Thursday, January 16, 2020

Period for Assessing Reasonable Compensation

Western Oilfield Equipment Rentals Ltd v M-I LLC 2019 FC 1606 O'Reilly J
            2,664,173 / Shaker and Degasser Combination

Previous posts have given an overview of Western Oilfield Eqpt v M-I and discussed the best mode requirement and an objection based on added mater. A final point of interest from the decision is the question of the period for assessing reasonable compensation under s 55(2) of the Act.

M-I claimed reasonable compensation under s 55(2) of the Act for acts that “would have constituted an infringement of the patent if the patent had been granted on the day the specification became open to public inspection.” There is not a great deal of case law on this provision. Prior case law has indicated that “reasonable compensation” will normally be equated to a “reasonable royalty” (see 2007 FC 358 [122]; 2010 FC 361 [337]) and that approach was also adopted in this case: [258].

A question that does not appear to have been previously considered is when the period for assessing reasonable compensation runs. In this case, the claims had changed between the date the patent was laid open and the date it was granted; in particular, it appears that the infringed claims were added during prosecution after the patentee became aware of the defendant’s system, though it appears that the defendant had been selling its system for some time preivously: [14], [89]. O’Reilly J’s analysis takes it for granted that reasonable compensation would be due for the period starting when the claims were amended to encompass the defendant’s product, and not before. I take it that this was common ground between the parties, which is why O’Reilly J did not consider the point explicitly. It is not clear to me that this approach is correct.

Wednesday, January 15, 2020

Added Matter Objection Considered

Western Oilfield Equipment Rentals Ltd v M-I LLC 2019 FC 1606 O'Reilly J
            2,664,173 / Shaker and Degasser Combination

Previous posts have given an overview of Western Oilfield Eqpt v M-I and discussed the best mode requirement. Western Oilfeild also considered an objection based on added mater. The specification of the 173 patent was amended after the application was filed, and Western argued that the amendment added new subject matter that could not reasonably be inferred from the original specification, contrary to s 38.2(2) of the Act and (then applicable) Rule 181. (Rule 181 has since been removed, presumably because it is redundant in light of 38.2(2).) O'Reilly J noted that “there is little Canadian law on the point” [238], and I must say that I am not aware of any at all. While O'Reilly J’s decision on the point largely turned on the facts, a brief discussion is warranted given the paucity of case law dealing with this provision.

O'Reilly J began by noting that:

[236] At trial, I ruled that the factual circumstances surrounding the amendments were not relevant to this issue. It is a matter of logic, not fact, whether the amendments are reasonably inferable.

In the first sentence of the paragraph O'Reilly J appears to be saying that the patentee’s motivation for introducing the amendments is not relevant. The second sentence is a bit confusing. As a general matter, I would have thought that whether the amendments would be reasonably inferable would be a matter of mixed fact and logic, as the question is to be answered by looking through the eyes of a skilled person. And indeed, in the subsequent analysis, O'Reilly J referred extensively to the evidence of the experts as to what could have been inferred.

As noted, O'Reilly J’s decision otherwise turned on the facts, but it is perhaps worth quoting one paragraph from the decision to illustrate the analysis.

Recall from my previous post that The invention relates to a machine called a “shale shaker,” used in the oil and gas industry to remove solids, aka “cuttings,” from the slurry that emerges from an active well, in order to separate the drilling fluid for reuse [6]. A shale shaker shakes the slurry over a screen to allow the fluid to fall through while the rock cuttings are carried away. Shaking alone does not remove all of the fluid, and the cuttings remain wet after passing through a standard shaker [33]. The invention consisted of a method and system for applying a vacuum (“pressure differential generator”) to the cuttings to recover more of the drilling fluid [35].

The prior art had disclosed a similar system using a continuous vacuum to suck fluid from the cuttings. The problem with that technique is that the continuous suction could cause cuttings to stick to the screen, clogging it and preventing fluid flow. The invention addressed this problem by varying the pressure, so that fluid would be sucked off in the high pressure intervals, and the rock cuttings would be released from the screen when the pressure dropped. This was described as “toggling” in the original claims, and “controlling air flow” in the amended claims. The point was crucial because Western’s product did not “toggle” the pressure differential, and so did not infringe claims limited to “toggling,” but it did control the air flow, and so infringed the amended claims [239]. O’Reilly J held as follows:

[251] First, while toggling was indeed an essential element of the original claims (and for that reason, Western did not infringe them), the original specification contemplated something broader. Paragraph 34 mentioned pulsing and toggling, but it went on to refer to the fact that “[m]anipulating the valve by opening and/or closing the valve, at least partially, may disrupt the flow of vapour from the sump, thereby affecting the pressure differential.” The concept of controlling air flow, not just pulsing and toggling, is reasonably inferable from this passage.

Tuesday, January 14, 2020

What Is a “Machine”?

Western Oilfield Equipment Rentals Ltd v M-I LLC 2019 FC 1606 O'Reilly J
            2,664,173 / Shaker and Degasser Combination

A previous post described the facts and some miscellaneous legal points raised by Western Oilfield Eqpt v M-I. This post consider the best mode requirement, and in particular the question of what it means for an invention to be “a machine.”

Best Mode
O'Reilly J rejected Western’s insufficiency arguments on the basis that all of the putative defects in the disclosure were within the ability of a skilled person to address without inventive ingenuity: [141]-[144].

He also summarily rejected an attack based on failure to disclose the best mode, per s 27(3)(c), on the ground that:

that provision relates solely to machines and, as I understand the patent, it claims a method and a system, not a machine [146].

That the provision relates solely to machines is well established. It is clear on the face of the provision, which applies “in the case of a machine,” and has been confirmed in a few cases: see 2009 FC 676 [328-33]; 2010 FCA 242 [72-73]; 2014 FC 844. But what is a “machine”? To my knowledge, the question did not arise in the prior cases, all of which concerned a composition of matter (to use the statutory term), namely ramipril, sildenafil and polyethylene copolymers, which are clearly not machines.

It seems clear enough that a method is not a machine, but what about a system? The mere fact that the claim uses the word “system” cannot be enough to settle the point, or it would be easy to avoid application of the provision by appropriate wording. Indeed, most claims to what would normally be considered a machine do not use that term, but rather claim eg “a vertical feed mixer.”

On the facts, Claim 19 was as follows:

19. A system comprising:
a first screen having an upper side and a lower side for separating drill cuttings and
drilling fluid within a shaker; and
a pressure differential generator configured to pull air or vapor through the first screen to enhance the flow of drilling fluid through the first screen with respect to a second screen within the shaker in which the pressure differential generator does not create a pressure differential between an area above and an area below the second screen

It’s not entirely clear to me that this does not describe a machine. That is not to say that I disagree with O’Reilly J’s conclusion, but only that there is a puzzle. Screens and a vacuum pump are fairly ordinary components of a machine. Perhaps it is a system rather than a machine because the shaker itself is a machine, and the invention additionally comprises drilling fluid, which is not part of the shaker? While that seems reasonable enough, it is not particularly compelling, and it would desirable to have this interpretation buttressed by purposive considerations.

Turning to the Act, s 2 defines an “invention” to mean any new and useful “art, process, machine, manufacture or composition of matter.” The question then is whether the “system” at issue should be considered a “machine” rather than an “art” or perhaps a “composition of matter.” The answer does not seem clear as a matter of ordinary language. Unfortunately, purposive considerations do not help much in interpreting the provision, as there is no obvious policy for confining the best mode to machines (even though the text clearly does so). It seems this provision, introduced in the Patent Act, 1935 s 35, was modeled on the US Patent Act in effect at the time, which was similarly restricted to a machine, but the US Act has subsequently been amended to provide for a broader best mode requirement which is generally applicable. This makes it difficult to invoke purposive considerations in drawing the distinction between a “machine” and any other type of invention.

I’m inclined to think that confining the best mode requirement to machines is arbitrary. It would be better to either expand it to encompass all types of inventions, as was done in the US Act, or (preferably) eliminate it entirely. Until there is some clear purposive rationale for confining the best mode requirement to “machines,” the scope of the provision will necessarily be uncertain, and a restrictive approach to the interpretation of the provision, such as that applied by O'Reilly J, is probably the best approach, as it has the virtue of minimizing uncertainty. It would be very unfortunate if an expansive yet unclear definition of “machine” became a trap for unwary drafters.

Monday, January 13, 2020

Inducement Does Not Require Knowledge That Acts of the Third Party Amount to Infringement

Western Oilfield Equipment Rentals Ltd v M-I LLC 2019 FC 1606 O'Reilly J
            2,664,173 / Shaker and Degasser Combination

In Western Oilfield Eqpt v M-I, O'Reilly J found most of the claims of M-I’s 173 patent to be valid and several to have been infringed by Western. The decision largely turned on the facts, but there are a few legal points of interest. This post will summarize the case and discuss inducing infringement, utility and obviousness, where the decision illustrates the application of established law. A subsequent post will deal with the best mode requirement, and another post will deal with added matter and the period for assessing reasonable compensation, where the decision raises more interesting legal issues.

The Invention
The invention relates to a machine called a “shale shaker,” used in the oil and gas industry to remove solids, aka “cuttings,” from the slurry that emerges from an active well, in order to separate the drilling fluid for reuse [6]. A shale shaker shakes the slurry over a screen to allow the fluid to fall through while the rock cuttings are carried away. Shaking alone does not remove all of the fluid, and the cuttings remain wet after passing through a standard shaker [33]. The invention consisted of a method and system for applying a vacuum (“pressure differential generator”) to the cuttings to recover more of the drilling fluid [35].

Claim Construction and Infringement
There were a number of contentious issues  on claim construction, but these turned on the evidence and ultimately O'Reilly J construed the claims in favour of the patentee. The finding that Western infringed and induced infringement followed directly from the construction of the patent: [91]-[92]. This result is not very surprising, as it appears that the infringed claims were added during prosecution after the patentee became aware of the defendant’s system: [14], [89].

Western directly infringed the system claims [116], but did not directly infringe the method claims, which required the step of introducing slurry to the shaker [117]. M-I argued that Western induced infringement of the system claims by the drilling companies, who were the end users of the system. The established test for inducement was set out in Weatherford 2011 FCA 228 [162]. The first branch requires an act of direct infringement, and it was not disputed that the drilling companies were direct infringers [129]. The second prong requires the patentee to establish that the defendant’s influence caused the direct infringement. This is often the main hurdle, but in this case the instructions and assistance given by Western to its clients were so extensive that it was clear that this aspect of the test was satisfied [130]-[132].

The third prong of the test from Weatherford requires that “the influence must knowingly be exercised by the inducer, that is, the inducer knows that this influence will result in the completion of the act of infringement” [162]. O'Reilly J held that this branch had also been made out, noting that:

[133] Western (and its experts) has misunderstood the third branch of the test for inducement. It does not require the alleged inducer to know that the actions of the third party amount to infringement. That would require a legal analysis of the patent’s claims. What is required is knowledge on the inducer’s part that the influence it wields will cause the third party to carry out the acts that amount to infringement. In other words, the alleged inducer simply has to know what the third party is likely to do in response to its influence.

O'Reilly J’s holding on this point is consistent with the formal statement of the test in Weatherford, but there are surprisingly few cases that turn on this point. While O'Reilly J did not review the case law, his holding on this point is consistent with the view expressed by Gauthier J in her more extensive discussion of the issue in Bauer v Easton 2010 FC 361 [195]-[203]. It’s interesting to note that in US law it is now established that knowledge of the patent is needed, both for contributory infringement and for inducement: see Aro II 377 US 476, 488 (1964) regarding contributory infringement and Global–Tech Appliances, Inc v SEB SA 563 US 754, 766 (2011) regarding inducement. However, the US Supreme Court has not provided any clear rationale for its approach.

Utility
O'Reilly J rejected Western’s utility challenge. His decision raises no new points of law, but his brief discussion at [139] provides a useful summary:

● First, the focus must be on the claims, not on embodiments that are [described in the specification but] not claimed;
● Second, a claim will not be found to lack utility for failure to mention a component that a skilled person would recognize as necessary; [see also Metalliflex [1961] SCR 117];
● Third, the fact that [the inventor] did not initially arrive at a prototype that could immediately be commercialized does not mean that his testing did not reveal a useful invention.

Obviousness
The second step of the Windsurfing/Pozzoli framework, endorsed by the SCC in Sanofi 2008 SCC 61 [67], is to “[i]dentify the inventive concept of the claim in question or if that cannot readily be done, construe it.” In many cases identifying the inventive concept can lead to an unproductive satellite debate, and in Ciba v SNF 2017 FCA 225 the FCA (see here) stated that:

[77] There may be cases in which the inventive concept can be grasped without difficulty but it appears to me that because “inventive concept” remains undefined, the search for it has brought considerable confusion into the law of obviousness. That uncertainty can be reduced by simply avoiding the inventive concept altogether and pursuing the alternate course of construing the claim.

As noted by the FCA in BMS v Teva 2017 FCA 76 (see here), in Pozzoli itself, [2007] EWCA Civ 588 [19], the EWCA struck a “cautionary note” in respect to the use of the inventive concept:

In some cases the parties cannot agree on what the concept is. If one is not careful such a disagreement can develop into an unnecessary satellite debate. In the end what matters is/are the difference(s) between what is claimed and the prior art. It is those differences which form the "step" to be considered at stage (4). So if a disagreement about the inventive concept of a claim starts getting too involved, the sensible way to proceed is to forget it and simply to work on the features of the claim.

The analysis of obviousness in Western Oilfield v M-I proceeded entirely in terms of the inventive concept, which allowed the claims at issue to be addressed in three categories, which reflected different inventive concepts [212]-[226]. This illustrates that there are indeed some cases in which “the inventive concept can be grasped without difficulty,” and in such cases, focusing on inventive concept can streamline the obviousness analysis.

Novelty
The anticipation attack largely failed on the facts, with O'Reilly J generally preferring the evidence of the patentee’s expert witness. However, the patentee’s own expert concluded that one item of prior art anticipated four claims, which were accordingly held to be invalid [148].

An overbreadth attack failed on the facts: [227]-[234].

Thursday, January 9, 2020

Demystifying Patent Holdup

My paper with Tom Cotter and Erik Hovenkamp, titled Demystifying Patent Holdup, 76 Wash. & Lee L. Rev. 1501- 65 (2019), is now out and available here (and here for a direct link to the pdf). Here's the abstract:

Patent holdup can arise when circumstances enable a patent owner to extract a larger royalty ex post than it could have obtained in an arms length transaction ex ante. While the concept of patent holdup is familiar to scholars and practitioners—particularly in the context of standard-essential patent (SEP) disputes—the economic details are frequently misunderstood. For example, the popular assumption that switching costs (those required to switch from the infringing technology to an alternative) necessarily contribute to holdup is false in general, and will tend to overstate the potential for extracting excessive royalties. On the other hand, some commentaries mistakenly presume that large fixed costs are an essential ingredient of patent holdup, which understates the scope of the problem. In this Article, we clarify and distinguish the most basic economic factors that contribute to patent holdup. This casts light on various points of confusion arising in many commentaries on the subject. Path dependence—which can act to inflate the value of a technology simply because it was adopted first—is a useful concept for understanding the problem. In particular, patent holdup can be viewed as opportunistic exploitation of path dependence effects serving to inflate the value of a patented technology (relative to the alternatives) after it is adopted. This clarifies that factors contributing to holdup are not static, but rather consist in changes in economic circumstances over time. By breaking down the problem into its most basic parts, our analysis provides a useful blueprint for applying patent holdup theory in complex cases.

Monday, January 6, 2020

"Patent Remedies for Complex Products" Wins IPKat Patent Book of the Year Award

I am very pleased to announce that the IPKat Blog has bestowed its 2019 Book of the Year Award on the edited volume Patent Remedies and Complex Products: Toward a Global Consensus (Brad Biddle, Jorge L. Contreras, Brian J. Love & Norman V. Siebrasse eds., Cambridge Univ. Press 2019). As well as being an editor and a member of the project steering committee, I was a co-author on the chapters on Ch 1 Reasonable Royalties; Ch 2 Lost Profits and Disgorgement; Ch 3 Enhanced Damages, Litigation Cost Recovery, and Interest; Ch 4 Injunctive Relief; Ch 5 The Effect of FRAND Commitments on Patent Remedies; and I was the sole author of Ch 7 Holdup, Holdout, and Royalty Stacking: A Review of the Literature.

Readers can obtain a hard copy from CUPAmazon, or other sellers, or download the individual chapters for free using this link.

Monday, December 30, 2019

No Right to Appeal Determination That a Substantial New Question of Patentability Is Raised by Re-examination Request

Cusitar v. Canada (Attorney General) 2019 FC 1641 McVeigh J
2,876,770 / Oil Sand Mining and Haulage Method

This decision, affirming a decision of the re-examination board cancelling all 15 claims of the 770 patent for obviousness [23], turned largely on the facts, but the patentee did raise one novel argument relating to the scope of an appeal. 

Re-examination is governed by s 48.1-48.5 of the Act. A request for re-examination may be made by any person who submits prior art and pays the required fee: s 48.1(1). After such a request is made and the re-examination board is established, the first task of the Board is to determine whether the request raises a “substantial new question of patentability” (SNQP) affecting any claim: 48.2(2). If not, the person who made the request is so notified, and the re-examination proceeding is closed. A negative decision is final, expressly without right of appeal or review: 48.2(3). (Dismissal of the re-examination request does not bar the requesting party from bringing a subsequent impeachment action.) If, as in this case, the Board finds that an SNQP is raised, the Board notifies the patentee and the re-examination goes ahead. At the conclusion of the process, the Board issues a certificate that may cancel, confirm or amend the claims: s 48.4(1). This is subject to appeal: specifically, the patentee may appeal any decision “set out in a certificate issued under subsection 48.4(1)” to the Federal Court: 48.5(1).

In this case, the patentee appealed the adverse decision pursuant to 48.5(1), but one of the grounds of appeal was the threshold determination by the Board that the request raised a substantial new question of patentability [29.A.1]. McVeigh J held that this is not a proper ground of appeal. As noted, the Act provides expressly that there is no appeal from a determination that there is not an SNQP; but it does not expressly state that there is no appeal from a determination that there is an SNQP. However, as McVeigh J noted, the Act only provides for an appeal from “[a]ny decision of a re-examination board set out in a certificate issued under 48.4(1) [34, original emphasis], and the decision that there is an SNQP is not a decision set out in the certificate, which merely states (in this case) that “claims 1-15. . . are unpatentable” [35]. Moreover, re-examination is intended to be a “relatively summary and inexpensive alternative to an impeachment process by litigation,” and allowing an appeal from the SNQP determination would introduce delay and undermine this aim [36]. Thus textual and purposive considerations both support the conclusion that there is no right of appeal of a determination by the Board that the re-examination request raises an SNQP.

Tuesday, December 17, 2019

Actavis Extended Protection Applied by EWHC

Excel-Eucan Ltd v Source Vagabond Systems Ltd [2019] EWHC 3175 (Pat) Clarke J
            GB2 489 116 / Linked ammunition carrying bag

In Actavis [2017] UKSC 48, Lord Neuberger, writing for a unanimous UKSC, held that the scope of protection afforded by a claim will sometimes “extend beyond” the meaning of the words of the claim. The decision of Clarke J in Excel v Source, finding that the defendant Source had not infringed the claims of Excel’s 116 patent as a matter of normal interpretation [75], but had infringed as an matter of extended protection [103], is an excellent example of a trial level application of Actavis. It has always been recognized that the advantage of extended protection is that it can give fairer outcomes by preventing an infringer from taking the inventive concept while avoiding infringement by a technical variant that avoids the claim language. That is on full display in this case, in which the defendant, Source, copied Excel’s patented design [58]. Excel v Source also illustrates that purposive interpretation of the language of claims alone is not always sufficient to avoid an injust result. And it also shows that the Actavis doctrine can be quite easy to apply.

The invention relates to a carrier for linked round machine-gun ammunition. Modern machine guns have a very high rate of fire, and a great deal of ammunition is required to supply the gun. In the prior art, the ammunition had typically been carried in a sand bag in the soldier’s rucksack, and had to be removed from first from the rucksack, then from the bag, and then laid on the ground to feed the machine gun. This was awkward to use and exposed the rounds to contamination by dirt etc, which was the main cause of weapon stoppages [23]-[34].

Friday, December 13, 2019

Stay Granted in Favour of Provincial Superior Court

Thermolec Ltée v Stelpro Design Inc 2019 FCA 301 Locke JA: Boivin, Nadon JJA rev’g 2019 FC 363 St-Louis J

This brief but significant decision from the FCA clarifies the circumstances in which a patent action in a Federal Court should be stayed in favour of an action in a provincial superior court. While the outcome seems right in terms of economy of judicial resources, the whole problem may be an unintended, and unwelcome, side-effect of the Federal Court’s unwillingness to grant interlocutory injunctions in patent cases.

As discussed in my post on St-Louis J’s decision, while the Federal Court has exclusive jurisdiction to annul a patent, its jurisdiction in respect of infringement is concurrent with that of the provincial superior courts (in this case Quebec): under the Federal Courts Act s 20(1)(2). When actions are brought concurrently, which, if either, should be stayed? One important consideration is that only the Federal Court can rule on the in rem validity of the patent and dispose of it at a national level. This would strongly imply that the FC action should not be stayed. To address this difficulty, the practice has arisen of the patentee giving an undertaking that if the final result in the litigation in the provincial superior court is that the patent is invalid as between the parties, the patentee would agree to the striking out of the patent by the Federal Court. This practice has now been sanctioned by the FCA in this decision [6].

If such an undertaking is given, the question largely boils down to judicial economy, which will be driven by the relative stage of proceedings in each court. In this case, St-Louis J had refused to grant a stay of the FC action, and the FCA has now reversed, giving the following list of the “most important considerations” on the facts of this case:

1) The advanced state of the Quebec proceeding relative to the Federal Court action;

2) The fact that the patent in issue, the issue of the validity thereof, and the parties are common to the two proceedings;

3) The duplication of efforts and the inefficient use of resources, both private and public, if both proceedings were allowed to proceed; and

4) In the event that the Quebec Superior Court determines that the patent in issue is invalid and the Undertaking is exercised, third parties (including the respondent) would be assured that they would not have to defend themselves from allegations of infringement in any other Canadian jurisdiction.

While this list was directed to the relevant facts of the case, it also provides more general guidance.

St-Louis J had not emphasized different factors; her decision to refuse the stay turned on her view that “the proceedings on the merits are still at an early stage in both courts” [FC 47]. The FCA pointed out that this observation is factually incorrect, and in fact the Quebec action was substantially further advanced [4]-[5], and it was primarily for this reason that the FCA reversed. This means that only the Quebec action will proceed, avoiding wasteful duplication.

While this outcome certainly seems preferable on the facts of this case, there is a larger question. In terms of efficacy of the overall judicial system, no doubt it is preferable to have a single action in provincial superior court as opposed to one there and one in the Federal Court. But arguably it would be even better to have a single action in Federal Court, which is, in effect, a specialized patent court, with trial and case management judges who are expert in patent law and the management of complex patent cases. Why are patentees foregoing these advantages? The cases on this issue show that it is typically the patentees who are seeking to avoid the Federal Court. It was a patentee who came up with the idea of giving an undertaking to allow its patent to be struck out, and a patentee who prefers to litigate in the Federal Court can tilt the scales in that direction by refusing to give such an undertaking.

So why do some patentees prefer to litigate in provincial superior court? I suspect that the choice may be motivated by the potential availability of an interlocutory injunction in provincial superior court, as opposed to the firm unwillingness of the Federal Court to grant interlocutory injunctions. That was clearly the case in Safilo v Contour Optik 2005 FC 278, and may also have been true in this case, as the patentee, Thermolec, was granted an interlocutory injunction in Quebec). Whatever the substantive merits on the Federal Court’s position on interlocutory injunctions was directing litigation to a less suitable forum, thereby undermining the efficiency of the patent litigation system as a whole.

Tuesday, December 10, 2019

US Solicitor General Calls for Reconsideration of Mayo v Prometheus

Hikma Pharmaceuticals v. Vanda Pharmaceuticals, 16-2707, 1887 F3d 1117 (Fed Cir 2018) petition for certiorari No 18-817
            US 8,586,610

The patentable subject-matter jurisprudence of the Supreme Court of the United States is a train wreck of historic proportions. In the brief of the United States recommending that the Supreme Court of the United States deny certiorari in Hikma Pharmaceuticals v. Vanda Pharmaceuticals, 16-2707, 1887 F3d 1117 (Fed Cir 2018). the US Solicitor General has joined the chorus of voices calling for reconsideration of SCOTUS’s framework for assessing patentable subject-matter, especially as set out in Mayo v Prometheus 566 US 66 (2012) (hat tip to Patent Docs).

The 610 patent relates to the use of iloperidone to treat schizophrenia. The drug was already known for that use, but the inventors had discovered that people with a specific genetic variant, the “CYP2D6 genotype,” did not tolerate it well. The representative claim 1, in effect claimed testing a patient for the CYP2D6 genotype and administering a reduced dose to those who did not tolerate the drug. As pointed out by Patently-O, the claim at issue in Hikma v Vanda is substantively very difficult to distinguish from the diagnostic method claim at issue in Mayo. However, in Hikma it was framed as a method of treatment claim—”A method for treating a patient” comprising testing and then administering iloperidone at a low or high dose according to the results—while in Mayo the claim was to “A method of optimizing therapeutic efficacy for treatment” of the disorder at issue, comprising a step of “determining the level” of the relevant analyte, such that the result “indicates a need” to increase or decrease the drug. In the Fed Cir, the majority in Hikma nonetheless held the claim to be patentable subject matter, distinguishing Mayo on the basis that in Hikma the claims include specific treatment steps rather than merely directing the physician to consider the test results. Prost CJ, in dissent, was of the view that Mayo was not distinguishable.

In its brief, the Solicitor General has now argued that cert should be denied, on the basis that the majority had gotten the right result on the facts (21). However, the Solicitor General (12-13, 15) acknowledged the force of Prost CJ’s logic. More importantly, the Solicitor General did not confine itself to the particular claim at hand. Throughout the brief, the Solicitor General emphasized that the logic of Mayo calling into question the patentability of many types of inventions that have long been considered to be unquestionably good subject matter:

Nevertheless, as evidenced by the dissenting opinion below, it is arguably unclear how the longstanding and entirely correct rule that method-of-treatment claims are patent-eligible can be reconciled with mechanical application of Mayo’s two-step framework. (10)

Indeed, it is arguably unclear whether even a method of treating disease with a newly created drug would be deemed patent-eligible under a mechanical application of Mayo’s two-part test. (14, original emphasis).

The brief as a whole is a sustained critique of Mayo. The question is not if Mayo should be reviewed, but when; the brief argues that this is not the right case to address the “confusion” caused by the recent SCOTUS jurisprudence: “instead should provide additional guidance in a case where the current confusion has a material effect on the outcome,” in particular a diagnostic method case such as several where the Fed Cir has indicated that it might have gone the other way but for Mayo.

I wonder if the Solicitor General has another motive in recommending that cert be denied in Hikma. While the Solicitor General is of the view that Mayo needs to be rolled back, it’s not evident that SCOTUS will agree. If they take a diagnostic methods case and affirm that diagnostic methods are unpatentable, this would be bad, but only in the same way that the status quo is bad. If they took Hikma and reversed it, holding Mayo really does apply, the situation would be even worse than it is already.

I won’t say more than that: Patent Docs provides a longer review, and the brief itself is well worth reading for those with a real interest. (I might quibble with the analysis a little bit; the brief suggests that the root of the problem is Bilski, which marked a sharp departure from prior SCOTUS jurisprudence when it added expressly non-statutory exceptions to patentability (4, 8). In my view, the roots of the problem go deeper, back to Funk Bros: see The Rule Against Abstract Claims: A Critical Perspective on US Jurisprudence, (2011) 27 CIPR 3. But this is a minor point: I do agree that Bilski was a turning point and turning the clock back that far would be an improvement.)

Unfortunately, this debate remains relevant in Canadian law. The modern SCOTUS approach is clearly inconsistent with Shell Oil [1982] 2 SCR 536, the leading SCC decision on patentable subject matter. Unfortunately, CIPO has gone its own way on the issue of patentable subject matter, and diagnostic methods in particular, apparently inspired by US case law. It seems inevitable that the issue will be litigated in Canada, and when it does, the Solicitor General’s brief should give Canadian courts fair warning that the SCOTUS jurisprudence should not be followed.

Friday, December 6, 2019

No New Cases

No new substantive patent cases were released for the week of 2 December.

Friday, November 22, 2019

Expanded State of the Art Circumvents Inquiry re Inventiveness of Selection

Janssen Inc v Apotex Inc 2019 FC 1355 Phelan J
            2,661,422 / abiraterone acetate & prednisone / ZYTIGA / old NOC

My last post outlined the unusual facts in this case, and discussed the overarching problem that arose. This post looks at a few points of legal interest that were raised, though none impacted the final decision. Briefly, Phelan J’s claim construction analysis reflects the ongoing debate as to whether it is always appropriate to look to the disclosure in construing the claims, or only if the claims are ambiguous; the obviousness analysis illustrates a problematic consequence of the holding in Ciba v SNF 2017 FCA 225 [51]-[63], that the state of the art for the purpose of an obviousness attack comprises all the prior art; the “patentable subject matter” analysis is, in my view, properly part of the obviousness analysis; and the utility analysis raises the question of what the SCC meant when it said in AstraZeneca 2017 SCC 36 [55] that the utility must be “related to the nature of the subject-matter.”

(As an aside, Phelan J uses the abbreviation “POS” to refer to a person skilled in the relevant art. I’m not sure I can endorse that abbreviation, given its slang meaning.)

Claim construction
Phelan J’s claim construction analysis reflects the ongoing debate over whether it is always appropriate to look to the disclosure in construing the claims, or whether recourse to the disclosure is permissible only if the claims are ambiguous when read on their own: see eg here, here and here.

Claim 3 is representative of the asserted claims [38]:

3. Use of a therapeutically effective amount of abiraterone acetate or a pharmaceutically acceptable salt thereof and a therapeutically effective amount of prednisone, for the treatment of a prostate cancer in a human

Janssen argued that the claim should be construed as requiring that the combination be effective for treating cancer [117], which would encompass a combination where prednisone was used only to address side effects. Phelan J rejected this argument, holding that on a plain reading of the claim, anti-cancer efficacy of the prednisone itself was required.

The point of interest arises because the construction ultimately adopted by Phelan J was express in the disclosure: “[T]he amount of the additional anti-cancer agent [prednisone]. . . is an amount that is sufficient to treat the cancer whether administered alone or in combination with [abiraterone]” [Disclosure ¶ 44]. Phelan J nonetheless came to his conclusion without recourse to the disclosure: “Even if there was some confusion or ambiguity, recourse to the Disclosure confirms as reference that the amount of inhibitors or of steroid is an amount sufficient to treat cancer, whether administered alone or in combination. However, there is no need to refer to the Disclosure” [125, my emphasis]. This implies that Phelan J is of the view that recourse to the disclosure is improper unless the claims are ambiguous when read on their own. This is even though Phelan J, at the same time, considered it “essential” to refer to the express definitions set out in the disclosure at [23]-[33]. My own view is that it is always appropriate, and I would suggest that referring to the statement in [44] of the disclosure is no more or less appropriate than referring to the definitions set out ten paragraphs earlier. The point would have been truly interesting if Phelan J had arrived at the contrary construction without relying on the disclosure; but since the express statement in the disclosure confirmed the construction he had arrived at for other reasons, the issue was moot.

Patentable subject matter
Under the heading “Patentable Subject Matter” [128] - [142], separate from obviousness and utility, Phelan J held that “[t]o be a patentable combination, the 422 Patent must claim a combination with effects different from the sum of the effects of the elements” [132, original emphasis], citing R v American Optical Co [1950] Ex CR 344, 13 CPR 87 at 98-99 and Eli Lilly Canada Inc v Apotex Inc 2018 FC 736 at paras 71-72.

I have two concerns. First, it appears that Phelan J may be saying that the synergistic effect must be specified in the claims: “[t]he issue regarding patentability of the subject matter is whether the 422 Patent reads from the perspective of the POS as claiming a combination with synergistic effect or effects beyond those of either component drug” [132]; “[f]or the claimed combination to be patentable, the Asserted Claims supported by the disclosure of the 422 Patent from the perspective of a POS must claim that the combination of AA [abiraterone] and PN [prednisone] has a greater effect than either component alone” [133]. If that is what he is saying, it is not supported by the cases cited, which merely say that is essential to validity that “the combination should lead to a unitary result, and that such result should be different from the sum of the results of the elements” Eli Lilly [72], citing American Optical which is to the same effect.

The second point is one I have already expressed in my post on Eli Lilly here, but I’ll be a bit more direct. There is no requirement of “patentable subject matter.” The requirement is a matter of obviousness: “The real and ultimate question is: Is the combination obvious or not?: Albert Wood & Amcolite Ltd v Gowshall Ltd (1937) 54 RPC 37 at 40 (CA), quoted with approval in Wandscheer [1948] SCR 1 at 12; Bridgeview 2010 FCA 188 [51]. In most cases the result will be the same either way. If I take ibuprofen for my sprained ankle and calcium carbonate for my heartburn, and all that happens is that the pain in my ankle subsides, exactly as it would have with ibuprofen and no calcium carbonate, and my heartburn goes away, exactly as it would have with calcium carbonate and no ibuprofen, then there is no inventive step in putting the two together; to claim the combination would be a matter of arbitrary selection. But the issue really should be treated as a matter of obviousness, because there is a large body of law addressed to obviousness, and re-creating that law under a different name to address combinations cannot help, and it has the potential to do harm if the so-called law of collocation diverges from the established law of obviousness.

State of the art for the purpose of an obviousness attack
Under the “old” Patent Act the body of prior art that may be set up against the patent in an obviousness attack — the “state of the art” — did not include all publicly available information that could be set up in a novelty attack, but only that which was generally known to a person skilled in the art or which would be discovered in a reasonably diligent search. As Hughes J noted in Merck v Pharmascience 2010 FC 510 at [37], there is a “quaere” as to whether codification of the obviousness requirement in s 28.3 of the new Act, which requires a person skilled in the art to have regard to information “available to the public” as of the claim date —the same language used in respect of novelty in s 28.2— has changed the law in this respect, so that all publicly available prior art may be used in an obviousness attack, regardless of whether it would have been discovered by a reasonably diligent search. In my article, ‘What is the State of the Art for the Purpose of an Obviousness Attack?’ (2012) 27 CIPR 385, I reviewed the debate. Subsequently, as discussed here, in Ciba v SNF 2017 FCA 225 [51]-[63], the FCA, per Pelletier JA and Rennie JA, with Woods JA expressing no opinion on this point, held that the new s 28.3 had indeed changed the law, so that the state of the art for the purpose of an obviousness attack does indeed encompass all prior art that is available in a novelty attack.

Janssen Inc v Apotex is one of the few cases so far to actually consider this point in the obviousness analysis, with Phelan J accepting that the FCA in Ciba “confirmed that Apotex can choose the prior art elements that make the 422 Patent obvious as long as they were publically available prior to [the filing date]” [164].

The application to the facts illustrates a significant shortcoming of the new rule. The general problem facing the inventors was that “the primary treatment for metastatic prostate cancer has been androgen deprivation therapy [ADT] through medical or surgical castration to suppress androgen production in the testes” [17]. Unfortunately, in some instances the cancer would become castration resistant and the cancer would continue to progress [18]. The invention, to combine abiraterone acetate, which is a CYP17 enzyme inhibitor, and prednisone, with a putative synergistic effect, was aimed at addressing this problem. It appears that Janssen wanted to argue that focusing on a CYP17 inhibitor was itself inventive, as the mechanism for castration resistance was not known at the time, and there were multiple theories where a large number of different experimental compounds, representing different approaches, were being tested at the time [73]-[74], [148]. As I read this decision, this line of argument was effectively foreclosed because Apotex was able to base its attack on the specific prior art documents that focused on CYP17 inhibitors and abiraterone, without ever having to establish that these were part of the common general knowledge [164].

This means that the obviousness question turned from something like ‘Was it obvious to focus on CYP17 inhibitors?’ to ‘Given a focus on CYP17 inhibitors, was it obvious to combine a CYP17 inhibitor, specifically abiraterone, with prednisone?’ These are very different questions and one might easily imagine that the answer to the former is “No” at the same time that the answer to the latter is “Yes.” In that case, a combination that would not in fact have been obvious to a person skilled in the art because it was not obvious to select one of the components, might nonetheless be found to be legally obvious, because the question of whether it was obvious to select that component never arises. That strikes me as wrong in principle.

With all that said, on these facts the difference in these questions didn’t matter, as Phelan J found that even starting with abiraterone, it would not have been obvious to combine it with prednisone [192]. (I would also note that on the facts, it is not clear that it would have been non-obvious to select abiraterone as a starting point; given his holding on the law, Phelan J did not have to make that determination.)

(As an aside, at [97] Phelan J says “[t]he relevant date for obviousness . . . is the common general knowledge as of the Filing Date, August 23, 2007," and at [164] he states that it is proper to consider all prior art available prior to August 23, 2007— again, the filing date—and then he does go on to consider prior art that does appear to post-date the claim date. This is even though s 28.3(b) provides that the relevant date is the claim date, the patent’s “priority filing date based on a US Patent was August 25, 2006" [7], and priority does appear to have been claimed. I’m clearly missing something.)

Utility
Finally, in assessing utility, Phelan J required that there be a scintilla of utility in the sense of a synergistic effect, such that the combination has a greater effect than either abiraterone or prednisone on its own: see eg [219]-[221]. The alternative would be to ask whether there was a scintilla of utility in the sense that if the combination is given to a person suffering from prostate cancer, it has a scintilla of utility in treating that cancer—without requiring any synergistic effect. The question is what the SCC in AstraZeneca 2017 SCC 36 meant when it said that the utility must be “related to the nature of the subject-matter” [55]. I won’t go on about this, given this is already a very long post, but I will say that I consider it very much an open question as to whether a synergistic effect is required in a case such as this one. I am inclined to think it is not, and the question of synergy or lack thereof is really a matter that should be confined to the non-obviousness inquiry. The SCC in AstraZeneca at [55] went on to explain that “a proposed invention cannot be saved by an entirely unrelated use. It is not sufficient for an inventor seeking a patent for a machine to assert it is useful as a paperweight.” Even without a synergistic effect, the use of the combination to treat prostate cancer is clearly related to a claim “for the treatment of a prostate cancer in a human”; it is far removed from claiming the use of the compound as a paperweight, or landfill. Requiring a scintilla of a synergistic effect links utility to the inventive concept; that may be problematic, given how tricky it can be to identify the inventive concept. It also strikes me as unnecessary, as the need to establish synergy can be adequately addressed in the context of non-obviousness. With that said, perhaps a different set of facts will shed a different light on the issue. In this case, the point didn’t make any difference, as Phelan J held that there was evidence of a scintilla of a synergistic effect [221].

Wednesday, November 20, 2019

Patentable Utility and Practical Utility

Janssen Inc v Apotex Inc 2019 FC 1355 Phelan J
            2,661,422 / abiraterone acetate & prednisone / ZYTIGA / old NOC

The somewhat unusual facts in this case raise a difficult overall puzzle for which I have no good solution. Phelan J’s decision also tangentially raises several interesting points of law, though none are crucial to the outcome. This post will describe the facts and the overarching puzzle; a subsequent post will deal with the other points of law.

Abiraterone, in combination with prednisone, is approved for the treatment of prostate cancer. In general terms, the 422 patent claims abiraterone acetate in combination with prednisone for the treatment of prostate cancer. Apotex wants to sell its version of abiraterone, but because it is approved in combination with prednisone, Apotex’ product monograph will instruct that it be used in combination with prednisone. Thus, infringement by inducement was straightforward [232], [246]. In this NOC proceeding (under the old Regulations) Apotex also raised validity attacks based on obviousness, lack of utility, and lack of “patentable subject matter.” Phelan J rejected all of these attacks, and consequnetly issued the order of prohibition.

The trick in this case is that the 422 patent apparently contemplated that prednisone would be used for its anti-cancer effect; the inventors hypothesized that prednisone would reverse resistance to abiraterone and thus act synergistically with it [40]. But it seems that this hypothesis was mostly wrong. So, as Phelan J put it, “A significant problem in this case is that the anti-cancer role of [prednisone] that is claimed in the 422 Patent when used in combination with [abiraterone] appears to no longer be understood as the main role [prednisone] plays in cancer treatment. Instead, [prednisone] is now primarily understood to address the side effects caused by [abiraterone ]” [5]. Phelan J did find that there was sufficient evidence of “a scintilla” of utility of a synergistic effect to establish demonstrated utility [221]. But this is not a typical case in which the effect in question is now well established, and the issue is that there was only evidence of a scintilla at the time of filing. There was a scintilla of evidence of synergistic effect then – though barely – and there is no more evidence now than there was then. That's why I say the hypothesis was "mostly" wrong; it had enough merit to support the requisite scintilla of patentable utility, but not enough to be of practical clinical use.*

The result is that Janssen is able to prevent Apotex from marketing abiraterone in combination with prednisone to control side effects, on the basis of a mostly wrong ‘discovery’ that prednisone acts synergistically with abiraterone. This is intuitively troubling, given that the practice of prescribing abiraterone with prednisone owes nothing to Janssen’s discovery. Nonetheless, I don’t see any flaw in Phelan J’s reasoning. (I have a few quibbles that I'll discuss in my next post, but nothing that would affect the outcome.) The result stems from the fact that the standard for utility is low, so Janssen was able to demonstrate utility on the basis of a very modest effect. Normally the low standard for utility works well, as it allows the inventor to get patent protection relatively early in the product development cycle. This has practical advantages, such as enabling product development and testing, such as clinical trials, without fear of anticipating one’s own invention; and there are also theoretical advantages, in preventing a wasteful “patent race”. In the great majority of cases, the early promise either pans out after more development, and a product is brought to market, or it doesn’t pan out, the product dies, and the patent becomes irrelevant. But in this case, the early promise did not pan out, and the combination was developed for entirely different purposes. Now the patent on the defunct quasi-invention has popped up to give a monopoly over a product that owed nothing to the inventor’s contribution.

I don’t really know what to make of this. I’m inclined to think that probably this is just a case where unusual facts have given rise to a problematic result, but we should accept that no system is perfect and it is better to address the majority of cases well and accept that sometimes rules that are generally good will lead to unsatisfactory results. Or maybe I’ve overlooked some policy angle that provides a good justification for this specific result. It’s also possible that existing law really does address this problem and I (along with Apotex and Phelan J) have overlooked the answer. Or it may be that the law should be tweaked somehow to address this particular problem; but as the saying goes, hard cases make bad law, and I wouldn’t advocate any change to address these unusual facts without taking care to make sure it doesn’t do more harm than good.

*This summary is as I understand the facts. I must say that I found the facts a bit difficult to grasp, and I’m not entirely confident that I have understood the facts correctly.

Thursday, November 14, 2019

Obviousness Rejection Affirmed

Stukanov v Canada (Attorney General) 2019 FCA 278 Locke JA: Nadon, Rivoalen JJA aff’g 2018 FC 1264 Fothergill J
            Application 2,792,456 / Universal External Drive

This is a straightforward case in which the Commissioner and PAB refused the 456 application on the basis of obviousness. The issue was purely one of fact, not law, and, unsurprisingly, Fothergill J affirmed. The self-represented applicant appealed, and the FCA affirmed Fothergill J.

Tuesday, November 12, 2019

Contributory Infringement in Canadian Law

My latest article, Contributory Infringement in Canadian Law, is now available online at the CIPR. A print version will be published in 2020. Here is the abstract:

Contributory infringement arises when a party knowingly supplies a direct infringer with a product especially adapted for use in a patented invention. Canadian courts have regularly stated that there is no liability for contributory infringement in Canadian law, in the absence of inducement. This article shows that there are nonetheless few cases actually refusing to impose liability on a contributory infringer, and none at the appellate level. The article argues that the reasoning and results in almost all the leading cases support a rule that the supply of a product especially adapted to infringe, and with no substantial non-infringing use, constitutes indirect infringement, even in the absence of active inducement. The current shape of the law is a result of a misreading of the early leading case of The Copeland-Chatterson Company Ltd v Hatton, in combination with the problematic decision in Slater Steel Industries Ltd v R Payer Co, which is the only prominent case refusing to impose liability in such circumstances. Slater Steel has been confined to its facts in both subsequent Court of Appeal decisions to address it, and this article argues that Slater Steel was wrongly decided on its facts. The article concludes that it is open to the courts to recognize that liability for contributory infringement may be imposed in Canadian law.

Friday, November 8, 2019

Application of Principle of Arbitrary Selection Affirmed by FCA

Millennium Pharmaceuticals Inc v Teva Canada Limited 2019 FCA 273 Stratas JA: Webb, de Montigny JJA aff’g 2018 FC 754 Locke J
            2,203,936 / 2,435,146 / 2,738,706 / bortezomib / VELCADE

This FCA decision has an interesting point on arbitrary selection hidden in what is otherwise a routine application of the deferential standard of appellate review. In the decision under appeal, Locke J had granted Teva compensation under s 8 of the NOC Regulations for losses suffered during the time its version of bortezomib was kept off the market. Millennium and Janssen had defended on the basis, inter alia, that sales by Teva would have infringed the 936 and 146 patents. Locke J found both those patents to be invalid for obviousness [1], [FC 344]. Millennium and Janssen appealed this finding [2]. The appeal was dismissed on the basis that “the appellant is trying to transform adverse findings of fact and mixed fact and law into errors of legal principle to avoid the difficult standard of palpable and overriding error” [17]. While there is nothing new here, the FCA decision has a good brief general discussion of the standard of appellate review, noting that an appellate court must read the reasons of the court below “as a whole” in context, while keeping in mind the rebuttable presumption that the first-instance court reviewed and considered all of the evidence [11].

With that said, one novel point regarding arbitrary selection was touched on tangentially. The general problem is this. The prior art discloses a genus compound exemplified by a few specific species, but with many substitutions from a class possible at one location (or several). If the inventor selects a new component from that class that exhibits surprising advantages over the previously disclosed species, that is an inventive selection. But what if the inventor randomly selects a new component that has no advantages over those previously disclosed? In one sense, the component is not obvious, because there are many in the class that might have been selected, and a skilled person looking to develop a new member of the family of compounds would not have picked out that particular compound in advance. But on the other hand, there is no invention in picking out one compound at random that gives exactly the results one would have expected from any random selection from the class. On its face, the arbitrary selection is not obvious, but neither is it inventive. This is the problem of arbitrary selection.

Thursday, October 31, 2019

Hypothetical Infringement Cannot Be Set up Against S 8 Claim

Pharmascience Inc v Pfizer Canada ULC 2019 FC 1271 O’Reilly J
            2,255,652 / pregabalin / LYRICA

The recent amendments to the PM(NOC) Regulations converted an NOC proceeding from an application to prohibit the Minister from issuing an NOC into an action for patent infringement. The old regime created some difficult questions as to the relationship between an NOC proceeding and subsequent action between the same parties in respect of the same drug. In particular, a statutory stay on the issuance of an NOC is triggered by NOC proceedings (s 7(1)(d)), and s 8 of the Regulations allows the generic to bring an action to recover damages for sales lost as a result being kept out of the market by the statutory stay. But what if the generic was successful in NOC proceedings, but unsuccessful in a subsequent infringement action in respect of the same drug? The law is now settled that the generic is not barred from bringing a s8 claim, but it is not entitled to recover for sales that it would have made but for the statutory stay if those sales would have been infringing: Apotex v Merck 2011 FCA 364 (here); 2012 FC 620 (here); 2012 FC 559 (here); 2017 FC 726 (here); 2018 FC 181 Locke J (here). The logic is that the generic should not be entitled to recover damages for lost sales which it had no right to make.

This case presents a twist on that issue: what if the patentee never brought a subsequent action? Can that patentee argue as a defence / offset in the s 8 action that the generic’s hypothetical sales would have hypothetically infringed the patent at issue, even though validity and infringement was never established in an infringement action?

Pfizer holds the 652 patent related to the use of pregabalin for treating pain. Pharmascience sought to enter the market with a generic version, and in response Pfizer commenced NOC proceedings under the old Regulations, triggering the statutory stay. Pfizer was unsuccessful in its attempt to obtain an order of prohibition (see 2013 FC 120), and Pharmascience is now seeking damages under s 8 of the NOC Regulations for compensation for the time it was kept off the market [1]. In response, Pfizer alleged that Pharmascience is disentitled to damages because the hypothetical sales of PMS-pregabalin would have hypothetically infringed Pfizer’s patent—even though such infringement had never been established in an infringement action [3].

O’Reilly J pointed out that in all the cases establishing that the generic cannot recover damages for wrongful sales, the wrongfulness of those sales had actually been established in an infringement action:

[17] Pfizer’s authorities suggest to me that infringement is a factor that can and should be taken into account in assessing the quantum of s 8 damages, but only where infringement has been asserted and proved, or is not disputed. Otherwise infringement is not relevant to s 8, even when an infringement action is pending.

He relied on the principle that “the but-for world should reflect, to the extent possible, what happened in the real world,” [23] so that if the patentee did not bring an action in the real world, it must be presumed that it would not have brought an action in the but-for world [21] (citing Apotex v Sanofi [Ramipril (s 8)] 2012 FC 553 (here) var’d 2014 FCA 68 (here)). Consequently, hypothetical infringement cannot be raised to reduce or eliminate the generic’s damages [25].

In my view, O’Reilly J’s holding was correct for the reason he gave. It’s a relief that the new Regulations will render such questions moot.