Thursday, May 21, 2015

Disgorgement of Patentee’s Profits Fails Second Branch of Unjust Enrichment Test

Apotex Inc v Eli Lilly & Co, 2015 ONCA 305 Feldman JA: Doherty, Blair JJA aff’g 2013 ONSC 5937 Grace J: Law, Sachs JJ

When a patentee brings an application for an order of prohibition pursuant to the NOC Regulations a statutory stay is automatically triggered keeping the generic off the market for 24 months or until the application is resolved in the generic's favour. If the generic prevails, it is entitled, under s 8, to damages equal to the profits it lost from having been kept off the market by the statutory stay. Since the patentee's price is normally higher than the generic's, the profits made by the patentee from sales that would have been made by the generic but for the stay are normally greater than the generic’s damages. Apotex has now failed, once again, to obtain not just its damages, but a disgorgement of the profits made by the patentee.

In its decision on this motion to strike Apotex' claim for unjust enrichment, the ONCA has provided a helpful review of the prior attempts by Apotex, both in the Federal Courts and Ontario courts, to obtain a disgorgement [22]-[31]. Apotex was previously unsuccessful on the basis that s 8 is a complete code which contemplates damages as the sole remedy [35] (and see here, discussing the previous ONCA decision, and here discussing the leading FCA decision).

In this case Apotex argued that these precedents do not govern when the patent holder obtains and lists its patent through misrepresentation: that is, it argued that even if mere invocation of the NOC Regulations cannot trigger disgorgement, knowingly triggering the Regulations by misrepretation may trigger such a remedy. This invited a debate as to the limits of the "complete code" argument, which was the basis on which Apotex' claim was struck by the Divisional Court. But the ONCA, of its own initiative [40], took a different tack. Instead of holding that the unjust enrichment claim was barred because allowing it would be inconsistent with the statutory regime, the ONCA held that Apotex' claim could not stand purely as a matter of the law of unjust enrichment [39], [41] (my emphasis):

there is a fundamental flaw in Apotex’s claim for unjust enrichment that makes this doctrine unavailable to Apotex, irrespective of the nature of Lilly’s conduct that may be proved at a trial. The flaw is in the second requirement for a claim of unjust enrichment: a corresponding deprivation.

Put simply, Apotex was never deprived of the portion of Lilly’s revenues represented by its monopolistic profits because Apotex would never have earned those profits.

It is true that the patentee, Lilly in this case, benefitted at Apotex’ expense to some degree – the profits lost by Apotex were gained by Lilly – but Apotex is already entitled to recover that loss under s 8. In the unjust enrichment claim Apotex is seeking Lilly’s excess profits above the damages which are already payable to Apotex, and “the portion of the windfall that is not compensable under s. 8 of the PMNOC regulations, the monopolistic profit, was not in any way transferred from Apotex or lost by Apotex” [53].

This brings us to Apotex’ policy argument, which is that [16]:

In the absence of a disgorgement of [the patentee’s profits], every patentee would have an incentive to use the PMNOC Regulations in all cases to unjustly delay entry of every generic product at the expense of the Generic, in the knowledge that the revenues made by it would exceed the damages for which it will be liable for the delay caused to the Generic.

There are two answers to this. One is the “complete code” argument. The appropriate incentive is a complex matter which has been addressed by the legislature in the NOC Regulations as a whole. There are a number of difficult policy decisions related to the incentives to use the regulations. For example, in under the US Hatch-Waxman, the first generic to successfully challenge the patent gets a 180 day exclusivity over other generics as an added incentive to file applications. This incentive feature is missing from Canadian law. Whether this is right or wrong, it is a decision that has been made by the legislature, and so should be changed, if necessary, by the same body.

The other response is made by the ONCA in this case:

Effectively, Apotex is asking the court to designate it as the de facto beneficiary of the wrongfully-obtained monopolistic profits despite recognizing in its pleadings that it was the public that suffered actual deprivation as a result of the monopolistic pricing. Unlike the plaintiffs in the “profiting from wrong” cases discussed above, Apotex is not positioned as the sole party with a legitimate right to “enforce” or “deter” the underlying wrong. The pecuniary interests of consumers, and potentially other generic companies, are also implicated.

That is, even if it is desirable to require the patentee to disgorge its profits to avoid abuse of the patent-linkage system, it does not follow that the profits should be disgorged to the generic. There is a prima facie argument that the parties actually harmed by the excessive prices, namely the consumers, should be those entitled to the disgorgement.

This argument is entirely distinct from the complete code argument. As the ONCA pointed out, in Low v Pfizer Canada Inc, 2014 BCSC 1469, Smith J allowed an allegation of unjust enrichment to stand in a class action claim on behalf of consumers [33]. Smith J’s holding required a rejection of the “complete code” argument [34], but it is consistent with the ONCA’s holding in this case. Even if it sound policy to require a patentee to disgorge is profits, Low v Pfizer illustrates that it is not necessary, either in theory or in practice, to require those profits to be disgorged to the generic that triggered the s 8 challenge.

Wednesday, May 20, 2015

OMNARIS Patents Invalid for Obviousness

Takeda Canada Inc v Apotex Inc 2015 FC 570 O'Reilly J
            2,388,322 / 2,388,325 / 2,538,419 / ciclesonide / OMNARIS

Takeda had a compound patent to ciclesonide (2,050,812) which expired in 2011 [3]. The patents at issue in this case were two formulation patents and a second use patent. O’Reilly J held all three patents to be obvious. None of the other grounds were addressed [5]. O’Reilly J’s holding turned entirely on the facts. One point of interest is that he did prefer evidence that was given before the expert knew what was claimed in the patent in dispute, following Rasagiline (blogged here) and Esomeprazole 2014 FC 638 [29], [43], [60]. However, this did not appear to be a determinative reason in his overall weighing of the evidence; for example, another factor that was at least as important was the fact that Takeda’s expert did not fully canvass the prior art [34], [45].

Tuesday, May 19, 2015

Should Claim Construction be a Matter of Law?

Cobalt Pharmaceuticals Co v Bayer Inc / drospirenone (NOC) 2015 FCA 116 Stratas JA: Pelletier, Webb JJA aff’g 2013 FC 1061 Hughes J (blogged here and here)
            2,382,426 / drospirenone / YAZ

In Cobalt / Drospirenone the FCA held that “[t]he Federal Court’s construction of the patent is to be reviewed on the basis of correctness” [12]. However, Stratas and Webb JA went on to argue at some length, in obiter comments, that it would make more sense to apply a deferential standard [16]-[24]. (Pelletier JA did not join in this potion of the decision; he did not disagree with the comments, but rather expressed no opinion on the basis that it was not necessary to do so for the disposition of the appeal [105]).

Stratas JA pointed out that “a court nearly always reads a patent through goggles supplied by the experts whom the judge considers to be credible and accurate,” and “[o]ften the experts’ testimony stretches beyond opinion evidence and goes into factual matters within their knowledge that are relevant to the construction exercise” [17], [18]. As is well-recognized, if an inquiry is heavily fact dependent, this militates in favour of a deferential standard of review [18], [20].

These are compelling arguments against reviewing claims construction on a correctness standard. I also agree with Stratas JA’s observation that “doctrine of comity among judges will ensure there is sufficient consistency and certainty in the meaning of patents” [21]. But I don’t think these points, valid though they are, lead to the conclusion that a generally deferential standard of review should apply. In principle at least, the problem of claim construction is a mixed question of fact and law. Ideally, the trial judge would use the testimony of the experts to educate herself as to the meaning of all the technical terms, and then, armed with that knowledge, would construe the claim herself. The first aspect of the inquiry is factual, while the second is legal. It would follow that in principle the mixed standard – deferential review except for extricable legal questions, which are reviewed for correctness – should be applied. This is the standard which applies in obviousness and utility for example, as Stratas JA notes [48], [55]. Stratas JA appealed to Sattva Capital 2014 SCC 53, for the proposition that “even legal documents may be subject to review on a deferential standard” [24]. Indeed, Sattva Capital does illustrate that legal documents are not necessarily reviewed on a correctness standard, but to be precise, the SCC held that a mixed standard of review was applicable to the contract in question [53].

I don’t think I am disagreeing with Stratas JA in suggesting that the appropriate standard is mixed standard. While he repeatedly referred to “a deferential approach” [20] or “a deferential standard” [24], or “according deference” [22], his comments were mainly directed at showing why a pure correctness standard was problematic, and in referring to “a” deferential standard, he appears to have intended to capture any standard more deferential than correctness. This is directly implied by his reference to both Sattva Capital and the USSC decision in Teva v Sandoz as endorsing a deferential standard, as both of those cases endorse a mixed standard.

In any event, even if a mixed standard is applicable in principle, can it really be applied in practice? Stratas JA made this point by asking rhetorically, “How are appellate judges supposed to cleave off those aspects of claim construction that flow from the trial judge’s appreciation of expert evidence from the words of the claim per se?” [20]. It seems to me that the answer is yes, sometimes they can. This is illustrated by Stratas JA’s own decision in Cobalt / Drospirenone. While he argued that a deferential standard would be preferable, he recognized that review for correctness is settled law, and correctness is the standard he actually applied [25].

The claim of the ‘426 patent in question, Claim 31, was to “drospirenone particles” [27] and the question was whether this should be construed as being limited to micronized particles [28]. In making the argument that it should be so limited, Cobalt pointed to references to micronized form in several points in the specification. In rejecting Cobalt’s argument, Stratas J noted that “Patents are not to be construed in a tendentious way. Rather, we must examine the patent as a whole construing the language of the claims with due regard to the inventor’s purpose through the eyes of the skilled reader: Whirlpool, [2000 SCC 67]” [31]. This, it seems to me, is a point of law, as is indicated by the fact that Stratas JA cited the authority of Whirlpool as support. He also noted that while some of the claims did explicitly claim “micronized drospirenone particles,” others, including the claim at issue, were not so limited [37]. Had the inventors intended to limit Claim 31 to micronized particles, they would have done so explicitly, as they did in other claims. This is not a question of what “micronized” means, or anything else which is informed by technical expertise, but is rather a matter of general grammar and interpretative principles, which are more squarely within the expertise of a judge than a technical expert. Similarly, Stratas JA pointed to a passage in the specification stating that “Instead of providing the drospirenone in micronized form, it is possible to [use other techniques to promote rapid dissolution]” [35]. To explicitly give micronized form as but one alternative in the specification supports the view that not all of the claims are restricted to micronized form. One can come to this conclusion without knowing what “micronized” means. Without getting into the niceties of whether these are all strictly extricable questions of law, at least they are questions which are squarely within the expertise of a judge, rather than a technical expert.

This distinction is important because the law / fact question goes not only to the standard of appellate review, but also to the role of the trial judge in the construction of the patent. Indeed, the statement by the SCC that is cited as authority for the correctness standard – “claims construction is a matter of law for the judge” – goes to the latter point (Whirlpool [61], cited at [12]). The full passage is as follows:

The appellants object that the "vane" controversy ought to have been foreclosed by the Agreed Statement of Facts where the parties agreed that the appellants' flex vane machine infringed the '803 patent subject to the removable sleeve issue. However, claims construction is a matter of law for the judge, and he was quite entitled to adopt a construction of the claims that differed from that put forward by the parties.

In the question of whether Claim 31 was restricted to micronized particles, it would no doubt be possible for a trial judge to decide this matter purely as a question of fact by considering the evidence of expert witnesses. But this would require the expert witness to testify eg that a skilled person would in fact construe the claims by looking to the patent as a whole with due regard to the inventor’s purpose, and that a skilled person would note that some claims did use this language, and would therefore infer that the claims that were not so restricted were broader, and so on. And another expert would no doubt testify to the contrary. The trial judge would likely then decide that the evidence of the expert who advanced grammatically peculiar interpretations was to be discounted. But if the trial judge could and should discount the evidence of an expert who testifies to an ungrammatical reading for the reason that the reading is ungrammatical, it is more straightforward for the trial judge to simply say directly she can consider matters of grammatical reading herself, without evidence from technology experts. That, it seems to me, is the gist of the SCC statement in Whirlpool.

In summary, Stratas JA has given strong reasons not to review claim construction on a pure correctness standard, but there is a stronger argument for a mixed standard than for a wholly deferential standard. Stratas JA’s comments were directly primarily to the problems with the correctness standard, and I do not see his remarks as ruling out the mixed standard.

Friday, May 15, 2015

Time for En Banc Review at the FCA?

Cobalt Pharmaceuticals Co v Bayer Inc / drospirenone (NOC) 2015 FCA 116 Stratas JA: Pelletier, Webb JJA aff’g 2013 FC 1061 Hughes J (blogged here and here)
            2,179,728 / 2,382,426 / drospirenone / YAZ

No new law was applied by the FCA in Cobalt / Drospirenone and the result itself is not surprising, but the decision is nonetheless very interesting. Stratas JA explicitly called for the SCC to provide advice in two different areas, namely the standard of review for claim construction [16] and whether methods of medical treatment should be considered patentable subject matter [101]. Stratas JA also provided an in-depth discussion, albeit in obiter, of whether construction of the claims should be considered a matter of law or fact [16]-[24].

That the FCA called for SCC clarification in two contentious areas of law raises the broader question of what institutional mechanisms should be used to clarify and advance the law. I suggest it is time to seriously consider instituting an en banc mechanism similar to that which is used in both the US appellate system, including the Federal Circuit, and in the EPO with the Enlarged Board of Appeal. In this mechanism, a court which normally sits in panels, will sit with a large number of judges (though not necessarily the full court) to review its own decision in appeals raising important points of law. As the EPO explains, the Enlarged Board of Appeal “clarifies and interprets important points of law . . . and ensures uniform application of the law.” The issues raised in this case illustrate the usefulness of a mechanism for clarificationj and interpretation of important points of law. An en banc procedure could also usefully address apparent divergences between different panels of the FCA. En banc review would have advantages over the options which are currently institutionally available, namely legislative amendment, review by the SCC, or allowing panels to overrule prior decisions of other panels.

The problem with legislative amendment is obvious: the legislature has a lot on its plate and even very important issues of patent law may not be important enough to warrant legislative action. This is so obvious that in his call for reform Stratas JA addressed himself only to the SCC: he did not bother to say “in the interests of the sound development of the law, I would like to offer certain observations for the legislature to consider.” But much the same can be said about the SCC. The SCC has a limited caseload and it grants leave only in cases which it considers to be “of public importance” (Supreme Court Act s 40; and see here for a general discussion of the factors considered in leave decisions.) As I noted in an earlier post, “The SCC only hears about 60 cases a year, including many as of right criminal appeals, and it has an understandable focus on constitutional and criminal law cases. With what remains it has to deal with every other area of private law. The SCC simply does not have the ability to deal with every confused technical area of law, no matter how important that area might be to some parties.” It is true that the SCC is more accessible than the legislature and it is certainly more likely to act on technical matters of law such as the nature of appellate review, but the fact remains that the SCC cannot deal with every area of patent law that requires clarification or reform.

The problem of accessibility does not arise if we look to individual panels of the FCA, but individual panels simply lack the requisite institutional authority. This is quite apart from any argument that a panel should not be permitted to change or depart from settled law in order to preserve the expectations of the parties. Even if we were to say that it is permissible for an individual panel to depart from settled law, doing so would be more likely to further confuse difficult areas of law. The views of any panel, even the most recent to opine on a particular issue, carry no more weight than the panels that went before it. If one panel purported to change or clarify the law, the next panel to hear the same issue would be perfectly justified in saying that the opinion of the panel that had changed the law deserved no more weight than any of the panels that went before it, and so the supposed change was ineffective. Certainly, a well reasoned opinion of one panel may be so persuasive that subsequent panels will follow it for that reason; and more broadly, mechanisms of comity can cause the law to evolve and become clearer through the decisions of multiple panels. Such a process often does work effectively to resolve difficult new issues of law. But sometimes even new issues prove intractable; and the mechanism of incremental change through the decisions of individual panels is much less effective to address the problem which arises when law which is taken to be settled in principle proves to be problematic in practice.

So, en banc review is more accessible than the legislature or the SCC and it is more authoritative and potentially quicker than the decisions of individual panels. With that said, I can think of a couple of objections to en banc review, though none which strike me as compelling. One is that the law once settled, should not be changed. But that is not an argument against en banc review; it is an argument against changing the law through any mechanism, including SCC review and legislative change. And if the issue is one of clarification or interpretation rather than change, then by definition there are no settled expectations to be disturbed.

The other objection is that en banc review will not be useful when the problematic law is SCC precedent. While it is true that not even an en banc panel of the FCA could overrule the SCC, that only limits the scope of en banc review in some cases. So, one of the areas addressed by the FCA was methods of medical treatment. As Stratas JA noted “The current law in this Court is that methods of medical treatment are not patentable. . . . The provenance of this is Tennessee Eastman Co. et al. v. Commissioner of Patents, [1974] S.C.R. 111, 33 D.L.R. (3d) 459, a decision based on former subsection 41(1) of the Patent Act, now repealed.” As Stratas JA points out, and as the SCC has affirmed, Tennessee Eastman itself was based on s 41. As discussed here, the notion that methods of medical treatment remain unpatentable despite the repeal of s 41 stems from the interpretation of Tennessee Eastman by the FCA itself in ICI (1986) 9 CPR(3d) 289, subsequently affirmed in other FCA decisions. While the law is settled, changing it would not require the FCA to overrule the SCC, but only to overrule its own prior decisions.

The question of the correct standard of appellate review of claim construction is different, because of the authority of the SCC in Whirlpool 2000 SCC 67 [61] holding that “claims construction is a matter of law for the judge.” I will discuss this in more detail in Monday’s post. For now I will just saw that I think the law could be considerably clarified and improved in this area without overruling Whirlpool. And even if I am wrong about that, if en banc review can authoritatively tackle even half the contentious patent issues that come to the FCA, that would be very helpful.

Thursday, May 7, 2015

Valid Industrial Design May Be Functional

Zero Spill Systems (Int’l) Inc v Heide 2015 FCA 115 Stratas JA: Dawson, Near JJA var’g 2013 FC 616 Barnes J

In its Zero Spill decision the FCA has largely set aside Barnes J’s decision and remitted it for redetermination. The only legal point of interest relates to the ‘793 Industrial Design.

Wednesday, May 6, 2015

Allegation of S 53 Invalidity Allowed to Stand

NOV Downhole Eurasia Limited v TLL Oil Field Consulting 2015 FCA 106 Nadon JA: Dawson, Boivin JJA aff’g 2014 FC 889 Mosley J
            2,255,065

In a brief decision from the bench the FCA has affirmed Mosley J’s refusal to strike a statement of defence asserting that the '065 patent was void pursuant to s 53(1) as a result of statements regarding claim scope made during prosecution. As discussed here, this case raises important issues regarding the relationship between s 53 and prosecution history estoppel, though of course these issues are not resolved by a motion to strike.

Monday, April 27, 2015

Blogging Break

I am taking an end of term vacation. I expect to resume blogging sometime on the week of May 11, starting with any decisions that came out while I was away.

Wednesday, April 22, 2015

SCC Affirms FCA on Calculation of Damages under NOC S 8

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

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

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

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

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

Friday, April 17, 2015

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Finally, Gleason J remarked that

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

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

Tuesday, April 14, 2015

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

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

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

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

Monday, April 13, 2015

Arbitrary Selection Is Not Inventive

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

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

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

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

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

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

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

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

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

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

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

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

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

Tuesday, March 31, 2015

Any Calculation Will Be Complex and Contentious

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Wednesday, March 25, 2015

IP License can be used to create a PMSI

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

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

Monday, March 23, 2015

Foreign Issue Estoppel in Theory and Practice

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

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

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

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

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

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

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

Friday, March 20, 2015

Product Claim Not Limited to Process Contemplated by Patentee

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

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

Wednesday, March 11, 2015

Tadalafil Formulation Patent Obvious and Not Infringed on the Facts

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

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

Tuesday, March 10, 2015

Deferential Review of Factual Findings of the Re-examination Board

Newco Tank Corp v Canada (Attorney General)2015 FCA 47 Ryer J: Webb, Near JJA, aff’g 2014 FC 287 Mosley J
            2,421,384

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

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

Monday, March 2, 2015

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

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

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

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

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

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

Thursday, February 26, 2015

Gliclazide Dosage Form Patent Obvious and Not Infringed

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

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

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

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

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

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

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