Saturday, July 23, 2016

Blogging Break

I'll be on vacation for a couple of weeks. I'll resume blogging when I get back, starting with any cases I might have missed while I was away.

Wednesday, July 13, 2016

Another Twist on Blinding the Expert

Bristol-Myers Squibb v Teva 2016 FC 580 Mactavish J
            2,250,840 / 2,317,736 / atazanavir / REYATAZ

In a number of recent cases (see here), the parties have tried “blinding” their experts from certain facts in a laudable attempt to reduce the problem of hindsight bias. The Atazanavir decision raised another twist on this practice, which is this subject of today's post. For an overview of the facts, see this post, which also discusses some of the issues related to obviousness; and see this post discussing claim construction.

The point arose in the context of the 840 patent, which claims atazanavir. One of Teva’s experts on obviousness, Dr Romero, was blinded perhaps even more thoroughly than in most previous cases:

[192] Dr. Romero was not told the name of the drug that was at issue in this proceeding, other than the fact that it was a protease inhibitor, nor was she told the names of the parties. She was also asked not to carry out any independent research that might identify the drug in question.

That is, it seems that Teva tried to place Dr Romero in the place of the notional skilled person, trying to solve the problem facing the inventors, without knowledge of their solution. There are a couple of caveats even to this degree of blinding. One is that an expert like Dr Romero cannot forget her own current knowledge, and to the extent that she is familiar with approaches that would not have been common knowledge at the time, she cannot fully avoid the effects of hindsight, even when blinded to the particular facts. Also, as Mactavish J pointed out, “Dr. Romero was provided with a limited selection of the prior art that had been ‘cherry-picked’ by Teva, and her evidence has to be viewed with this in mind” [193]. This point was not merely theoretical; Mactavish J expressed concern that Dr Romero had only been provided with papers dealing with an azapeptide backbone, the class which atazanavir belongs to, and not prior art dealing with other possible backbones [194].

With those caveats, no approach is perfect and this heightened degree of blinding seems to be helpful in avoiding hindsight bias. However, it did not help Teva win its case. The details of Dr Romero's evidence were not spelled out by Mactavish J, but it seems the gist was that there were a finite number of modifications that the POSITA would have made in trying to make a better protease inhibitor [212]. However, Dr Romero proposed some modifications to the backbone which would never have led to atazanavir [195], and

[211] Dr. Romero does not identify which compounds or which substitutions should be made to obtain an improved protease inhibitor in her evidence, or how the POSITA should prioritize them. Importantly, Dr. Romero never states that the POSITA would make the substitutions necessary to get to atazanavir.

In the end, Dr Romero’s evidence may have hurt Teva’s case as much as it helped. The 840 patent survived the obviousness attack, and was ultimately held to be valid.

The fact that blinding the expert did not help Teva in this case helps confirm the value of the practice. If a witness blinded in this manner had arrived directly at the claimed invention, it would seem to be good evidence that the invention was obvious. (Though even this degree of blinding would not be conclusive, in light of the caveats noted above, as well as Locke J’s observation in 2016 FC 382 [46].)

Tuesday, July 12, 2016

A Summary Judgment Procedure under the NOC Regulations?

Janssen Inc v Celltrion Healthcare Co, Ltd 2016 FC 651 Hughes J
            2,261,630 / infliximab / INFLECTRA / REMICADE

This decision marks either a straightforward application of s 5(1) of the NOC Regulations, or a procedurally innovative use of s 6(5)(b) of the Regulations to effectively allowing a summary disposition of an NOC proceeding. Unfortunately, Hughes J was writing under a time constraint [1], and the decision is brief and some key facts are not clear (at least to me).

Janssen’s 630 patent covers the use of infliximab in treating rheumatoid arthritis [28]. Celltrion had already received an NOC for rheumatoid arthritis and related indications (the RA indications) based on a NDS filed before the 630 patent was granted, and so it did not have to address the 630 patent at that time [8]. (An infringement action is now underway [9].) Then, after the 630 patent was granted, Celltrion sought an NOC for indications related to inflammatory bowel disease (the IBD indications) [10]. Hughes J stated that “Celltrion was required to address the 630 patent under [the PMNOC Regulations].” Celltrion sent an NOA to Janssen, which then brought an application for an order of prohibition [10]. In response, Celltrion brought a motion under s 6(5)(b) asking that Janssen’s application be dismissed as an abuse of process, evidently on the general ground that the 630 patent did not cover the indications for which the NOC was being sought..Celltrion’s motion was granted by Aalto J.

Hughes J affirmed in brief reasons, in part adopting Aalto J’s reasons as his own [25]. But Hughes J also went to on to rely on Biolyse 2005 SCC 26 to conclude that “in a case such as the present one, where a patent claims a particular use of a drug it is that use that must be compared with the intended use by the generic and not just the drug” [27].

My difficulty with this case is that it is not entirely clear to me whether Celltrion was comparing its product with Janssen’s in seeking its NOC. Celltrion’s application was apparently based on an SNDS, not an ANDS or SANDS [10], and there is no suggestion in Hughes J’s reasons that Celltrion was comparing its drug to Janssen’s. If Celltrion was not comparing its product with Janssen’s, then the reasoning in the case strikes me as a bit odd. Biolyse held that it is only necessary to address patents on the register if the party submitting the application for an NOC compares its drug with that of the another drug against which the patent is listed. In other words, a party who is relying on their own data does not need to address the listed patents, even if the submission is for the same indications; it is only “copy-cats” who need to address listed patents. This was affirmed by the subsequently amended s 5(1), which says patents listed against a drug must be addressed only if “the submission directly or indirectly compares the drug with, or makes reference to, another drug.” (See also the RIAS to the 2006 amendments, SOR2006-242 at 1519-20.) So, if Celltrion was not comparing its product to Janssen’s then it would follow directly from per s 5(1) that it would not be required to address the 630 patent at all, even if the 630 patent was listed against infliximab, and even if Janssen’s NOC covers the IBD indications. The puzzle is that on this view of the decision, it is not clear why “Celltrion was required to address the 630 patent under [the PMNOC Regulations]” [10] in the first place.

On the other hand, if Celltrion was comparing its drug to Janssen’s for the IBD indications, that would explain why Celltrion was required to address the 630 patent. In that case Biolyse would not be directly applicable, as Celltrion’s product would be a “copy-cat” drug, in the sense of relying on Janssen’s data, even if Janssen’s data were for an unpatented indication. On those facts, Hughes J’s holding would not be a direct application of Biolyse, but rather an extension, which would mean that a generic need not address a listed patent even if the generic is indeed piggy-backing off the data submitted by the patentee, so long as the indication for which an NOC was sought did not infringe. Normally that would require an NOC proceeding based on an allegation of non-infringement pursuant to s 5(1)(b)(iv)t, but perhaps the motion under s 6(5)(b) was based on the view that the non-infringement issue was so clear that it would be an abuse to proceed with the NOC proceeding. In other words, s 6(5)(b) was being used for a summary disposition of the NOC proceeding. If that is what happened, then the decision is procedurally quite significant.

Friday, July 8, 2016

A Teaching Example on Claim Construction

Bristol-Myers Squibb v Teva 2016 FC 580 Mactavish J
            2,250,840 / 2,317,736 / atazanavir / REYATAZ

My previous post gave an overview of the facts of this decision and discussed some of the issues related to obviousness. This post discusses a tricky claim construction issue that arose in the context of the 736 patent. While it did not raise any new legal issues, it is a good example of the tension between the primacy of the claims and the principle that purposive construction requires that the claims are read in the context of the specification as a whole.

Monday, July 4, 2016

Discovery of Something Unexpected about Something Obvious

Bristol-Myers Squibb v Teva (NOC) 2016 FC 580 Mactavish J
            2,250,840 / 2,317,736 / atazanavir / REYATAZ

In this NOC proceeding Mactavish J held Novartis’ 840 patent, which claims the compound atazanavir [53], to be valid in the face of obviousness and anticipation attacks, while she held BMS’s 736 patent, which claims the bisulfate salt of atazanavir [273], to be obvious. A central dispute between the parties in respect of both patents was whether the inventive concept of the claimed inventions comprised just the compound itself, as Teva argued, or the compound and all its properties, as the patentees argued. The idea is that the more properties that are part of the inventive concept, the less likely it is that they will all be predictable, and so the less likely it is that the patent will be held obvious. In this post, I will argue that this idea is wrong; the number of properties in the inventive concept does not affect how likely it is that the claimed invention will be held to be obvious. In another post I will suggest that multiplying the inventive concepts might actually make invalidity more likely. The 736 patent also raised a very tricky claim construction problem, which I will discuss in a subsequent post.

Atazanavir is used in the treatment of HIV/AIDS. The first class of anti-HIV drugs were known as nucleotide reverse transcriptase inhibitors (or NRTIs) [13]. While these had potent activity against HIV, they were susceptible to the evolution of drug resistance and had unpleasant side-effects [14], [15]. A new class of anti-HIV drugs was developed, known as protease inhibitors [16]. These has a number of advantages over NRTIs, but the first generation protease inhibitors had poor bioavailability, which resulted in poor compliance and a consequent potential for the development of drug resistance [22]. There was therefore a strong motivation to develop second-generation protease inhibitors [23]. One of these was atazanavir, which came on the market in 2003 and which remains one of the best second generation protease inhibitors [24-25]. The 840 patent, which claimed atazanavir and its salts, disclosed only the free base form. While the free base had good inherent bioavailability, it was not sufficiently orally bioavailable in solid form to be a viable product [266-67]. The problem facing the inventors of the 736 patent was to develop a form of atazanavir having properties suitable for an oral pharmaceutical dosage form, including improved oral bioavailability [268]. They performed a salt screen, and solved the problem with the bisulfate salt which was claimed in the 736 patent. (Ciba-Geigy, which became Novartis, developed atazanavir, and BMS acquired the rights to atazanavir from Novartis and then developed atazanavir bisulfate.)

Monday, June 20, 2016

Miscellaneous Issues in Levofloxacin Damages

Janssen Inc v Teva Canada Ltd / levofloxacin 2016 FC 593 Hughes J
            1,304,080 / levofloxacin / LEVAQUIN

Friday’s post discussed the standing issue in Levofloxacin Damages. This post discusses the three other contentious issues, quantum, pre-judgment interest, and mitigation [25].

Damages are assessed as the difference between the patentee’s actual position and the position it would have been in but for the infringement. The main issue respecting quantum was a purely factual one as to which “but for” scenario was most likely. Hughes J resolved this in favour of the scenario preferred by Janssen’s expert [106], with a few relatively minor modifications. While that finding was based on the evidence as a whole, it seems that Teva’s witness did not help his case by arguing that the infringement actually benefitted Janssen to the tune of $4 million [95].

Because a generic cannot normally ramp up its sales immediately on expiry of the patent, absent infringement there will be some period post-expiry during which the patentee has lingering elevated market share. Consistently with established law (see 2013 FC 751, blogged here), Hughes J allowed recovery of damages for these lost post-expiry sales, on the general principle that the patentee is entitled to recover losses caused by the infringement [109]. On the facts, the runoff period allowed by Hughes J was two months for retail sales, and one year for hospital sales [112].

Hughes J also allowed a claim for price suppression – that is, the losses due to the reduced price at which LEVAQUIN was sold in order to compete with infringing generic entry. This is nothing new [116]; the loss is caused by the infringement whether a patentee loses sales entirely, or makes the sales but at a lower price. Of more interest, Teva was eventually forced to withdraw from the marketplace as a result of the injunction granted by Hughes J at the end of the liability phase, but the evidence showed that as a practical matter, Janssen could not raise its price to hospitals after Teva withdrew; the price reduction was effectively locked in, as a matter of customer relations [117]. Hughes J allowed recovery for that continued price suppression. Given the factual finding, recovery for locked-in price suppression follows directly from the principle that the patentee is prima facie entitled to recover losses caused by the infringement. The point was raised again in the context of the argument that Janssen should have mitigated its loss by raising its prices again [144]. Hughes J dismissed this argument on the basis that the burden lies on the defendant to prove that mitigation was possible and the plaintiff failed to make reasonable efforts to do so, and Teva had not discharged its burden in this regard.

Some interesting issues were raised with respect to whether pre-judgment interest should be compounded, with Janssen US relying on Zinn J’s decision in Cefaclor Damages 2014 FC 1254 (blogged here) [134], but Hughes J held that the terms of the liability judgment 2006 FC 1234, [135], awarding pre-judgment interest, not compounded, applied to Janssen US as well as to Janssen Canada [138], so the substantive issues were not really engaged.

Friday, June 17, 2016

A Purposive Interpretation of the Standing Provision

Janssen Inc v Teva Canada Ltd / levofloxacin 2016 FC 593 Hughes J
            1,304,080 / levofloxacin / LEVAQUIN

This Levofloxacin Damages decision is the damages phase of 2006 FC 1234 aff’d 2007 FCA 217, in which Hughes J held Claim 4 of the ‘080 patent, a compound claim to levofloxacin, to be valid and infringed by the Novopharm (now Teva). The decision turned largely on the facts, with the most legally significant issue being the standing of Janssen US to claim damages.

The standing issue was important to the bottom line. Hughes J ultimately held that Janssen US did have standing and he awarded it over $13m, while Janssen Canada was awarded just under $5.5m. The standing issue arose in light of the structure of Janssen’s supply chain. Daiichi, the owner of the ‘080 patent, supplied levofloxacin API to Janssen Puerto Rico, which manufactured finished tablets and then routed them, financially, at least, through Janssen US to Janssen Canada for sale in Canada. It was these sales that were displaced by Teva’s infringing sales, and Janssen US was claiming for the lost profit it would have made on its sales to Janssen Canada [54]. (Daiichi, while a named plaintiff, had settled with Teva and did not participate in the damages proceeding [5].)

Standing is statutorily governed by s 55(2) of the Act which provides that infringer is liable in damages “to all persons claiming under the patentee” for losses sustained as a result of infringing acts. Hughes J thoroughly canvassed the case law, which generally interprets “claiming under” quite broadly, including an assignee, a licensee, including a non-exclusive licensee [43]. Moreover, the Canadian courts take a very pragmatic approach in determining whether a party is a licensee, as the license need not be in writing and may be inferred from the facts [43].

However, in one case, Servier v Apotex 2008 FC 825, Snider J held that none of the companies in the Servier global family, except ADIR, the patentee, and Servier Canada, which exploited the patent in Canada, had standing to seek damages [Servier 67-95]. Hughes J characterized Servier as holding that an entity that did not operate “in Canada'” did not have standing [42], and that the claim must be one in respect of a use in Canada and not elsewhere in the corporate chain [43]. He also distinguished Servier on the basis that in that case, each of the foreign entities had its own geographical sphere of operation and those entities not operating in a Canadian sphere could not be considered to have standing, whereas in this case “the J&J group of companies are operating as a team whereby licensed tablets ultimately found their way to Canada” [67].

Stepping back from the cases, in defining who may claim damages s 55(2) has two effects, at least potentially. On the one hand, it gives standing to entities which might not otherwise have standing under a common law test. And on the other hand, it may operate to deny recovery to some entities. The exclusionary effect of s 55 only bites if the entity claiming standing actually suffered a loss as a result of the infringement of the Canadian patent. If we are to give a purposive interpretation to s 55(2), we must ask when it is right to hold that an entity should not recover, even though it has actually suffered loss caused by the infringement. There is a prima facie argument that such loss should always be recoverable, on the basis that a wrongdoer should be liable for all the harm it causes, or the wrong will not be sufficiently deterred and victims will not be adequately compensated.

This intuition is not always sound. Suppose that Company A, which is at arms length to both the patentee and the infringer, produces feedstock for the process used by the patentee to produce the API. The feedstock itself is not patented and so A does not need or take a license. As a consequence of infringement, the patentee reduces production, and so A suffers lost profits on the consequently reduced sales of the feedstock. Should A be able to recover? Apart from any limits imposed by s 55(2), it might seem that A should be able to recover, on the basis that it has suffered a loss caused by the infringer. But now suppose that A also supplied the feedstock to the infringer, and when A’s sales to the patentee went down, its sales to the infringer went up by exactly the same amount. In that case A should clearly not recover because it would have suffered no loss. Now suppose that instead, the infringer bought the feedstock, not from A, but from arms length Company B, so that A’s loss was B’s gain. Should A recover? From a law and economics perspective, the answer is no. The shift in profit from A to B is a mere transfer; while A has lost, B has gained, and in the broader picture, no harm was done. To impose liability on the infringer for A’s loss would consequently cause over-deterrence. This is one of the main justifications for the general reluctance of tort law to provide recovery for pure economic loss: see CNR v Norsk [1992] 1 SCR 1021. Denying recovery to A in such a case also makes sense purely in terms of patent policy, because A is not operating under the patent, and so refusing to allow it to recover does not adversely affect the incentive to invent. In this scenario, in which A did not have a licence and so did not “claim under the patentee,” s 55(2) would operate to deny recovery to an entity that had suffered a loss as a result of the infringement, and this result would be sound as a matter of policy.

This analysis suggests that the role of standing, and s 55(2) of the Act, is to prevent recovery by an entity which has suffered a loss as a result of the infringement when that loss did not affect the incentive to invent. Put another way, by analogy with the requirement for an “antitrust injury” in US competition law, we might say that only an entity that has suffered a “patent injury” should be entitled to recover. This is broadly consistent with the “claiming under” requirement of s 55, on the reasoning that if the entity’s loss is linked to its rights under the patent, then the loss would adversely affect the incentive to invent. So, for example, the profits made by a licensee contribute to the incentive to invent via the royalty paid for that license.

This theory supports Hughes J’s holding in this case that Janssen US has standing. I’m not sure whether it is consistent with Servier, because the nature of the loss that would have been claimed by the excluded entities in that case is not clear to me. This theory is at least consistent with Snider J’s rejection of the highly speculative scenario advanced by Servier in support of its claim at [88-89].

Thanks to Smart & Biggar for posting this decision before it was posted on the FC website.

Friday, June 10, 2016

Affidavit from Remaining Inventors Not Required When Correcting Inventorship of Granted Patent

Qualcomm Incorporated v Canada (Commissioner of Patents) 2016 FC 499 Simpson J

Qualcomm applied for an order pursuant to s 52 of the Act, to delete Mr Palanki as a co-inventor on the ‘309 patent. The application was not opposed by CIPO and Mr Palanki consented to the order sought on the basis that he was not a co-inventor. The only difficulty is that some decisions, in particular Imperial Oil 2015 FC 1218 (blogged here) and Segatoys 2013 FC 98, had suggested that in deciding whether to remove a co-inventor, the Court should follow the test set out for the Commission of Patents in s 31(3) [5], which provides that when a joint applicant for a patent is removed as not being an inventor, the prosecution may be carried on by the remaining applicants “on satisfying the Commissioner by affidavit that the remaining applicant or applicants is or are the sole inventor or inventors” [6]. In this case, even though it was uncontested that Mr Palanki was not an inventor, there was no affidavit that the remaining named inventors were the sole inventors. Simpson J held that the affidavit in question is essentially a housekeeping requirement to promote the efficient processing of pending patent applications in the Patent Office and it is not required when an issued patent is being considered by the Court under s 52 [9]-[10]. She therefore granted the application. I note that this is not inconsistent with Imperial Oil and Segatoys in the result, since in both of those cases the application was also granted: neither was a case in which an application to amend under s 52 was refused for failure to provide the affidavit in question.

Thursday, June 9, 2016

Hearsay is Inadmissible

Pfizer Canada Inc v Teva Canada Ltd 2016 FCA 161 Stratas JA: Ryer, Gleason JJA var’g 2014 FC 248 (here) and subsequent reasons re pre-judgment interest 2014 FC 634 (here) Zinn J
            1,248,540/ 2,199,778 / venlafaxine / EFFEXOR XR / NOC s 8 / Venlafaxine s8 FCA

As discussed in yesterday’s post, which dealt with the burden of proof in establishing causation, the FCA in Venlafaxine s8 held that in order to establish its compensable loss under s 8 of the PM(NOC) Regulations, Teva had to show that it “would and could” have supplied the market for venlafaxine. While Zinn J did not articulate the requirement in quite this way, he nonetheless applied the proper principles of causation in holding that Teva had established the necessary causal link [70]-[73], and in the result he awarded Teva almost $125m as compensation for having wrongly been kept off the market for venlafaxine [2]. However, the FCA held that Zinn J’s holding was vitiated by the fact that he improperly relied on hearsay evidence in coming to this conclusion [75]-[121], and the FCA therefore set aside Zinn J’s judgment and remitted the matter to him for redetermination [174]. At the same time, the FCA also affirmed Zinn J’s holdings with respect to the appropriate start date for the compensable period, on authorized generics in constructing the hypothetical world, and on the start date for assessing pre-judgment interest.

Teva’s position was that if it had received its NOC, its supplier, Alembic would have been able to supply adequate quantities of venlafaxine product at the relevant time [41]. While this was accepted by Zinn J, the only evidence on Alembic’s capacity was provided by Mr. Major, a former executive of Ratiopharm (now Teva) [36]. The difficulty is that almost all of Mr Major’s testimony was hearsay, sometimes double or even triple hearsay. Despite Pfizer’s objections, Zinn J admitted the hearsay evidence, saying the objection went to weight rather than admissibility [121]. The FCA disapproved, noting that

[83] Recently, some rules of evidence have been liberalized, allowing for more flexibility. Seduced by this trend towards flexibility, some judges in various jurisdictions have been tempted to rule all relevant evidence as admissible, subject to their later assessment of weight. But according to our Supreme Court, this is heresy. The trend towards flexibility has not undermined the need for judges to take a rigorous approach to admissibility, separating that analytical step from others, such as determining the weight to be given to evidence.

After reviewing the evidence in question, the FCA remarked that “All of the mischief associated with admitting hearsay evidence is present in this case” [119]. Because Zinn J had admitted evidence that should have been excluded, and that error might have affected the outcome of the case, the FCA set aside the Zinn J’s judgment [121]. I am not sufficiently familiar with evidentiary rulings in the Federal Courts to say whether Zinn J’s decision to admit hearsay evidence was unusual, or whether this FCA’s decision signals a course correction to the FC generally.

On the issue of the start date for the compensable period, Pfizer had argued that the appropriate date was the end of the 45 day waiting period under s 7(1)(d) during which the Minister is precluded from issuing an NOC. The waiting period starts at the time the generic serves an NOA and allows a patentee to seek a prohibition order. In effect, Pfizer argued that in the hypothetical world, it should be assumed that rather than seeking an order of prohibition, Pfizer would have done nothing at all, so that Teva’s NOC would have issued only after the expiry of the waiting period. Zinn J rejected this arugment (see here), and the FCA affirmed for substantially the same reasons, based on the plain meaning of the Regulations as well as the case law [126]-[133].

The FCA also reaffirmed its holding in Apotex Ramipril s. 8 FCA 2014 FCA 68 (see here) that entry of authorized generics should be considered as part of the hypothetical world [134]-[138]

Finally, the FCA also affirmed Zinn J’s holding that pre-judgment interest should be calculated from the date on which the cause of action arises, which is typically the start of the compensable period, and not on the date that the prohibition application is dismissed [145].

Wednesday, June 8, 2016

Burden of Proof Respecting Alternative ‘But For’ World

Pfizer Canada Inc v Teva Canada Ltd 2016 FCA 161 Stratas JA: Ryer, Gleason JJA var’g 2014 FC 248 and 2014 FC 634 Zinn J
            1,248,540 / 2,199,778 / venlafaxine / EFFEXOR XR / NOC s 8 / Venlafaxine s8 FCA

In his Venlafaxine s8 FC decision, 2014 FC 248 (blogged here), Zinn J awarded Teva almost $125m, including interest, under s 8 of the PM(NOC) Regulations, as compensation for having wrongly been kept off the market for venlafaxine [2]. The FCA has now vacated that award because it was based on inadmissible hearsay evidence, and remitted the matter to Zinn J for redetermination [159], [174]. The decision is primarily of interest for its clarification of the “could and would” requirement for establishing causation of loss, which is discussed in this post.

Section 8 provides that a generic that is kept off the market by operation of the statutory stay under the NOC Regulations is entitled to compensation for “any loss suffered” during the relevant period, if the patentee is ultimately unsuccessful in obtaining an order of prohibition. The courts have (rightly) interpreted this as providing compensation only for loss that was caused by the statutory stay that is triggered by the patentee’s application for an order of prohibition under the Regulations [45]. The loss typically takes the form of lost sales of product that the generic would have made had it not been kept off the market [45].

The losses caused by the patentee’s triggering conduct is the difference between the sales actually made by the generic (zero), and the sales that the generic would have made in the hypothetical world where the patentee’s impugned conduct did not take place [47]. Some issues, in particular the start and end dates to the compensable period, are specific to the NOC context, but the causation inquiry is the same as for patent infringement, in that “in both types of claims the court’s task is the same: to assess a hypothetical world where the defendant’s impugned conduct did not take place” [47]. Consequently, the FCA in this case looked to its prior damages decision in Lovastatin 2015 FCA 171 (blogged here and here) as setting out the relevant principles.

The key issue in this appeal was whether Teva would have been able to supply the market with venlafaxine in the hypothetical world in which it had received its NOC. In Lovastatin, the key issue was whether the generic (Apotex), would have been able to compete in the market with a non-infringing alternative in the hypothetical world in which it did not infringe. In Lovastatin the FCA held that to establish causation, the defendant generic would have to show that in the hypothetical world it “would have and could have” had access to sufficient quantities of non-infringing product [49]. By the same token, in this case Teva had to establish that it “would and could” have supplied the market with venlafaxine if the NOC had been granted [53].

The first issue dealt with by the FCA concerned the burden of proof. The FCA held that Teva, as the claimant, had the burden of proof concerning what would and could have happened had its product not been kept off the market, on the general principle that the plaintiff must prove its loss [53]-[55]. Specifically, Teva had argued that it would and could have obtained venlafaxine from its supplier, Alembic, and Teva therefore bore the burden of proof on that issue.

That much was straightforward. But the FCA also noted a caveat. “Suppose Pfizer took the position that [Teva] would not have tried to obtain venlafaxine from Alembic but instead would have given up and pursued another business objective, such as getting another generic drug to market” [65]. In that case, the burden would lie with Pfizer to prove that alternative hypothetical [63]:

a defendant that sets up a new issue bears the burden of proving it. The plaintiff, having proved its version of the hypothetical world, does not have to disprove other speculative hypotheses.

The point is important one because it introduces a significant caveat on the holding in Lovastatin, in which, in discussing the “would” branch of the causation requirement, the FCA at [94] held that even though

Apotex had capacity to make the non-infringing lovastatin and that Apotex would have made an accounting profit by producing the non-infringing tablets, Apotex has not established that it would have pursued that alternative in the "but for" world. Specifically, Apotex did not point to evidence that demonstrated the profits that it would have made through the non-infringing alternative would have been greater than value lost in any of the identified scenarios (for example, the research and development activities foregone by repurposing the Winnipeg facility). As such, notwithstanding whether it had the capacity to produce the non-infringing alternative, Apotex has not satisfied its persuasive burden to demonstrate on the facts that it would have produced the non-infringing lovastatin.

The first part of this paragraph evidently says that Apotex had established its verison of the hypothetical world, namely that it would (or at least could) have supplied the market with a non-infringing alternative, while the second part of the paragraph seems to say that Apotex also bore the burden of proving that it would not have pursued a different business objective, namely exiting the lovastatin market in favour of some other opportunity (see here for a more detailed discussion). This holding in Lovastatin is very difficult to reconcile with the holding in Venlafaxine s8 FCA that “Teva would not have borne the burden of proving that it would not have pursued a different business objective” [65]. Indeed, this statement from Venlafaxine s8 is so directly on point that it almost seems to be specifically targeted at this particular holding from Lovastatin.

The point was strictly obiter, because Pfizer did not in fact make any such argument; it simply contested the very hypothetical relied on by Teva, with the result that the burden remained with Teva [66]. However, the issue was fully considered, including reliance on the SCC decision in Rainbow Caterers [1991] 3 SCR 3, and the remark regarding Pfizer’s burden to prove an alternative hypothetical was made in the context of explaining why the burden remained with Teva in the context of the arguments made in this case [58]-[66]. The point was certainly more fully reasoned than the brief and somewhat cryptic discussion of this issue in Lovastatin [93]-[95]. Moreover it was expressly stated as a general principle of law, rather than, as in Lovastatin, a finding on the facts. It would seem to follow that this statement from Venlafaxine s8 FCA now represents the law on this point. 

In my view the approach taken in Venlafaxine s8 is preferable to that taken in Lovastatin, for policy reasons discussed here, for the practical reason that it is unduly burdensome to require a plaintiff not only to prove one hypothetical world, but also to disprove all other potential hypothetical worlds, and for the legal reason that the SCC in Hamilton v Open Window Bakery Ltd 2004 SCC 9, held that it is open to the a party to adopt the hypothetical world that is “least burthensome” to it [11]. It will be interesting to see how this issue plays out in future cases.

Monday, May 23, 2016

Blogging Break

I'll be taking a break from blogging for a couple of weeks. I'll resume in mid-June, starting with any cases I might have missed in the interim.

Wednesday, May 18, 2016

Xpresspost is a Designated Establishment

Biogen Idec Ma Inc. v Canada (Attorney General) 2016 FC 517 Elliott J

In Biogen v Canada (Attorney General) Elliott J held that use of Canada Post’s Xpresspost™ service is delivery to the designated establishment under s 5(4) of the Patent Rules, such that correspondence addressed to the Commissioner is deemed to be received by the Commissioner on the date of delivery to the designated establishment (or the next following business day that the Patent Office is open), as opposed to the date on which it is physically received by the Patent Office. While this application for judicial review arose in the context of a conflict proceeding under the Old Act (perhaps the last! [4]), it is of more general interest because the applicable rules under the Old Act were repealed without transitional provisions [20], so the case was decided under the “Rules of General Application” of the new Rules. The decision will also be relevant to Copyright Regulations, Industrial Design Regulations, Trademarks Regulations and Integrated Circuit Topography Regulations, all of which employ the same delivery process using a “designated establishment” [4].

Applying a deferential standard of review [43], Elliott J held that the Commissioner’s decision that only Registered Mail™ was permitted was unreasonable [144]. The broader question raised by this case is why the Commissioner adopted such an unreasonable position in the first place, particularly since, as detailed by Elliott J, the Commissioner’s interpretation would result in more cost and inconvenience for everyone, including the Patent Office as well as its clients.

Monday, May 9, 2016

FC Interpretation of Transitional Patent Listing Provisions Affirmed

Gilead Sciences Inc v Apotex Inc 2016 FCA 140 Boivin JA: Pelletier, Rennie JJA aff’g 2016 FC 295 (judgment), 2016 FC 231 (reasons) Heneghan J
            2,261,619 / tenofovir (PMPA) / TRUVADA

In brief reasons delivered from the bench, the FCA has affirmed Heneghan J’s decision in favour of Apotex (blogged here) which turned on the transitional provisions of the PM(NOC) Regulations relating to patent listing, saying “we see no error of law in the Federal Court Judge’s analysis and conclusions that would warrant this Court's intervention.” [1].

Friday, April 29, 2016

Blinding the Expert Witness in the UK

American Science & Engineering Inc v Rapiscan Systems Ltd [2016] EWHC 756 (Pat)

Earlier this month we saw contrasting decisions on the practice of blinding expert witnesses from Zinn J in Allergan v Apotex 2016 FC 344 (blogged here) and Locke J in Shire v Apotex 2016 FC 382 (blogged here). Just days later, the decision of Arnold J in AS&E v Rapiscan addressed the same question. The invention related to an X-ray security scanning system for use at borders. The main question was the obviousness, and both the patentee, AS&E, and the defendant Rapiscan, introduced expert evidence. They both blinded their experts, but in slightly different ways, neither of which was satisfactory according to Arnold J, who made the following general comments on the expert evidence:

109. Each party contends that the other party instructed its expert to ask himself the wrong question. Both sides’ solicitors proceeded in a carefully structured manner by first asking their expert to consider the person skilled in the art and the common general knowledge, then to consider the prior art relied upon by Rapiscan and only then to consider the Patent. The difference between them was that AS&E’s solicitors asked Dr Bjorkholm to consider obvious developments of the prior art before showing him the Patent, whereas Rapiscan’s solicitors only asked Dr Lanza to consider the question of obviousness after they had shown him the Patent.

110. In my view there is force in the criticisms which each side levels at the other’s approach. The approach adopted by AS&E’s solicitors had the advantage that it enabled Dr Bjorkholm to consider obvious developments of the prior art free from knowledge of the Patent; but it meant that he never addressed in his reports the question of whether the differences between Swift and the claimed invention constituted steps which would have been obvious to the person skilled in the art. The mere fact that a step did not occur to Dr Bjorkholm when reviewing the prior art was not sufficient to exclude the possibility that he might agree that it was obvious if asked. Unlike the person skilled in art, real people sometimes miss the obvious.

111. The approach adopted by Rapiscan’s solicitors avoided that difficulty. The problem is that, whereas the correct question is whether, viewed without any knowledge of the claimed invention, the differences constituted steps which would be obvious, Dr Lanza expressed his understanding of the question he had been asked to consider without referring to the need to exclude knowledge of the claimed invention. Moreover, this does not appear to have been an artefact of the drafting of the report. On the contrary, Dr Lanza confirmed in cross-examination that his approach had been to consider obviousness as if the skilled person had been shown the claims and asked if they were obvious. Thus Dr Lanza does not appear to have understood the importance of trying to avoid hindsight.

AS&E’s expert was untainted by hindsight, but for precisely that reason he was unable to focus on “where the shoe pinches.” Rapiscan’s expert could focus on the crucial question, but his evidence was affected by hindsight. Could the problem have been avoided if Rapiscan had emphasized to their expert the importance of trying to avoid hindsight? I don’t think so. As I recall the research on the hindsight bias, being instructed to avoid hindsight does not significantly mitigate the bias.

The problem is inherent in the Windsurfing/ Pozzoli approach to the obviousness, endorsed by the SCC in Sanofi 2008 SCC 61, [67]. As Lewison J noted in Virgin Airways v Premium Aircrafts Interior 2009 EWHC 26 (Pat) at [271]:

Although the structured approach is relatively easy to describe, it can be very difficult to apply. One reason for this is that at the third stage of the structured approach it is necessary to focus on the differences between the prior art and the patent in suit; but at the immediately succeeding fourth stage it is necessary to erase all knowledge of the alleged invention from the mind. That is not an easy task.

“Not easy” is polite; "impossible" would be more accurate.

The FCA also recognized the problem in E Mishan & Sons, Inc v Supertek Canada Inc 2015 FCA 163 (blogged here):

[36] In applying the fourth step of the Sanofi test, in my view, the requirement that this step be completed “without any knowledge of the alleged invention as claimed” does not mean that the differences that were identified in step 3 would be forgotten for step 4. These differences are an essential part of step 4. Without knowing the differences between the relevant prior art and the inventive concept, step 4 could not be completed. The differences are based on the inventive concept of the claims in issue and the relevant prior art and, therefore, are determined based on some knowledge of what is claimed in the patent in issue. Therefore, some knowledge of the alleged invention will be reflected in the differences that are analyzed in applying step 4 of the Sanofi test.

Thus a expert who is blinded as in AS&E’s approach cannot apply the Windsurfing analysis, but an expert who is not so blinded will have their evidence tainted by hindsight.

Pick your poison.

Wednesday, April 27, 2016

Markush Claims are Not in the Alternative

Mylan Pharmaceuticals ULC v Eli Lilly Canada Inc (NOC) 2016 FCA 119, Rennie JA, Trudel, Dawson JJA aff’g 2015 FC 17 de Montigny J
            2,226,784 / tadalafil / CIALIS

Claim 18 of the ‘784 patent claims oral administration of tadalafil or 3-methyl tadalafil in treating ED in humans [FC 25]. Mylan challenged the validity of that claim for lack of utility. de Montigny J ultimately held that there was a sound prediction that tadalafil was useful for that purpose [FC 111] (blogged here). Mylan argued that the claim should be held invalid even so, because there was no sound basis for predicting that 3-methyl tadalafil was also useful. de Montigny J held that (1) the claims “are Markush claims and not alternative claims,” and (2) consequently, s 27(5) did not apply and therefore (3) whether the use of 3-methyl tadalafil was soundly predicted is irrelevant as the claim to tadalafil would stand in any event [FC 120]. If this sounds complicated, it is. Each of the steps in this reasoning can be debated – are the claims in question really Markush claims? Does s 27(5) – which provides that “where a claim defines the subject-matter of an invention in the alternative, each alternative is a separate claim for the purposes of sections 2, 28.1 to 28.3 and 78.3” – apply? If it does not, does that mean the “alternatives” (if that is what they are) are independent? (See here a discussion of some of these issues; and be sure to read the very helpful anonymous comment to that post.)

On appeal, the FCA held that “a Markush claim requires that each compound in the claimed class, not merely one of the compounds, have utility” [56] citing von Finckenstein J's decision in Abbott Laboratories v. Canada (Minister of Health) (Clarithromycin), 2005 FC 1095, [23-27], and thus de Montigny J erred in holding that the claim was valid even if 3-methyl tadalafil lacked utility [56]. (The error was of no consequence, as Rennie JA held that the utility of 3-methyl tadalafil was soundly predicted [57].) While Rennie JA did not mention s 27(5), he evidently approved von Finckenstein J's reasoning and not just the result, so this tells us that s 27(5) does not apply to a Markush claim. That is, whether or not de Montigny J was right on point (1), he was right on point (2), but wrong on point (3): all the compounds in Markush claim must have utility (and otherwise claim patentable subject matter) because s 27(5) does not apply.

This is helpful clarification, but it leaves open a few questions. First, the distinction between Markush claims and a claim drafted in the alternative is now very important. How exactly are Markush claims defined? Both von Finckenstein J and de Montigny J emphasized the “and” language in the claim at issue, presumably in contrast to “or” language. Rennie JA said “Assuming, without deciding, that claim 18 was indeed a Markush claim,” de Montigny J erred [56]. One can’t read too much into this language, but it does at least imply that the FCA did not consider it self-evident that Claim 18 was a Markush claim. Claim 18 was a dependent claim and the key Markush language was in Claim 12:

            12.       Use of a compound selected from the group consisting of:

            [tadalafil] or a physiologically acceptable salt or solvate thereof; and

            [3-methyl tadalafil] or a physiologically acceptable salt or solvate thereof,

            for the curative or prophylactic treatment of erectile dysfunction in a male animal.

von Finckenstein J said that a Markush claim “defines a homemade genus, all the members of which can be used interchangeably” [26], but there appears to be some uncertainty as to exactly what language will constitute a Markush claim.

Second, as discussed in my earlier post, Phelan J in Abbott v Apotex / clarithromycin 2005 FC 1332 [50]-[57] held, albeit in obiter, that s 27(5) would not save the claim even if it was framed in the alternative. It seems to me that this must be wrong, for reasons discussed in my earlier post, but I don’t think the FCA decision in this case addresses the point, even by implication.

Tuesday, April 26, 2016

Publication Date of Second Patent is Not the Date for Assessing Double Patenting

Mylan Pharmaceuticals ULC v Eli Lilly Canada Inc (NOC) 2016 FCA 119, Rennie JA, Trudel, Dawson JJA aff’g 2015 FC 17 de Montigny J
            2,226,784 / tadalafil / CIALIS

The main question addressed in this appeal was the date for assessing obviousness type double-patenting. Double patenting is a judicially created doctrine which prevents an inventor from obtaining a second patent for an invention which is an obvious variant of an invention disclosed in its own prior unpublished prior application, even though that prior application is not part of the state of the art defined in s 28.3. So, in Com'r of Patents v. Farbwerke Hoechst 1964] SCR 49, the SCC held that Hoechst’s application for a patent for a medicine consisting of consisting of sulphonyl urea diluted by a carrier should be rejected as not inventively distinct over Hoechst’s prior application for a patent for sulphonyl urea, given that there was no inventive step in mixing sulphonyl urea with a carrier.

If the state of the art does not change, then the date at which double patenting is assessed does not matter; in Hoechst it had always been common general knowledge that a medicine could be mixed with a carrier. But when the common general knowledge changes, the date is important. That is what happened in this case.

The question was whether Lilly’s ‘784 patent was invalid for obviousness-type double patenting over Lilly’s 2,181,377 patent. The ‘377 patent claimed tadalafil, which is a PDE V inhibitor. It had a priority date of 21 Jan 1994. The ‘784 patent claimed tadalafil for the treatment of erectile dysfunction (ED). It had a priority date of 14 July 1995. The publication date of the ‘784 patent was 6 Feb 1997. Between the first date and the last there were two new pieces of information available to the public. On 22 Dec 1994, Pfizer’s ‘902 US patent application was published, disclosing that sildenafil, another PDE V inhibitor, was useful for treating ED [6]. In June 1996 the Boolell study was published, which provided good evidence that a PDE V inhibitor could be administered orally for safe, effective treatment of ED [7]. The timeline was conveniently summarized by Rennie JA in this chart:

If the relevant date for assessing double patenting was the publication date of the‘784 patent, then it was uncontroversial that it would be obvious, because the ‘377 patent disclosed that tadalafil is a PDE V inhibitor and the Boolell paper disclosed that any PDE V inhibitor would be effective to treat ED [46].

The FCA rejected that date. Mylan had argued that Whirlpool 2000 SCC 67 mandated the use of the publication date of the later patent [15], presumably on the basis that Whirlpool [55] had held that the claims had to be construed as of the date of publication [55, 56]. Rennie JA held that Whirlpool was not controlling authority on this point, essentially on the basis that the question of the correct date was not at issue [48]. The refusal to decide the issue by exegesis of Whirlpool strikes me as sound both in law and as a matter of policy. In R v Henry, 2005 SCC 76 [57] the SCC pointed out that its dicta is to be treated as binding only when obviously “intended for guidance,” and “[t]he notion that each phrase in a judgment of this Court should be treated as if enacted in a statute is not supported by the cases and is inconsistent with the basic fundamental principle that the common law develops by experience.” It is better to rely on the considered reasoning of the FCA on the merits of the issue, rather than an attempt to discern what the SCC might have intended on an issue which it never addressed.

Turning to the merits, Rennie JA held that it would be inappropriate to use any date later than the claim date of the second patent because that would permit consideration of information arising after the patent’s claim date, contrary to s 28.3 [50]. For example, pretend the the ‘377 patent didn’t exist and suppose the Boolell paper was published in August of 1996, so that no one knew that PDE V inhibitors could be used to treat ED until then. If double patenting was assessed as of February 1997, the ‘784 patent would be held invalid for obviousness, even though on the claim date of the ‘784 patent it was not obvious to anyone that tadalafil could be used to treat ED – not even to someone with full knowledge that tadalafil was a PDE V inhibitor, as disclosed by the ‘377 patent. That cannot be right, as Lilly would have made two distinct contributions to knowledge, namely that tadalafil was a PDE V inhibitor, and that tadalafil could be used to treat ED.

The next question is whether the claim date of the ‘377 patent should be used, or the claim date of the ‘784 patent. Rennie JA held it was not necessary to decide, because de Montigny J had held [147] that notwithstanding the disclosure of Pfizer’s ‘377 patent, on the claim date of the ‘784 patent it was still not thought that oral administration of a PDE V inhibitor would be effective in treating ED. That is, the ‘377 patent did not change the common general knowledge and therefore the use of tadalafil to treat ED would not have been obvious over the ‘377 patent and the common general knowledge even at the priority date of the ‘784 patent. This was a finding of fact which was entitled to deference [53]. It might be said that the FCA should have decided the point anyway to provide clarity, particularly since it was fully argued, but on the whole I think the point is difficult enough that the FCA was right to leave it to a case in which it is determinative. I haven’t had any fresh thoughts of my own on which of those dates is preferable since I wrote my post on the decision of de Montigny J (here) and the more fully considered comments on Gleason J’s decision (here).