to demonstrate of lack of resources”
[12].
Monday, October 22, 2018
Friday, October 19, 2018
Actavis Extended Protection Applied by EWCA
Icescape Ltd v Ice-World International BV & Ors [2018] EWCA Civ 2219 var’g [2017] EWHC
42 (Pat) Baldwin QC
In Icescape, the EWCA applied the Actavis approach to infringement for the first time, holding that the defendant's product did not infringe as a matter of "normal" construction, but that it did infringe as a matter of extended protection. The main take-away is that it appears that the Actavis approach is here to stay: the EWCA applied it easily and without qualification.
In Actavis [2017] UKSC 48 Lord Neuberger, writing for a unanimous UKSC, held that infringement should be approached by addressing two issues: (i) first, whether the defendant’s product falls within the scope of the claims as a matter of “normal” interpretation — that is, the words of the claim, purposively construed; and (ii) if the product nonetheless infringes as a matter of protection which extends beyond that meaning [54], [56]. This effectively reversed Kirin-Amgen [2004] UKHL 46, in which Lord Hoffmann had held that the law “shuts the door on any doctrine which extends protection outside the claims” [44], with Lord Neuberger remarking that Lord Hoffmann had “effectively conflated the two issues” [55]. Lord Neuberger held that extended protection would be limited to immaterial variations [54], and he set out a three-part test for determining when the variant should be considered immaterial [59]-[66].
In many cases, the two-stage approach will not make any difference: if the defendant’s product infringes as a matter of normal interpretation, there is no need to consider extended protection; and if it does not infringe as a matter of normal interpretation, it will often not infringe as a matter of extended protection either. But the two-stage Actavis approach has had an impact in Icescape, the first case in which the EWCA has applied the Actavis approach [91]. The EWCA held that Ice-World’s product did not infringe on normal interpretation, but that it did infringe as a matter of extended protection. (Though in the end, the infringement point was moot, as the patent was invalid as it was not entitled to priority, which was acknowledged to be crucial [3], [44].)
Ice-World’s 755 patent relates to a mobile system for cooling ice rinks, and in particular the system of pipes for delivering and recovering coolant. A typical prior art system comprised a feed manifold and a discharge manifold running parallel to one another, with a series of orthogonal cooling pipes running the length of the field [6], substantially as shown in Fig 8 (with one exception). The problem with the prior art is that the cooling pipes had to be assembled and disassembled on site, which was time-consuming, both because of assembly time and because of the need to check for leaks. The solution provided by the invention was to use flexible joint members (element 70 in Fig 8) to construct the cooling pipes, so that the pipes could be folded for transportation. This reduced assembly and disassembly time, and allowed leak-checking to be done prior to transport. Thus, the “inventive core” of the patent was the use of a flexible joint member, which allowed the system to be folded [72].
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The defendant Icescape’s system was substantially the same as that described in the patent, including the flexible joint members, with one difference which was at the heart of the case on infringement. Icescape’s system used three cooling elements connected in parallel, as shown below [49], in contrast with the series connection shown in the patent specification and illustrated in Fig 8 [49]. Icescape’s system is therefore a variant of the system described in the patent, in that it uses a parallel rather than series connection. Icescape accepted that its system incorporated all of the other features of the claim [45], and the question was therefore whether infringement was avoided by the fact that the elements in its system were connected in parallel rather than in series.
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Claim 1, the only claim at issue, claimed a system of course comprising a flexible joint member (integer C), to capture the inventive core of the invention [27]. The other elements of Claim 1 were common general knowledge, including integers D and E, which on a “normal” interpretation of Claim 1 specified a series connection [70]. (Note that 1 Kitchin expressly equated “normal” interpretation with “purposive” interpretation [70].) Because Icescape’s system used a parallel connection, it therefore did not infringe on a normal or purposive interpretation of the language of claim. This is a classic scenario, reminiscent of McPhar Engineering v Sharpe Instruments [1956-60] Ex CR 467, 35 CPR 105 (Ex Ct). In addition to the novel integer, the patentee also had to include other ancillary integers, which were part of the common general knowledge, in order to claim an operative system. The defendant had taken the novel integer, but implemented a variant of the conventional integers, so as to avoid coming within the language of the claims [72].
After concluding that Icescape’s system did not infringe as a matter of normal interpretation, Lord Kitchin then went on to apply the three part test set out in Actavis. The first Actavis question asks whether the variant “achieves substantially the same result in substantially the same way as the invention,” or more briefly, whether the variant takes the “inventive core” of the invention [72]. The answer was clear: “I do not think there can be any doubt about the answer to this question,” as the “inventive core of the patent” is the flexible member (70), which was taken by Icescape [72].
The second Actavis question asks not just whether the variant took the inventive core, but further whether it would be obvious to a skilled person that the variant took to the inventive core. Again, Lord Kitchin had no hesitation answering this question in the affirmative: “it would be entirely obvious to the skilled person that, so far as the inventive core of the patent is concerned, the Icescape system achieves substantially the same result. . . in precisely the same way” [73].
The third Actavis question is whether strict compliance with the language of the claims is nonetheless required. Lord Kitchin noted that “the fact that the language of the claim does not cover the variant is certainly not enough to justify holding that Icescape does not satisfy this question” [74]. Lord Kitchin concluded that the answer to this question is “plainly ‘no’,” essentially because it was obvious that the inventive core had nothing to do with integers D and E.
Icescape is important as being the first application by the EWCA of the extended form of protection set out Actavis; and it is all the more important because the application of the test was so routine. The EWCA applied Actavis without difficulty and without hesitation. There was no attempt to find a loophole, perhaps through the third Actavis question, the precise ambit of which remains unclear. It is significant that Lord Kitchin, an experienced and eminent patent law judge, wrote the main decision. Moreover, Floyd LJ, the other experienced patent law judge on the panel, wrote a brief concurring opinion devoted largely to explaining how the Actavis approach is consistent with Art 69(1) of the EPC and the Protocol on its interpretation. The Protocol seeks a middle ground between two extremes. Floyd LJ explained that purposive construction of the language of the claims “now represents the minimum protection afforded by the patent” [96], but the Actavis approach still avoids the other extreme, where the claims are a mere guideline:
While it would be wrong to extrapolate with too much confidence from a single decision, the early signs are that the Actavis approach will be accepted and indeed embraced, by the EWCA, and, with Lord Kitchen’s appointment to the UKSC, at that level as well.
Icescape also illustrates that extended protection under Actavis does not necessarily lead to uncertainty. On the facts of this case, as Floyd LJ pointed out, the application of these new principles does not create any difficulty” [98]. Indeed, in this case the normal interpretation was “not...an easy question to answer” [70], while the analysis of extended protection under Actavis was straightforward.
Another significant point concerns the use of prosecution history. In addition to setting out a new approach to claim construction, Lord Neuberger in Actavis held that the prosecution history might be used, albeit in limited circumstances [87], though on the facts he concluded that the prosecution history did not justify departing from his initial conclusion based on the patent itself [89]. In Icescape Lord Kitchin accepted that Ice-World should be permitted to rely on the prosecution history [76], but, like Lord Neuberger in Actavis, he concluded that the prosecution history did not change his initial conclusion, as the contents of the file “do not unambiguously resolve the point with which we have to deal as to the scope of protection conferred by claim 1" [79]. He concluded that “this is a very good illustration of why it is generally so unprofitable to explore the prosecution history” [79]. In Canada, of course, prosecution history may not be used (Free World [66]), but I have written some posts suggesting that it may be time to revisit that rule: see here and generally here. I have to say that I am beginning to reconsider that position. The argument in favour of using prosecution history is that it is unfair to allow a patentee to explicitly give up subject-matter during prosecution, and then reclaim it during litigation. I remain sympathetic to the argument. However, there is also a fairness consideration on the other side, as the use of prosecution history can put the patentee between a rock and hard place, when, as happened in Actavis, the examiner is probably wrong on the merits, but the patentee needs to get its patent granted in order to effectively protect its product. And aside from fairness arguments, there is the point made by the SCC in Free World [66], and illustrated by Icescape, that use of prosecution history estoppel will often be a Pandora’s box, which adds complexity and uncertainty without improving the result. Since writing my earlier posts on prosecution history, I have read more about the mess that is the US doctrine of prosecution history estoppel, and I have come to have greater appreciation for the force of that argument.
In Icescape, the EWCA applied the Actavis approach to infringement for the first time, holding that the defendant's product did not infringe as a matter of "normal" construction, but that it did infringe as a matter of extended protection. The main take-away is that it appears that the Actavis approach is here to stay: the EWCA applied it easily and without qualification.
In Actavis [2017] UKSC 48 Lord Neuberger, writing for a unanimous UKSC, held that infringement should be approached by addressing two issues: (i) first, whether the defendant’s product falls within the scope of the claims as a matter of “normal” interpretation — that is, the words of the claim, purposively construed; and (ii) if the product nonetheless infringes as a matter of protection which extends beyond that meaning [54], [56]. This effectively reversed Kirin-Amgen [2004] UKHL 46, in which Lord Hoffmann had held that the law “shuts the door on any doctrine which extends protection outside the claims” [44], with Lord Neuberger remarking that Lord Hoffmann had “effectively conflated the two issues” [55]. Lord Neuberger held that extended protection would be limited to immaterial variations [54], and he set out a three-part test for determining when the variant should be considered immaterial [59]-[66].
In many cases, the two-stage approach will not make any difference: if the defendant’s product infringes as a matter of normal interpretation, there is no need to consider extended protection; and if it does not infringe as a matter of normal interpretation, it will often not infringe as a matter of extended protection either. But the two-stage Actavis approach has had an impact in Icescape, the first case in which the EWCA has applied the Actavis approach [91]. The EWCA held that Ice-World’s product did not infringe on normal interpretation, but that it did infringe as a matter of extended protection. (Though in the end, the infringement point was moot, as the patent was invalid as it was not entitled to priority, which was acknowledged to be crucial [3], [44].)
Ice-World’s 755 patent relates to a mobile system for cooling ice rinks, and in particular the system of pipes for delivering and recovering coolant. A typical prior art system comprised a feed manifold and a discharge manifold running parallel to one another, with a series of orthogonal cooling pipes running the length of the field [6], substantially as shown in Fig 8 (with one exception). The problem with the prior art is that the cooling pipes had to be assembled and disassembled on site, which was time-consuming, both because of assembly time and because of the need to check for leaks. The solution provided by the invention was to use flexible joint members (element 70 in Fig 8) to construct the cooling pipes, so that the pipes could be folded for transportation. This reduced assembly and disassembly time, and allowed leak-checking to be done prior to transport. Thus, the “inventive core” of the patent was the use of a flexible joint member, which allowed the system to be folded [72].
The defendant Icescape’s system was substantially the same as that described in the patent, including the flexible joint members, with one difference which was at the heart of the case on infringement. Icescape’s system used three cooling elements connected in parallel, as shown below [49], in contrast with the series connection shown in the patent specification and illustrated in Fig 8 [49]. Icescape’s system is therefore a variant of the system described in the patent, in that it uses a parallel rather than series connection. Icescape accepted that its system incorporated all of the other features of the claim [45], and the question was therefore whether infringement was avoided by the fact that the elements in its system were connected in parallel rather than in series.
Claim 1, the only claim at issue, claimed a system of course comprising a flexible joint member (integer C), to capture the inventive core of the invention [27]. The other elements of Claim 1 were common general knowledge, including integers D and E, which on a “normal” interpretation of Claim 1 specified a series connection [70]. (Note that 1 Kitchin expressly equated “normal” interpretation with “purposive” interpretation [70].) Because Icescape’s system used a parallel connection, it therefore did not infringe on a normal or purposive interpretation of the language of claim. This is a classic scenario, reminiscent of McPhar Engineering v Sharpe Instruments [1956-60] Ex CR 467, 35 CPR 105 (Ex Ct). In addition to the novel integer, the patentee also had to include other ancillary integers, which were part of the common general knowledge, in order to claim an operative system. The defendant had taken the novel integer, but implemented a variant of the conventional integers, so as to avoid coming within the language of the claims [72].
After concluding that Icescape’s system did not infringe as a matter of normal interpretation, Lord Kitchin then went on to apply the three part test set out in Actavis. The first Actavis question asks whether the variant “achieves substantially the same result in substantially the same way as the invention,” or more briefly, whether the variant takes the “inventive core” of the invention [72]. The answer was clear: “I do not think there can be any doubt about the answer to this question,” as the “inventive core of the patent” is the flexible member (70), which was taken by Icescape [72].
The second Actavis question asks not just whether the variant took the inventive core, but further whether it would be obvious to a skilled person that the variant took to the inventive core. Again, Lord Kitchin had no hesitation answering this question in the affirmative: “it would be entirely obvious to the skilled person that, so far as the inventive core of the patent is concerned, the Icescape system achieves substantially the same result. . . in precisely the same way” [73].
The third Actavis question is whether strict compliance with the language of the claims is nonetheless required. Lord Kitchin noted that “the fact that the language of the claim does not cover the variant is certainly not enough to justify holding that Icescape does not satisfy this question” [74]. Lord Kitchin concluded that the answer to this question is “plainly ‘no’,” essentially because it was obvious that the inventive core had nothing to do with integers D and E.
Icescape is important as being the first application by the EWCA of the extended form of protection set out Actavis; and it is all the more important because the application of the test was so routine. The EWCA applied Actavis without difficulty and without hesitation. There was no attempt to find a loophole, perhaps through the third Actavis question, the precise ambit of which remains unclear. It is significant that Lord Kitchin, an experienced and eminent patent law judge, wrote the main decision. Moreover, Floyd LJ, the other experienced patent law judge on the panel, wrote a brief concurring opinion devoted largely to explaining how the Actavis approach is consistent with Art 69(1) of the EPC and the Protocol on its interpretation. The Protocol seeks a middle ground between two extremes. Floyd LJ explained that purposive construction of the language of the claims “now represents the minimum protection afforded by the patent” [96], but the Actavis approach still avoids the other extreme, where the claims are a mere guideline:
[97] It should not be thought, however, that the claims do not continue to have an
important function. It is variants from the claim which have to achieve substantially the
same effect in substantially same way as the invention. The claims remain the starting
point for the subsequent analysis of variants. Although we may have edged closer to it,
the new approach does not transgress the second of the outlawed approaches in the
Protocol, which treats the claim merely as a somewhat vague guideline.
While it would be wrong to extrapolate with too much confidence from a single decision, the early signs are that the Actavis approach will be accepted and indeed embraced, by the EWCA, and, with Lord Kitchen’s appointment to the UKSC, at that level as well.
Icescape also illustrates that extended protection under Actavis does not necessarily lead to uncertainty. On the facts of this case, as Floyd LJ pointed out, the application of these new principles does not create any difficulty” [98]. Indeed, in this case the normal interpretation was “not...an easy question to answer” [70], while the analysis of extended protection under Actavis was straightforward.
Another significant point concerns the use of prosecution history. In addition to setting out a new approach to claim construction, Lord Neuberger in Actavis held that the prosecution history might be used, albeit in limited circumstances [87], though on the facts he concluded that the prosecution history did not justify departing from his initial conclusion based on the patent itself [89]. In Icescape Lord Kitchin accepted that Ice-World should be permitted to rely on the prosecution history [76], but, like Lord Neuberger in Actavis, he concluded that the prosecution history did not change his initial conclusion, as the contents of the file “do not unambiguously resolve the point with which we have to deal as to the scope of protection conferred by claim 1" [79]. He concluded that “this is a very good illustration of why it is generally so unprofitable to explore the prosecution history” [79]. In Canada, of course, prosecution history may not be used (Free World [66]), but I have written some posts suggesting that it may be time to revisit that rule: see here and generally here. I have to say that I am beginning to reconsider that position. The argument in favour of using prosecution history is that it is unfair to allow a patentee to explicitly give up subject-matter during prosecution, and then reclaim it during litigation. I remain sympathetic to the argument. However, there is also a fairness consideration on the other side, as the use of prosecution history can put the patentee between a rock and hard place, when, as happened in Actavis, the examiner is probably wrong on the merits, but the patentee needs to get its patent granted in order to effectively protect its product. And aside from fairness arguments, there is the point made by the SCC in Free World [66], and illustrated by Icescape, that use of prosecution history estoppel will often be a Pandora’s box, which adds complexity and uncertainty without improving the result. Since writing my earlier posts on prosecution history, I have read more about the mess that is the US doctrine of prosecution history estoppel, and I have come to have greater appreciation for the force of that argument.
Tuesday, October 16, 2018
Kellogg Co v Kellogg and Jurisdiction of the Federal Court to Interpret Contracts Related to Patent Ownership
Farmobile, LLC v Farmers Edge Inc 2018 FC 915 Ring J
2,888,742 / Farming data collection
Farmobile brought an action against Farmers Edge for infringement of the 742 patent. Farmers Edge wants to defend on the basis that it is the rightful owner of the 742 patent. On this motion to strike, Ring J has held that the Federal Court lacks jurisdiction, because determination of ownership is essentially a matter of interpretation of the contracts of assignment. This means that in order to effectively defend against this action brought against it, Farmers Edge will have to bring a separate action in a different forum seeking a declaration that it is the true owner [55].
The jurisdiction of the Federal Courts in such matters is governed by s 52 of the Act, which (in combination with s 20) gives the Court jurisdiction “to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged.” Ring J stated that “It is well-established that this Court lacks jurisdiction to entertain a claim under section 52 of the Patent Act where the issue to be decided is the proper owner of a particular patent, and the determination of ownership depends on the interpretation of various contract documents between the parties and the application and interpretation of contract law principles” [27].
There is indeed a well-established line of authority in the Federal Court to that effect. In my post on SALT Canada Inc v Baker 2016 FC 830, I suggested that this line of authority had overlooked the SCC decision in Kellogg Co v Kellogg, [1941] SCR 242, or interpreted it too narrowly. Kellogg also involved a motion to strike, where the underlying action was a conflict between pending applications. It is worth setting out the pleading (246) which was allowed to stand by the Supreme Court:
Compare this with the allegations which were stuck in Farmobile (reformatted for clarity)
The allegations are substantively virtually the same: they are both to the effect that the invention was made during the course of employment and therefore belong to the employer.
Ring J distinguished Kellogg as follows (original emphasis):
The distinction being drawn by Ring J is evidently that in Kellogg the disputed pleading was in the alternative, whereas in Farmobile it was by way of counterclaim. While that is true, I do not see it as a satisfactory distinction, for two reasons.
First, in the preceding section of her decision, Ring J had made the point that jurisdiction over the counterclaim has to be assessed separately from jurisdiction over the main action, relying on Innotech (1997) 74 CPR (3d) 275 (FCA) rev’g 72 CPR (3d) 522 (FC). In Innotech, the FCA held that “The counterclaim, when viewed by itself, would stand alone as an action for breach of contract and as such is not within the jurisdiction of this Court.” The same principle would appear to apply to the alternative claim in Kellogg, as the issue raised in the disputed pleading would have been capable of standing alone as a separate action. That is, if the pleading in Kellogg had been struck, and the plaintiff had subsequently lost and the patent issued to the defendant, nothing would have prevented the plaintiff from bringing an action to establish its ownership of the patent based on the facts alleged in the pleading at issue.
Secondly, and more importantly, there is not the least hint in Kellogg itself that the fact that the pleading was in the alternative is at all relevant; it was mentioned in the description of the facts, but never even adverted to in the Court’s reasoning.
Ring J then stated:
Ring J’s point is that the interpretation of the agreements is “purely and simply” a contractual dispute. One could certainly say that the dispute is over the interpretation of a contract, which just happens to involve ownership of a patent; but one could also say that the dispute is over the ownership of a patent, which just happens to turn on contractual interpretation. In my view, the SCC decision in Kellogg makes it quite clear that the second way of looking at the matter is correct.
Here is the crux of the SCC’s reasoning in Kellogg (249-50):
That is, in Kellogg the claim was allowed to stand because it was primarily about who owned the patent – even though the answer to that question turned entirely on the contract of employment. On its face, Kellogg says that a contractual dispute over ownership of an invention is primarily a dispute about the invention, not primarily about the contract. This holding was not obiter: the result in Kellogg itself is that Court had jurisdiction over a contractual dispute concerning the ownership of a patent, because of the subject matter of the dispute, ownership of the patent, meant it was more than “purely and simply” a contract between a subject and subject. An example of a dispute which is purely and simply between subject and subject is Consolidated Distilleries, in which the SCC held that the Exchequer Court did not have jurisdiction to hear a claim for indemnity for loss suffered by reason of certain bond agreements; it was a contractual dispute about a underlying issue which was itself unrelated to any head of federal power.
While I don’t find Ring J’s attempt to distinguish Kellogg to be at all persuasive, I again acknowledge that she was right to say that her decision is consistent with a well-established line of Federal Court authority. In my view, Farmobile illustrates the inconsistency between Kellogg and that line of cases. At the very least, there is a real tension. We should keep in mind that this was a motion to strike. It may be plain and obvious that the Court lacks jurisdiction based on the recent line of Federal Court cases; but the real question is whether it is plain and obvious that those cases are consistent with with Kellogg. Even if my interpretation of Kellogg is wrong, I would like to think that it is not “plain and obvious” that I am wrong. Ring J’s attempt to distinguish Kellogg implies that if the facts were such that the claim at issue in Farmobile had been pleaded in the alternative, it would have been allowed to stand. Is it plain and obvious that there is a crucial principled distinction between a counterclaim and a claim in the alternative?
Ring J, and the Court of Appeal, have said that the fact that the parties whose claim is struck will have to bring its action in a different forum is an “inconvenience,” but “such inconvenience ‘is not, of itself, a basis for this Court assuming jurisdiction.” [39], [55]. No doubt it is true that the Court cannot assume jurisdiction simply because it would make good practical sense for it to do so, but the problem should not be dismissed as a mere inconvenience. It is a defect in our patent system — indeed, a scandal worthy of Dickens — that a party seeking to defend a patent action should have to bring a separate action based on overlapping facts in a different court. If the law requires such a scandalous result, so be it, but I remain unconvinced.
2,888,742 / Farming data collection
Farmobile brought an action against Farmers Edge for infringement of the 742 patent. Farmers Edge wants to defend on the basis that it is the rightful owner of the 742 patent. On this motion to strike, Ring J has held that the Federal Court lacks jurisdiction, because determination of ownership is essentially a matter of interpretation of the contracts of assignment. This means that in order to effectively defend against this action brought against it, Farmers Edge will have to bring a separate action in a different forum seeking a declaration that it is the true owner [55].
The jurisdiction of the Federal Courts in such matters is governed by s 52 of the Act, which (in combination with s 20) gives the Court jurisdiction “to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged.” Ring J stated that “It is well-established that this Court lacks jurisdiction to entertain a claim under section 52 of the Patent Act where the issue to be decided is the proper owner of a particular patent, and the determination of ownership depends on the interpretation of various contract documents between the parties and the application and interpretation of contract law principles” [27].
There is indeed a well-established line of authority in the Federal Court to that effect. In my post on SALT Canada Inc v Baker 2016 FC 830, I suggested that this line of authority had overlooked the SCC decision in Kellogg Co v Kellogg, [1941] SCR 242, or interpreted it too narrowly. Kellogg also involved a motion to strike, where the underlying action was a conflict between pending applications. It is worth setting out the pleading (246) which was allowed to stand by the Supreme Court:
8. In the event that the Court should find as a fact that the said John L. Kellogg, Jr., was
the first inventor of the subject-matter of the said application serial No. 450,047, then the
plaintiff alleges
(a) That the late John L. Kellogg, Jr., was employed in the Experimental
Department of the Kellogg Company from October 15, 1936, until December 19,
1936;
(b) If any invention was made by the said John L. Kellogg, Jr., which is not
admitted but denied, it was made during and in the course of his employment by
the plaintiff and when he was carrying out work which he was instructed to do on
the plaintiff's behalf. By virtue of the contract of employment and the
circumstances under which the invention was made the said John L. Kellogg, Jr.,
became and was a trustee of the invention for the company which was and is
entitled to the benefit of it.
(c) The said John L. Kellogg, Jr., was by reason of his being such a trustee unable
to transfer any right, title or interest in the invention to any other party and the
plaintiff is now the owner of any invention covered by the application serial No.
450,047.
Compare this with the allegations which were stuck in Farmobile (reformatted for clarity)
[4] In support of its assertion that all rights to the invention claimed in the ‘742 Patent
were ultimately assigned to it, Farmers Edge pleads that
(a) the three individuals who incorporated Farmobile, Heath Gerlock, Randall
Nuss, and Jason Tatge, had previously been employed by Crop Ventures Inc., the
corporate predecessor of Farmers Edge;
(b) Ron Osborne, who was the CEO of Crop Ventures, and Gerlock and Nuss
jointly conceived and developed the invention claimed in the ‘742 Patent while
they worked for Crop Ventures;
(c) Gerlock and Nuss each signed confidentiality and non-competition agreements
whereby they assigned all rights and interests in the intellectual property to the
inventions claimed in the ‘742 Patent to Crop Ventures; and
(d) Tatge signed an employment terms letter agreement whereby he agreed to sign
Crop Venture’s standard Proprietary Information and Inventions Agreement
[collectively the “Agreements”].
The allegations are substantively virtually the same: they are both to the effect that the invention was made during the course of employment and therefore belong to the employer.
Ring J distinguished Kellogg as follows (original emphasis):
[33] Further, I am of the view that the Supreme Court’s decision in Kellogg Co v
Kellogg, [1941] SCR 242, is distinguishable and does not assist Farmers Edge in
responding to Farmobile’s motion to strike. In Kellogg, the moving party sought an order
striking out a claim, pled in the alternative, that the plaintiff was entitled to the benefit of
an invention by virtue of an employment contract. In the present case, the essence of the
Amended Counterclaim, namely the claim of ownership to the subject matter of the ‘742
Patent based on a series of Agreements, is sought to be struck out.
The distinction being drawn by Ring J is evidently that in Kellogg the disputed pleading was in the alternative, whereas in Farmobile it was by way of counterclaim. While that is true, I do not see it as a satisfactory distinction, for two reasons.
First, in the preceding section of her decision, Ring J had made the point that jurisdiction over the counterclaim has to be assessed separately from jurisdiction over the main action, relying on Innotech (1997) 74 CPR (3d) 275 (FCA) rev’g 72 CPR (3d) 522 (FC). In Innotech, the FCA held that “The counterclaim, when viewed by itself, would stand alone as an action for breach of contract and as such is not within the jurisdiction of this Court.” The same principle would appear to apply to the alternative claim in Kellogg, as the issue raised in the disputed pleading would have been capable of standing alone as a separate action. That is, if the pleading in Kellogg had been struck, and the plaintiff had subsequently lost and the patent issued to the defendant, nothing would have prevented the plaintiff from bringing an action to establish its ownership of the patent based on the facts alleged in the pleading at issue.
Secondly, and more importantly, there is not the least hint in Kellogg itself that the fact that the pleading was in the alternative is at all relevant; it was mentioned in the description of the facts, but never even adverted to in the Court’s reasoning.
Ring J then stated:
[34] Kellogg stands for the proposition that the Federal Court may resolve incidental
contractual issues where the overall claim is, in “pith and substance”, within the Court’s
jurisdiction. However, this Court has no jurisdiction to adjudicate a claim (or in this case,
a counterclaim), where the claim is “purely and simply” a contractual dispute (Kellogg),
or where an issue over which the Court may have jurisdiction is “secondary to and
dependent upon” the resolution of a contractual issue (Salt).
[35] Since the relief sought by Farmers Edge in its Amended Counterclaim is dependent
on a prior determination of the rights conferred by the Agreements described in the
Amended Counterclaim, and the interpretation of these Agreements is clearly a matter of
contract, rather than patent law, it is plain and obvious that the Court lacks jurisdiction to
adjudicate the impugned portions of the Amended Counterclaim, and those pleadings
must be struck out.
Ring J’s point is that the interpretation of the agreements is “purely and simply” a contractual dispute. One could certainly say that the dispute is over the interpretation of a contract, which just happens to involve ownership of a patent; but one could also say that the dispute is over the ownership of a patent, which just happens to turn on contractual interpretation. In my view, the SCC decision in Kellogg makes it quite clear that the second way of looking at the matter is correct.
Here is the crux of the SCC’s reasoning in Kellogg (249-50):
It is undoubtedly true, as stated by the learned President, that the Exchequer Court has no
jurisdiction to determine an issue purely and simply concerning a contract between
subject and subject (His Majesty the King and Hume and Consolidated Distilleries
Limited and Consolidated Exporters Corporation Limited); but here the subject-matter of
the appellant's allegation only incidentally refers to the contract of employment between
John L. Kellogg, Jr., and the appellant. The allegation primarily concerns the invention
alleged to have been made by him and of which the appellant claims to be the owner as a
result of the contract and of the other facts set forth; in the allegation. The contract and
the claims based thereon are advanced for the purpose of establishing that the appellant is
entitled both to the rights deriving from the invention and to the issue of a patent in its
own name. That is precisely the remedy which the Exchequer Court of Canada has the
power to grant under paragraph (iv) of subs. 8 of sec. 44 of the Patent Act
That is, in Kellogg the claim was allowed to stand because it was primarily about who owned the patent – even though the answer to that question turned entirely on the contract of employment. On its face, Kellogg says that a contractual dispute over ownership of an invention is primarily a dispute about the invention, not primarily about the contract. This holding was not obiter: the result in Kellogg itself is that Court had jurisdiction over a contractual dispute concerning the ownership of a patent, because of the subject matter of the dispute, ownership of the patent, meant it was more than “purely and simply” a contract between a subject and subject. An example of a dispute which is purely and simply between subject and subject is Consolidated Distilleries, in which the SCC held that the Exchequer Court did not have jurisdiction to hear a claim for indemnity for loss suffered by reason of certain bond agreements; it was a contractual dispute about a underlying issue which was itself unrelated to any head of federal power.
While I don’t find Ring J’s attempt to distinguish Kellogg to be at all persuasive, I again acknowledge that she was right to say that her decision is consistent with a well-established line of Federal Court authority. In my view, Farmobile illustrates the inconsistency between Kellogg and that line of cases. At the very least, there is a real tension. We should keep in mind that this was a motion to strike. It may be plain and obvious that the Court lacks jurisdiction based on the recent line of Federal Court cases; but the real question is whether it is plain and obvious that those cases are consistent with with Kellogg. Even if my interpretation of Kellogg is wrong, I would like to think that it is not “plain and obvious” that I am wrong. Ring J’s attempt to distinguish Kellogg implies that if the facts were such that the claim at issue in Farmobile had been pleaded in the alternative, it would have been allowed to stand. Is it plain and obvious that there is a crucial principled distinction between a counterclaim and a claim in the alternative?
Ring J, and the Court of Appeal, have said that the fact that the parties whose claim is struck will have to bring its action in a different forum is an “inconvenience,” but “such inconvenience ‘is not, of itself, a basis for this Court assuming jurisdiction.” [39], [55]. No doubt it is true that the Court cannot assume jurisdiction simply because it would make good practical sense for it to do so, but the problem should not be dismissed as a mere inconvenience. It is a defect in our patent system — indeed, a scandal worthy of Dickens — that a party seeking to defend a patent action should have to bring a separate action based on overlapping facts in a different court. If the law requires such a scandalous result, so be it, but I remain unconvinced.
Thursday, October 4, 2018
"Whack the Zombies Dead Once and for All"
Apotex Inc v Abbott Laboratories, Ltd 2018 ONSC 5199 Quigley J
The now defunct rule that a patent would be invalid for lack of utility under s 2 of the Act if the invention failed to meet the promise of the patent is known as the Promise Doctrine. The Promise Doctrine was abolished by the SCC in AstraZeneca 2017 SCC 36 (see here). In a series of cases, defendants have sought to resurrect it in another guise, with almost uniform lack of success. In this decision, another attempt to revive the promise doctrine was rejected by Quigley J in the strongest possible terms.
The decision concerned a motion by Apotex to amend its pleadings in litigation in which Apotex has been seeking damages under s 8 of the NOC Regulations against Abbott and Takeda in the Ontario courts, in respect of lansoprazole [1]. (Some of the history of this very complex litigation is provided here.) Abbott and Takeda have counterclaimed against Apotex for patent infringement, and hence a central issue is the validity of Abbott and Takeda’s patents relating to lansoprazole; if the patents are valid, then damages on the counterclaim will substantially reduce or even entirely negate Apotex’s s 8 damages [4].
Apotex had defended against the counterclaim by alleging the patents were invalid for failure to meet the promise of the patent. Apotex has conceded that as a result of AstraZeneca, these allegations are not longer capable of supporting an argument for invalidity [19]. In this motion, Apotex therefore sought to amend its pleadings to allege invalidity for insufficiency, overbreadth, and material misrepresentation under s 27(3) and s 53 [23], without any changes to the underlying factual allegations [18]. Consequently:
It is, I think, uncontroversial that prior to AstraZeneca, the Promise Doctrine was not legally coextensive with insufficiency and material misrepresentation. That is, facts which would support an allegation of invalidity for failure to meet the promise of the patent would not necessarily support an allegation of insufficiency or material misrepresentation. For example, in the Olanzapine litigation an attack based on s 53(1) was rejected 2009 FC 1018, [150-53], even though the patent was ultimately held invalid, by the same judge, for failure to satisfy the promise of the patent: 2011 FC 1288, [209]-[210] aff’d 2012 FCA 232. Of course, in some cases the same facts might support multiple grounds for invalidity, just as a single piece of prior art might render a patent invalid for both anticipation and obviousness.
Apotex therefore argued that AstraZeneca substantively changed the law of insufficiency and material misrepresentation [6]. The argument was effectively that the substance of the Promise Doctrine is still good law, and the only change wrought by AstraZeneca is that it must be pleaded as a matter of s 27(3) or s 53, rather than as a matter of s 2, which is what Apotex's proposed amendments sought to do. In contrast, Abbott and Takeda argued that “AstraZeneca had no effect on the law as it relates to any other ground of invalidity (including insufficiency, overbreadth, or fraud on the Commissioner of Patents)” [17, original emphasis].
In support of its position, Apotex relied on the following passage from AstraZeneca (my emphasis):
The question is whether this passage was intended to change the law of sufficiency, overbreadth and material misrepresentation, as Apotex argued, so that they would now reflect the promise doctrine; or merely to acknowledge that some forms of overpromising had always been addressed by those doctrines, as Abbott and Takeda argued. My view is that the latter interpretation is correct. For example, s 53 has an intent requirement of wilful misleading that was never part of the promise doctrine. Wilfully overpromising for the purpose of misleading is undoubtedly a “mischief.” Prior to AstraZeneca it might have engaged both s 53 and the Promise Doctrine; after AstraZeneca it will still engage s 53. But that does not mean that overpromising that was neither willful nor for the purpose of misleading will now engage s 53, even though it might have engaged the defunct Promise Doctrine.
Quigely J held unequivocally in favour of Abbott and Takeda on this issue.
Quigley J found support in this conclusion in the consistent holdings to the same effect in the Federal Court [28] (and see here, discussing these holdings). He also cited my blog posts for the position that “we should ‘whack the zombies dead once and for all’” [28]. While I don’t believe I ever said exactly those words, I wish I had, and the statement certainly captures the gist of my comments.
Quigley J then went on to consider whether the factual allegations made by Apotex would nonetheless support an allegation of invalidity under s 53, notwithstanding that it had not initially been pleaded as such [31]-[32]. He concluded that they did not [33], [39].
Further, he awarded costs on the motion on a substantial indemnity basis [48]:
The now defunct rule that a patent would be invalid for lack of utility under s 2 of the Act if the invention failed to meet the promise of the patent is known as the Promise Doctrine. The Promise Doctrine was abolished by the SCC in AstraZeneca 2017 SCC 36 (see here). In a series of cases, defendants have sought to resurrect it in another guise, with almost uniform lack of success. In this decision, another attempt to revive the promise doctrine was rejected by Quigley J in the strongest possible terms.
The decision concerned a motion by Apotex to amend its pleadings in litigation in which Apotex has been seeking damages under s 8 of the NOC Regulations against Abbott and Takeda in the Ontario courts, in respect of lansoprazole [1]. (Some of the history of this very complex litigation is provided here.) Abbott and Takeda have counterclaimed against Apotex for patent infringement, and hence a central issue is the validity of Abbott and Takeda’s patents relating to lansoprazole; if the patents are valid, then damages on the counterclaim will substantially reduce or even entirely negate Apotex’s s 8 damages [4].
Apotex had defended against the counterclaim by alleging the patents were invalid for failure to meet the promise of the patent. Apotex has conceded that as a result of AstraZeneca, these allegations are not longer capable of supporting an argument for invalidity [19]. In this motion, Apotex therefore sought to amend its pleadings to allege invalidity for insufficiency, overbreadth, and material misrepresentation under s 27(3) and s 53 [23], without any changes to the underlying factual allegations [18]. Consequently:
[22] The question on this motion is clear: While abolishing the “Promise Doctrine”, did
the Supreme Court nevertheless intend that promise based claims of patent invalidity
could now be brought under ss. 27 and 53 of the Act? Apotex says yes. Abbott and
Takeda say no.
It is, I think, uncontroversial that prior to AstraZeneca, the Promise Doctrine was not legally coextensive with insufficiency and material misrepresentation. That is, facts which would support an allegation of invalidity for failure to meet the promise of the patent would not necessarily support an allegation of insufficiency or material misrepresentation. For example, in the Olanzapine litigation an attack based on s 53(1) was rejected 2009 FC 1018, [150-53], even though the patent was ultimately held invalid, by the same judge, for failure to satisfy the promise of the patent: 2011 FC 1288, [209]-[210] aff’d 2012 FCA 232. Of course, in some cases the same facts might support multiple grounds for invalidity, just as a single piece of prior art might render a patent invalid for both anticipation and obviousness.
Apotex therefore argued that AstraZeneca substantively changed the law of insufficiency and material misrepresentation [6]. The argument was effectively that the substance of the Promise Doctrine is still good law, and the only change wrought by AstraZeneca is that it must be pleaded as a matter of s 27(3) or s 53, rather than as a matter of s 2, which is what Apotex's proposed amendments sought to do. In contrast, Abbott and Takeda argued that “AstraZeneca had no effect on the law as it relates to any other ground of invalidity (including insufficiency, overbreadth, or fraud on the Commissioner of Patents)” [17, original emphasis].
In support of its position, Apotex relied on the following passage from AstraZeneca (my emphasis):
[45] Supporters of the doctrine assert that the consequences of the Promise Doctrine play
a key role in ensuring patentees do not “overpromise” in their patent applications. That is,
a patentee will be dissuaded from stating the invention can be used for things that are not
sufficiently established at the time of filing if doing so would risk invalidating the entire
patent. The utility requirement should not be interpreted, however, as the Federal Courts
have done, to address such concerns. Nonetheless, overpromising is a mischief.
[46] The scheme of the Act treats the mischief of overpromising in multiple ways. There
are consequences for failing to properly disclose an invention by claiming, for instance,
that you have invented more than you have. A disclosure which is not correct and full, or
states an unsubstantiated use or operation of the invention, may be found to fail to fulfill
the requirements of s. 27(3). An overly broad claim may be declared invalid; however,
under the operation of s. 58 of the Patent Act, remaining valid claims can be given effect.
As well, this mischief may result in a patent being void under s. 53 of the Act, where
overpromising in a specification amounts to an omission or addition that is “wilfully
made for the purpose of misleading”.
The question is whether this passage was intended to change the law of sufficiency, overbreadth and material misrepresentation, as Apotex argued, so that they would now reflect the promise doctrine; or merely to acknowledge that some forms of overpromising had always been addressed by those doctrines, as Abbott and Takeda argued. My view is that the latter interpretation is correct. For example, s 53 has an intent requirement of wilful misleading that was never part of the promise doctrine. Wilfully overpromising for the purpose of misleading is undoubtedly a “mischief.” Prior to AstraZeneca it might have engaged both s 53 and the Promise Doctrine; after AstraZeneca it will still engage s 53. But that does not mean that overpromising that was neither willful nor for the purpose of misleading will now engage s 53, even though it might have engaged the defunct Promise Doctrine.
Quigely J held unequivocally in favour of Abbott and Takeda on this issue.
[27] Having specifically overruled the Promise Doctrine as bad law, it is not evident and
indeed is counterintuitive that the Supreme Court intended that promise based arguments
would simply be imported into claims of overbreadth or misrepresentation under those
sections.
Quigley J found support in this conclusion in the consistent holdings to the same effect in the Federal Court [28] (and see here, discussing these holdings). He also cited my blog posts for the position that “we should ‘whack the zombies dead once and for all’” [28]. While I don’t believe I ever said exactly those words, I wish I had, and the statement certainly captures the gist of my comments.
Quigley J then went on to consider whether the factual allegations made by Apotex would nonetheless support an allegation of invalidity under s 53, notwithstanding that it had not initially been pleaded as such [31]-[32]. He concluded that they did not [33], [39].
Further, he awarded costs on the motion on a substantial indemnity basis [48]:
[47] “the caselaw is plain that any party against whom such unfounded and deficient s. 53
fraud allegations are made, in this case Takeda, will be severely prejudiced if they are
permitted to be advanced. . . . The allegation alone may severely damage Takeda’s
reputation, as well as the reputation of its inventors. The mere publication of fraud
allegations causes reputational harm. As such, I agree that the making of the allegation
without foundation must entitle Takeda to heightened costs on this motion.
Monday, October 1, 2018
Preferred Embodiments do not Limit the Claims
Bombardier Recreational Products Inc v Arctic Cat, Inc 2018 FCA 172 Gauthier JA: Pelletier,
de Montigny JJA var’g 2017 FC 207 Roy J
2,293,106 / 2,485,813 / 2,411,964 / 2,350,264
As noted in my post on Roy J’s trial decision, in the late 1990s, Bombardier Recreational Products (BRP) made a “significant breakthrough” in snowmobile design [FC 415]. Its so-called radical evolution vehicle (REV), introduced in 2002, moved the rider weight forward, so that instead of sitting back as if on a couch, the rider is balanced forward, as if riding a dirt bike [FC 414]. BRP obtained four patents related to its new design. The three Rider Position Patents (106, 813 and 964), claimed a snowmobile with a rider forward position; the 264 patent, aka the Frame Construction Patent, claimed a new frame design with enhanced rigidity [FC 100]. At trial, Roy J held the 264 patent was not infringed. The FCA has now reversed on this point, and returned the matter to Roy J for determination of the outstanding issues relating to the 264 patent, namely validity and remedies [57]. The FCA affirmed Roy J’s holding that the Rider Position Patents were invalid for insufficiency.
Frame Construction Patent / 264 patent
The 264 patent claimed a pyramidal frame assembly with “a frame including a tunnel and an engine cradle forward of the tunnel” [19]. The key question was the meaning of the term “engine cradle”. Roy J held that this meant a cradle with walls, which plays a role in enhancing the rigidity of the vehicle [FC 348, 350, 372, 377, 380, 382] [50], and so excluded the defendant’s snowmobiles, in which the engine cradle was not walled [FC 378-79]. The FCA reversed on this point, essentially on the ground that Roy J had wrongly used the description of the preferred embodiment to limit the claims: the FCA noted that the Roy J’s comments “appear to ignore the basic principle that the description of the preferred embodiments is not meant to include all the possible embodiments of the invention claimed”: [54], and see generally [40]-[55]. This holding did not involve new law. As the FCA noted, it is well-established that the description of the preferred embodiments does not exhaust the invention claimed: [41] (quoting Whirlpool 2000 SCC 67 [54]), [47]. It is possible to have a definition in the disclosure which would limit the ordinary meaning of a term of art, but that was not the case here [43].
On a preliminary point, the FCA also emphasized that claim construction, including purposive construction, is objective:
(See to the same effect, Kirin-Amgen [2004] UKHL 46, [32], noting “[t]here is no window into the mind of the patentee,” and "[c]onstruction is objective in the sense that it is concerned with what a reasonable person to whom the utterance was addressed would have understood the author to be using the words to mean.") Thus, evidence of the inventor’s subjective intent, such as whether inventor considered a particular claim element to be important, is irrelevant [22].
Further, reference to other extrinsic evidence, such as other patents or patent applications, is also “inappropriate and cannot inform the construction of the claims” [51]:
Rider Position Patents
As noted, at trial Roy J had held the disclosure of how to make the invention in the Rider Position Patents (which shared the same description), to be insufficient. I had interpreted Roy J’s decision as turning on the view, based on Teva v Pfizer [Viagra] 2012 SCC 60, that the specification would be insufficient if even a “minor research project” were required to put the invention into practice. I noted that this view was an error of law, albeit understandable in light of Viagra.
On appeal, the FCA reiterated that the SCC decision in Teva v Pfizer [Viagra] 2012 SCC 60, did not change the law of enablement (as opposed to disclosure of the invention) [78], a point the Court had originally made in Teva v Leo Pharma 2017 FCA 50 [58]. The Court at [78] emphasized that “Enablement (how to practice the invention) is a concept completely distinct from the disclosure of the invention itself, the latter of which was at issue in Pfizer.” The Court noted that Leo Pharma had been released only after Roy J’s decision [78].
Nonetheless, the FCA affirmed Roy J’s holding on this point, on the view that he had also applied the correct standard [79]. The Court noted that “[t]he extent of the effort required in any given case is a pure question of fact,” and despite Roy J’s error in interpreting Viagra, the FCA cannot substitute its own assessment of the evidence. After reviewing the evidence, the Court held that it was open to Roy J to conclude that a major research project would have been required to work the invention [95].
Two points mentioned by the FCA in arriving at this conclusion are worth noting.
First, the patent did not contain even a single clear example of the full configuration. While an example does not serve to limit the claims, it may nonetheless be important to proper disclosure [85]. Moreover, there was “no evidence that anyone was ever able to make a configuration of the invention on the sole basis of the information contained in the disclosures without the pyramidal frame assembly claimed in the 264 Patent” [86]. This suggests that a pyramidal frame assembly, which was not disclosed in the Rider Position Patents, might have been necessary to solving the problems associated with the new rider position.
Second, in my post on this aspect of Roy J’s decision, I had noted that Roy J seemed to suggest that the specification should have explained how the new invention was different from the prior art, even though that is not required as a matter of law. The FCA reaffirmed that “an inventor does not have to describe the differences between an embodiment of the invention and those of the prior art” [84].
2,293,106 / 2,485,813 / 2,411,964 / 2,350,264
As noted in my post on Roy J’s trial decision, in the late 1990s, Bombardier Recreational Products (BRP) made a “significant breakthrough” in snowmobile design [FC 415]. Its so-called radical evolution vehicle (REV), introduced in 2002, moved the rider weight forward, so that instead of sitting back as if on a couch, the rider is balanced forward, as if riding a dirt bike [FC 414]. BRP obtained four patents related to its new design. The three Rider Position Patents (106, 813 and 964), claimed a snowmobile with a rider forward position; the 264 patent, aka the Frame Construction Patent, claimed a new frame design with enhanced rigidity [FC 100]. At trial, Roy J held the 264 patent was not infringed. The FCA has now reversed on this point, and returned the matter to Roy J for determination of the outstanding issues relating to the 264 patent, namely validity and remedies [57]. The FCA affirmed Roy J’s holding that the Rider Position Patents were invalid for insufficiency.
Frame Construction Patent / 264 patent
The 264 patent claimed a pyramidal frame assembly with “a frame including a tunnel and an engine cradle forward of the tunnel” [19]. The key question was the meaning of the term “engine cradle”. Roy J held that this meant a cradle with walls, which plays a role in enhancing the rigidity of the vehicle [FC 348, 350, 372, 377, 380, 382] [50], and so excluded the defendant’s snowmobiles, in which the engine cradle was not walled [FC 378-79]. The FCA reversed on this point, essentially on the ground that Roy J had wrongly used the description of the preferred embodiment to limit the claims: the FCA noted that the Roy J’s comments “appear to ignore the basic principle that the description of the preferred embodiments is not meant to include all the possible embodiments of the invention claimed”: [54], and see generally [40]-[55]. This holding did not involve new law. As the FCA noted, it is well-established that the description of the preferred embodiments does not exhaust the invention claimed: [41] (quoting Whirlpool 2000 SCC 67 [54]), [47]. It is possible to have a definition in the disclosure which would limit the ordinary meaning of a term of art, but that was not the case here [43].
On a preliminary point, the FCA also emphasized that claim construction, including purposive construction, is objective:
[23] although purposive interpretation can be viewed as an attempt to determine the
intention of the inventor, one does not seek to establish the subjective intention of the
inventor. Rather, one must seek to determine the objective intention as it was expressed
in the patent itself, and as would be understood by the person to whom it is addressed.
(See to the same effect, Kirin-Amgen [2004] UKHL 46, [32], noting “[t]here is no window into the mind of the patentee,” and "[c]onstruction is objective in the sense that it is concerned with what a reasonable person to whom the utterance was addressed would have understood the author to be using the words to mean.") Thus, evidence of the inventor’s subjective intent, such as whether inventor considered a particular claim element to be important, is irrelevant [22].
Further, reference to other extrinsic evidence, such as other patents or patent applications, is also “inappropriate and cannot inform the construction of the claims” [51]:
[24] Thus, apart from the specification itself, the only evidence that should be considered
to inform a court’s analysis of a claim is proper evidence as to how the POSITA would
understand it in light of his or her relevant common general knowledge in the context of
the specification as a whole.
Rider Position Patents
As noted, at trial Roy J had held the disclosure of how to make the invention in the Rider Position Patents (which shared the same description), to be insufficient. I had interpreted Roy J’s decision as turning on the view, based on Teva v Pfizer [Viagra] 2012 SCC 60, that the specification would be insufficient if even a “minor research project” were required to put the invention into practice. I noted that this view was an error of law, albeit understandable in light of Viagra.
On appeal, the FCA reiterated that the SCC decision in Teva v Pfizer [Viagra] 2012 SCC 60, did not change the law of enablement (as opposed to disclosure of the invention) [78], a point the Court had originally made in Teva v Leo Pharma 2017 FCA 50 [58]. The Court at [78] emphasized that “Enablement (how to practice the invention) is a concept completely distinct from the disclosure of the invention itself, the latter of which was at issue in Pfizer.” The Court noted that Leo Pharma had been released only after Roy J’s decision [78].
Nonetheless, the FCA affirmed Roy J’s holding on this point, on the view that he had also applied the correct standard [79]. The Court noted that “[t]he extent of the effort required in any given case is a pure question of fact,” and despite Roy J’s error in interpreting Viagra, the FCA cannot substitute its own assessment of the evidence. After reviewing the evidence, the Court held that it was open to Roy J to conclude that a major research project would have been required to work the invention [95].
Two points mentioned by the FCA in arriving at this conclusion are worth noting.
First, the patent did not contain even a single clear example of the full configuration. While an example does not serve to limit the claims, it may nonetheless be important to proper disclosure [85]. Moreover, there was “no evidence that anyone was ever able to make a configuration of the invention on the sole basis of the information contained in the disclosures without the pyramidal frame assembly claimed in the 264 Patent” [86]. This suggests that a pyramidal frame assembly, which was not disclosed in the Rider Position Patents, might have been necessary to solving the problems associated with the new rider position.
Second, in my post on this aspect of Roy J’s decision, I had noted that Roy J seemed to suggest that the specification should have explained how the new invention was different from the prior art, even though that is not required as a matter of law. The FCA reaffirmed that “an inventor does not have to describe the differences between an embodiment of the invention and those of the prior art” [84].
Friday, September 28, 2018
Sierra Club Test Governs Protective Orders
Seedlings Life Science Ventures LLC v Pfizer Canada Inc 2018 FC 956 Ahmed J rev’g 2018 FC
443 Tabib J
In the decision under appeal, Tabib J refused to issue a protective order, essentially on the basis that the implied undertaking rule, supplemented by a private agreement between the parties, would provide adequate protection: see here. In so holding, Tabib J held that the test set out in Sierra Club of Canada v Canada (Minister of Finance), 2002 SCC 41 was not applicable. In her view [15], Sierra Club was applicable only to confidentiality orders, which allow parties to file confidential information under seal with the Registry, and not to protective orders, which govern the way parties may designate as confidential, and must thereafter treat, information that they will exchange between themselves in the pre-trial phase of an action. On appeal, Ahmed J held that Tabib J erred in distinguishing Sierra Club, and that the test set out in Sierra Club is applicable to both confidentiality orders and protective orders [26]. He noted that nothing in the text of Sierra Club itself supports the distinction [26]. Further, since the rationale for a protective order, a confidentiality order, or a hybrid order, is the same — namely “the protection of sensitive information – whether from the general public or other business adversaries – from abuse or use in activities collateral to the litigation” — there was no basis for applying different tests to the different types of orders [26].
Aside from the issue of the binding nature of Sierra Club, Ahmed J noted that Tabib J had been motivated by “a desire to respond to a problem in contemporary patent litigation. In her view, routine motions for protective orders do not add substantial protection above and beyond what is already available under the implied undertaking rule or achievable through private agreements, and the judicial processing of these orders constitutes a substantial burden to the Court” [30]. Ahmed J was sympathetic to this concern: “Surely those observations are not without merit and it may well be the time for change” [30]. But in his view, it is not appropriate to implement “a fundamental shift in longstanding practice” through the jurisprudence of “this Court”: “That is the role of the legislature, or perhaps the courts above” [30]. I’m not sure I agree with that observation. The law must evolve to meet changed circumstances, and some of that evolution must come at the hands of the courts, as the legislature simply does not have the capacity to address every desirable change, no matter how minor. The same is true of the Supreme Court. Moreover, even if the Supreme Court could deal with every issue, it is arguably preferable to have some changes initiated by a lower level of court, which may, as in this case, have more practical expertise on the issue. Ahmed J stated that “in my view, it would be unjust to the litigants in the case at bar to have the so-called ‘rules of the game’ changed partway through these proceedings” [30]. That is an important point, but it is not determinative. It is the nature of the common law that the law evolves in light of decisions on the facts of particular cases, and the rules of the game are changed mid-course whenever an appeal to the SCC results in a change in the law. It is no more or less fair to have the rules changed simply because it is the SCC that changes them. To be sure, it is important to respect the settled expectations of the parties, and courts should therefore be more reluctant to change the law or practice, the more firmly it is established. But that is a matter of balancing the need for change against the importance of the settled expectations.
The test set out in Sierra Club [60] has two branches: 1) the information has been treated as confidential and that on a balance of probabilities its proprietary, commercial and scientific interests could reasonably be harmed by the disclosure of the information, and 2) it is of a confidential nature with a reasonable expectation that it be kept confidential [23]. [24]. Ahmed J held that in matter at hand, both criteria were met [28], and he therefore allowed the appeal and order the protective order be issued [29].
In the decision under appeal, Tabib J refused to issue a protective order, essentially on the basis that the implied undertaking rule, supplemented by a private agreement between the parties, would provide adequate protection: see here. In so holding, Tabib J held that the test set out in Sierra Club of Canada v Canada (Minister of Finance), 2002 SCC 41 was not applicable. In her view [15], Sierra Club was applicable only to confidentiality orders, which allow parties to file confidential information under seal with the Registry, and not to protective orders, which govern the way parties may designate as confidential, and must thereafter treat, information that they will exchange between themselves in the pre-trial phase of an action. On appeal, Ahmed J held that Tabib J erred in distinguishing Sierra Club, and that the test set out in Sierra Club is applicable to both confidentiality orders and protective orders [26]. He noted that nothing in the text of Sierra Club itself supports the distinction [26]. Further, since the rationale for a protective order, a confidentiality order, or a hybrid order, is the same — namely “the protection of sensitive information – whether from the general public or other business adversaries – from abuse or use in activities collateral to the litigation” — there was no basis for applying different tests to the different types of orders [26].
Aside from the issue of the binding nature of Sierra Club, Ahmed J noted that Tabib J had been motivated by “a desire to respond to a problem in contemporary patent litigation. In her view, routine motions for protective orders do not add substantial protection above and beyond what is already available under the implied undertaking rule or achievable through private agreements, and the judicial processing of these orders constitutes a substantial burden to the Court” [30]. Ahmed J was sympathetic to this concern: “Surely those observations are not without merit and it may well be the time for change” [30]. But in his view, it is not appropriate to implement “a fundamental shift in longstanding practice” through the jurisprudence of “this Court”: “That is the role of the legislature, or perhaps the courts above” [30]. I’m not sure I agree with that observation. The law must evolve to meet changed circumstances, and some of that evolution must come at the hands of the courts, as the legislature simply does not have the capacity to address every desirable change, no matter how minor. The same is true of the Supreme Court. Moreover, even if the Supreme Court could deal with every issue, it is arguably preferable to have some changes initiated by a lower level of court, which may, as in this case, have more practical expertise on the issue. Ahmed J stated that “in my view, it would be unjust to the litigants in the case at bar to have the so-called ‘rules of the game’ changed partway through these proceedings” [30]. That is an important point, but it is not determinative. It is the nature of the common law that the law evolves in light of decisions on the facts of particular cases, and the rules of the game are changed mid-course whenever an appeal to the SCC results in a change in the law. It is no more or less fair to have the rules changed simply because it is the SCC that changes them. To be sure, it is important to respect the settled expectations of the parties, and courts should therefore be more reluctant to change the law or practice, the more firmly it is established. But that is a matter of balancing the need for change against the importance of the settled expectations.
The test set out in Sierra Club [60] has two branches: 1) the information has been treated as confidential and that on a balance of probabilities its proprietary, commercial and scientific interests could reasonably be harmed by the disclosure of the information, and 2) it is of a confidential nature with a reasonable expectation that it be kept confidential [23]. [24]. Ahmed J held that in matter at hand, both criteria were met [28], and he therefore allowed the appeal and order the protective order be issued [29].
Tuesday, September 18, 2018
Patent Remedies and Complex Products: Toward a Global Consensus
For the past three (plus) years I have been involved in the International Patent Remedies for
Complex Products (INPRECOMP) project, which brought together twenty patent scholars from
around the world to address remedial issues related to patents for products containing multiple
patented technologies, such as smartphones, robotics and the Internet of Things. The manuscript
of our resulting volume, Patent Remedies and Complex Products: Toward a Global Consensus
(Brad Biddle, Jorge L. Contreras, Brian J. Love & Norman V. Siebrasse eds.) is now in the hands
of Cambridge University Press. It is being published under an open access model, and individual
chapters are now available on SSRN (links below). As well as being an editor, I was a member of
the steering committee, and I am also an author on all of the chapters except chapter 6.
The aim of the project was to arrive at a consensus and make recommendations regarding best practices, where that was possible, and to make recommendations for further research which might help resolve outstanding issues. Most of the individual chapters were written as multi-author collaborations to ensure a diversity of perspectives on the issues. The process of arriving at a final version of each chapter was challenging, thought-provoking, and sometimes contentious. I would like to thank all of the authors with whom I collaborated on the various chapters. I would also like to extend a special thank you to my co-editors, Brad Biddle, Jorge Contreras, and Brian J Love, who were always a pleasure to work with.
The INPRECOMP project was primarily funded by a gift from Intel Corporation to the Center for Law, Science and Innovation (CLSI) at Arizona State University's Sandra Day O'Connor College of Law. CLSI provided logistical and administrative support for the project.
Patent Remedies and Complex Products: Toward a Global Consensus
The aim of the project was to arrive at a consensus and make recommendations regarding best practices, where that was possible, and to make recommendations for further research which might help resolve outstanding issues. Most of the individual chapters were written as multi-author collaborations to ensure a diversity of perspectives on the issues. The process of arriving at a final version of each chapter was challenging, thought-provoking, and sometimes contentious. I would like to thank all of the authors with whom I collaborated on the various chapters. I would also like to extend a special thank you to my co-editors, Brad Biddle, Jorge Contreras, and Brian J Love, who were always a pleasure to work with.
The INPRECOMP project was primarily funded by a gift from Intel Corporation to the Center for Law, Science and Innovation (CLSI) at Arizona State University's Sandra Day O'Connor College of Law. CLSI provided logistical and administrative support for the project.
Patent Remedies and Complex Products: Toward a Global Consensus
Ch 1 Reasonable Royalties
Ch 4 Injunctive Relief
Friday, August 24, 2018
Functional Analysis in Claim Construction
Valeant Canada v Ranbaxy Pharmaceuticals Canada, 2018 FC 847 McVeigh J
2,524,300 / bupropion XL / WELLBUTRIN XL
This decision raises an interesting point about “functional” claim construction. In this NOC proceeding Valeant sought an order of prohibition to prevent Ranbaxy from launching its generic version of extended release bupropion. The only issue was infringement [6]. The 300 patent claimed a modified-release tablet comprising (i) a core, (ii) a control-releasing coat, and (iii) an outer moisture barrier comprising an enteric polymer, a permeation enhancer and optionally a plasticizer, wherein the permeation enhancer is about 20% to about 40% of the dry weight [8]. The key element at issue was (iii). The preferred permeation enhancer disclosed was silicon dioxide. Ranbaxy’s formulation also used silicon dioxide as a permeation enhancer, but in less than the claimed range (which was ultimately construed as being 18%-44% [103]). Ranbaxy’s formulation also polyethylene glycol [PEG] and triethyl citrate [TEC], which Ranbaxy characterized as plasticizers. Valeant argued that PEG and TEC should also be considered to be permeation enhancers, in which case the Ranbaxy formulation would fall within the claimed range [10]. The key question, therefore, was whether PEG and TEC could be considered to be permeation enhancers as a matter of claim construction.
My understanding is that PEG and TEC are conventionally used as plasticizers, and Valeant did not dispute this, but Valeant argued that the “practical reality is that PEG and TEC are permeation enhancers” [50]. So, Valeant’s experts testified that PEG served as a permeation enhancer in Ranbaxy’s product and that the term “permeation enhancer” should be construed to include PEG [52]-[53], [62]. McVeigh J held that this constituted a “functional approach” to claim construction, rather than a “purposive construction,” and this functional approach was an error of law [51], [52], [56], [61], [68].
As I understand it, in McVeigh J’s view, a functional approach is one that looks to the function of the claim element in the context of the invention, while a purposive construction looks to the language of the claim and the specification: see [57], [61], [68]. That is, the proper question is not whether PEG in fact serves as a permeation enhancer, but whether the 300 patent itself says that PEG serves, or can serve, as a permeation enhancer.
In my view, McVeigh J’s apparent refusal to consider evidence of the functional characteristics of PEG and TEC, in favour of an exclusive focus on the specification, is not consistent with purposive construction. A functional analysis is part of purposive construction, not an alternative to it. In Catnic [1982] RPC 183 (HL), the question was whether “extending vertically” should be construed to encompass a support angled at 6-8°. In holding in the affirmative, Lord Diplock emphasized, at 242-43, that “From the point of view of function a reduction of this order in vertical support provided for the upper horizontal plate is negligible.” In a famous passage at 244, he said (my emphasis):
Note that in Catnic this functional analysis actually trumped the language of the specification. The courts below had held that the phrase meant exactly vertical, not primarily because that was the literal meaning, but rather because the claim itself distinguished between a member that extended “vertically” and one which was “inclined” with the latter being described in the disclosure as being an angle of only 13° from exactly vertical: Catnic, at 212–13, 228–29. That is, a focus on the language of the specification alone led to the conclusion that the term “vertically” did not include the inclined support, and Lord Diplock came to the opposite conclusion on the basis of the functional role of the support member. Thus, it is perfectly clear from Catnic that the function must be considered in addition to the language of the specification.
To take a hypothetical loosely modeled on the present case, suppose the presence of the specified ratio of permeation enhancer was the central inventive concept enabling effective extended release. Suppose PEG was conventionally used as a plasticizer, and the specification therefore discussed it solely as being a plasticizer, in the context of the control-releasing coat. The generic discovers that PEG actually is also an acceptable permeation enhancer – perhaps not as good as silicon dioxide, which is why it is not used as such, but good enough to get the job done. The generic uses PEG in its formulation of the outer moisture-releasing cost, solely as a permeation enhancer, since a plasticizer is not necessary in the outer coating at all. In that case, I would suggested that reading “permeation enhancer” to exclude PEG would be to improperly import a limitation from the disclosure into the claims, enabling the generic to take the inventive concept.
The only authority cited by McVeigh J for rejecting functional considerations is the FCA decision in Eurocopter 2013 FCA 219, specifically [84], [96], cited by McVeigh J at [68]. Paragraph [84] simply endorses purposive construction, so the key discussion is at [96] (emphasis added, citations omitted):
As the emphasized sentence makes clear, Eurocopter did not hold that functional characteristics are not to be considering in construing a claim, but rather than functional equivalence does not justify going beyond the claims.
While the details of Eurcopter’s submissions were not specified in the decision, they seem to have been quite extreme. The invention at issue in Eurocopter was “sleigh-type” landing gear, which the claims characterized as having an inclined transition zone “with double curvature.” The defendant Bell’s “Legacy” gear (ultimately held to infringe), did have this double curvature, but the “Production” gear (ultimately held not to infringe), did not. Eurocopter evidently wanted to argue that Bell’s Production gear should be held to infringe because it achieved the same functional landing characteristics, eg ground resonance, as Eurocopter’s patented gear. The FCA noted that
That is, Eurocopter had disclosed and claimed one way of achieving desirable landing characteristics. This did not justify it claiming a monopoly over a completely different way of achieving the same desirable landing characteristics.
No doubt in some cases there may be difficulties in deciding whether a functional analysis is being invoked to construe the claims, or go beyond them. But in most cases the distinction will be clear enough. Part of the problem is the level of generality at which “functionality” is defined. Eurocopter had been arguing for a functional analysis at a very high level of generality — did the Production gear perform the same function as the patented landing gear, such as effectively allowing a helicopter to land without excessive ground resonance? In Catnic, and in this case, the level of generality is much lower: is the support inclined at 6°functionally vertical within the context of the invention? Is the role of PEG in the moisture barrier functionally that of a pemeation enhancer? Ultimately, I would suggest that the correct level of generality turns on the nature of the inventive concept, and is related to the essentiality analysis, but that is more than I can discuss in this post.
This is not to say that the McVeigh J’s construction was wrong, as purposive construction also depends on the language of the claims and specification, not just on the function. Moreover, there is a separate factual issue as to whether PEG and TEC really do function as permeation enhancers [63]. My point is only that it is wrong to focus solely on the language of the specification, to the exclusion of functional considerations.
I should also say that my post on this aspect of the FCA Eurocopter decision largely missed the point being made by the FCA, particularly when the Court quoted Binnie J’s analogy to a patent for a particular method of growing hair on bald men. While I quibbled with this aspect of the FCA decision in that post, on re-reading it strikes me as straightforwardly correct.
2,524,300 / bupropion XL / WELLBUTRIN XL
This decision raises an interesting point about “functional” claim construction. In this NOC proceeding Valeant sought an order of prohibition to prevent Ranbaxy from launching its generic version of extended release bupropion. The only issue was infringement [6]. The 300 patent claimed a modified-release tablet comprising (i) a core, (ii) a control-releasing coat, and (iii) an outer moisture barrier comprising an enteric polymer, a permeation enhancer and optionally a plasticizer, wherein the permeation enhancer is about 20% to about 40% of the dry weight [8]. The key element at issue was (iii). The preferred permeation enhancer disclosed was silicon dioxide. Ranbaxy’s formulation also used silicon dioxide as a permeation enhancer, but in less than the claimed range (which was ultimately construed as being 18%-44% [103]). Ranbaxy’s formulation also polyethylene glycol [PEG] and triethyl citrate [TEC], which Ranbaxy characterized as plasticizers. Valeant argued that PEG and TEC should also be considered to be permeation enhancers, in which case the Ranbaxy formulation would fall within the claimed range [10]. The key question, therefore, was whether PEG and TEC could be considered to be permeation enhancers as a matter of claim construction.
My understanding is that PEG and TEC are conventionally used as plasticizers, and Valeant did not dispute this, but Valeant argued that the “practical reality is that PEG and TEC are permeation enhancers” [50]. So, Valeant’s experts testified that PEG served as a permeation enhancer in Ranbaxy’s product and that the term “permeation enhancer” should be construed to include PEG [52]-[53], [62]. McVeigh J held that this constituted a “functional approach” to claim construction, rather than a “purposive construction,” and this functional approach was an error of law [51], [52], [56], [61], [68].
As I understand it, in McVeigh J’s view, a functional approach is one that looks to the function of the claim element in the context of the invention, while a purposive construction looks to the language of the claim and the specification: see [57], [61], [68]. That is, the proper question is not whether PEG in fact serves as a permeation enhancer, but whether the 300 patent itself says that PEG serves, or can serve, as a permeation enhancer.
In my view, McVeigh J’s apparent refusal to consider evidence of the functional characteristics of PEG and TEC, in favour of an exclusive focus on the specification, is not consistent with purposive construction. A functional analysis is part of purposive construction, not an alternative to it. In Catnic [1982] RPC 183 (HL), the question was whether “extending vertically” should be construed to encompass a support angled at 6-8°. In holding in the affirmative, Lord Diplock emphasized, at 242-43, that “From the point of view of function a reduction of this order in vertical support provided for the upper horizontal plate is negligible.” In a famous passage at 244, he said (my emphasis):
It may be that when used by a geometer addressing himself to fellow geometers, such
expressions descriptive of relative position as "horizontal", "parallel", "vertical" and
"vertically" are to be understood as words of precision only; but when used in a
description of a manufactured product intended to perform the practical function of a
weight-bearing box girder in supporting courses of brickwork over window and door
spaces in buildings, it seems to me that the expression "extending vertically" as
descriptive of the position of what in use will be the upright member of a
trapezoid-shaped box girder, is perfectly capable of meaning positioned near enough to
the exact geometrical vertical to enable it in actual use to perform satisfactorily all the
functions that it could perform if it were precisely vertical...
Note that in Catnic this functional analysis actually trumped the language of the specification. The courts below had held that the phrase meant exactly vertical, not primarily because that was the literal meaning, but rather because the claim itself distinguished between a member that extended “vertically” and one which was “inclined” with the latter being described in the disclosure as being an angle of only 13° from exactly vertical: Catnic, at 212–13, 228–29. That is, a focus on the language of the specification alone led to the conclusion that the term “vertically” did not include the inclined support, and Lord Diplock came to the opposite conclusion on the basis of the functional role of the support member. Thus, it is perfectly clear from Catnic that the function must be considered in addition to the language of the specification.
To take a hypothetical loosely modeled on the present case, suppose the presence of the specified ratio of permeation enhancer was the central inventive concept enabling effective extended release. Suppose PEG was conventionally used as a plasticizer, and the specification therefore discussed it solely as being a plasticizer, in the context of the control-releasing coat. The generic discovers that PEG actually is also an acceptable permeation enhancer – perhaps not as good as silicon dioxide, which is why it is not used as such, but good enough to get the job done. The generic uses PEG in its formulation of the outer moisture-releasing cost, solely as a permeation enhancer, since a plasticizer is not necessary in the outer coating at all. In that case, I would suggested that reading “permeation enhancer” to exclude PEG would be to improperly import a limitation from the disclosure into the claims, enabling the generic to take the inventive concept.
The only authority cited by McVeigh J for rejecting functional considerations is the FCA decision in Eurocopter 2013 FCA 219, specifically [84], [96], cited by McVeigh J at [68]. Paragraph [84] simply endorses purposive construction, so the key discussion is at [96] (emphasis added, citations omitted):
Third issue: Did the Judge err by not considering the functional equivalency of the
landing gear disclosed by the ‘787 Patent?
[95] However, Eurocopter’s submissions go far beyond the construction of the
claims. It is also of the view that a party can be found to infringe a patent even though it
omitted or changed an element that the patent itself identifies as essential. It submits that
the invention should be considered and compared, for infringement purposes, from the
perspective of its functional equivalence with other landing gears, such as Bell
Helicopter’s Production landing gear: Eurocopter’s Memorandum at paras. 114 to 117,
123 and 129.
[96] This approach is clearly inconsistent with the teachings of Free World Trust
since it fails to recognize the primacy of the language of the claims in determining the
essential elements, which the Supreme Court has clearly indicated as the foundation of
claims construction.
As the emphasized sentence makes clear, Eurocopter did not hold that functional characteristics are not to be considering in construing a claim, but rather than functional equivalence does not justify going beyond the claims.
While the details of Eurcopter’s submissions were not specified in the decision, they seem to have been quite extreme. The invention at issue in Eurocopter was “sleigh-type” landing gear, which the claims characterized as having an inclined transition zone “with double curvature.” The defendant Bell’s “Legacy” gear (ultimately held to infringe), did have this double curvature, but the “Production” gear (ultimately held not to infringe), did not. Eurocopter evidently wanted to argue that Bell’s Production gear should be held to infringe because it achieved the same functional landing characteristics, eg ground resonance, as Eurocopter’s patented gear. The FCA noted that
[97] As aptly noted by Binnie J. in Free World Trust at para. 32:
As stated, the ingenuity of the patent lies not in the identification of a desirable
result but in teaching one particular means to achieve it. The claims cannot be
stretched to allow the patentee to monopolize anything that achieves the desirable
result. It is not legitimate, for example, to obtain a patent for a particular method
to grow hair on bald men and thereafter claim that anything that grows hair on
bald men infringes.
That is, Eurocopter had disclosed and claimed one way of achieving desirable landing characteristics. This did not justify it claiming a monopoly over a completely different way of achieving the same desirable landing characteristics.
No doubt in some cases there may be difficulties in deciding whether a functional analysis is being invoked to construe the claims, or go beyond them. But in most cases the distinction will be clear enough. Part of the problem is the level of generality at which “functionality” is defined. Eurocopter had been arguing for a functional analysis at a very high level of generality — did the Production gear perform the same function as the patented landing gear, such as effectively allowing a helicopter to land without excessive ground resonance? In Catnic, and in this case, the level of generality is much lower: is the support inclined at 6°functionally vertical within the context of the invention? Is the role of PEG in the moisture barrier functionally that of a pemeation enhancer? Ultimately, I would suggest that the correct level of generality turns on the nature of the inventive concept, and is related to the essentiality analysis, but that is more than I can discuss in this post.
This is not to say that the McVeigh J’s construction was wrong, as purposive construction also depends on the language of the claims and specification, not just on the function. Moreover, there is a separate factual issue as to whether PEG and TEC really do function as permeation enhancers [63]. My point is only that it is wrong to focus solely on the language of the specification, to the exclusion of functional considerations.
I should also say that my post on this aspect of the FCA Eurocopter decision largely missed the point being made by the FCA, particularly when the Court quoted Binnie J’s analogy to a patent for a particular method of growing hair on bald men. While I quibbled with this aspect of the FCA decision in that post, on re-reading it strikes me as straightforwardly correct.
Thursday, August 23, 2018
Arbitrary Selection
Teva Canada Ltd v Janssen Inc 2018 FC 754 Locke J
2,203,936 / 2,435,146 / 2,738,706 / bortezomib / VELCADE
Yesterday’s post focused on claim construction. Another point of considerable importance arose, almost in passing, in the obviousness discussion concerning the 936 patent. The 936 patent claims the compound bortezomib [41], and the key piece of prior art was an application disclosing a genus of compounds encompassing bortezomib. One of the points distinguishing bortezomib from that prior art was the selection of the amino acid phenylalanine (Phe) at P2 position of the peptide. It was agreed that several amino acids would work at P2, and the evidence was that a hydrophobic amino acid, such as Phe, would be preferred. The question was whether it was inventive to select Phe from the fewer than 10 hydrophobic amino acids. Crucially, there was no evidence that Phe was any better than any of the other options. Locke J held that the selection was obvious. In so holding he cited (at [198]) with apparent approval the decision of Jacob LJ in Actavis UK Ltd v Novartis AG, [2010] EWCA Civ 82 [36]-[37], discussing the “5¼ inch plate paradox.” As Jacob LJ explained:
The principle, then, is that an arbitrary selection is not inventive. In my view, this principle is both sound and important, as it provides a principled basis for explaining why some selections which are not obvious, in the sense that a posita would not necessarily have routinely arrived at that particular selection, are nonetheless not inventive. I have previously discussed this reasoning (in the context of prior bortezomib litigation, as it happens), but I believe this is the first time it has been explicitly acknowledged in Canadian law.
2,203,936 / 2,435,146 / 2,738,706 / bortezomib / VELCADE
Yesterday’s post focused on claim construction. Another point of considerable importance arose, almost in passing, in the obviousness discussion concerning the 936 patent. The 936 patent claims the compound bortezomib [41], and the key piece of prior art was an application disclosing a genus of compounds encompassing bortezomib. One of the points distinguishing bortezomib from that prior art was the selection of the amino acid phenylalanine (Phe) at P2 position of the peptide. It was agreed that several amino acids would work at P2, and the evidence was that a hydrophobic amino acid, such as Phe, would be preferred. The question was whether it was inventive to select Phe from the fewer than 10 hydrophobic amino acids. Crucially, there was no evidence that Phe was any better than any of the other options. Locke J held that the selection was obvious. In so holding he cited (at [198]) with apparent approval the decision of Jacob LJ in Actavis UK Ltd v Novartis AG, [2010] EWCA Civ 82 [36]-[37], discussing the “5¼ inch plate paradox.” As Jacob LJ explained:
[The paradox] runs like this. Suppose the patent claim is for a plate of diameter 5¼
inches. And suppose no-one can find a plate of that particular diameter in the prior art.
Then (a) it is novel and (b) it is non-obvious for there is no particular reason to choose
that diameter. The conclusion, that the plate is patentable, is so absurd that it cannot be
so.
What then is the answer to the paradox? It is this: the 5¼ inch limitation is purely
arbitrary and non-technical. It solves no problem and advances the art not at all. It is not
inventive. And although "inventive step" is defined as being one which is not obvious,
one must always remember the purpose of that definition – to define what is inventive.
That which is not inventive by any criteria is not made so by the definition. Trivial
limitations, such as specifying the plate diameter, or painting a known machine blue for
no technical reason are treated as obvious because they are not inventive.
The principle, then, is that an arbitrary selection is not inventive. In my view, this principle is both sound and important, as it provides a principled basis for explaining why some selections which are not obvious, in the sense that a posita would not necessarily have routinely arrived at that particular selection, are nonetheless not inventive. I have previously discussed this reasoning (in the context of prior bortezomib litigation, as it happens), but I believe this is the first time it has been explicitly acknowledged in Canadian law.
Wednesday, August 22, 2018
When Is it Permissible to Look at the Disclosure to Interpret the Claims?
Teva Canada Ltd v Janssen Inc 2018 FC 754 Locke J
2,203,936 / 2,435,146 / 2,738,706 / bortezomib / VELCADE
Bortezomib is the API in a pharmaceutical product used for treating certain blood cancers [7]. The 936 patent claims the compound bortezomib [41], the 146 patent claims a specific formulation, namely the lyophilized mannitol ester of bortezomib [51], and the 706 patent claims a process for “large-scale” production of bortezomib. In prior NOC proceedings, Barnes J had held the 936 and 146 patents invalid for obviousness: 2015 FC 184 (discussed here), and 2015 FC 247 (here). Teva then brought an action for s 8 compensation and Janssen defended and counter-claimed on the basis that Teva had infringed the 936, 146 and 706 patents. Locke J held that the 936 and 146 patents were invalid for obviousness [208], [287] and that the 706 patent was not infringed [337], [341-42]. The s 8 action was therefore dismissed. Locke J’s decision turned on the facts.
One legal issue of interest is that, as discussed here, there has been something of an ongoing debate as to whether recourse to the disclosure as an aid to construing the claims is always permissible, or is permissible only if the claims are ambiguous when read on their own. Locke J in particular has been concerned about this problem in prior decisions. On the one hand, it has been held that recourse to the disclosure is unnecessary where the words of the claim are plain and unambiguous, and in Mylan v Eli Lilly (CIALIS) 2016 FCA 119 [39] the FCA took that next step and held that “the judge erred in referring to the specification when construing the claims of the ‘377 patent. The rules of patent construction preclude reference to the specification when the claims are clear,” (my emphasis; and see similarly [43], cited by Locke J at [72]). On the other hand, the SCC said has a number of times that the claims must be construed in light of the specification as a whole, eg in Consolboard [1981] 1 SCR 504, at 520: “We must look to the whole of the disclosure and the claims to ascertain the nature of the invention and methods of its performance” (quoted at [75]). Locke J reviewed some of the relevant jurisprudence, noting the “potential for tension,” which he resolved by agreeing, at [74], with the assessment of Zinn J in Janssen-Ortho Inc v Novopharm Ltd 2010 FC 42 [115-116], [119 ].
In my view, with respect, the statement by the FCA in Mylan v Lilly that reference to the disclosure is impermissible when the claims are clear, is simply wrong. It is inconsistent with the statement by the SCC in Metalliflex [1961] SCR 117 , 122:
This statement was re-affirmed in Whirlpool 2000 SCC 67 [52], and is consistent with the passage from Consolboard quoted above. Similarly, in Minerals Separation [1950] SCR 36, 56, the SCC quoted with approval from the leading UKHL decision in EMI v Lissen (1939) 56 RPC 23 at 39, in which Lord Russell said
The SCC in Minerals Separation then confirmed that “The claims then define and limit the ambit of the invention and may be read with the disclosure in the earlier part of the specification ‘in order to understand what the former says’.” (The above passage from Metalliflex was also quoted by Zinn J in Janssen-Ortho v Novopharm 2010 FC 42 and properly emphasized by Locke J in this case [74].)
The contrary rule, expressed by the FCA in Mylan v Eli Lilly, stems from a summary of the law provided by Urie JA in Procter & Gamble v Beecham 61 CPR(2d) 1, 11 (FCA):
It is (b) that has caused the problems. In itself, (b) is not strictly inconsistent with the SCC precedent, in that when the words of the claim are plain and unambiguous, reading them in light of the disclosure is unlikely to change much. But it is a short step from there to saying that it is impermissible to consider the disclosure except when the claims are unambiguous — a step which the FCA took in Mylan v Eli Lilly. Various problems ensue, such as whether it is permissible to look at the disclosure to decide whether the words of the claims are ambiguous.
What did Urie JA mean by part (b) of his summary statement? He began the discussion which led to that summary by citing the SCC in Minerals Separation as saying that the claims may be read with the disclosure, and then went on to quote from EMI v Lissen, which, as just noted, clearly endorses reading the entire specification to understand the claims. It seems that (b) was derived from the following passages in EMI, which are the only places in Urie JA’s review referring to “unambiguous” claims:
Neither of these statements says that it is impermissible to read the disclosure to understand the claims, if the claims are plain and unambiguous. Rather, they both say that it is impermissible to use the disclosure to change the meaning of the claims. That, I suggest, is the real import of part (b) of Urie JA’s summary.
This view is consistent with Dableh v Ontario Hydro [1996] 3 FC 751 (FCA), which quoted Urie JA’s summary, as in Dableh the trial judge had in effect impermissibly restricted the scope of the claims to the specific embodiment of the invention set out in the description. Even in Mylan v Eli Lilly, the putative error was “of no consequence” [43].
2,203,936 / 2,435,146 / 2,738,706 / bortezomib / VELCADE
Bortezomib is the API in a pharmaceutical product used for treating certain blood cancers [7]. The 936 patent claims the compound bortezomib [41], the 146 patent claims a specific formulation, namely the lyophilized mannitol ester of bortezomib [51], and the 706 patent claims a process for “large-scale” production of bortezomib. In prior NOC proceedings, Barnes J had held the 936 and 146 patents invalid for obviousness: 2015 FC 184 (discussed here), and 2015 FC 247 (here). Teva then brought an action for s 8 compensation and Janssen defended and counter-claimed on the basis that Teva had infringed the 936, 146 and 706 patents. Locke J held that the 936 and 146 patents were invalid for obviousness [208], [287] and that the 706 patent was not infringed [337], [341-42]. The s 8 action was therefore dismissed. Locke J’s decision turned on the facts.
One legal issue of interest is that, as discussed here, there has been something of an ongoing debate as to whether recourse to the disclosure as an aid to construing the claims is always permissible, or is permissible only if the claims are ambiguous when read on their own. Locke J in particular has been concerned about this problem in prior decisions. On the one hand, it has been held that recourse to the disclosure is unnecessary where the words of the claim are plain and unambiguous, and in Mylan v Eli Lilly (CIALIS) 2016 FCA 119 [39] the FCA took that next step and held that “the judge erred in referring to the specification when construing the claims of the ‘377 patent. The rules of patent construction preclude reference to the specification when the claims are clear,” (my emphasis; and see similarly [43], cited by Locke J at [72]). On the other hand, the SCC said has a number of times that the claims must be construed in light of the specification as a whole, eg in Consolboard [1981] 1 SCR 504, at 520: “We must look to the whole of the disclosure and the claims to ascertain the nature of the invention and methods of its performance” (quoted at [75]). Locke J reviewed some of the relevant jurisprudence, noting the “potential for tension,” which he resolved by agreeing, at [74], with the assessment of Zinn J in Janssen-Ortho Inc v Novopharm Ltd 2010 FC 42 [115-116], [119 ].
In my view, with respect, the statement by the FCA in Mylan v Lilly that reference to the disclosure is impermissible when the claims are clear, is simply wrong. It is inconsistent with the statement by the SCC in Metalliflex [1961] SCR 117 , 122:
The claims, of course, must be construed with reference to the entire specifications, and
the latter may therefore be considered in order to assist in apprehending and construing a
claim, but the patentee may not be allowed to expand his monopoly specifically expressed
in the claims "by borrowing this or that gloss from other parts of the specifications".
This statement was re-affirmed in Whirlpool 2000 SCC 67 [52], and is consistent with the passage from Consolboard quoted above. Similarly, in Minerals Separation [1950] SCR 36, 56, the SCC quoted with approval from the leading UKHL decision in EMI v Lissen (1939) 56 RPC 23 at 39, in which Lord Russell said
The claims must undoubtedly be read as part of the entire document and not as a separate
document; but the forbidden field must be found in the language of the claims and not
elsewhere.
The SCC in Minerals Separation then confirmed that “The claims then define and limit the ambit of the invention and may be read with the disclosure in the earlier part of the specification ‘in order to understand what the former says’.” (The above passage from Metalliflex was also quoted by Zinn J in Janssen-Ortho v Novopharm 2010 FC 42 and properly emphasized by Locke J in this case [74].)
The contrary rule, expressed by the FCA in Mylan v Eli Lilly, stems from a summary of the law provided by Urie JA in Procter & Gamble v Beecham 61 CPR(2d) 1, 11 (FCA):
In summary, the principles which I derive from the above-mentioned authorities as well
as from others referred to in argument, to which further reference need not be made here,
are that in construing the claims in a patent, recourse to the remainder of the specification
is (a) permissible only to assist in understanding terms used in the claims; (b) unnecessary
where the words of the claim are plain and unambiguous; and (c) improper to vary the
scope or ambit of the claims.
It is (b) that has caused the problems. In itself, (b) is not strictly inconsistent with the SCC precedent, in that when the words of the claim are plain and unambiguous, reading them in light of the disclosure is unlikely to change much. But it is a short step from there to saying that it is impermissible to consider the disclosure except when the claims are unambiguous — a step which the FCA took in Mylan v Eli Lilly. Various problems ensue, such as whether it is permissible to look at the disclosure to decide whether the words of the claims are ambiguous.
What did Urie JA mean by part (b) of his summary statement? He began the discussion which led to that summary by citing the SCC in Minerals Separation as saying that the claims may be read with the disclosure, and then went on to quote from EMI v Lissen, which, as just noted, clearly endorses reading the entire specification to understand the claims. It seems that (b) was derived from the following passages in EMI, which are the only places in Urie JA’s review referring to “unambiguous” claims:
But I know of no canon or principle which will justify one in departing from the
unambiguous and grammatical meaning of a claim and narrowing or extending its scope
by reading into it words which are not in it;
If the patentee has done this in a claim the language of which is plain and unambiguous, it
is not open to your Lordships to restrict or expand or qualify its scope by reference to the
body of the specification.
Neither of these statements says that it is impermissible to read the disclosure to understand the claims, if the claims are plain and unambiguous. Rather, they both say that it is impermissible to use the disclosure to change the meaning of the claims. That, I suggest, is the real import of part (b) of Urie JA’s summary.
This view is consistent with Dableh v Ontario Hydro [1996] 3 FC 751 (FCA), which quoted Urie JA’s summary, as in Dableh the trial judge had in effect impermissibly restricted the scope of the claims to the specific embodiment of the invention set out in the description. Even in Mylan v Eli Lilly, the putative error was “of no consequence” [43].
Friday, August 17, 2018
Friday, August 10, 2018
No new cases
No new substantive patent cases were released last week.
Note that I generally only blog on substantive patent cases. A new decision in the ongoing saga between Apotex and Health Canada regarding Apotex's Indian facility was released: Apotex Inc. v. Canada (Health), 2018 FCA 147. To keep abreast of new decisions like this one, as well as procedural decisions and copyright and trade-mark cases, I recommend subscribing to the Daily Intellectual Property News service from Alan Macek's IPPractice.
Note that I generally only blog on substantive patent cases. A new decision in the ongoing saga between Apotex and Health Canada regarding Apotex's Indian facility was released: Apotex Inc. v. Canada (Health), 2018 FCA 147. To keep abreast of new decisions like this one, as well as procedural decisions and copyright and trade-mark cases, I recommend subscribing to the Daily Intellectual Property News service from Alan Macek's IPPractice.
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