Wednesday, April 22, 2015

Scc Affirms FCA on Calculation of Damages under NOC S 8

Sanofi-Aventis Canada Inc v Apotex Inc / ramipril (s 8) SCC 35886 aff’g 2014 FCA 68 Sharlow JA, Pelletier JA concurring, Mainville JA dissenting, var’g 2012 FC 553 Snider J

On Monday the SCC delivered judgment orally, dismissing the appeal in Ramipril s 8:

THE CHIEF JUSTICE — We are all of the view to dismiss the appeal substantially for the reasons of the majority of the Court of Appeal.
           The appeal is dismissed with costs.

My posts on the FCA decision are here, here and here; posts on the FC decision are here and here, as well as here in the related Teva action.

The companion Teva case, which was not appealed to the SCC, also dealt with assessment of damages under s 8: 2014 FCA 67 var’g 2012 FC 552, with an additional blog post here relating to an issue raised solely in Teva. See also the related litigation challenging the validity of s 8: 2014 FCA 69 blogged here, aff’g 2012 FC 551 here.

Friday, April 17, 2015

Should Experts Be “Blinded” as to the Infringing Device When Construing the Claim?

Teva Canada Innovation and Teva Pharmaceutical Industries Ltd v Apotex Inc (NOC) 2014 FC 1070 Gleason J
            2,232,310 / rasagiline / AZILECT

In this NOC decision, which turned entirely on claim construction, Apotex’ Apo-rasagiline product was found not to infringe Teva’s ‘310 patent. The main point of legal interest is Gleason J’s holding that if an expert is “blinded” as to the nature of the putatively infringing product when carrying out their claim construction, this is a reason to prefer that evidence over the evidence of an expert who is not so blinded.

The ‘310 claims a pharmaceutical composition comprising rasagiline and at least one alcohol selected from the group consisting of “pentahydric and hexahydric alcohols” [7]. It was undisputed that the term “pentahydric” refers to five hydroxyl, or “-OH” groups, and that the term “hexahydric” refers to six hydroxyl groups [20]. So, for example, mannitol is pentahydric:

Apotex’s product comprised rasagiline and an alcohol, and the sole question was whether that alcohol was pentahydric or hexahydric. While the exact alcohol used by Apotex was redacted (with the redaction to be removed once Apotex’ NOC is issued) [5], the problem can be understood if we suppose Apotex’ product contained maltitol:
Apotex’ experts opined that in naming an alcohol, all the -OH groups in the molecule should be counted, while Teva’s experts were of the view that only the groups on the alcohol moiety should be counted. So, on the former view maltitol would be a nonahydric alcohol, and on the latter view it would be pentahydric.

Gleason J accepted the view of Apotex’ experts, primarily - or at least "firstly" - as a matter of textual construction of the specification. In particular, the specification uses the term “alcohol” to refer to the entire molecule to be used in the composition, not just the alcohol moiety, and it uses the term “pentahydric or hexahydric” to modify the term “alcohol,” thus implying that all the -OH groups in the molecule must be counted, not just those on the alcohol moiety [89]-[93].

A second reason that Gleason J preferred the evidence of Apotex’ experts is of more general interest. Apotex’ experts had been provided with the ‘310 patent and asked to construe it, and only subsequently were they provided with Apotex’ ANDS and asked to opine as to whether Apo-rasagiline fell within the claims [43]-[46]. Teva’s experts, on the other hand, construed the ‘310 patent with the allegedly infringing substance in mind [34]-[42]. Gleason J held that the way in which they had been instructed was a reason to prefer the evidence of Apotex’ experts [94]. (Though she did not suggest it was a determinative reason.)

As Gleason J acknowledged [96], this raises the tension between the principle that “the construction exercise [should] be uninfluenced by concerns over infringement or invalidity,” and the competing principle that in construing claims "it is essential to see where the shoe pinches” Nokia v Interdigital [2007] EWHC 3077 (Pat) [25], quoted with approval in Qualcomm v Nokia [2008] EWHC 329 (Pat) [7], quoted with approval by Hughes J in Shire Biochem 2008 FC 538, [22] (and see 2009 FC 991 [88]; 2009 FC 676 [82]). Gleason J said that

However, the decision in Shire Biochem does not stand as authority for the proposition that it is proper to construe a patent with the infringing substance in mind, but, rather, only for the common sense notion that to be useful evidence and arguments in a case must be directed toward the issues that arise.

This is not quite right. What Floyd J said in Qualcomm, quoted with approval by Hughes J in Shire Biochem, is that

It is often said that a patent specification should be construed without reference to the infringement. Yet one cannot sensibly identify the point of construction without understanding what it is about the alleged infringement which is said to take it outside the claims.

So, when the claim calls for A, and the allegedly infringing device requires B, “the right question is . . . whether in its context in the specification the skilled man would appreciate that A in the claim encompassed B” (Qualcomm [25]). This necessarily requires focusing on the allegedly infringing device. Similarly, in Technip France SA's Patent (2004) RPC 46, quoted in Shire Biochem, Jacob LJ remarked that “in most sensible discussions of the meaning of language run on the general lines `does it mean this, or that, or the other?' rather than the open-ended `what does it mean'?” In Nokia, Pumfrey J prefaced the quoted remark with the statement that “it seems sensible to turn to the [allegedly infringing product] to identify the points of construction that arise” [25]. He specifically directed the parties to serve statements of the case identifying the relevant aspects of the allegedly infringing product for the experts to focus on in construing the claims, and he indicated that such statements are “essential” [26], at least in a complex case.

Two SCC decisions cited for the proposition that claim construction is independent of validity and infringement are Whirlpool 2000 SCC 67 and Sanofi 2008 SCC 61. In Whirlpool the Court said that “Claims construction is antecedent to consideration of both validity and infringement issues” [43]. This may be taken to say that construction should not be influenced by concerns over infringement or invalidity, but it does not say that claim construction should be undertaken without reference to the infringing product. In holding that the report of the experts who had been “blinded” should be preferred, Gleanson J cited Rennie J’s holding to the same effect in Omeprazole 3 2014 FC 638, [321]. Rennie J held that the “blinded” experts “had mandates that allowed them to opine on the state of the art, in the words of the Supreme Court of Canada, ‘viewed without any knowledge of the alleged invention as claimed’ (Sanofi-Synthelabo Plavix, at para 67).” But that statement in Sanofi was made in the fourth step of the Windsurfing / Pozzoli test for obviousness

(4) Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of invention?

What this is saying is that the obviousness inquiry must be undertaken without the benefit of hindsight. Claim construction is step (2) of the test, and Sanofi does not say that claim construction should be undertaken without reference to the infringing product.

Apart from these authorities, I see a danger in ignoring the infringing device. Suppose that almost all alcohols were simple linear chain molecules, so that there is normally no difference between counting -OH groups in the alcohol moiety and counting them in the molecule as a whole. If asked the general question of how to define a pentahydric alcohol, a skilled person might say “count the -OH groups in the molecule.” But if then presented with an unusual alcohol with two distinct parts, the skilled person might well say “Well, I never thought of that – of course I meant that when there are two parts to the molecule, you should count the -OH groups on the alcohol moiety.” Imagine trying to give legal advice to a client who insisted on asking “what are the requirements for a valid patent,” while refusing to disclose her invention, and who then insisted on holding you to your original definition after revealing the peculiarities of her own invention.

I take the point that claim construction should not be tendentious. But it seems to me that ignoring the infringing device in claim construction can also be misleading. Either course has its risks. Rather than preferring the evidence of experts who have been blinded, perhaps it would be better to recognize the problem of tendentious testimony on the one hand, and misdirected evidence on the other.

Finally, Gleason J remarked that

[96] Teva could easily have directed its experts’ attention to these issues by posing the question whether the terms “pentahydric or hexahydric alcohols” as used in the 310 Patent would connote a molecule or a moiety to the skilled person, without alerting the experts to the fact that the potentially infringing substance was [redacted].

I don’t find this persuasive. I agree that this would have properly directed the experts’ witness to where the shoe pinches, but I’m not sure this type of instruction is any better than revealing the allegedly infringing molecule itself. The experts knew that all the alcohols specifically mentioned in the specification were linear chain alcohols (mannitol, sorbitol and xylitol), and an expert instructed to consider whether the term connoted a molecule or a moiety could readily have inferred that the infringing substance had two distinct moieties, which would defeat the purpose of the blinding. More importantly, this approach demands an excessive degree of foresight from counsel; how can counsel, who are not normally themselves persons skilled in the art, know in advance which aspects of the allegedly infringing product are relevant to the claim construction? How would they known to present the molecule / moiety distinction before having an opinion from an expert that it was relevant? Perhaps in this case the particular point might have been obvious to a pharmaceutical litigators of ordinary skill, but as a general matter we cannot presume that litigators will know “where the shoe pinches” before they are told by experts.

Tuesday, April 14, 2015

Minister Cannot Issue NOC to Generic Licensee on Basis of Administrative Submission

Actelion Pharmaceuticals Canada Inc v Canada (Attorney General) 2014 FC 1249 Gleason J
            2,071,193 / bosentan / TRACLEER

This decision is a companion to Gleason J’s Exemestane 2014 FC 1243 decision, in which she held that when a first generic has received an NOC, a second generic which licenses from that first generic remains subject to s 5. Consequently, as discussed here, the second generic must serve an NOA on the patentee, and the Minister cannot issue an NOC to the second generic based on an administrative drug submission that cross-references the first generic’s submission.

The Bosentan case raised exactly the same question and Gleason J simply applied Exemestane and held that the patentee was entitled to a declaration that Health Canada had failed to comply with the PMNOC Regulations by failing to require the second generics to address the 193 Patent before issuing them NOCs for their bosentan products [9]. However, in this case the patent had expired by the time of judgment and Gleason J noted that an order quashing the NOC would potentially be moot. Since the mootness question had not been fully argued, she required the patentee to file additional submissions if it wished to pursue an order quashing the NOCs [10].

Monday, April 13, 2015

Arbitrary Selection Is Not Inventive

Janssen Inc v Teva Canada Ltd / bortezomib (NOC) 2015 FC 247 Barnes J
            2,203,936 / bortezomib / VELCADE

In light of the difficulty that is sometimes caused by selection patents, Barnes J’s Bortezomib decision is very welcome as a paradigmatic example of the correct use of selection patent concepts to strike down an invalid selection patent. Of course, invalid selection is not an independent ground for patent invalidity: 2010 FCA 197 [33]. In Canadian law that an invention is a selection is said to inform the analysis of all grounds of invalidity [ibid 27]. In his decision, Barnes J has focused entirely on obviousness; this is how European (EPO Guidelines G.VII.12) and US law (737 F 3d 731, 739 (Fed Cir 2013); 738 F 3d 1337, 1344 (Fed Cir 2013)) deal with selection patents, and it is, in my view, the correct emphasis.

Bortezomib is a proteasome inhibitor which is useful in the treatment of cancer [4]. The asserted claims of the 936 patent are to the compound bortezomib, as well as its use to treat cancer and a dosage form [7]. The prior art 904 patent disclosed a genus of compounds that includes bortezomib [54]. That Patent also disclosed that the disclosed compounds are potent proteasome inhibitors [27]. Barnes J noted that this meant that the 936 patent is a selection from the 904 patent [27], but this holding as such played no role in his analysis. His basic point was that “A person of skill is not doing anything inventive when he chooses options provided in a prior patent to build a molecule that he expects will work” [40]. The 904 patent tells us that all the compounds within the genus are potent proteosome inhibitors; bortezomib is a compound within the genus; therefore any skilled person would have know that bortezomib was a potent proteosome inhibitor, even before the 936 specifically disclosed it as such.

Barnes J’s use of the word “inventive” is helpful here. Much of the confusion related to selection patents because the inventive step requirement is expressed in terms of obviousness. In some sense it was not obvious to select bortezomib out of the myriad compounds in the 904 genus. But the fundamental question is not whether the selection was obvious, but whether it was inventive. (Prior to codification in s 28.3, what is now known as the non-obviousness requirement was normally called the inventive step requirement. Obviousness is only the test for inventiveness. The drafting of the EPC is explicit on this point: see Arts 52(1) and 56.) It might not have been obvious to select bortezomib out of the range of proteasome inhibitors described by the 904 patent, but neither was it inventive; it is what the EWCA has called an “arbitrary” selection: Dr Reddy's [2009] EWCA Civ 1362 [52]. The codification of non-obviousness in s 28.3 in conjunction with the endorsement of the Windsurfing / Pozzoli framework in Sanofi 2008 SCC 61, [67] which focuses on the “inventive concept,” means that in Canada this question is now often framed in terms of defining the inventive concept. So, in Bortezomib there was a question as to whether the inventive concept is only the compound bortezomib, or also the properties of bortezomib [20]. If the inventive concept is only the compound, then it would not be obvious to select the particular compound from the genus; but if the inventive compound includes the properties, it is obvious that bortezomib is useful in the same way that all the members of the genus are useful. In my view it is not particularly helpful in this context to debate what the inventive concept might be. Focussing, as Barnes J did, on whether the patentee had done anything inventive, addresses the same point, but it is more straightforward and less likely to lead to error.

While it is not inventive to discover that bortezomib is a proteasome inhibitor, it might be inventive to discover that it is a particularly effective proteasome inhibitor in comparison with others in the genus. Thus the requirement that a valid selection patent have a “a special property of an unexpected character” or “a substantial advantage over the genus from which it was selected” [44] flows directly from the inventive step requirement. The argument that bortezomib was unexpectedly superior was made by Janssen, but it failed on the facts. There was simply no evidence that bortezomib was particularly effective [44], [46]. Indeed, neither the patent nor Janssen’s experts even asserted that it was particularly effective [47], [48].

Janssen had also argued that bortezomib was not in fact a selection from the 904 genus. If that were true, then it might be inventive to discover an entirely new compound which was a potent proteasome inhibitor; but this argument also failed on the facts: [54].

One point of note is that Barnes J quoted at length from Kane J’s Travoprost 2014 FC 699 decision, which he described as “a very similar situation” in which Kane J applied “classic obviousness principles” in concluding that the patent was invalid. I do not read the Travoprost decision in the same was as Barnes J. As discussed here, as I read it, Kane J’s analysis turned on her construction of the inventive concept. That is, the central question was not whether the species actually had special and unexpected properties, but whether the inventive concept, properly construed, included those properties. I considered Kane J’s analysis on this point to illustrate how a focus on the inventive concept can lead to an erroneous analysis. I do hope that I have misinterpreted her decision, and that Barnes J is right to say that it applied classic obviousness principles in the same way as did Barnes J himself.

Finally, while on the facts as found by Barnes J the identification of bortezomib was not sufficiently inventive to support a patent, we should recognize that the development of bortezomib was an important medical contribution. While the 904 application disclosed a genus of proteasome inhibitors, to actually treat cancer it is necessary to chose one and take it through clinical trials to regulatory approval. This case illustrates that patents alone may not provide a sufficient incentive in this respect. What if all of the members of the 904 genus are in fact equally effective? In that case it would be impossible to get a valid patent, and yet without a valid patent it would not be worthwhile to conduct the clinical trials necessary for marketing authorization. The facts of Bortezomib illustrate that a robust data protection regime is an essential complement to the patent system.

Affirmed that Perfect Match Required for Listing on Patent Register for Medicine as Well as Formulation

ViiV Healthcare ULC v Teva Canada Ltd 2015 FCA 93 Near J: Ryer, Rennie JJA aff’g 2014 FC 893 Hughes J (here) aff’g 2014 FC 328 Milczynski J (here)
            abacavir & lamivudine / KIVEXA / 2,289,753

In this decision the FCA affirmed that the “perfect match” requirement for listing of a patent on the Patent Register applies under all branches of the s 4(2)(a) of the NOC Regulations. That is, each medicinal ingredient must be explicitly named in a claim; it is not enough that the generic product would necessarily infringe the claim and it is not enough that all the ingredients are explicitly listed in the description.

This holding is not a surprise. I have argued that the perfect match requirement is not sound as a matter of policy, but, as discussed in my posts on the decisions under appeal (here and here) and as the FCA held [17], the case at hand is not distinguishable from the leading case, Gilead / COMPLEREA 2012 FCA 254 (blogged here).

While the Minister argued in favour of the perfected match requirement in the cases in which the requirement was initially established, it argued against the requirement in this case. Industry Canada has recently indicated that the NOC Regulations will be amended to “confirm established Health Canada practices in relation to the policy intent of the NOC Regulations.” It sounds like this will reverse the rule in ViiV v Teva, but I doubt the amendments will be entirely satisfactory. As discussed here, the Minister's position is that a perfect match is required under para 4(2)(b), which applies to "a claim for the formulation that contains the medicinal ingredient," but not under para 4(2)(a), which applies to "a claim for the medicinal ingredient.” But as I explained in that earlier post, the perfect match requirement may result in pointless formalism even when applied solely under para 4(2)(b).

Tuesday, March 31, 2015

Any Calculation Will Be Complex and Contentious

Philip Morris Products SA v Marlboro Canada Ltd 2015 FC 364 de Montigny J

This issue in this decision in the Philip Morris v Marlboro litigation is whether Marlboro Canada and Imperial Tobacco (ITL), which prevailed in a trademark action, should be entitled to elect an accounting of profits. It is relevant to the same question in the patent context, as de Montigny J relied on the patent case law on the same point [17] and he was clearly of the view that the applicable principles are the same in both contexts. The decision is noteworthy for its extensive review of the factors to be considered in deciding whether to allow a successful part to elect an accounting.

As I noted in a previous post, there is something of a split between cases suggesting that a patentee will normally be permitted to elect an accounting unless there is some reason why that remedy should be denied, and others indicating that an accounting will be denied unless the plaintiff can show some positive reason why it should be granted. That issue was directly raised in Philip Morris, as ITL argued that “the remedy is ordinarily awarded unless there are special circumstances,” whereas Philip Morris, the defendant on the trademark claim, argued that the Court must simply balance the equities and decide whether the remedy is appropriate in the circumstances [18]. de Montigny J held that an accounting is not a presumptive remedy and the trial judge has complete discretion [19], but on the whole, this decision falls into the first category (my emphasis):

[21] I shall therefore weigh the relevant factors in light of the equitable purposes of the remedy, bearing in mind that the Defendants have no right to an accounting of profits but that they should not be denied that option in the absence of any compelling reasons.

(While ITL was the successful party in the litigation, it was the defendant on the underlying action, and the plaintiff only by counterclaim, and so is referred to as the “Defendant” by de Montigny J, while Philip Morris is referred to as the “Plaintiff”.)

de Montigny J then reviewed a number of factors. This list is of course not exhaustive, but only reflects those raised by the parties. And, as de Montigny J noted, "none of the factors is controlling, in and of itself” [21].
(1) The claimant's conduct
The main point here is that “As for delay, it would dearly be inequitable to allow a plaintiff to recover profits made by a defendant while the plaintiff was aware of the infringement for some time and did nothing about it” [22]. This strikes me as sensible. Delay should not be encouraged, particularly when the defendant reasonably believes it is not infringing and so may be relying on the status quo. 

On the facts, there was no undue delay in this case, nor was there any allegation of unclean hands [22]-[23]. de Montigny J then held that "All these factors clearly militate in favour of an accounting of profits - and indeed the Plaintiffs do not contest any of these arguments [24]. It is interesting that the fact that there is no undue delay and no unclean hands militates in favour of an accounting, rather than being neutral. This reinforces the point that an accounting will be granted unless there is some reason not to do so.

(2) Complexity of an accounting of profits
The complexity of an accounting of profits is often raised as a factor militating against an accounting, and indeed is cited as the main reason why US law abolished the accounting remedy in patent cases. The key point made by de Montigny J on this issue is that “the calculation of damages is likely to be as complex as the accounting of profits” [31]. While is true that an accounting in this case would be difficult [27]-[29], “[j]ust as with accounting, the causation/apportionment issues will likely be contentious in the calculation of damages” [31]. Consequently,

[32] [A]ny calculation will be complex and contentious, whether in relation to assess the damages or in relation to the apportionment issue. For that reason, I am of the view that the complexity factor weighs neither for nor against the accounting of profits.

In my view this is an entirely sound point which is too often overlooked. The correct question is not whether an accounting is complex, but whether it is substantially more complex than the damages calculation would be. When the accounting remedy was rejected in US law, the principles used in assessing the defendant’s profits were not the same as those used in modern Canadian law. In Canadian law, the basic “but for” inquiry is conceptually the same in either case, particularly when lost profit damages are claimed. Depending on the particular facts, an accounting may be more complex than the damages assessment, but it may also be less complex or roughly equivalent, as in this case.

Another point made by de Montigny J is that the absolute complexity is not the main issue, but rather proportionality: “the Court is essentially concerned with the proportionality of the accounting remedy in view of the length or extent of the infringing activity and the likely benefit of the accounting exercise” [29].

(3) The infringer’s conduct
Here de Montigny J noted that the legal issue in question “was a genuinely novel legal issue, and not a case of blatant infringement” [35]. He contrasted this was Varco 2013 FC 750 (blogged here) in which the defendants “knew the patent infringement was blatant and the only defence would be patent invalidity” [35]. I am not persuaded by this distinction. Many granted patents turn out to be invalid, and I don’t see why it is more blameworthy to proceed in the face of uncertainty as to liability on the facts, as opposed to uncertainty as to liability as a matter of law. It is entirely legitimate to infringe a patent in order to test its validity, and a defendant who does so successfully is doing a public service, as the benefit of lower prices from having a bad patent held invalid redounds to society as a whole in the form of lower prices. Such infringement should not be discouraged by the threat of a more severe remedy. (This is not to say that an accounting should never be awarded in the case of patent infringement, but only that the distinction between uncertainty in the law and uncertainty on the facts does not strike me as a proper consideration in deciding whether to allow an accounting.)

(4) The claimant's damages
The defendant, Philip Morris, argued that “if the claimant could never have earned the profits or was in no way harmed by the infringement, accounting would be an undue windfall to the claimant” [36]. de Montigny J rejected this both for lack of authority, and because taking this factor into account would require a detailed assessment of disputed evidence [37]-[38]. This seems right to me: to take into account the plaintiff’s damages would require the court to undertake an assessment of damages as part of the analysis of whether to allow the plaintiff to elect an accounting. This is impractical.

(5) Actual confusion
This factor is specific to trademark litigation.

Thanks to Alan Macek's IPPractice for making this case available before it is posted on the FC website.

Wednesday, March 25, 2015

IP License can be used to create a PMSI

Contech Enterprises Ltd. v Vegherb, LLC, 2015 BCCA 99

While security interests in IP have been the topic of law reform projects, conferences and academic articles over the past decade or more, we do not have many of cases directly on point. The BCCA decision in Contech is a welcome development because it is, in my view, correct in both the reasoning and the result. In many ways it is a relatively easy case which does not directly deal with the most contentious issues, such as priority conflicts when one party registers under the PPSA and the other under the relevant federal IP Act, but it does establish a solid foundation on which to address those more difficult questions. I will not discuss it in more detail here, as Professor Tony Duggan and I are planning on writing a brief case comment for the IPJ.

Monday, March 23, 2015

Foreign Issue Estoppel in Theory and Practice

AstraZeneca Canada Inc v Apotex Inc / omeprazole 2015 FC 322 Barnes J
            1,292,693 / omeprazole formulation / LOSEC

An overview of this litigation is given in yesterday’s post. Parallel litigation US had taken place between the parties and AstraZeneca argued that principles of issue estoppel and abuse of process should apply to prevent relitigation of a number of findings of fact made by the US court in that previous litigation. There is an interesting issue of principle, discussed here, here and here, as to whether issue estoppel in Canadian patent litigation can be based on foreign findings of fact. The theory in favour of accepting foreign issue estoppel is the same as for domestic issue estoppel: it will save judicial resources and save the embarrassment of inconsistent decisions.

Barnes J recognized this theoretical argument, but he had a powerful rejoinder:

[379 [T]he practical problems of applying estoppel in a way that will actually protect judicial resources cannot be ignored. Those problems were quite apparent in this case.

[380] Given the discretionary nature of the application of foreign issue estoppel, AstraZeneca could not prudently assume the doctrine would be applied. It, therefore, independently led evidence on all of the above evidentiary points required to make its case. The practical effect of this was that no time was saved. In fact, by pleading estoppel, the trial was substantially lengthened. In response to AstraZeneca’s plea of estoppel, Apotex led fact evidence from two attorneys involved in the United States omeprazole proceedings, Martin Endres and Robert Silver. It also led opinion evidence from two legal experts, Judge Benson Legg (retired) and Mr. John Whealan. That evidence described the approach that the United States District Court took to the management of its multi-party infringement actions including the separation of the proceeding into waves. The purpose of this evidence was to attempt to explain the differences between United States and Canadian procedures and substantive patent law and to show that the two systems are sufficiently distinct that the application of estoppel would work an injustice on Apotex.

The theory is that foreign issue estoppel will reduce litigation costs; the practical reality, at least in this case, is that costs were increased to no benefit. Consequently,

[381] Considering the somewhat unusual process that was followed in the United States second wave proceedings involving Apotex, the practical disadvantages of applying issue estoppel to only a handful of findings made in that proceeding, and the fact that it is not necessary to rely upon the doctrine to fill a gap in the evidentiary record, I decline to apply the principle here.

Friday, March 20, 2015

Product Claim Not Limited to Process Contemplated by Patentee

AstraZeneca Canada Inc v Apotex Inc / omeprazole 2015 FC 322 Barnes J
            1,292,693 / omeprazole formulation / LOSEC

In this Omeprazole formulation decision, which turned primarily on the facts, Barnes J held AstraZeneca’s ‘693 patent to valid and infringed. While the decision does not break new legal ground, it does illustrate some points of interest with respect to claim drafting, claim construction and litigation strategy. Also, in the bigger picture, some are inclined to characterize any pharmaceutical patent other than that for the API per se, and in particular formulation and dosage form patents, as “evergreening” patents which should not be allowed. In this case it was established that formulation of omeprazole presented a difficult problem which had to be solved to produce a medically useful drug and consequently, after a detailed review of the facts - the decision was 177 pages long - the invention was held to be non-obvious [273]. This contrasts with other recent cases, discussed here and here, in which dosage and formulation patents were held to be obvious. The lesson is a simple one, but perhaps worth repeating: sometimes formulation patents are good and sometimes they are bad, and either way, they are carefully scrutinized by the courts.

Wednesday, March 11, 2015

Tadalafil Formulation Patent Obvious and Not Infringed on the Facts

Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC / Tadalafil Formulation (NOC) 2015 FC 178 de Montigny J
            2,379,948 / Tadalafil formulation / CIALIS

Tadalafil Formulation (NOC) concerns Lilly's ‘948 patent for a formulation of tadalafil with free drug particles of less than a specified size (40 microns in Claim 1) plus specified excipients [20]. de Montigny J found Mylan’s allegations of non-infringement and obviousness to be justified. The decision turned entirely on the facts. As counsel for Lilly stated at one point, “a lot of it just comes down to which expert the Court is going to go with” [92]. For the most part, the Court went with Mylan’s expert. The points of most general interest are an evidentiary point concerning provision of testing data in an NOC proceeding, and a point regarding the use of documents which are not cited in the NOA. There are also a couple of points that may be of interest in interpreting formulation claims.

Tuesday, March 10, 2015

Deferential Review of Factual Findings of the Re-examination Board

Newco Tank Corp v Canada (Attorney General)2015 FCA 47 Ryer J: Webb, Near JJA, aff’g 2014 FC 287 Mosley J

In this re-examination the Board cancelled three of the claims of the ‘384 patent as being obvious. An appeal to the FC was dismissed on the facts, as discussed here. On appeal to the FCA, the patentee argued that the Board had erred in law by construing the “information presented as background knowledge in the patent itself” as being an admission of the common general knowledge [7]. In particular the patentee argued that the invention lay in the identification of the problem (inefficiency in heating of liquid storage tanks at well sites) and so it was an error to conclude that the problem itself was known merely because it was identified in the patent.

The FCA dismissed the appeal on the basis that the Board’s finding that the common general knowledge of the skilled person included the information presented as background knowledge in the patent itself was simply a factual finding [10], and so was properly reviewed by the FC on a deferential (reasonableness) standard [12]. I do not take this as a holding that any statements in the patent are indeed to be considered to be admissions as to the state of the common general knowledge; as I read it, the FCA was only saying that in this particular case it was reasonable for the Board to have concluded that the statements in question described the common general knowledge.

Monday, March 2, 2015

Is There a Requirement to Refer to Evidence of Demonstrated Utility in the Patent?

Les Laboratoires Servier v Apotex Inc / gliclazide (NOC) 2015 FC 108 Roy J
            2,629,670 / gliclazide / DIAMICRON MR

As noted yesterday, in Gliclazide Dosage Form Roy J dismissed Servier’s application for an order of prohibition primarily on the basis of non-infringement [147], though he went on to hold the patent to be obvious and lacking in utility. The findings of non-infringement and obviousness were legally straightforward, but in the utility analysis has an important novel development (as if the law of utility was not controversial enough as it is): Roy J held that the factual basis for demonstrated utility must be referred to in the patent.

Servier argued that the promised utility was demonstrated by two bioequivalence studies. However, neither of these studies was alluded to in the specification [213]. Roy J held that these studies cannot be considered in establishing demonstrated utility:

the tests Servier points to that are not referred to in the `670 Patent are not relevant for establishing demonstrated utility [216].

It is now established in Canadian law that when utility is based on sound prediction, the factual basis for that prediction must be disclosed in the specification. Roy J did not hold that the factual basis for demonstrated utility must be disclosed, but he did hold that it must be referred to. That is, the distinction between sound prediction and demonstrated utility is whether the data itself must be set out in the patent, or whether it is sufficient to merely reference the relevant tests.

Thursday, February 26, 2015

Gliclazide Dosage Form Patent Obvious and Not Infringed

Les Laboratoires Servier v Apotex Inc / gliclazide (NOC) 2015 FC 108 Roy J
            2,629,670 / gliclazide / DIAMICRON MR

In Gliclazide Dosage Form Roy J dismissed Servier’s application for an order of prohibition, primarily on the basis of non-infringement [147], though he went on to hold the patent to be obvious and lacking in utility. The findings of non-infringement and obviousness turned largely on the facts and do not raise any novel legal issues, but the discussion of utility is noteworthy for holding explicitly that the factual basis for demonstrated utility must be disclosed in the patent. This post discusses the first points, and tomorrow’s will discuss utility.

Gliclazide is a known compound used for treating diabetes. The original dosage form was a breakable immediate release tablet [4]. Subsequently, a modified (slow) release tablet was developed, but it was not breakable [5]; some modified release formulations should not be broken, as dividing the tablet will alter the release profile. The invention of the ‘670 patent is related to a breakable modified release table with an identical dissolution profile whether or not it has been subdivided [70]. It was not disputed that the essential elements of claim 1 of the ‘670 patent are to a “gliclazide, a cellulose derivative which provides the modified release of the active ingredient, a binder and, once subdivided, that the gliclazide tablet has an identical dissolution profile to that of the whole tablet” [101]. The other asserted claims were variations on this theme [80].

There was dispute as to whether Apotex’ product had a binder: Apotex argued that it’s product was held together by compression, without a separate binder, while Servier argued that the cellulose derivative that was present in Apotex' product can serve both as a binder and a modified release matrix [113], [116]. There was also dispute as to whether the “identical dissolution profile” referred to the profile measured in vitro or in vivo. Apotex prevailed on both these point, which turned primarily on the terms of the patent itself. Without going into the details, I will simply say that Roy J’s analysis on these issues struck me as entirely sound.

The finding of non-infringement followed almost directly from the claim construction. There are two points of some general interest. First, Servier argued that Apotex’ evidence of its manufacturing process, which goes to the point that it tablets were held together by compression, without a binder, was inadmissible because it was not disclosed in the NOA [133]. Roy J rejected this on basis “that Apotex did not have to anticipate the position Servier chose to take,” which is to say the position that the patent should be construed to that the cellulose derivative could serve a dual purpose [133]. Roy J at [136] quoted the FCA 2005 FCA 270 [16]: “A second person [the generic] should not be required to anticipate every theory of possible infringement, however speculative, in the detailed statement supporting its allegations.”

The second point of some interest is that Servier argued that the fact that Apotex had obtained regulatory approval by showing bioequivalence with Servier’s product showed that Apotex’ product must have had an identical in vivo dissolution rate [141]. Roy J rejected this on the basis that even if that is true, the patent, properly construed, speaks to in vitro dissolution rate [142]. So, while infringement in NOC proceedings is often conceded, regulatory approval using the patentee’s product as a comparator, does not necessarily imply infringement of a patent covering that product.

The obviousness aspect of the Roy J’s decision turned straightforwardly on the facts: “[185] In my opinion, Apotex has in effect shown that the skilled worker would have been able to combine the mosaic of prior art into the claimed invention. The step was not high. The gap was not broad.”

Thursday, February 19, 2015

Golden Bonus Rule Applied

Janssen Inc v Teva Canada Ltd / bortezomib (NOC) 2015 FC 184 Barnes J
            2,435,146 – bortezomib formulation – VELCADE

In this NOC proceeding Barnes J held the claimed invention to be obvious using an obvious-to-try analysis. While the case turned largely on the facts, it does make one important legal point of general interest, which is that the discovery of a non-obvious characteristic of an otherwise obvious invention cannot support a patent. This is known in UK law as the “golden bonus” rule. And while not as legally noteworthy, Barnes J’s decision is a very good example of the application of the obvious to try analysis to hold a patent invalid. Finally, the argument turned in part on the identity of the skilled person, and the case illustrates the established law that the patent must be read as a whole when identifying the expertise of the person skilled in the art.

Wednesday, February 18, 2015

More File Wrapper Estoppel in Canada

Eli Lilly Canada Inc. v. Mylan Pharmaceuticals ULC / tadalafil (NOC) 2015 FC 125 de Montigny J
            2,371,684 – tadalafil dosage form – CIALIS

The ‘684 patent was for tadalafil in a dosage form of less than 20mg, with separate claims to various specific dosage forms (eg “5. The dosage form of claim 3 comprising about 5 mg of the compound in unit dosage form”). A question arose as to whether a maximum daily dosage of 20mg should be considered to be an essential element of the claims [150]. de Montigny J rejected this argument, relying in part on the file history. The application originally filed with the Patent Office contained claims reciting the method of treating sexual dysfunction comprising administering about 1 to 20 mg tadalafil, up to a maximum total dose of 20 mg per day. These claims were rejected for claiming a method of medical treatment. In response, Lilly redrafted these claims as “use” claims and removed any reference to a maximum total dose per day [154]. Citing his own prior decision in Distrimedic 2013 FC 1043, [209-10], held that it was proper to use this file history in interpreting the claims:

[154] While the file history of a patent application is generally considered as extrinsic evidence and not admissible, I have already held that a change in the wording of a claim as a result of an objection from the Patent Office is an objective fact that can be considered and from which an inference may de drawn

This is notwithstanding the SCC’s insistence in Free World 2000 SCC 66 that in light of the objective nature of claim construction “To allow . . . extrinsic evidence [such as statements or admissions made in the course of patent prosecution] for the purpose of defining the monopoly would undermine the public notice function of the claims, and increase uncertainty as well as fuelling the already overheated engines of patent litigation” [66]. As I argued in my post on Distrimedic, de Montigny J is right to allow this use of the file history and the SCC is wrong. This Tadalafil Dosage Form decision provides another illustration of why it is wrong to allow a patentee to try to reclaim in litigation a limitation that it gave up in prosecution. As discussed here, the alternative approach to dealing with this kind of shifting position is to invoke s 53(1), potentially resulting in the invalidation of the entire patent. Patentees might prefer to embrace file wrapper estoppel.

Tuesday, February 17, 2015

Promise of the Patent and Obviousness

Eli Lilly Canada Inc. v. Mylan Pharmaceuticals ULC / tadalafil (NOC) 2015 FC 125 de Montigny J
            2,371,684 – tadalafil dosage form – CIALIS

In Plavix 2013 FCA 186 the FCA held that utility will only be measured against the promise of the patent when an “explicit” promise is made and “it should not be taken to have assumed that every patent contains an explicit promise” [49]-[50]. As I noted in my post on that decision “The crucial question will be how explicit a promise must be in order to establish the standard for utility.” I predicted that direct statements of use such as ‘The compounds of this invention . . . are useful” for a particular purpose would be treated as promises. de Montigny J’s decision in Tadalafil Dosage Form confirms this prediction. (For a similar decision, see also 2014 FC 638, blogged here). Consequently, it seems that while Plavix may have restrained some of the more aggressive applications of the doctrine, the promise of the patent remains very much a central feature of Canadian patent law. The case also illustrates that the promise doctrine is unnecessary to deal with defects that are better addressed by the non-obviousness requirement.

It’s significant that de Montigny J began his discussion of utility with the following statement:

[85] The promise of a patent is fundamental to the utility analysis and must be ascertained at its outset. As stated by the Federal Court of Appeal in Sanofi-Aventis v Apotex, 2013 FCA 186, at para 47, “[t]he promise of the patent is the standard against which the utility of the invention described in the patent is measured”.

This would have been uncontroversial pre-Plavix, but it is difficult to square with the holding in Plavix that “it should not be taken to have assumed that every patent contains an explicit promise.” This reversion to this pre-Plavix premise suggests that Plavix’s impact may be quite limited.

The ‘684 patent was for tadalafil in a dosage form of less than 20mg. Lilly’s position was that the promise of the patent is that the claimed doses are efficacious and have a better side effects profile than sildenafil [86], while Mylan argued that the patent promised not just an improved side effects profile, but to reduce side effects to “clinically insignificant levels” [95]. The particular side effects in question were flushing, vision abnormalities, and a potentially life-threatening reduction of blood pressure when tadalafil is co-administered with nitrates, which are used to treat heart conditions. The last was most important because it is potentially fatal [90].

Key language in the patent included the following statements [93]-[94]:

Most unexpectedly, the product also can be administered with clinically insignificant side effects associated with the combined effects of a PDE5 inhibitor and an organic nitrate. Thus, the contraindication once believed 20 necessary for a product containing a PDES inhibitor is unnecessary when Compound (I) is administered as a unit dose of about 1 to about 20 mg, as disclosed herein. (4)

The present invention is based on detailed 25 experiments and clinical trials, and the unexpected observations that side effects previously believed to be indicative of PDE5 inhibition can be reduced to clinically insignificant levels by the selection of a compound and unit dose. (10)

de Montigny J construed this and other similar language as promising a reduction of side effects to clinically insignificant levels. The promise was held not to be satisfied, in part because co-administration of tadalafil and nitrates is strictly contraindicated by both US and Canadian health regulatory authorities [61]. Thus, the patent was construed as promising a regulatory standard of utility [99]. Since it is well-established that regulatory approval is not the general standard for patentable utility, it is clear that the patent was construed as promising a much higher utility than the minimum which would be required to establish patentable utility in the absence of an explicit promise.

Consequently, the patent was held to be invalid for failing to meet this stringent standard for the promised utility [122]. However, the heightened promise was not determinative, as de Montigny J held that even the promise proposed by Lilly, namely an improved side effects profile as compared with sildenafil, had not been established [144].

This decision shows that the promise doctrine continues to play a central role in the Canadian law of utility. I have been and continue to be critical of that doctrine: see Form and Function in the Law of Utility: A Reply to Gold & Shortt, (2015) 30(2) CIPR 109 (draft version available here). As I see it, even Lilly put the promise too high. The ‘684 patent is clearly useful, because the claimed invention is effective in treating ED.

With that said, the fact that tadalafil does not have an improved side effects profile as compared with sildenafil is certainly relevant to the validity of the '684 patent, but it goes to obviousness, not utility; and, as discussed yesterday, the patent was properly held to be invalid on that basis. Indeed, the question of whether the side effects are reduced to clinically insignificant levels is relevant to obviousness. This is not because obviousness is measured against statements made in the patent. Rather, as discussed in yesterday’s post, on the facts a reduced dosage is expected to result in reduced side effects, and therefore a reduced dosage form would only be inventive if the side effects were reduced to an unexpected degree. The assertion that the side effects were reduced to clinically insignificant levels was likely made to convince the examiner that the reduction in side effects was sufficiently unexpected to satisfy the inventive step requirement. This does not mean that the patentee should be held to such promises of utility, as some have suggested. On the contrary, it is will established that the standard for obviousness is objective; it is what a skilled person would find obvious, not what the inventor thought was obvious. (See eg Nichia Corporation v Argos Ltd, [2007] EWCA Civ 741 [13].) The proper response is simpler. Regardless of what the patentee might have “promised” or not “promised” if the reduction in side effects are not in fact large enough to be unexpected to a person skilled in the art, then the patent will be invalid for obviousness. That is exactly what happened in this case.

Monday, February 16, 2015

Reduced Dosage Form of Tadalafil Obvious to Try

Eli Lilly Canada Inc. v. Mylan Pharmaceuticals ULC / tadalafil (NOC) 2015 FC 125 de Montigny J
            2,371,684 – tadalafil dosage form – CIALIS

In this NOC proceeding de Montigny J held that Lilly’s tadalafil dosage form patent was invalid for failure to satisfy the promise of the patent, as being anticipated, and for obviousness. While the decision raises some interesting legal points regarding the promise of the patent, anticipation, and prosecution history estoppel, the holding respecting obviousness was quite straightforward and it is convenient to begin by discussing that aspect of the case.

Both sildenafil and tadalafil were known in the prior art for the treatment of ED. Lilly’s ‘784 patent, claiming tadalafil for the treatment of ED, disclosed unit doses of tadalafil from 0.2 to 400 mg [4] (and see 2015 FC 17, blogged here, holding the ‘784 patent to be valid). Sildenafil was marketed in doses of 25 mg, 50 mg, and 100 mg, with 100mg being the most common dose [6], [10]. Sildenafil has a variety of side effects, including flushing, vision abnormalities, and a negative interaction with nitrates that are used to treat heart conditions [6]. Early studies with tadalafil used 100mg doses. Lilly researchers discovered that despite being equipotent with sildenafil, tadalafil did not need high doses, and lower doses of tadalafil could be used effectively and with reduced side effects. This discovery was the basis for the ‘684 patent [12]..

There was some debate as to whether the inventive concept included reduced side effects, or was simply a dosage of less than 20mg for the treatment of ED [164]. If the inventive concept was simply the dosage, then it seems to me that it must be obvious, as the ‘784 patent disclosed that dosages of tadalafil including that range would effectively treat ED, so there would be no technical contribution to what was already known. For the invention to be non-obvious, there must be something surprising about the claimed dosage range, such as unexpectedly reduced side effects. In any event, de Montigny J did not need to resolve this debate as he found that the invention was obvious even if the inventive concept included reduced side effects. He found on the facts that in drug development it is standard practice to lower the dosage to reduce side effects [168] and there is a standard process for determining a minimal effective dose [169], so it would have been routine for a skilled person to carry out a dose escalation study starting at 5mg and moving up to 50mg [170]. Even though the optimal dosage regime could not have been predicted in advance, that lower dosages were effective with reduced side effects was the unsurprising outcome of a routine research program that a skilled person would be motivated to carry out [172]. This is a classic case of an invention that is obvious to try. Lilly argued that a skilled person would not have been motivated to try doses of less than 50mg, but de Montigny J rejected this on the facts [165].

Tuesday, February 10, 2015

Moot NOC Proceedings Remain Moot Despite Impending CETA

Janssen Inc v Teva Canada Ltd 2015 FCA 36

This is an appeal from a decision of Barnes J in an NOC proceeding (2014 FC 1192, not yet publicly available), refusing to grant an order of prohibition [5]. The NOC was issued eight days after the judgment [6]. The patentees appealed four days later. Unsurprisingly, the FCA has dismissed the appeal as moot, in accordance with its long-established jurisprudence.

The FCA noted that while it does have the discretion to hear a moot appeal, to date it has exercised that discretion only once [8], [11]. Janssen’s main argument that the FCA should hear the appeal in this case is that Art 9 bis of the IP chapter of CETA gives all litigants “equivalent and effective rights of appeal” [12]. But as the FCA pointed out, CETA is not yet part of Canadian law [14].

Thursday, February 5, 2015

Compound Pre-Judgment Interest Arrives in Canadian Patent Litigation

Eli Lilly and Co v Apotex Inc / cefaclor, 2014 FC 1254 Zinn J [Cefaclor Damages]
            1,133,0071,146,5361,133,4681,150,725 [the Lilly Patents]
            1,095,0261,132,5471,136,1321,144,924 [the Shionogi Patents]

Zinn J’s Cefaclor Damages decision is a major step in taking the law of pre-judgment interest in an economically sound direction. The first step was taken by Gauthier J in liability phase of this bifurcated action, Cefaclor Liability 2009 FC 991 aff’d 2010 FCA 240. As described in more detail in my blog post on the interest issue in that decision, the common law traditionally prohibited interest and while that prohibition was statutorily reversed those statutes did not allow for compound interest. In Bank of America 2002 SCC 43, (aka Clarica Trust,), the SCC recognized that simple interest is not fully compensatory, and consequently, the SCC held that even if compound interest was not available under the relevant statute, it was available under the common law of contract as compensation, so long as it was claimed as such and proven.

Wednesday, February 4, 2015

Allegation of Non-infringement Need Not Be Put “In Play”

Bristol-Myers Squibb & Gilead Sciences v Teva / efavirenz (NOC) 2015 FCA 3 Near JA: Dawson, Stratas JJA aff’g 2014 FC 30 Barnes J
             2,279,198 / efavirenz / ATRIPLA

In this NOC proceeding, the FCA has affirmed Barnes J’s decision that the patentee failed to established that Teva’s product would infringe the ‘198 patent for a particular crystalline form of efavirenz. The decision at first instance (blogged here) turned entirely on the facts, and the FCA affirmed on the basis that the appellant patentee had not established and palpable and overriding error.

The only point of general legal interest is that the FCA held that when non-infringement is alleged in an NOC proceeding, there is no evidentiary burden on a generic to adduce evidence in order to put that allegation “in play.” It is enough to make the allegation in the NOA, and the burden is then on the patentee to prove infringement on the balance of probabilities [11], [8]. This is in contrast to an allegation of invalidity, in which the generic must adduce some evidence to put the allegation of invalidity into play before the burden shifts to the patentee to disprove invalidity. The reason for the difference is the presumption of validity under s 43(2) of the Act [10].

Tuesday, February 3, 2015

"That Mode Is Adopted Which Is . . . the Least Burthensome to the Defendant"

Eli Lilly and Co v Apotex Inc / cefaclor, 2014 FC 1254 Zinn J [Cefaclor Damages]
            1,133,0071,146,5361,133,4681,150,725 [“Lilly Patents”]
            1,095,0261,132,5471,136,1321,144,924 [“Shionogi Patents”]

In the liability phase of this bifurcated action, Cefaclor Liability 2009 FC 991 aff’d 2010 FCA 240, Gauthier J held that at least one valid claim of each of the eight patents was infringed by Apotex. Lilly elected damages, which were assessed by Zinn J in the decision at hand. Sunday’s post concerned the misnamed “NIA defence,” which turned entirely on a question of law. Today’s post looks at what I will call “reverse springboard” damages, though that is probably also a misnomer. The question is whether Lilly should be able to claim lost profit damages for sales it would have made in the but for world, even though in the relevant period in the actual world Apotex was selling non-infringing product.

At issue were two set of four patents relating to processes for producing cefaclor. (The so-called “Shionogi patents” had been assigned to Lilly by Shionogi. The different sets of patents related to somewhat different processes.) There were essentially three processes used to make the cefaclor imported and sold by Aptoex: Kyong Bo, Lupin 1 and Lupin 2. The first two processes were infringing, but Lupin 2 was non-infringing. (More precisely, Lilly failed to prove that Lupin 2 infringed and Zinn J took this as tantamount to a finding of non-infringement for the purposes of the damages phase [61].) In the liability phase it was established that the last shipment of infringing cefaclor was received by Apotex on June 3, 1998 [Liability 228-29], [58]. Presumably there was some subsequent period during which Apotex sold infringing product that it had imported prior to that time, but unfortunately, it is not clear from either the liability decision or the damages decision exactly when the last infringing product was sold by Apotex in Canada.

On the question of when Apotex would have entered the market with non-infringing product in the “but for” world, Apotex argued that

proof of what it would have done in the but-for world is established by what it did in the real world. In the real world, when it determined that the process being used infringed the patents, it sought out a non-infringing process and continued selling in the marketplace. [63]

Zinn J rejected this, and held that in the but for world, Apotex would not have been in the cefaclor market under April 19, 2000, when the last of the Shionogi patents expired [70]. It is implicit in this exchange that in the real world, the last infringing product was sold by Apotex prior to that time. My understanding is that Apotex stopped selling infringing product by the summer of 1999 at the latest, so that all product sold in the real world in the period from (at least) the late summer of 1999 to April of 2000 was non-infringing.

So, my analysis of this point proceeds on the basis that Lilly was awarded lost profit damages on sales it would have made in the but for world for a period during which Apotex was selling non-infringing product in the real world.

On its face, Zinn J’s reasoning is based simply on the construction of the but for world on the facts. The main evidence relied on by Apotex to establish that in the but for world it would have used a non-infringing process, at least as of the summer of 1999, is that it did so in the actual world. Specifically, in the real world, Apotex “sought out” a non-infringing process “when it determined that the process being used infringed the patents” [63]. Zinn J accepted this as true [63], but he was not persuaded that that what Apotex would have done in the but for world. His reasoning is quite brief, but if I understand it correctly, he is saying that Apotex developed an NIA only because it was in the market and wanted to stay in the market. If it had not entered the market in the first place, it would not have had any incentive to develop the NIA [63]-[64]. That, while it would have been technically feasible for Apotex to have marketed non-infringing product, it would not have been motivated to do so. Instead, it would have stayed out of the market entirely and Lilly would have had the market to itself until the expiry of the last Shionogi patent, which would have allowed Apotex to produce non-infringing product using the Kyong Bo process [69].

This reasoning calls to mind Open Window Bakery 2004 SCC 9, in which the plaintiff had been wrongly dismissed without cause and without notice. The trial judge held that but for the breach of contract, the plaintiff would not have been dismissed, but would have been retained for the entire remainder of the contract term. The defendant argued that on the contrary, but for the wrongful dismissal, the plaintiff would have been dismissed without cause but with notice. (The putative cause for dismissal involved dishonesty, and while the plaintiff had acted inappropriately [2000] OJ 5004 [70], the trial judge held that dishonesty was not established [112]. The trial judge also held that the employees who had made honest mistakes were generously treated by defendant’s CEO [115].)

So, in Open Window Bakery there were two ways in which the defendant might have avoiding wrongdoing: (1) it might have retained the plaintiff for the duration of the contract; or (2) it might have terminated the plaintiff without cause but with notice. The trial judge found that in fact the defendant would have chosen option (1), though option (2) would have been less burdensome. This case presents much the same scenario. Apotex might have avoided infringement by (1) staying out of the market for until the expiry of the patents at issue; or (2) by developing a non-infringing alternative. Zinn J found that in fact Apotex would have chosen option (1), though option (2) would have been less burdensome.

The SCC in Open Window Bakery reversed the trial judge, without disputing his finding of fact, on the basis that as a matter of law, “where there are several ways in which the contract might be performed, that mode is adopted which is . . . the least burthensome to the defendant” [11] (and see similarly [20], [21]). Now, in Open Window Bakery the SCC emphasized this is a principle of contract law, and distinguished it from “a tort-like inquiry as to what would have happened if [the plaintiff] had not breached its contractual obligations to [the defendant]” [19]. But I am not sure that the trial judge’s approach really reflected a tort-like analysis. The tort analogy would be more exact if there were two ways of avoiding liability, and one would have resulted in harm to the defendant. I’m not sure how tort law would handle such a case, but it is not clear to me that it would necessarily be strictly by an inquiry as to what most likely would have happened. I suggest that rather than considering the principle of “least burdensome performance” as being a unique aspect of contract law, it can be explained as a presumption of law regarding the most likely course of action in fact, which simply happens to arise more commonly in contract.

In any event, while patent infringement is often described as a kind of “statutory tort” [10], it is not a tort as such, and the principles of patent damages must be interpreted in a manner that is consistent with the purposes of the Patent Act. The relevant principle is that the patentee should be rewarded commensurately with the social value of its invention, and that is the difference between the value of the invention and the value of the best non-infringing alternative. To posit that Apotex would not have entered with a non-infringing method means that Lilly would be rewarded as if it process were more valuable than it is really is. Consequently, it seems to me that the principle of least burdensome performance should apply, at least presumptively, under the Patent Act as much as in contract.