Contributory Infringement in Canadian Law

I have a new paper entitled "Contributory Infringement in Canadian Law," forthcoming in the CIPR. A draft version is available on SSRN. 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 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.

Medical Records Patents Valid and Infringed

Bessette c. Québec (Procureure générale du Québec) 2019 CF 393 LeBlanc J

2,233,794 / 2,329,598 / Distributed network system for management of medical records

This very long decision, holding M Bessette’s 794 and 598 patents to be infringed and most of the key claims to be valid, turned largely on the evidence. M Bessette was an emergency physician at a Montreal hospital in the 1990s. Patient information was held in multiple locations and even when found, the crucial information was often buried in detail. He conceived of a system which enable medical staff to quickly access relevant medical information. Rather than collecting all the information in one place, the system used a data structure with pointers to the remote location for retrieval on demand [4], [60]-[65]. The 794 patent related to a distributed network system for accessing medical records. The 598 patent was an improvement which enabled automatic “push” updating of the information [5].

While a system of this type would doubtless have been developed eventually as a result of increasing pervasiveness of distributed internet based database systems, M Bessette’s thinking was ahead of its time – exactly how far ahead is a matter for the obviousness discussion. In any event, it was certainly a very good idea. In 1998 M Bessette set out to commercialize his invention. He initially attracted considerable interest from a number of parties, including private sector technology firms, and the Quebec government, which would have had to implement the system in the Quebec hospital system. For reasons that are not entirely clear, the Quebec government ultimately lost interest by about 2000 [66]-[77]. Several years later, in around 2005, the Quebec government again decided that an internet based medical records system was a good idea. After several years of development, the accused infringing system, the Dossier Santé Québec [DSQ], was implemented in 2013 [2], [253]-[257]. There seems to be an interesting business school case study here regarding government nimbleness in innovation, but that is not really relevant to the patent case.

So far as infringement is concerned, there was the usual detailed construction of the terms of the claims (all of which were agreed to be essential [108], [242]). But the 794 patent was quite broad, and while the DSQ system had a number of features not disclosed by the 794 patent, the question, of course, is not whether the patent discloses all of the features of the allegedly infringing system, but the opposite, whether the defendant’s system incorporates all the essential features of the patented system [295], [331]. At the end of the day, Claims 1 to 8 of the 794 patent were infringed [320], as were many of the claims of the 598 patent.

The main invalidity attack on the 794 patent was based on anticipation. While various prior publications had disclosed aspects of the patented inventions, no single publication disclosed everything. One key difference was that the invention used pointers, and particularly a two-component pointer [412], [425], [427].

Given the rapid development of internet based data systems, a key question related to the 794 patent in particular would seem to be whether it was truly an inventive technical advance, or whether M Bessette was simply the first to see an opportunity which was obvious in light of the rapidly advancing state of the art. This situation calls to mind the infamous Selden automobile patent, which essentially claimed the automobile. It is now generally considered to have been a paradigmatic example of a bad patent, as the true advance in the basic automobile was not the concept of putting an engine on a cart, but rather the development of a light enough engine. Now, all inventions are obvious once the state of the art has advanced far enough, and it is entirely possible that M Bessette was sufficiently visionary that his conception would have been inventive at the relevant time. It is also possible that his particular implementation, using pointers, was inventive. But one way or the other, this would seem to be the key question. Curiously, the expert for the defendants barely touched on this issue, with a few conclusory statements rather than a detailed analysis [437]. The expert for the plaintiff therefore was instructed not to address the issue either [438]. Consequently, LeBlanc J was left to decide the issue of obviousness largely without the benefit of expert evidence on this factually driven inquiry [439]. Remarking that the obviousness argument “repose sur une preuve largement déficiente” [443], he rejected the attack, partly on the basis of the burden [441], and partly on what evidence was available [442].

The 598 patent was attacked for obviousness, insufficiency and overbreadth [448]. The key point on obviousness was the use of “push” notifications, and those claims which omitted this feature were held to be obvious [488], while the attack was otherwise rejected. The overbreadth and insufficiency arguments were also rejected on the facts.

The trial was bifurcated and damages was not addressed.

Short Blogging Break

Exam period is upon us, and I'll be taking a short blogging break to make up and grade exams. I'll return soon and start with any decisions I might have missed, including the very long Bessette c. Québec 2019 CF 393.

A Stay in Favour of Provincial Superior Courts Will Be Granted Only in the Clearest of Cases

Stelpro Design Inc. v. Thermolec Ltée, 2019 FC 363 St-Louis J

While the Federal Court has exclusive jurisdiction to annul a patent (Federal Courts Act s 20(1)), its jurisdiction in respect of infringement is concurrent with that of the provincial superior courts: s 20(2). In Stelpro, the patentee, Thermolec, brought an action in the Superior Court of Québec, and Stelpro defended there in part on the basis that the patent was invalid. Stelpro then brought an impeachment action before the Federal Court. Stelpro moved to have Quebec action stayed; that motion was refused by the Quebec court: [9]. Thermolec in turn sought to have the Federal Court action stayed by the Federal Court. That motion was also refused by St-Louis J in this decision.

The facts are similar to those in Safilo Canada Inc v Contour Optik Inc 2005 FC 278, in which Safilo brought action for impeachment in the Federal Court a few hours before the patentee, Contour, brought an action in the Superior Court of Québec. (In Safilo it is clear that the patentee was motivated to bring its action in the Quebec courts in part by the prospect of obtaining an interlocutory injunction, which is of course essentially impossible for a patentee to obtain in the Federal Court, and which was granted by the Quebec court. One might speculate that Thermolec’s motivation was the same, as it was also granted an interlocutory injunction in Quebec).

In considering whether to grant a stay, both de Montigny J in Safilo and St-Louis J in the case at hand, referred to the list of relevant factors summarized by by Dubé J. in White v EBF Manufacturing Ltd, 2001 FCT 713:

1. Would the continuation of the action cause prejudice or injustice (not merely inconvenience or extra expense) to the defendant?

2. Would the stay work an injustice to the plaintiff?

3. The onus is on the party which seeks a stay to establish that these two conditions are met.

4. The grant or refusal of the stay is within the discretionary power of the judge.

5. The power to grant a stay may only be exercised sparingly and in the clearest of cases.

6. Are the facts alleged, the legal issues involved and the relief sought similar in both actions?

7. What are the possibilities of inconsistent findings in both Courts?

8. Until there is a risk of imminent adjudication in the two different forums, the Court should be very reluctant to interfere with any litigant's right of access to another jurisdiction.

9. Priority ought not necessarily be given to the first proceeding over the second or, vice versa.

Two important additional factors emerged in Safilo.

First, only the Federal Court can rule on the in rem validity of the patent and dispose of it at a national level, while the Superior Court judgment would only be valid between the parties and in Quebec. This strongly suggests that the FC action should not be stayed. To address this difficulty, the patentee in Safilo, who was seeking to pursue the action in Quebec, gave an undertaking that if the final result in the Quebec litigation was that the patent was invalid as between the parties, the patentee would agree to the striking out of the patent by the Federal Court [33]. (This practice was derived from the copyright case of Apotex v Astrazeneca [2003] 4 FC 826.) A similar undertaking was given in this case. In Safilo de Montigny J indicated that an undertaking “makes moot the distinction between the in rem and in personam nature of the remedies which the Federal Court and Superior Court may grant respectively” [34]; in this case, St-Louis J quoted this statement and remarked “I have no reason to disagree” [45]. The undertaking thus removes one major substantive objection to staying the FC action.

As noted by St-Louis J at [42], a second important consideration emerging from Safilo is the relative state of advancement in the proceedings in each of the courts. In Safilo, de Montigny J granted the stay, essentially on basis that case was further advanced in Quebec and in light of undertaking to expunge given by the patentee [38]. (And see also YKK Zipper v Wahl Bros (1972), 8 CPR(2d) 131, also granting a stay when the proceedings in the Superior Court of Québec were very far advanced when the FC action was initiated.)

In Stelpro, in contrast, St-Louis J refused to stay the Federal Court action. The decisions are straightforwardly distinguishable, because, as St-Louis J emphasized, in Stelpro, unlike in Safilo, the proceedings on the merits were at an early stage in both courts.

St-Louis J concluded that

[48] As per the Safilo Canada guidelines, the power to grant a stay may only be exercised sparingly and in the clearest of cases. As can be shown from the paragraphs above, I have not been convinced that this is “the clearest of cases”, and will thus not grant the stay.

This is despite the undertaking given by Thermolec to agree to consent to the entry of a judgment in the Federal Court that mirrors the Superior Court’s future decision on the validity of the patent [9], and despite the fact that a stay had been refused by the Superior Court of Québec, giving rise to a real prospect of duplicative litigation and conflicting outcomes.

This illustrates that the principle that a stay will granted only in the rarest of cases is an important one. Per the 8^th point from White v EBF, “the Court should be very reluctant to interfere with any litigant's right of access to another jurisdiction.” While I acknowledge the force of that principle, and St-Louis J’s decision in this case does appear to be consistent with the prior caselaw, I must say that the result does not seem entirely satisfactory.

UKSC Weighs in on Obvious to Try and Golden Bonus

Actavis v ICOS [2019] UKSC 15 (27 March 2019) Lord Hodge: Lady Hale, Lords Kerr, Sumption, Briggs aff’g [2017] EWCA Civ 1671 Kitchin LJ: Lewison, Floyd LLJ rev’g [2016] EWHC 1955 (Pat) Birss J

EP (UK) 1,173,181 / tadalafil dosage / CIALIS

In Actavis v ICOS the UKSC has affirmed the decision of the EWCA holding ICOS’s dosage patent for tadalafil to be obvious on an obvious-to-try analysis. As discussed here, the EWCA decision was consistent with the way the obvious-to-try analysis has consistently been applied by the Federal Courts. The decision of the UKSC provides further reassurance, if any was needed, that the Canadian approach is sound. Along the way, the UKSC expressly affirmed the “golden bonus” rule: if a particular invention is obvious for one reason, it does not become non-obvious simply because it had additional unexpected or non-obvious advantages.

The obvious-to-try analysis was endorsed by the SCC in Sanofi 2008 SCC 61, where the Court stated that:

[65] I am of the opinion that the “obvious to try” test will work only where it is very plain or, to use the words of Jacob L.J., more or less self-evident that what is being tested ought to work.

This might lend itself to the view that it must be self-evident, prior to any experimentation, that the claimed invention will solve the problem at hand. But the Court immediately went on to say that for an invention to be “obvious to try”, there must be evidence that it was “more or less self-evident to try to obtain the invention” [66]. That is, it is trying that must be self-evident, not that that the specific claimed invention would work. In Actavis v ICOS, the UKSC addressed exactly this question.

The facts in Actavis v ICOS are simple, and raise a paradigmatic version of the obvious-to-try analysis. The key claim was to a 5mg daily dose of tadalafil for the treatment of ED.^* Tadalafil was known to be an effective oral treatment for ED, but the optimal dosage was not part of the the prior art [23]. It was obvious to carry out a dose-ranging student to determine the appropriate dose. The initial dose ranging study would be of on demand dosing using 25, 50 and 100mg doses. This study would have revealed a therapeutic plateau in that range [35]-[36]. Birss J held that it was “very likely” that a skilled team would then investigate lower doses. Both the EWCA and the UKSC treated this “very likely” finding as meaning that it would have been obvious to do so; ie, that it would have been obvious to try lower doses. Birss J held that if they had done so they would have discovered that a 5mg dose tadalafil was efficacious and had reduced side effects; that is, the posita would have discovered the invention. There would, however, have been no prior expectation that a dose of 5mg would have been efficacious; on the contrary, it would have been surprising that such a low dose would be effective [37]. It would have doubly surprising that the 5mg dose also had reduced side-effects [37].

Birss J held that claims at issue to be non-obvious, essentially because “the claimants failed to prove that efficacy at 5mg tadalafil was predictable or worth considering by the skilled team based on the properties of tadalafil as compared to sildenafil,” and “[a]ssuming a 5mg/day dose of tadalafil was tested, it would not be tested with a reasonable expectation of success” [38]. In other words, Birss J held that the 5mg dose was not obvious because, if the skilled team had been asked, prior to testing, whether a 5mg dose would have been efficacious, the answer would have be "probably not". In Birss J's view, the conclusion of non-obviousness followed notwithstanding that the entire course of research leading to the invention would have been obvious to try. The EWCA reversed, and Lilly (the exclusive licensee), appealed.

The key question was summarized in Lilly’s central submission [50]:

the question which the Court of Appeal should have asked was whether at the priority date, before the skilled team embarked on its investigation, it was obvious in the light of [the knowledge that tadalafil is effective for treating ED], and without knowledge of the alleged invention, that a 5mg per day dose of tadalafil would be a safe and effective treatment, with minimal side effects, for sexual dysfunction.

That is, the invention is not obvious unless there would be a reasonable expectation, prior to undertaking the dose-ranging study, that the 5mg dose would work. A reasonable expectation that some minimum dose would be safe and effective, and that the minimum could be determined from a dose-ranging study, would not suffice, unless there was a reasonable expectation that the 5mg dose in particular would work.

The UKSC rejected this submission [52]: “uninventive steps which the skilled team would take after the priority date to implement the [knowledge that tadalafil is effective in treating ED] are not excluded from consideration in assessing the obviousness of the alleged invention at the priority date” [59]. On the facts, the UKSC affirmed the EWCA in holding the patent to be obvious [105]. This is a clear holding that the mere fact that there would be no reasonable prior expectation that the particular claimed invention – the 5mg dose – would work, does not in itself mean the invention is non-obvious.

The UKSC elaborated with nine points.

First, “it is relevant to consider whether at the priority date something was ‘obvious to try’” [65]. I take this to mean the same as the SCC meant in Sanofi when it held at [64] that the “obvious to try” inquiry is one factor to be considered in the obviousness inquiry. An invention which is obvious to try is not necessarily obvious for that reason alone, as there may be invention in getting it to work.

The second point was that “the routine nature of the research and any established practice of following such research through to a particular point may be a relevant consideration” [66]. Even if it was not obvious in advance that the invention would work, it may nonetheless be obvious, if the route to success was obvious to try, and there were no difficulties along the way requiring invention. The Court continued by saying that this is “weighed against the consideration that the claimed process or product was not obvious to try at the outset of a research programme” [66]. This is a bit obscure to me. The point appears to be that the fact that the particular claimed product – the 5mg daily dose – was not obvious to try at the outset is a consideration. I’m not sure why that should be a consideration, as the premise here is that the specific claim product would not have been predicted in advance, even though it was the outcome of a routine investigation.

“Thirdly, the burden and cost of the research programme is relevant” [67]. The parallels the Sanofi factor asking as to the “extent, nature and amount of effort required to achieve the invention? Are routine trials carried out or is the experimentation prolonged and arduous, such that the trials would not be considered routine?” [69] Even trials that are technically routine might nonetheless rise to the level of invention if sufficiently arduous: “A patient searcher is as much entitled to the benefits of a monopoly as someone who hits upon an invention by some lucky chance or an inspiration” (Halocarbon [1979] 2 SCR 929).

“Fourthly, the necessity for and the nature of the value judgments which the skilled team” [68]. Routine work is no longer routine if it requires extensive exercise of judgement.

“Fifthly, the existence of alternative or multiple paths of research will often be an indicator that the invention contained in the claim or claims was not obvious” [69]. Again, this corresponds to Sanofi (by coincidence also at [69]): “Are there a finite number of identified predictable solutions known to persons skilled in the art?”

“Sixthly, the motive of the skilled person is a relevant consideration. The notional skilled person is not assumed to undertake technical trials for the sake of doing so but rather because he or she has some end in mind. It is not sufficient that a skilled person could undertake a particular trial; one may wish to ask whether in the circumstances he or she would be motivated to do so” [70]. The invention may lie in the decision to try a pursue a particular line of investigation, even if the inquiry is routine after that decision is made. Put another way, an invention that is not obvious to try, is not obvious under the obvious to try test. The invention may lie either in the decision to pursue a particular line of inquiry, or in overcoming obstacles along the way.

“Seventhly, the fact that the results of research which the inventor actually carried out are unexpected or surprising is a relevant consideration as it may point to an inventive step, at least in so far as it suggests that a test was not obvious to try or otherwise the absence of a known target of the research which would make it less likely that the skilled person would conduct a test” [71]. I take this to be related to the previous point. Mere unexpected results – as on the facts, the unexpectedly low effective dosage – does not establish non-obviousness, but the unexpected nature of the results may be relevant to the extent that it supports a finding that the inquiry was not obvious to try in the first place.

“Eighthly, the courts have repeatedly emphasised that one must not use hindsight, which includes knowledge of the invention, in addressing the statutory question of obviousness” [72]. This point is very well recognized by the Canadian courts.

The ninth point is particularly significant, as it is the first time, to my knowledge, that the UKSC has expressly affirmed the “golden bonus” rule. If a particular invention is obvious for one reason, it does not become non-obvious simply because it had additional unexpected or non-obvious advantages. The leading case is Hallen & Co v Brabantia (UK) Ltd [1991] RPC 195 (EWCA), in which it was obvious to coat a corkscrew with slippery PTFE in order to aid its penetration into the cork. The EWCA held that the invention did not become non-obvious simply because it turns out that it also had a non-obvious benefit of improving extraction of the cork. That holding has now been approved in principle by the UKSC [73], and also apparently applied it on the facts, as the 5mg dosage had a surprising beneficial property of minimal side effects, which nonetheless did not make that dosage regime an invention [31].

While the UKSC held the claims at issue to be obvious, the Court took pains to say that dosage patents are not suspect per se, approving the view that: “there [is] no policy reason why a novel non-obvious dosage regime, which was the product of expensive and unpredictable research, should not be rewarded with a patent of a Swiss-form claim” [76], [103]. Moreover, there is no general rule “that the product of well-established or routine enquiries cannot be inventive” [103]. 

It should not be very surprising that the SCC and UKSC jurisprudence on obvious-to-try are consistent, given that the SCC in Sanofi relied heavily on the prior UK case law. It is nonetheless reassuring that a consistent body of jurisprudence has developed, as this indicates that the charted path was the right one.

*The representative claim was Claim 7, which was effectively to a dosage form of tadalafil suitable for oral administration up to a maximum total dose of 5 mg per day, for the treatment of sexual dysfunction.

Common Hearing of Common Issues in NOC Proceedings is not Impermissible Joinder

Bayer Inc v Apotex Inc 2019 FC 191 Tabib J
            2,547,113 / 2,624,310 / 2,823,159 / rivaroxaban

Bayer is the plaintiff in two NOC actions, one against Teva, and a second, brought a month later, against Apotex [2]. Tabib J was appointed the case management judge in both actions [3]-[4]. It appears that she proposed that the common invalidity issues be tried together, as in Biogen v Taro 2018 FC 1034, in order to avoid unnecessary duplication and facilitate scheduling [22]. Both generics were amenable, but Bayer objected on the basis that doing so would constitute a joinder of actions prohibited by s 6.02 of the NOC Regulations.

Tabib J explained that what was being proposed was not consolidation, but rather common hearing of the common issues [12], [14]. Discoveries might be coordinated on consent, but need not be, and “the trials of both actions would proceed together, but only in respect of common issues, namely, claim construction and invalidity, for which the evidence would be adduced only once for the purposes of both; with respect to all other issues, including any issue of infringement, the trials would continue separately; finally, and just as importantly, two separate judgements would necessarily issue, each having binding effect only on the parties to which it relates, and each of which could even issue at different times” [14]. 

She noted that on a plain reading s 6.02 prohibits only joinder or consolidation, not a common hearing [16]. She also noted that the purpose of the prohibition was to restrict the number of issues in dispute in order to facilitate timely resolution of the action and to avoid complicating the assessment of damages [17]. She observed that ordering a common hearing of common issues was consistent with a purposive construction of the section, as the common hearing would likely facilitate timely resolution of the cases by facilitating scheduling [21], and would not introduce complications such as the need for amendments to the pleadings and so on, because the actions remain separate [20].

Tabib J therefore ordered that the two actions would be heard concurrently in respect of all common invalidity issues, but would proceed separately in all other respects.

First Person & Second Person Requires Control at a Minimum and Does Not Include Additional Persons Carrying out Common Design

Genentech, Inc v Celltrion Healthcare Co, Ltd 2019 FC 293 Aylen CMJ
            HERZUMA HERCEPTIN / NOC

In this motion the plaintiffs Genentech, Inc. and Hoffmann-La Roche Ltd sought to join additional defendants and amend their statement of claim in this NOC s 6(1) action. While I don’t usually blog on procedural decisions, it raises a few interesting issues, which I will note, without engaging in a detailed analysis.

Celltrion Healthcare Co, Ltd (CTHC) is seeking to bring HERZUMA to market as a biosimilar to HERCEPTIN. CTHC filed the NDSs and served the NOAs at issue [33]. The plaintiffs alleged that CTHC entered into an exclusive partnership to commercialize HERZUMA under a Business Collaboration Agreement, with various other parties (including eg Celltrion Inc and Teva Canada Ltd) who would collectively be responsible for manufacturing, importing, marketing, and seeking regulatory approval for HERZUMA [33]. The plaintiffs sought to join these “Additional Defendants.”

The first issue was whether the Regulations permit a section 6(1) action to be brought against a person who is not a “second person” [14]. Aylen CMJ held that the answer is clearly no [24]. Her reasoning was based both on a plain reading of the regulations, which create a statutory cause of action against a second person only [15]; and on a purposive interpretation of the provision, noting that “the limitation on the claims that may be brought within the context of the Regulations is driven by a critical consideration – namely, the speed by which such actions must be determined” [19].

Given the conclusion that non-second persons cannot be joined, the next question was whether these Additional Defendants should properly be considered as second persons. This raised the question of the correct interpretation of “second person” and whether the proposed pleadings brought the Additional Defendants within that definition [24].

On the legal point, the plaintiffs had asserted that the definition of second persons is flexible enough to include the Additional Defendants by virtue of the common law concepts of agency, corporate control, inducement and common design [34]. Aylen CMJ reviewed a number of cases considering whether “control” for the purposes of being a first person under s.8 of the PMNOC can only mean “control” in the traditional sense of corporate structure, or whether “control” can have a broader meaning [26]-[32]. She concluded that the scope of the definition of a “first person” remains an unsettled issue [32], and by parallel reasoning, it remained possible that a person other than the person who filed the NDS might be considered a second person using a similar control test [32].

However, she held that the case law, while leaving the door open to a broader interpretation of the proper scope of a "first person," "is premised on the notion that the first person is controlled by the proposed additional first person, whether by virtue of corporate organization or some other means” [34]. The proposed pleading did not allege control, but merely that the parties were carrying out a common design. Aylen CMJ held that this could not satisfy the requirement for control, and hence sufficient material facts had not been pleaded to support an allegation that the Additional Defendants fell within the definition of a “second person,” even under the broader interpretation that remains an open question in the case law.

She did, however, allow the plaintiffs to plead infringement by common design against CTHC itself [38], on the view that the concept of infringement by common design, or acting in concert, has been recognized in Canadian law, even though it has not been applied in the context of a patent infringement action, and the pleading should therefore not be struck on a pleadings motion [38]-[43]. She also held that when alleging infringement by common design, it was not necessary to join all the potential joint tortfeasors in order to allow the action to proceed against one of them [44].

Article on Contributory Infringement in Canada

I have a new article on Contributory Infringement in Canadian Law forthcoming in the Canadian Intellectual Property Review. 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 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.

Geogrid Patent Valid but not Infringed

Tensar Technologies Ltd v. Enviro-Pro Geosynthetics Ltd 2019 FC 277 Manson J
            2,491,858 / multiaxial geogrids

Geogrids are a heavy duty plastic mesh used for applications such as holding rocks and fill in place in civil engineering projects. The 858 patent relates to multiaxial geogrids, which have a hexagonal rather than rectangular mesh pattern. In this decision Manson J held that Tensar’s 858 patent relating to was valid but not infringed. The decision turned entirely on the facts.

Geogrids were an improvement over the prior art, which primarily consisted of woven or knitted geosynthetics, like a heavy duty landscape fabric. The first generation geogrids had a primarily rectangular form. The multiaxial form had a number of advantages, such as strength in more directions [47], and defendant, Enviro-Pro, lost market share to Tensar soon after Tensar introduced its multiaxial product [61]. Enviro-Pro then reached out to its Chinese supplier of geogrids, TMP, to see if it could make a competing product [62]. In order to avoid infringing Tensar’s patent, Enviro-Pro instructed TMP to make the product according to the prior art Wyckoff patent [63]. Before launch, Enviro-Pro even asked an independent consultant to check a sample of the TMP product to make sure it was manufactured entirely in accordance with the Wyckoff patent. The consultant had been provided with the Wyckoff patent, but not with a sample of Enviro-Pro’s product, and it seems that he did not appreciate the significance of some of the fine points (or even some of the basic points) of the patent [64]. This seems like an instance of failing to consider “where the shoe pinches”.

Because it had taken these steps, Enviro-Pro tried to run a Gillette defence, on the basis that it had manufactured its product in accordance with the prior art. Unfortunately, while TMP may have been instructed to follow the Wyckoff patent, the evidence did not establish it had actually done so [139]. There were significant differences between the teaching of the Wyckoff patent and the material made by TMP and sold by Enviro-Pro [137]. Accordingly, the Gillette defence failed [140].

On claim construction there was one contentious term, “continuous orientation.” Manson J did not entirely accept the evidence of either expert in coming to his conclusion [100]-[120]. This simply illustrates the well-established rule that claim construction is a matter for the Court [70].

On obviousness, Manson J found that the prior art patents all had a significant difference from the teachings of the 858 patent [150]. Manson J took into account the need to avoid hindsight, as well as the actual course of conduct – which had required considerable experimentation by an experienced engineer who brought a novel perspective to bear, having previously designed military armour – and concluded that the differences would not have been obvious to a posita [162].

While the patentee prevailed on validity, Manson J held that Tensar had failed to establish infringement [173-74]. This was not a case in which non-infringement was established. Rather, Manson J had concluded that the element of continuous orientation required a predominant or substantial degree of uninterrupted molecular orientation in a specified area of the grid, and the testing methods used by the patentee where simply incapable of establishing the degree or direction of orientation [171]. There being no evidence to establish infringement, the defendant prevailed on the burden of proof [172]. The defendant also tendered evidence of non-infringement, but that evidence was also deficient [184], [188]. While Manson J considered that the defendant’s evidence offered “some limited additional support” for the conclusion of non-infringement [188], the case was decided primarily on the basis of lack of evidence of infringement.

Routine Correction of Inventorship

General Transport Equipment Pty Ltd v Canada (Attorney General) 2019 FC 309 McDonald J
            2,639,371

In the third decision released this week that raises no interesting issues of law, McDonald J granted a routine uncontested application, pursuant to s 52, to amend the records to add a co-inventor to the 371 patent.

Controlled Release Dosage Form Patent Not Invalid on the Facts

Valeant Canada LP/Valeant Canada SEC v Generic Partners Canada Inc 2019 FC 253
Fothergill J
            2,412,671 / NOC

Valeant v Generic Partners is the second case released this week, and the second to raise no interesting issues of law. Valeant’s 671 patent relates to a controlled release dosage form for drugs requiring gastric retention. One known mechanism for controlled release was a polymeric matrix which swells in the stomach so the dose cannot exit into the small intestine [2]. It turns out that some of these forms, particularly those with an elongated shape for easy swallowing, could nonetheless partially exit if the pill became lodged with the long dimension protruding into the pylorus (the opening to the small intestine) [3]. The 671 patent comprises a swellable dosage form with a particular shape that avoids this problem.

In this NOC proceeding, Generic Partners conceded infringement of several claims, and attacked the validity of the 671 patent on the basis of anticipation, obviousness, double patenting and insufficiency. The main attacks were anticipation and obviousness. These both failed on the facts, essentially because nothing in the prior art suggested that shape was a central component of gastric retention [71]-[72], [106]-[108]. Rejection of the double patenting attack followed directly from the conclusion on anticipation [111], and Fothergill J easily dismissed the insufficiency allegation [116].

ATV Track Assemblies Patents Invalid on the Facts

Camso Inc v Soucy International Inc 2019 FC 255 Locke J

2,372,949 / 2,388,294 / 2,822,562 / 2,825,509 / ATV Track Assemblies

Camso’s patents at issue in this case concerned ATV track assemblies. In a decision which turned on claim construction and the facts, Locke J held all the claims in issue (almost 250 different claims in three patents) to be invalid for anticipation and/or obviousness [442]. 

The aim of the invention was to provide an ATV track assembly that would be easy to steer especially on hard ground. This was accomplished by reducing the size of the track belt’s contact area with the ground, both longitudinally (along the length of the track) and transversely (across its width) [5]. A smaller contact patch makes it easier to pivot the track. The contact patch was reduced longitudinally by arranging the assembly so that the bottom run of the track belt is slightly curved from front to back, “so that it rises from the ground ahead of and behind the area of ground contact which bears the weight of the assembly and the ATV” [6]. It was reduced transversely by using rodless tracks which omitted the usual transverse stiffening rods [8].

Soucy had focused its defence on non-infringement, and consequently had argued for a narrow scope of claims, conceding the validity of many claims. The patentee, Camso, had argued for broader claim construction, in order to establish infringement: [330-32]. Camso largely prevailed on claim construction, but its victory was Pyrrhic, as the result was that the broad claims were invalid. The rodless track patents were anticipated by an early kit sold by another track assembly maker. The kit had not been particularly successful – it was not clearly established that any had actually been sold [318] – but it had been publicly displayed and promoted, and any skilled person would have readily recognized that the tracks were rodless [319]. The curved track assembly patents were anticipated by one of the earliest track assemblies ever commercially sold [357-59]. In effect, the inventors had rediscovered features that had been used in some very early track assemblies and then abandoned. Some of the many claims had additional features that were not anticipated, but these variants were obvious over the same prior art, or some additional prior art.

What Does Actavis v Lilly Mean for Canadian Law?

I have a new article forthcoming in the Intellectual Property Journal, entitled “Protection Extending Beyond the Language of the Claim: What Does Actavis v Lilly Mean for Canadian Law?” The article will be published in two parts. Here is the abstract for Part I:

In its landmark decision in Actavis UK Ltd v Eli Lilly and Co, the UK Supreme Court held that the scope of protection afforded by a patent claim will sometimes “extend beyond” the meaning of the words of the claim, even when those words are read contextually. The Court also provided a structured approach to determining when extended protection is appropriate. This article considers what Actavis means for Canadian law. Part I argues that the Actavis approach represents a refinement of existing Canadian law, not a revolution. In the leading Supreme Court of Canada companion cases on claim construction, Free World Trust v Électro Santé Inc and Whirlpool Co v Camco Inc, the Court held that claim construction in Canadian law was, and always had been, based on purposive construction, including an identification of the essential elements of the claim. The extended protection of Actavis stems from the same recognition that omission of non-essential elements does not avoid infringement. Part II will argue that the Actavis approach is also sound as a matter of policy.

Cotter, Hovenkamp, and Siebrasse on Patent Holdup

Tom Cotter, Erik Hovenkamp, and I have posted a paper on ssrn titled Demystifying Patent Holdup, 76 Washington & Lee Law Review __ (forthcoming 2019). Here is a link to the paper, and here is 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 arm's 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.

Is the Test for Correcting Inventorship Errors under S 52 the Same as under S 31?

Pharma Inc. v. Canada (Commissioner of Patents) 2019 FC 208 Pentney J
            2,503,570

This decision concerned an uncontested application to add the name of a co-inventor who had been inadvertently omitted from the original application [1], [2]. The leading case on this issue is Micromass UK Ltd v Canada (Commissioner of Patents), 2006 FC 117 [10], which held that an application to the Court is required, as the Commissioner cannot make corrections related to inventorship under s 8 of the Act, which only gives the Commissioner authority to correct “clerical errors” [4]. Pentney J granted the application pursuant to s 52, which provides that:

52 The Federal Court has jurisdiction, on the application of the Commissioner or of any person interested, to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged.

While the matter was routine, one point caught my eye. Pentney J remarked that:

[5] In prior cases involving the addition or deletion of an inventor’s (or co-inventor’s) name, the Court has considered the test set out in sub-sections 31(3) and (4) of the Act, which relate to the addition or removal of applicants to a pending patent application: Plasti-Fab v Canada (Commissioner of Patents), 2010 FC 172, at para 14; Qualcomm Inc v Canada (Commissioner of Patents), 2016 FC 1092; Gilead Sciences Inc. v Canada (Commissioner of Patents), 2019 FC 70. The pertinent part for the purposes of this application requires that the Court be satisfied: (i) that the person should be joined as a co-inventor; and (ii) “that the omission of the further applicant or applicants had been by inadvertence or mistake and was not for the purpose of delay” (sub-section 31(4)).

Note the careful language. Pentney J did not say that the test for changing inventorship under s 52 is the same as under s 31(3)(4), but rather that the Court “has considered” that test. Nonetheless, on the facts he applied the s 31 test, and there seems to be a creeping tendency to import the s 31 test into s 52.

While the point didn't make any difference on the facts, it seems to me that it would be wrong in principle to hold that the s 31(4) test applies under s 52 as well. (And I would repeat that Pentney J did not so hold.) Section 31(4), relevant to adding an inventor, provides as follows:

(4) Where an application is filed by one or more applicants and it subsequently appears that one or more further applicants should have been joined, the further applicant or applicants may be joined on satisfying the Commissioner that he or they should be so joined, and that the omission of the further applicant or applicants had been by inadvertence or mistake and was not for the purpose of delay.

The second part of the test stated by Pentney J in [5], that “that the omission of the further applicant or applicants had been by inadvertence or mistake and was not for the purpose of delay,” is drawn directly from s 31(4), as Pentney J noted. Section 52 is much broader on its face. As Layden-Stevenson J noted in Micromass:

[15] The powers conferred on the Court under section 52 are very broad. In Clopay, Cameron J. described section 54 (now section 52) of the Act in the following manner:

...I think, therefore, that s. 54 was enacted so as to enable the rectification by the Court of the records in the Patent Office relating to title in order that the party or parties actually entitled to the grant or to be registered as to the assignees of the patent, might have their rights properly recorded (p. 235).

There is no suggestion in Micromass, or in s 52 itself, that s 52 is in any way restricted to cases of inadvertence or mistake.

The notion that the test from s 31 is relevant to s 52 appears to stem from Plasti-Fab 2010 FC 172 [14], where O’Keefe J, after quoting at length from Micromass, stated “Therefore this Court may, in place of the Commissioner, engage the test set out in subsection 31(4) to determine if an individual should be joined.” With respect, there is nothing whatsoever in the passage quoted by O’Keefe J, or anywhere else in Micromass, to suggest that s 52 engages the test set out in s 31(4).

Other cases have considered the relationship between the provisions. In Gilead 2019 FC 70 [2], Grammond J stated that “This Court has said, however, that the criteria found in section 31(4), which governs the addition of applicants to a patent application, are relevant to an application under section 52,” citing Micromass and Pasti-Fab. Plasti-Fab does stand for this proposition, via the questionable interpretation of Micromass, just discussed, but Micromass does not.

Qualcomm #1 2016 FC 499 (blogged here) concerned an application under s 52 to remove a co-inventor from a granted patent. Simpson J considered s 31(3), which relates to the removal of an named inventor from an application, where (i) “it . . . appears that one or more of them has had no part in the invention,” and (ii) the Commissioner is satisfied “by affidavit that the remaining applicant or applicants is or are the sole inventor or inventors.” Simpson J stated at [7] that “I am satisfied that the first part of the test in [s 31(3)] is relevant” under s 52; but this is only to say that a named inventor should not be removed unless they are in fact not an inventor. No doubt the Court would have come to that conclusion under s 52, even without consulting s 31(3). She then went on to say that the second part of s 31(3), the requirement for an affidavit, did not apply [8]-[11]. Thus, Qualcomm #1 is authority for the proposition that the test from s 31(3) is not applicable under s 52, though some of the same considerations may be relevant.

In Qualcomm #2 2016 FC 1092 (blogged here) Southcott J noted that Simpson J in Qualcomm #1 had held that affidavits were not required under s 2, but he accepted them nonetheless given that they had been sworn and introduced into evidence. He did not suggest that he disagreed with Simpson J’s holding.

It does seem entirely reasonable to say that the test from s 31 may be relevant under s 52, in that whenever the more restrictive requirements of s 31 are met, it will almost always be appropriate to order the correction under s 52. But on the face of the Act, and in light of Micromass and Qualcomm #1, it seems to me that the opposite is not true; s 52 might properly be invoked even in circumstances where the test from s 31 is not satisfied.

This is a longer post than is perhaps necessary given that the issue discussed made no difference on the facts. But I am concerned that by slow accretion of obiter statements it might become accepted that the s 31 test is required under s 52, thereby effectively reading a restriction from s 31 into s 52. I appreciate Pentney J’s careful language on this point, noting that prior decisions had considered the test from s 31, without saying that it was necessary under s 52.

Airbus v Bell Punitive Damages Award Upheld

Airbus Helicopters S.A.S. v. Bell Helicopter Textron Canada Limited 2019 FCA 29 de Montigny JA: Pelletier, Boivin JJA aff’g 2017 FC 170 Martineau J
            2,207,787 / helicopter landing gear

In Eurocopter v. Bell Helicopter Textron Canada Limitée 2012 FC 113 aff’d 2013 FCA 219 Martineau J held that one of the claims of the 787 patent, owned by Eurocopter (now the helicopter division of Airbus), to be valid and infringed. The patent covers sleigh type skid landing gear for helicopters [8]. In the subsequent Airbus Damages decision, Martineau J awarded $500,000 in compensatory damages (see here and here) and $1,000,000 in punitive damages, plus pre-judgment and post-judgment interest. (I wrote far to much on the punitive damages aspect of the trial decision, trying to analyze the relevant principles. I won’t repeat that here, but for those who are interested the posts are here, here, and here.) Airbus appealed, arguing that the award of punitive damages should have been higher, alleging a variety of errors [29]. Bell cross-appealed on the basis that the award of punitive damages was too high [71]. A few general principles arise from the FCA decision.

The standard of review is deferential

The Court noted that:

[30] It is now well established that appellate intervention with respect to an award of punitive damages will only be warranted where the trial court made an error of law or a “wholly erroneous assessment” of the quantum of damages (Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265 at para. 190 (Time)). In Cinar Corporation v. Robinson, 2013 SCC 73, [2013] 3 S.C.R. 1168 (Cinar), the Supreme Court summarized the applicable standard of review in the following way:

In [Time], this Court held that an appellate court may only interfere with a trial judge’s assessment of punitive damages (1) if there is an error of law; or (2) if the amount is not rationally connected to the purposes for which the damages are awarded, namely prevention, deterrence (both specific and general), and denunciation …

                                    Cinar at para. 134.

Airbus argued that Martineau J had not attached sufficient importance to various factors, such as the blameworthiness of the respondent’s conduct, and the financial means of the defendant [39]. However, Martineau J “correctly identified the factors going to the proportionality of a permissible quantum of punitive damages, and properly applied them to the facts of this case” [50]. So long as that is done, the FCA will not be inclined to reweigh the relevant factors itself [39], [45]-[52], [57].

Prior awards may be used as guideposts

Airbus argued that “the judge’s determination of the quantum of punitive damages was based on his erroneous belief in the existence of a $2,000,000 ceiling” on punitive damages awards [34]. The FCA concluded that Martineau J had not in fact felt himself limited by any such ceiling [36], [38]. Rather, “he saw this scale simply as a helpful indication of the range of punitive damages previously awarded” [36]. Moreover (emphasis added):

[37] In my view, there is nothing untoward or inappropriate in using a range of previous awards, as guideposts, in assessing the quantum of punitive damages. Even the Supreme Court, in Whiten, took such a range into account, when it concluded that the award was “certainly at the upper end of a sustainable award on these facts but not beyond it” (at para. 4). It is, in fact, a very common practice, and a sound one for that matter, to consider previous awards in assessing the quantum of punitive damages in a particular case.

Lubrizol is of limited precedential value

In Lubrizol 58 CPR(3d) 167 (FCTD) rev’d 67 CPR(3d) 1 (FCA) the FC had initially awarded $15,000,000 in punitive damages. This was overturned on appeal because the quantum of the compensatory damages had not been considered in the analysis [40] and they had not yet even been assessed. As the FCA stated in Lubrizol, “the Court cannot decide whether exemplary damages are required until after it decides whether the general damages were insufficient for punishment and deterrent purposes.” Airbus argued that nonetheless the FCA in Lubrizol had “implicitly agreed” that $15,000,000 was appropriate [41]. The FCA in this case rejected that reading of Lubrizol [41], and went on to state that

[43] Lubrizol was decided almost 25 years ago and does not seem to have been given much precedential value. I have been unable to find any other case where such a large award of punitive damages has been made, and counsel has not drawn our attention to any such case. [On review of other awards] Lubrizol would therefore appear to be the outlier in terms of the significance of the award in punitive damages, and the judge was certainly entitled to distinguish that decision from the present case.

Post infringement mitigating conduct should be considered

Bell had originally used the infringing gear, known as the “Legacy” gear, but after an infringement action was brought in Canada and other jurisdictions (including the US and France), had switched to non-infringing Production gear [10]. Martineau J had taken this into account as a mitigating factor in assessing punitive damages. Airbus argued that doing so was an error of law. It argued, based on the discussion of “potential harm” in Whiten 2002 SCC 18 [117], that “the seriousness of the prejudice must be assessed at the time of the wrongful behaviour, whether or not actual prejudice ensued” [60]. This FCA rejected this, pointing out that it was clear from the SCC discussion in Whiten that “what the Court really wanted to prevent was for bare luck to be considered as a mitigating factor” [61].

Further, the FCA held that “it was open to the judge to regard the steps taken by the respondent after the infringement as a mitigating factor” [62], and indeed,“[n]ot taking into account the conduct of the respondent after being notified of the violation would be antithetical to [the holistic and balancing approach endorsed in Whiten]” [63, my emphasis]: and see [64].

Sanctions for the same infringement in other jurisdictions may be taken into account

Airbus argued that Martineau J had erred in law in considering other penalties, in particular the likelihood of damages for infringement in parallel US and French proceedings [65],[66]. (And see [FC 435], [FC 440]. The FCA held that this may be taken into account, at least so long as the proceedings related to the same infringement [66] and are actually likely to result in a sanction [67]. (Though in any event, on the facts Martineau J appears to have considered this factor to be neutral [69].)

Finally, Bell cross-appealed on the basis that the award of $1,000,000 was more than the minimum necessary to meet the purposes of punitive damages [71]. The FCA rejected this argument, holding that on the facts, it was open to Martineau J to conclude that substantial punitive damages were warranted [75].

Patent Listing Timing Turns on Date Submission is “Administratively Complete”

Eli Lilly Canada Inc. v. Canada (Attorney General) 2019 FC 5 Lafrenière J
            2,812,704 / pegbovigrastim / IMRESTOR

The PM(NOC) Regulations allow patents to be listed against a drug. The basic rule is that only patents which pre-date the NOC application are eligible for listing, on the rationale that subsequent inventions should not extend the duration of the linkage [12]. The Regulations implement this timing requirement with two provisions. Subsection 4(5) states that the patent list must be submitted at the time of filing the NDS, so that only patents that have already been granted can be listed under this provision. But it is not necessary that the patent has already been granted, so long as it has been applied for. Subsection 4(6) provides that a patent is eligible for listing if it has a Canadian filing date prior to “the date of filing of the [new drug] submission.” The question in this case is what is the date of filing of the NDS: is it the date at which the NDS is “administratively complete” or the date at which is it substantively or technically complete? Short answer: the former.

On June 21, 2011, Elanco submitted a Drug Submission Application form and some related forms, which got the ball rolling on the application process [20]. This material was received on June 24, 2011 and determined to be “administratively complete” as of that date. It was common ground that the submission was not substantively complete, in the sense that the efficacy data, animal safety data, etc required by subsection C.08.002(2) was not provided [20]. Elanco had been permitted to engage in a rolling submission process [19], and the bulk of the substantive information was provided over the year from March 2012 to March 2013. The Canadian patent filing date was September 22, 2011 [22], between these two dates. Thus, if it is enough that the NOC application is administratively complete, then the ‘704 patent was not eligible for listing as the patent filing date was after the NDS filing date. But if the NOC application has to be substantively complete, the timing requirement would be met, and ‘704 would be eligible for listing.

Health Canada’s position is that the date of filing is when the NDS is administratively complete. Accordingly, it refused to list the ‘704 patent. Elanco appealed. Lafrenière J, applying a deferential standard of review [50], upheld Health Canada’s position. (To be eligible for listing under s 4(6), it is also necessary that the patent be submitted for listing within 30 days of issuance. That requirement was met, and was not at issue [31].)

A key point is that “[n]either the Patent Act, the NOC Regulations or the FD Regulations define the term “date of filing” of a submission, nor do they establish rules for determining that date” [58]. Elanco relied on C.08.002(2) of the FD Regulations, which specify “A new drug submission shall contain sufficient information and material to enable the Minister to assess the safety and effectiveness of the new drug, including...” Elanco argued that “shall” was a mandatory provision. However, as Lafrenière J noted, “Subsection C.08.002(2) simply speaks to the contents of a NDS and not to when a NDS may be considered filed. All the provision does is to set out the information that a first person is required to provide in order for a submission to be processed” [59]. If it were mandatory in terms of timing, then the practice of allowing rolling submissions would not be permitted [60].

In the absence of governing statutory provisions defining the date of filing, it was open to the Minister to allocate a filing date for submissions [63]. Moreover, the rationale for using the date the filing is sound, because it promotes certainty [66]. Adopting a requirement of substantive completeness would introduce considerable uncertainty, both in light of rolling submissions and supplementary submissions.

Crystalline Form Not Obvious to Try

Apotex Inc v Pfizer Canada Inc 2019 FCA 16 Boivin JA: Webb, de Montigny JJA aff’g 2017 FC 774 Brown J
Teva Canada Ltd v Pfizer Canada Inc 2019 FCA 15 Boivin JA: Webb, de Montigny JJA aff’g 2017 FC 777 Brown J

2,436,668 / desvenlafaxine (ODV) / PRISTIQ / NOC

In ODV the FCA has affirmed Brown J’s finding that Claims 8 and 9 of the ‘668 patent, to Form I ODV succinate (a particular crystal form of a particular salt of the compound ODV), were not obvious. The decision turns on the obvious-to-try analysis: see here for a review of the facts. The FCA decision does not apply new law, but it is another helpful discussion of the obvious-to-try analysis applied to the particular facts. It is useful to contrast this case, in which the crystalline form was found not to be obvious on an obvious-to-try analysis, with Dasatinib 2017 FCA 190 aff’g 2017 FC 296, holding the claims at issue to be obvious-to-try: see here for a discussion. These are companion cases, and the reasons are largely the same. This discussion will refer primarily to the Apotex decisions, simply because it is the one I happened to read first.

As the FCA discussed in Atazanavir 2017 FCA 76 (see here), as well as in Ciba v SNF 2017 FCA 225 (see here), the role of the inventive concept in an obviousness analysis has been problematic. In this case, it was uncontested that the inventive concept of the relevant claims is Form I ODV succinate. Apotex’s main argument was that “the Federal Court Judge erred when he made reference to the properties of ODV succinate – and specifically Form I – in his reasons as they are not part of the inventive concept” [37]. This is an important point. An obvious to try analysis is likely to be appropriate “where advances are often won by experimentation” (Sanofi [68]). In such a case, the detailed properties of the invention normally cannot be predicted in advance. If the detailed properties are part of the inventive concept, then the claimed invention would never be obvious, even though it was obvious to try and succeeded without the need for inventive ingenuity, as, for example, in Dasatinib. The FCA acknowledged this concern:

[38] I am mindful that our Court cautioned in Atazanavir to not implicitly adopt a definition of the inventive concept that focuses on properties if the properties are not part of the inventive concept (Atazanavir at para. 74).

In the Teva appeal, the Court noted that there was no dispute between the parties that the inventive concept does not include properties [32]. (This is not to say that the properties can never be part of the inventive concept, as the Court indicated in [38].)

Apotex’s complaint did have some basis in Brown J's reasons; in places, he did discuss the properties of ODV in a way that could be taken to imply that it would have been necessary to be able to predict its properties from the prior art: see eg the passages quoted at [38]. However, when read as a whole:

the Federal Court Judge did not find non-obviousness on the basis that the properties were not predictable in the manner seemingly suggested by Apotex. Indeed, although the Federal Court Judge discusses properties in various parts of his reasons, his conclusion that Form I ODV succinate is not obvious does not rest solely on the unpredictability of the properties of a salt form. Rather, the Federal Court Judge relied on evidence that demonstrated that a skilled person could not have known or predicted that the Form I ODV succinate – i.e., the crystal form itself – could be made or even existed:

So, Brown J found that “the number of experiments required to move from the acceptable pharmaceutical salts to the Form I ODV succinate was extremely large, as Dr. Myerson deposes at para 102 of his affidavit, and in the nature of a research program, not routine experimentation” [FC 230] quoted at [38]. So, on the facts, actually making the crystal form required inventive ingenuity, quite aside from whether the properties are part of the inventive concept, or could have been predicted.

The FCA also affirmed that the jurisprudence “does not establish any “hard and fast rules” on obviousness when it comes to evaluating whether or not a salt screen or any other form of experimentation is obvious or not” [42]. Whether salt forms, polymorphs or crystalline forms are obvious will turn on the facts of the case.

No new cases

No new substantive patent cases were released for the week of 28 January.

No new cases

No new substantive patent cases were released last week.

Note that I generally only blog on substantive patent cases. To keep abreast of all new decisions, including procedural decisions and copyright and trade-mark cases, I recommend subscribing to the Daily Intellectual Property News service from Alan Macek's IPPractice.

Ownership Can Be Raised as a Defence but Not as a Counterclaim

Farmobile, LLC v Farmers Edge Inc 2018 FC 1269 Mactavish J aff’g 2018 FC 915 Ring J
            2,888,742 / Farming data collection

Farmobile, the patentee in this action, sued Farmers Edge (FE) for infringement of the 742 patent. FE asserted, by way of both defence and counterclaim, that it was the rightful owner of the patent [915-3]. The defence and counterclaim were both based on the same facts [14], [914-38], to the effect that the right in the invention had been assigned to it [8]-[12], [914-4]. Farmobile sought to strike the allegations related to ownership from both the Statement of the Defence and the Statement of Counterclaim, which were considered separately. Ring J granted the motion to strike the counterclaim, but allowed the same allegations to stand as a defence (see here). Mactavish J has now affirmed.

In affirming that the allegation of ownership may stand as a defence, Mactavish J established what appears to be a novel point, albeit a minor one, namely that ownership of the patent by the defendant is indeed a defence to a claim of patent infringement which may be asserted in Federal Court, like non-infringement, invalidity and use pursuant to a licence [31]. This was in the face of Farmobile’s argument that the Federal Court lacked jurisdiction to entertain ownership in any context; it asserted that “while ownership is indeed a defence to a claim for patent infringement, it is not one that can be asserted in this Court” (Mactavish J’s emphasis). As Mactavish J pointed out, it is well-established that a licence to use is a valid defence, notwithstanding that assessing the merits of such a defence involves a matter of contractual interpretation, and “A licence is, after all, merely one form of contract” [32]. This holding seems clearly correct, but it is nonetheless a relief.

At the same time, Mactavish J affirmed that the Court does not have jurisdiction to consider exactly the same issue, based on exactly the same facts, by way of counterclaim. Mactavish J held that the contracts relating to ownership may be used a shield, but not as a sword [26], [35], [50]. The rationale is that in the defence, the essence of the litigation is patent infringement, while in the counterclaim, the essence of the litigation is patent ownership. This distinction does have support in the cases, in particular Innotech (1997) 74 CPR (3d) 275 (FCA), relied on by Mactavish J [34],[43]-[50]. And it is also reasonable to say the that the Federal Court can determine ownership when raised as a defence to an infringement action, even if it does not have jurisdiction to do so when ownership is raised independently.

However, the shield / sword distinction does not address, or affect, the more fundamental issue as to whether the Federal Court has jurisdiction to consider patent ownership when raised indepednently. If the Federal Court does not have such jurisdiction, then the sword / shield distinction makes sense; but if it does have such jurisdiction, then it doesn’t. Mactavish J’s reasoning is sound if one accepts that the Federal Court does not have jurisdiction to determine patent ownership on its own, but nothing in her decision addresses that fundamental point, one way or the other.

In previous posts, here and here, I have argued that the Federal Court does indeed have such jurisdiction, in light of s 20(2) of the Federal Court Act which gives the Federal Court “concurrent jurisdiction in all cases. . . in which a remedy is sought under the authority of an Act of Parliament or at law or in equity respecting any patent of invention.” In Kellogg [1941] SCR 242 the SCC interpreted the predecessor provision of the Exchequer Court Act as follows:

It will be noticed that subsection (c) deals with the "remedy" which is sought. And it enacts that the Exchequer Court shall have jurisdiction between subject and subject in all cases where a "remedy is sought" "respecting any patent of invention" "under the authority of any Act of the Parliament of Canada or at Common Law or in Equity." The remedy sought by the appellant, as a result of paragraph 8 of its statement of claim, is evidently a remedy in Equity respecting a patent of invention. The appellant claims that remedy as a consequence of the facts alleged in its paragraph 8 [that the appellant was owner by assignment]. It claims the remedy as owner deriving its title from the same alleged inventor of whom the respondent claims to be the assignee, through other assignors. In such a case, the invention or the right to the patent for the invention is primarily the subject-matter of the appellant's claim, and the remedy sought for is clearly "respecting any patent of invention." And this is covered by subsection (c) of section 22 of the Exchequer Court Act, as it stands at present.

Mactavish J interpreted Kellogg as holding that the Federal Court “may resolve contractual issues raised in an action that is in ‘pith and substance’ within the Court’s jurisdiction” [20]. I’m not sure that is exactly right: what the above passage says is that a party has jurisdiction when seeking a remedy respecting any patent of invention; which, of course, is what s 20(2) of the Act says on its face.In any event, whatever the broader principle, it seems to be to say quite explicitly that the Court does have jurisdiction in the circumstances at hand.

The argument endorsed above was made in the alternative (though that does not detract from its authority, as it was "obviously intended for guidance" and so should be accepted as authoritative: R v Henry 2005 SCC 76 [57]). Mactavish J implicitly distinguished Kellogg by saying that in that case the “primary issue” was a matter of patent law, not that alternative argument, citing pages 249-250. The exact “matter of patent law” at issue in Kellogg at 249 was as follows

the appellant is entitled to the benefit of the invention because John L. Kellogg, Jr. [the putative inventor], at the time when he is alleged to have made it, was in the employ of the appellant and then carrying out work which he was instructed to do on the plaintiff's behalf, and that, by virtue of his contract of employment and the circumstances under which the invention was made, he became and is a trustee of the invention for the company; if it be true further that, by reason of his being such a trustee, he was unable to transfer any right, title, or interest in the invention to any other party, and that the plaintiff is now the owner of any invention so made by John L. Kellogg, Jr., this would be one of the reasons why the appellant should be declared entitled, as against the respondent, to the issue of a patent including the claims in conflict as applied for by it.

That is, the "matter of patent law" is the question of who is the true owner of the patent in light of the contract of employment. This is exactly the question at issue in Farmobile: see the allegations [915-4], reproduced in my post on Ring J’s decision. The argument which I have previously discussed, based on what is now s 20(2), was an argument in the alternative. The primary basis for the decision in Kellogg, which Mactavish J acknowledged was a matter of patent law, is that ownership of a patent by virtue of contractual assignment and related circumstances, is essentially a matter of patent law and so the Federal Court has jurisdiction by virtue of that fact. This is entirely apart from any authority to award a remedy under s 20(2), or vary the Register under s 20(1). This aspect of Kellogg strikes as even more fundamental and directly on point. I cannot see how it is distinguishable from the facts at hand.

I remain perplexed by the Federal Court’s unwillingness to accept jurisdiction in these situations. When SCC precedent is unsound, I can understand that the Federal Court would resist its application by looking for tenuous distinctions. Indeed, that is in part how the common law “works itself pure.” But to my mind Kellogg makes perfect sense. The Federal Court consistently recognizes that it is “inconvenient” to require a party to commence a second proceeding in a provincial superior court in such circumstances [52]; the Court does not seem to be resisting jurisdiction out of concern that it would create some practical problem, which might not be apparent to an academic such as myself. It is of course true that inconvenience in itself is not a basis to assert jurisdiction where it does not exist [52], but conversely, creating inconvenience is not a basis to refuse jurisdiction where it does exist.

More broadly, a court faced with the question of who is the present owner of the patent must address who was the inventor, in order to determine who had the right to make a valid assignment in the first place, and that is surely a matter of patent law; as well as the question of how is the first owner, which is usually said to be a matter of patent law (see Comstock 38 CPR(3e) 29, 51-54; s 49); as well as the matter of priorities under s 51. Ultimately the remedy is amendment of the Register, which is established pursuant to s 12, and which the Federal Court, but not the provincial superior courts, has the authority to order amended, pursuant to s 52. Thus, patent law and the Patent Act is implicated at every stage of an patent ownership dispute. Consequently, while contacts of assignment are also implicated, the matter of ownership of a patent seems to me to be essentially a matter of patent law, and that is what Kellogg says on its face.