Claim Construction in EXJADE Affirmed as Correct

Teva Canada Ltd v Novartis Pharmaceuticals Canada Inc 2016 FCA 230 Dawson JA: Gauthier, Near JJA aff’g 2015 FC 770 O'Reilly J
            2,255,951 / deferasirox / EXJADE / NOC

In the decision under appeal O'Reilly J issued an order of prohibition in respect Teva’s generic version of EXJADE on the basis of the ‘951 patent. The only issue on appeal was whether O’Reilly J, having correctly stated the law relating to the promise of the patent, had correctly applied that law in construing the promise of the ‘951 patent [4]. (The promise aspect of O’Reilly J’s decision is blogged here. See here and here for discussion of other aspects of his decision.)

In a brief decision, the FCA held that O’Reilly J’s construction of the promise was “correct” [25]. In light of the recent Nova v Dow , 2016 FCA 216 decision on the standard of review for claim construction (see here), it is interesting that the FCA did not discuss the standard of review at all. (To be clear, the FCA did not hold that the standard of review for construction of the promise was correctness; it simply did not discuss the issue.) Of course, a holding that the decision below is correct is consistent with upholding it on a less stringent standard of review, and it may be that the FCA simply felt no need to address the standard of review.

The FCA also went out of its way to quote Celebrex 2014 FCA 250 [66] (see here) to the effect that “the promise of the patent doctrine will hold an invention to an elevated standard of utility ‘only where a clear and unambiguous promise has been made.’ Where a patent’s validity is ‘challenged on the basis of an alleged unfulfilled promise, the patent will be construed in favour of the patentee where it can reasonably be read by the skilled person as excluding this promise’” [26]. Finally, the FCA re-affirmed that the point made in Celebrex (see here) that the promise doctrine applies on a claim-by-claim basis, so “different claims can have different utilities for the same compound” [23].

Repayment of Damages Paid Pending Appeal

Pfizer Canada Inc v Teva Canada Ltd 2016 FCA 218 Stratas JA:Gleason JA (Ryer JA*) refusing to vary 2016 FCA 161
            1,248,540/ 2,199,778 / venlafaxine / EFFEXOR XR

The circumstances of this motion are “unusual” [25]. In Teva v Pfizer 2014 FC 248 (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. Pfizer paid the damages award to Teva and launched an appeal [3]. Pfizer was successful, at least to the extent that in 2016 FCA 161 the FCA vacated Zinn J’s award because it was based on inadmissible hearsay evidence. The matter was remitted to Zinn J for redetermination (see here) [2]. Pfizer then asked Teva for the money back. Teva refused. The difficulty for Pfizer is that there was no provision in the FCA judgment requiring Teva to return the money. Pfizer therefore brought this motion, asking the FCA to vary its judgment to add a term requiring Teva to repay the money with interest [5].

The first issue was whether the two remaining members of the original panel has subject-matter jurisdiction, notwithstanding the retirement of the third. The Court concluded that it did have jurisdiction [10].

Nonetheless, and notwithstanding that “[i]n light of the judgment of this Court and on the record before us, Teva has absolutely no right to keep Pfizer’s payment” [4], the FCA refused to vary its judgment to order Teva to return the money. Pfizer’s failure to request the return of the money was fatal: “Without a formal, explicit request for specific relief in the notice of appeal, the request is not before the Court. . . . Now that judgment has been rendered, it is not possible to retroactively expand the scope of the appeal and then vary the judgment” [22].

Pfizer is not without recourse. The matter has been remitted to Zinn J for redetermination. He may again find that Pfizer owes substantial damages to Teva. If he does, in making his award of damages he “will be bound to take into account any payments that Teva might have received to which it is not entitled,” including consideration of interest [23]. That is, the amount already paid will be offset, with interest, against any future award. In the alternative, or if no damages are awarded on remand, Pfizer “can sue Teva for restitutionary recovery of monies wrongly withheld from it” [23].

*Ryer JA was a member of the original panel, but had retired and was functus by the time of this hearing [8].

The Complexities of Comity and Stare Decisis

Bayer Inc v Apotex Inc 2016 FC 1013 Fothergill J
            2,382,426 / micronized drospirenone / YAZ YASMIN

As noted in yesterday’s post Bayer’s ‘426 patent covers an oral contraceptive comprising drospirenone and ethinylestradiol, where the drospirenone is in the form of fast dissolving particles. The claims of the ‘426 had previously been construed by Hughes J and the FCA in the prior NOC proceedings: Bayer v Cobalt 2013 FC 1061 J aff’d 2015 FCA 116 (blogged here). This raised the question of the extent to which Fothergill J was bound to follow the claim construction arrived at by Hughes J (on the basis of comity) and the FCA (on the basis of stare decisis) [45].

Bayer argued that Fothergill J should adhere to the FCA’s construction “unless the evidence demonstrates the prior construction was wrong, or if different evidence compels a different result” [46], relying on Allergan 2012 FCA 308, [44] (here). This position is in some ways surprisingly modest. Allergan did state that test, but in the context of comity, which governs the relationship between courts of the same level. As noted in Pfizer 2014 FCA 250 [59] (here) (also relied on by Bayer), claim construction is a matter of law, and stare decisis implies that a subsequent lower court should be strictly bound by a holding of law by a higher court. On the other hand, Cobalt and Apotex pointed out that because of their summary nature, even holdings of law in an NOC proceedings are arguably not strictly binding at all in a subsequent infringement action: Lilly v Novopharm / nizatidine [1998] 2 SCR 129 [95]-[96]; Lilly v Novopharm /olanzapine 2007 FCA 359 [41].

Broad Experimental Use Exception to Anticipation

Bayer Inc v Apotex Inc 2016 FC 1013 Fothergill J
            2,382,426 / micronized drospirenone / YAZ YASMIN / action

Bayer’s ‘426 patent covers an oral contraceptive comprising drospirenone and ethinylestradiol, where the drospirenone is in the form of fast dissolving particles. In this consolidated infringement action, Fothergill J found claims 31, 48 and 49 to be valid and infringed by Apotex’s Zamine and Mya tablets and Cobalt’s Zarah tablets. The conclusions on validity and infringement turned on almost entirely the facts. With that said, it is significant that that Fothergill J accepted the broad experimental use exception to anticipation set out by Hughes J in his NOC decision concerning the same patent. Fothergill J’s remarks on blinding of expert witnesses, as well as on comity and the binding effect of prior FCA decisions on claim construction, are also of interest. This post deals with experimental use and blinding, while tomorrow’s post will deal with comity.

More than one year before the filing date, Schering, Bayer’s predecessor in title [19], conducted Phase III clinical studies in Europe and the United States involving oral contraceptive tablets containing the claimed amounts of drospirenone and ethinylestradiol [145]. (It is not clear to me whether it was admitted that these tablets also fit the claimed formulation profile, but for the purposes of Fothergill J’s reasoning, we may assume they did.)

Participants were given a large number of the tablets, which were to be self-administered over several months outside of a clinical setting. In all three trials, participants were told what the tablets contained, and knew that the tablets were intended to be used as oral contraceptives. No restriction was imposed on participants regarding the disclosure of information concerning the tablets. The participants did not sign confidentiality agreements. [145-46].

Apotex alleged these trials anticipated the ‘426 patent. Fothergill J held they did not. He pointed out that anticipation requires enabling disclosure, and he held that even if some of the tablets had made their way into the hands of a person skilled in the art, such a person would not have been able to reverse engineer the tablets to discover the particular formulation which constituted the invention without the exercise of inventive ingenuity [154-55]. That finding turned on the facts and the law he applied is not controversial.

More interesting is the “alternative” basis for Fothergill J’s holding that the trial did not anticipate [156]. In Bayer v Apotex 2014 FC 436 a prior NOC case involving the ‘426 patent, the same argument was raised that these same clinical trial were anticipatory. Hughes J held that they were not, on the primary basis that Bayer benefited from an experimental use exception to anticipation. The following key passage from Hughes J's decision was quoted by Fothergill J [159]:

[121] In the present case clinical studies were necessary to prove that the drug was safe and effective and, thereby, gain government approval for sale. Until this had been demonstrated, no commercial sale of the drug could have been made. Bayer took reasonable steps to ensure the confidentiality of the relevant documents and to ensure that unused tablets were returned. The theoretical possibility that some tablets were retained and analyzed is just that, theoretical. This theoretical possibility does not preclude the fact that the studies were experimental, and of necessity, conducted by the provision of tablets to members of the public. Thus these clinical studies are exempted from public use.

As I said in my blog post on Hughes J’s decision, this seemingly establishes a broad experimental use exception to what would otherwise be anticipating disclosure, which applies to any clinical trial, so long as reasonable steps are taken to ensure that the unused tablets are returned. Fothergill J agreed with Hughes J both as to this statement of the law and its application to the facts of this case [156], [159]. Fothergill J also clarified that the fact that these trials had been conducted for the purpose of gaining regulatory approval did not take them outside of the experimental use exception [162].

In my post on Hughes J’s decision, I suggested that his decision was notable because, while there was some case law supporting such a broad exception, it was not well-established. Fothergill J’s holding is therefore significant as reinforcing the law stated by Hughes J.

Blinding Expert Witnesses
Apotex argued that the evidence of its expert witnesses should be preferred to those of Bayer’s witnesses because its experts had been “blinded.” Like Brown J in the recent VIREAD decision, 2016 FC 857 (blogged here), Fothergill J was unimpressed by the arguments in favour of blinding. Fothergill J noted that “[t]he fact that expert witnesses were blinded may be persuasive and helpful in weighing their evidence where credibility concerns arise” [65], but, citing Locke J in Shire 2016 FC 382, [45] (blogged here), he continued to say that “if an expert’s opinion is well supported, then there may be no reason to place less weight on the expert’s evidence merely because he or she was not blinded to certain facts when forming that opinion” [66]. In this case, “I have not found the blinding of expert witnesses to be a significant factor in deciding the legal and factual issues raised by this case” [66]. It is still too early to be sure, but the tide may be turning against “blinding.”

"Some leeway" Standard of Review for Claim Construction

NOVA Chemicals Corporation v The Dow Chemical Company, 2016 FCA 216 de Montigny JA: Webb, Boivin JJA aff’g 2014 FC 844 O'Keefe J here
            2,160,705 / film-grade polymers / ELITE SURPASS / Action

At trial in this action O’Keefe J held Dow’s ‘705 patent related to film-grade polymers to be valid and infringed by Nove. In my post on that decision I noted that “[t]he result turned largely on the evidence, and no novel points of law were raised.” Unsurprisingly, the FCA has now affirmed, noting that “[a]ll of the arguments raised by the appellant amount to no more than mere disagreements with the Judge’s factual findings and assessment of the expert evidence” [93]. With that said, there are a few points of general interest in the decision relating to the nature of claim construction, the meaning of “comprising,” and the promise of the patent.

The most significant point is the Court’s remarks on the nature of claim construction:

[15] On the other hand, the construction of the patent is to be reviewed on the basis of correctness. As the Supreme Court has stated in Whirlpool Corp. v. Camco Inc., 2000 SCC 67 at para. 61, [2000] 2 S.C.R. 1067, “claims construction is a matter of law”. That being said, I share the concerns of my colleague Justice Stratas that it will often be difficult, if not unrealistic and artificial, to distinguish between those aspects of claim construction that flow from the trial judge’s assessment of expert evidence from the words of the claim themselves (see Cobalt Pharmaceuticals Company v. Bayer Inc., 2015 FCA 116 at paras. 16-24, [2015] F.C.J. No. 555). After all, the construction of a patent is heavily dependent on the evidence given by persons skilled in the art, and that evidence will bear heavily on the judge’s findings. For that reason, I accept (as I must) that the construction of a patent is a question of law to be reviewed on a standard of correctness, but trial judges are nevertheless entitled to some leeway as they are often in a much better position than appellate judges to understand the intricacies of the art underlying the invention disclosed in a patent.

“Some leeway” is an interesting caveat to the correctness standard, which arguably amounts to a halfway (quarterway?) house between correctness and deference. Substantively, it is seems like a reasonable position in light of the concerns identified by the FCA. In principle the expert evidence enables the court to understand the meaning of the technical terms – a factual inquiry – while the court interprets that claims in light of that understanding – a legal inquiry. But since words take their meaning partly from the context in which they are used, it is not possible to separate the two inquiries so neatly. However, as the FCA notes, claim construction is a matter of law, and the standard is therefore correctness, and it is not clear that giving the trial court “some leeway” is consistent with the correctness standard. Moreover, whether as a third level of deference, or simply a caveat to correctness which is applicable to claims construction, it runs counter to the general trend of simplifying the standards of review, as illustrated by Dunsmuir [2008] 1 SCR 190, Housen v Nikolaisen 2002 SCC 33, and most recently in the FCA’s own decision in Hospira 2016 FCA 215 (discussed here). I note that the FCA did not embrace the correctness standard on its merits, but rather because of binding SCC authority. Do I detect some dissatisfaction with the SCC’s holding in this paragraph? Perhaps the FCA is hinting that it would prefer a fully deferential standard of review for claim construction and “some leeway” is the furthest it felt it could go in light of Camco. But a fully deferential standard would have its own significant problems, and maybe it is better to accept the decision on its face, as fully endorsing a standard of correctness with some leeway, even if that leaves a tension with broader trends.

On another claim construction point, the FCA affirmed O'Keefe J’s construction of the word “comprising” as meaning “including, but not limited to” [81]. The FCA stated that Nova’s argument to the contrary “is inconsistent with the ordinary meaning of the word ‘comprising’” [82] The Court also noted that “the traditional meaning of the word ‘comprising’ is ‘including but not limited thereto’” [82]. This is a welcome departure from the FCA’s decision in Purdue Pharma / TARGIN 2011 FCA 132, where, as discussed here, the FCA held in effect that “comprising” has no presumptive meaning. The FCA in this case did acknowledge that “a presumption should not be applied inflexibly” [83], so it is possible that “comprising” might be interpreted as limiting in the context of a different patent. However, even that statement helpfully recognizes that there is indeed a “presumption” that “comprising” is not normally limiting.

Finally, the utility argument at trial had turned on the construction of the promise of the patent, and O’Keefe J had held that there was no promise at all, so that utility should be assessed against a scintilla standard. The FCA affirmed, referring to the “presumption that an inventor should only be held to an elevated standard where a clear and unambiguous promise has been made,” and citing Celecoxib 2014 FCA 250 [66] (blogged here), for the proposition that “[w]here the validity of a patent is challenged on the basis of an alleged unfulfilled promise, the patent will be construed in favour of the patentee where it can reasonably be read by the skilled person as excluding this promise” [24]. It might be possible to read this as generally emphasizing the need for restraint in construing the promise of the patent, reinforcing Plavix 2013 FCA 186 (here). However, as the FCA also emphasized, in this case the argument for an enhanced promise was weak in any event. We’ll learn more when the FCA next reviews a construction of the promise that is closer to the line, one way or the other.

UPDATE: In preparing this post, I neglected to review Cobalt v Bayer 2015 FCA 116, which was cited by the FCA in the key paragraph 15, quoted above. As discussed in my post on that decision, Stratas JA explicitly argued for a deferential standard of review in construction of the patent at [12]-25]. So the answer to the question I posted above, as to whether the FCA in this case is expressing some dissatisfaction with the correctness standard and hinting that it would prefer a more deferential standard, is evidently "yes." In my post on Cobalt v Bayer I argued that while there are compelling arguments against reviewing claim construction on a correctness standard, there are also problems with a fully deferential standard. I'm now inclined to think that the modestly deferential "some leeway" standard might be the best approach, notwithstanding the trend towards simplification of standards of review.

VIREAD Patent Valid on the Facts

Gilead Sciences v Apotex Inc 2016 FC 857 Brown J
            2,261,619 / tenofovir disoproxil / VIREAD / NOC

In this NOC decision. Apotex’s validity attacks on the ‘619 patent, based on anticipation / invalid selection, obviousness and lack of utility, all failed on the facts. The main point of legal interest is Brown J’s agnostic approach to the question of “blinding the witness.”

Tenofovir, or PMPA, is a nucleotide reverse transcriptase inhibitor which was known to be effective against retroviral infections such as HIV. However, its oral bioavailability was poor and it was only effective when administered intravenously [32]. The claim of the ‘619 patent at issue, Claim 32, claims tenofovir disoproxil (TD) and its salts, tautomers and solvates [6], [70]. TD is an oral prodrug of tenofovir, which allows effective oral admininstration of tenofovir [31].

The Limits of Stare Decisis

Hospira Healthcare Corporation v The Kennedy Institute of Rheumatology, 2016 FCA 215 Nadon JA: Pelletier, Rennie, de Montigny, Gleason JJA
            2,261,630 / infliximab / INFLECTRA

As discussed in yesterday’s post, in Hospira the FCA held that the standard of review for discretionary decisions of prothonotaries set out in Aqua-Gem should be abandoned and replaced by the standard of review set out in Housen 2002 SCC 33. As well as the issue of whether Aqua-Gem should be abandoned, there was a question as to whether Aqua-Gem could be abandoned, because the Aqua-Gem standard had been approved by the SCC, and it was established FCA law. Hospira therefore raises the question of when the FCA can depart from SCC authority, and when it should overrule its own prior decisions.

Housen Standard of Applies to All Types of Appellate Review

Hospira Healthcare Corporation v The Kennedy Institute of Rheumatology, 2016 FCA 215 Nadon JA: Pelletier, Rennie, de Montigny, Gleason JJA
            2,261,630 / infliximab / INFLECTRA

The Hospira decision, with Nadon JA writing for a unanimous five member panel of the FCA, is important in several respects. Most prominently, it changed the standard of review for discretionary decisions of prothonotaries, replacing the standard set out by the FCA in Canada v Aqua-Gem Investments Ltd [1993] 2 FC 425 with the Housen 2002 SCC 33 standard. Relatedly, Hospira held that the Housen standard should also apply to appellate review of a motions judge reviewing an order of a prothonotary, and to appellate review of discretionary decisions of judges [78], [83]. On the substantive point at issue, the FCA clarified the law relating to the limits on examination for discovery. Hospira also addressed broader jurisprudential questions. The Court considered when it could depart from SCC precedent, and it also implicitly overruled its own prior decision in Miller 2002 FCA 370, as to when its own decisions should be overruled. And the decision is also institutionally significant, as it was heard by a five judge panel – the first five judge panel since Aqua-Gem itself, more than 20 years ago [29]. This post will deal with the first issue.

In the underlying dispute Hospira is seeking a declaration that Kennedy’s ‘630 patent is invalid and not infringed [4]. Hospira requested two days for discovery of each of the inventors, but Kennedy refused, saying one day was sufficient. Hospira conducted one day of examination of each of the inventors, in London and New York (both inventors reside in the UK, but one happened to be in New York). At the end of the day, examination was terminated by Kennedy. Hospira then brought a motion seeking to continue the examination, in person, for one day per inventor [7], [104]. Prothonotary Milczynski heard the motion, and ordered the examination be continued for one-half day, by teleconference [8]. Hospira appealed, and the Motions Judge, Boswell J, applied the Aqua-Gem standard and dismissed the appeal [9]. Hospira then brought this appeal to the FCA.

Standard of review of discretionary orders of a prothonotary
A central question on the appeal was whether the standard of review set out in Aqua-Gem as applicable to discretionary orders of a prothonotary, should be abandoned and replaced by the standard of review set out in Housen v Nikolaisen 2002 SCC 33 [19]-[37] as being applicable to the decisions of trial judges. Under the Aqua-Gem standard, a discretionary order of a prothonotary ought not to be disturbed unless (1) the question is vital to the final issue, in which case it is subject to a de novo review; or (2) “the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts” [42]. Under Housen, factual conclusions reached by a trial judge are subject to deferential review for palpable and overriding error; for questions of law and questions of mixed fact and law, where there is an extricable legal principle at issue, the applicable standard is that of correctness [66]. The FCA held that despite the different language, there was no real difference between the second branch of Aqua-Gem and the deferential standard set out Housen [26], [68]. Thus the question was whether the first branch of Aqua-Gem, which provides for de novo review on questions that are vital to the final issue, should be abandoned [26].

The FCA held that the de novo review branch of Aqua-Gem should indeed be abandoned, most importantly because it was wrong in principle [51]-[55]. The FCA adopted the reasoning of Low J in Zeitoun v. Economical Insurance Group 2008 CanLII 20996 aff’d 2009 ONCA 415, which had effected the same change in Ontario law [51]-[55]. This point boils to recognizing “a presumption of fitness that both judges and masters were capable of carrying out the mandates which the legislator had assigned to them” [53]. Masters may once have been assistants to judges, but they are now independent judicial officers [63]. There is consequently no justification for applying a different standard of review based merely on notions of judicial hierarchy [51].

The FCA further held that the Aqua-Gem standard should be replaced by the Housen standard [79]. On this point, I take the Court to be saying that even though the first branch of Aqua-Gem was substantially the same as the Housen standard, it is the Housen standard itself which should be used, and not some alternative formulation, even if putatively equivalent. The FCA also held that the Housen standard should be applied in reviewing discretionary decisions of motions judges, as was held in Imperial Manufacturing 2015 FCA 100, and doing away with the possibly conflicting formulation set out in Turmel 2016 FCA 9 [74]-[78]. The FCA also held that the same standard applies to appellate review of a motions judge reviewing a discretionary order of a prothonotary pursuant to Rule 51 [80].

Consequently, the law has been significantly simplified. There is now only one standard of review for discretionary decisions of prothonotaries and discretionary decisions of judges, which is the Housen standard [79]: absent error on a question of law or an extricable legal principle, intervention is warranted only in cases of palpable and overriding error. 

Alternatives to s 8 Damages

Apotex Inc v Pfizer Ireland Pharmaceuticals et al 2016 ONSC 4966 Lederman J

Under our patent linkage system, a patent that is ultimately held to be invalid can keep competitors off the market until the conclusion of the NOC proceedings. Section 8 of the NOC Regs provides a remedy in the form of damages to the generic that has wrongly been kept off the market. However, there are limitations to this remedy. Both the FCA and the ONCA have held that if the generic is successful in the s 8 proceeding, s 8 entitles it only to its own damages, and not disgorgement of the patentee’s profits: Apotex v Eli Lilly Canada 2011 FCA 358 (here); Apotex v Abbott Laboratories 2013 ONCA 555 JJA (here). The FCA has also held that if the generic is unsuccessful in the NOC proceeding, it cannot claim s 8 damages, even if the patent is subsequently held invalid in an infringement action: see Eli Lilly Canada v Apotex 2013 FCA 282 (blogged here). Undeterred, in a series of actions Apotex has sought a way around these limitations by pleading a bewildering variety of causes of action. None has so far proceeded beyond the pleading / certification stage. I haven’t blogged all of them and this decision presents an opportunity to try to summarize the holdings, though so many causes of action have been raised that I can’t guarantee that I have caught them all.

This decision itself is also noteworthy in a few respects. Most importantly, Lederman J refused to strike the claim for unjust enrichment [36]. In so doing, he declined to follow the BCCA decision in Low v Pfizer 2015 BCCA 506. As discusssed here, Low held that the claim for unjust enrichment had no prospect of success because there was a juristic reason for the infringement. Lederman J noted that Low was not binding on him [30], and he consequently held that jurisprudence is inconclusive [33]. He also distinguished Apotex v Eli Lilly 2015 ONCA 305 (here) on the basis that in that case Apotex had been seeking disgorgement of all of the patentee’s profits, whereas in this case, Apotex “claims only that portion of Pfizer’s revenues that represent the revenues Apotex was deprived of because of the delay in obtaining its Notice of Compliance” [35]. That is, in this case Apotex is in effect seeking its own damages in the guise of an unjust enrichment claim.

Lederman J also allowed a claim for damages in nuisance [39]. I believe this is the first time Apotex has advanced a nuisance claim.

A third point of interest is that Lederman J also struck Apotex’s claim for damages under s 8 [18]. This is not too surprising, as he was simply following [14] the FCA holding in Eli Lilly Canada v Apotex 2013 FCA 282 n this point but given his view of the BCCA decision in Low, it was not a foregone conclusion that he would accept the FCA’s reasoning.

Apotex also pleaded treble damages under the English and Ontario Statutes of Monopolies [1]. Pfizer did not seek to have this struck, in light of the prior jurisprudence allowing such a claim to stand. Lederman J also allowed the claim under s 7(a) of the Trade-marks Act to stand, in light of prior decisions [28]. He rejected the claim based on Ashby v. White, on the view that “The principle borrowed from that case – ‘no right without a remedy’ – is simply a phrase, a principle or a maxim. By itself, it does not disclose a cause of action and should be struck” [40].

To summarize (at least partially) the cases to date:

No prospect of success
            Disgorgement under s 8

Apotex v Eli Lilly Canada 2011 FCA 358 (blogged here); Apotex v Abbott Laboratories 2013 ONCA 555 (here) aff’g 2013 ONSC 356

Damages under s 8 if patent held valid in NOC proceeding

Eli Lilly Canada v Apotex 2013 FCA 282 (blogged here); Apotex v Pfizer Ireland 2016 ONSC 4966

            Unlawful interference with economic relations
                        Low v Pfizer 2015 BCCA 506 (here)

Waiver of tort

                        Low v Pfizer 2015 BCCA 506 (here)

            The “principle” in Ashby v White

Apotex v Pfizer Ireland 2016 ONSC 4966

Allowed to stand

Damages under the Trade-marks Act s 7(a)

Apotex v Pfizer Ireland 2016 ONSC 4966

Apotex v Eli Lilly 2012 ONSC 3808 leave to appeal refused 2013 ONSC 1135 (here)

Apotex v Schering 2016 ONSC 3407

Treble damages under the English and Ontario Statutes of Monopolies:

Apotex Inc. v. Eli Lilly, 2015 ONSC 5396; Apotex Inc v Schering Corp 2016 ONSC 3407

            Damages in nuisance

Apotex v Pfizer Ireland 2016 ONSC 4966

            Conspiracy
                        Apotex v Pfizer Ireland 2016 ONSC 4966

Unjust enrichment
            No cause of action in unjust enrichment

Low v Pfizer 2015 BCCA 506 (here) contra Apotex v Pfizer 2016 ONSC 4966

            No disgorgement of patent’s entire profits
                        Apotex v Eli Lilly 2015 ONCA 305 (here)
            Disgorgement of profits corresponding to generic’s damages

Apotex v Pfizer Ireland 2016 ONSC 4966 contra Low v Pfizer 2015 BCCA 506

Jurisdiction of the Federal Court and IP Related Contracts

SALT Canada Inc v Baker 2016 FC 830 Boswell J
            2,222,058

Section 52 of the Act gives the Federal Court “jurisdiction. . . to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged.” SALT Canada brought an application for a declaration under s 52 that the register be varied to list SALT as the owner of the ‘058 patent. Boswell J dismissed the application for lack of jurisdiction. In so doing Boswell J review a number of cases and provided a helpful and clear statement of the law related to the jurisdiction of the FC under s 52. However, he did not discuss Kellogg Co v Kellogg [1941] SCR 242, presumably because it was not cited to him. This omission is unfortunate, as that case might be taken to suggest a different result, and it would have been interesting to see how it would have affected his reasoning. Boswell J also emphasized the need for the court which does have jurisdiction hear the dispute to take into account s 51 of the Act, which establishes a priority scheme for patent title based on registration. But that same point, looked at from the other direction, suggests that the FC might have jurisdiction to begin with. So, while Boswell J’s holding initially appears to be a straightforward application of existing law, a closer look suggests there may be a reasonable argument for a broader interpretation of the Court’s jurisdiction.

The case involved two conflicting assignments of rights in the ‘058 patent from the inventor, Dr Markels. The first was a complex series of assignments which ultimately led to the Respondent, Baker. Baker registered his ownership with the Patent Office. Some of the assignments in this series included provisions requiring the ‘058 patent to be reassigned to Markels if certain conditions were breached. Apparently believing that the conditions had indeed been breached, in 2015 Markels assigned title to the Applicant, SALT. Markels also prepared a reassignment from Baker to Markels, which was, however, never executed by Baker. SALT sought to have its ownership registered, but the Patent Office refused on the basis that the assignment was not executed by Baker, the registered owner [3]-[9].

SALT then brought this application for a declaration under s 52 that the register be varied to list SALT as the owner of the ‘058 patent (as well as other additional and alternative relief). A key substantive question related to the interpretation of the various agreements, and whether the conditions in the first series of assignments had been breached, such that Markels was entitled to a reassignment [24].

Comments on the State of the Art for an Obviousness Attack

Pollard Banknote Limited v BABN Technologies Corp 2016 FC 883 Locke J
            2,752,551

“What is the State of the Art for the Purpose of an Obviousness Attack?” That’s the title of an article I wrote in 2012 (27 CIPR 385). The puzzle is this. Traditionally, under the old Act, the body of prior art which could be set up against the patent in an obviousness attack (the “state of the art”), included only the common general knowledge plus prior art which would be discovered in a reasonably diligent search directed to the problem at hand. But s 28.3, which codified the obviousness in the new Act, provides that the relevant information is that “disclosed before the claim date … in such a manner that the information became available to the public”. That includes all public prior art, not just prior art which would have been found in a reasonably diligent search. There is an open question as to whether s 28.3, which was generally thought to have simply codified the existing non-obviousness requirement, had extended the state of the art. In my article I concluded that “contextual and purposive considerations imply that s. 28.3 was not intended to change the law, and the state of the art remains limited to information that is reasonably discoverable,” but “the argument based on the text of the provision is sufficiently strong that case law directly addressing the question will be needed before the point can be considered settled.”

While a number of decisions under the new Act simply assumed that the relevant state of the art was the same as under the old Act, the first decision to address this question directly, albeit briefly, was Novartis v Teva / deferasirox 2015 FC 770 blogged here, in which O’Reilly J held that indeed the law had not changed. (The question was noted, but not addressed, in 2015 FCA 163 [21].) Now, in Pollard v BABN, Locke J has suggested that he may prefer the opposite conclusion [192-95]. The question was relevant in respect of the Camarato application, which was crucial to the holding that Claim 1 was obvious. As I read his decision, Locke J never directly held that the state of the art extends to all publicly available prior art. Locke J noted the problem and made some comments on it, but his only direct holding was “Even if I was of the view that this reference’s findability in a diligent search was a relevant consideration, I would nevertheless conclude that it is citable for obviousness,” because it was indeed have been found in a diligent search, and so would be part of the state of the art under either test [196]. The phrase “even if I was” is ambiguous. It might suggest that he was of the view and findability is not the test, and his holding that the Camarato application was findable was in the alternative; but it might also mean that it didn’t matter whether findability was the test, given that the reference was in fact findable.

Regardless of the precise holding, Locke J was clearly sympathetic to the argument that the state of the art should comprise all public prior art:

[194] [I]n order to obtain a valid patent, it is not enough for a skilled person simply to make an obvious change to what is known in the art. This principle should apply to any information that was available to the public, even if it would not have been located in a diligent search. For example, should a skilled person be able to obtain a valid patent by simply searching a dusty corner of a public library for a document that describes a forgotten invention and making an obvious change to it?

The problem with the final rhetorical question is that even under the traditional test a person cannot obtain a patent by “simply” searching a dusty corner and making an obvious change, because if the search was simple, by definition it would have been found in a reasonably diligent search. The proper question is whether a skilled person should be able to obtain a valid patent by making an obvious modification to a document that was found after a long and arduous search. The answer to that question is not so easy. The EWCA in Windsurfing [1985] RPC 59, 71 made a very similar argument, which I discuss at more length in my article at 391-93.

Protests Do Not Result in a Higher Burden in Subsequent Litigation

Pollard Banknote Limited v BABN Technologies Corp 2016 FC 883 Locke J
            2,752,551

Pollard v BABN raised two issues related to the standard of review. The more significant holding was that a party which protests or submits prior art during prosecution, pursuant to s 34.1, will not be disadvantaged by a higher burden of proof if it subsequently challenges the same patent in litigation. I believe this is the first decision to address this issue.

In Wellcome / AZT 2002 SCC 77 [42]-[44], the SCC apparently held that a challenge to the validity of a granted patent was somehow a form of judicial review of the Commissioner’s decision to grant the patent, and that decision should be treated with deference, so that the patent would only be held invalid if the Commissioner’s decision to grant it was unreasonable. The SCC’s conclusion was rejected by Gauthier J in Cefaclor 2009 FC 991 [350]-[370], who, after a devastating critique of the SCC’s reasoning, held that the correct standard was the traditional balance of probabilities. Subsequent decisions of the FC addressing this issue have consistently followed the lead of Gauthier J, essentially (and rightly, in my view) treating the SCC statements in Wellcome / AZT as having been made per incuriam. Locke J in this case did the same, citing Cefaclor and recognizing, as the SCC did not, that “[t]here is no standard of review applicable to Pollard’s challenge to the validity of the 551 Patent because this is not a judicial review of the decision to allow the 551 Patent to issue. . . . The standard is the balance of probabilities” [129].

The more interesting issue related to s 34.1. Pollard had been involved in challenging the patent during prosecution by filing 12 protests pursuant to s 34.1, including both prior art submissions and argument [128]. SG argued that “in view of the depth of Pollard’s involvement in challenging the patented invention during prosecution, it benefited from what was effectively a patent opposition process. For this reason, and because of the extraordinary delay SG experienced in obtaining allowance of its patent application, SG argues that a degree of deference to the examiner’s decision to allow the 551 Patent to issue should apply” [128].

Locke J rejected SG’s argument. He noted that SG could not be held accountable for the delay:

[131] Its protests contributed to the delay in the 551 Patent’s issuance only inasmuch as the examiner accepted the arguments contained in those protests and included them in the rejection letters that were sent to the applicant. A more direct reason for the delay in the issuance of the 551 Patent is that it took many exchanges with the patent examiner before the applicant found the claim language that would be accepted. I see no basis for criticizing Pollard for having filed its protests.

The delay should not be attributed to the protests, because if they are well-founded, the examiner should have raised them in any event, and if they are not, the examiner need not and should not require the applicant to respond.

Locke J also raised an important policy issue:

[133] Another concern I would have about raising the burden on Pollard for its validity challenge is that it would, as a result, have a higher hurdle than other interested members of the public who might wish to mount a similar challenge. It should also be noted that an impeachment action, if successful, is a benefit not just to the plaintiff, but also to the public as a whole since an unjustified monopoly is thereby removed from the patent register.

If a party faced a higher burden for issues it raised during prosecution, that would no doubt affect its decision whether to protest or submit prior art under s 34.1, and as Locke J pointed out, it is in the interest of the public as a whole to ensure that unjustified patents are not granted. The flip side of the coin is that a interested party like SG gets two kicks at the can – though that is perhaps not a serious problem if its contribution to the prosecution imposes no significant additional burden on the applicant, as Locke J indicated. 

Locke J also noted on the facts that the applicant was apparently not concerned about the delay, because it “responded at or near the end of the six-month deadline for responding to the examiner’s action in every case but one” [132]. Quare whether this would form the basis for a distinction in a future case? I think not, given the rest of Locke J's reasoning, but the fact that he mentioned this point leaves the question open. And of course, future judges might see the whole issue differently.

Claim Held Invalid for Ambiguity for the First Time in 40 Years

Pollard Banknote Limited v BABN Technologies Corp 2016 FC 883 Locke J
            2,752,551

Subsection 27(4) of the Act provides that the claim must define the invention “distinctly and in explicit terms.” A claim that fails to do so will be invalid for ambiguity [136]. However, as Hughes J has pointed out, the bar for holding a claim invalid for ambiguity is very high – the claim must be essentially incapable of being meaningfully interpreted – and as a consequence, an ambiguity attack is very rarely successful: 2005 FC 1725 [50]-[53]. Nonetheless, Claim 2 of  the '551 patent was held to be invalid for ambiguity – apparently for the first time in almost 40 years* (see 2005 FC 1725 [51], noting that the last time a claim was held invalid on this ground was 1977).

Recall from yesterday’s post that the invention was a security feature for lottery tickets, and Claim 1 was to a ticket comprising a non-play area on the ticket (containing the bar code), “spaced apart from” the play area (containing the prize information or "game data"). This is shown in Fig 3:



Claim 2 was a dependent claim to

2. The printed document of claim 1wherein the game data is printed around the bar code.

This was apparently intended to be illustrated by Fig 4:



It is not possible for the game data to be printed around the bar code at the same time as the play area, which contains the game data, is “spaced apart” from the non-play area, containing the bar code, as is required by the dependency [141]. This means that Fig 4 does not really illustrate Claim 2; while the game data is printed around the bar code, the play area is not spaced apart from the non-play area. 

Claim2 was therefore held invalid for ambiguity [144]. This holding of ambiguity is the exception that proves the rule that the bar for a successful ambiguity attack is very high; while the claim was held to be invalid, the claim was internally contradictory, and so was incapable of meaningful interpretation.

*See the comment to this post, noting that Apotex v Hoffman-La Roche (1989), 24 CPR(3d) 289 (FCA) the claims were held invalid for ambiguity, so it has really been 'only' 27 years since the last time an ambiguity attack was successful.

Is it Time to Revisit the Rule Against Using Extrinsic Evidence in Claim Construction?

Pollard Banknote Limited v BABN Technologies Corp 2016 FC 883 Locke J
            2,752,551

In this declaratory action brought by Pollard, Locke J declared both claims of the ‘551 patent, owned by Scientific Games (the successor to BABN), to be invalid (Claim 1 for obviousness 242], Claim 2 for ambiguity [144]). On the infringement counter-claim, he held that the claims were not infringed in any event [2]. The decision raises a number of interesting issues, perhaps the most of important of which relates to prosecution history estoppel.

The ‘551 patent relates to a security feature for instant lottery tickets. These tickets have a scratch-off layer covering the “game data” which the customer scratches off to reveal whether the ticket is a winner and the amount of any prize. (In cheaper tickets a paper pull-tab may be used to cover the prize instead of the scratch-off layer.) To prevent fraud, the tickets normally also have validation information, in the form of numbers and/or a bar code, which is checked against the lottery’s online system on redemption to confirm that the ticket had been legitimately sold, that it was indeed a winner, and that it had not previously been redeemed [12]. As additional security, the validation information may also be hidden by a scratch off layer. This was all part of the prior art.

Coordinating S 8 NOC and Infringement Actions

Apotex Inc v Alcon Canada Inc 2016 FC 720 Tabib J

            2,129,287, 2,606,370 / travoprost / TRAVATAN Z

NOC proceedings and infringement actions give rise to independent litigation over infringement and validity of the same patents, with potentially conflicting monetary remedies. This decision by Tabib J on a motion for bifurcation of a s 8 damages action deals with some of the complex procedural issues that arise in attempting to resolve this conflict. While appropriate procedural decisions may help reduce duplicative litigation and avoid inconsistent results, it is hard to avoid the conclusion that the remedial overlap is another illustration that the PM(NOC) Regulations’ well-intentioned attempt to create a simple and streamlined patent linkage system has not been a success.

The patent linkage systems operating in the US and Canada are functionally equivalent to giving an automatic interlocutory injunction to a pharmaceutical patentee threatened by generic entry. In a jurisdiction in which interlocutory injunctions are relatively easy to get, linkage is hardly necessary. So, as I understand it, in the UK a pharmaceutical patentee will normally be able to get an interlocutory injunction against a generic which seeks to launch at risk, and consequently the generic will normally bring a declaratory action to “clear the way.” The effect is that the generic cannot launch before it has been determined that the patents reading on the product are invalid or not infringed. In jurisdictions such as Canada and the US, where interlocutory injunctions are more difficult to obtain, the generic might be able to launch even though its product infringed a valid patent. The patent linkage system addresses this by effectively giving the patentee an automatic interlocutory injunction. In the US, the application for marketing authorization is a deemed infringement, giving rise to a statutory stay which is roughly equivalent to an interlocutory injunction. However, there is no separate hearing to assess the merits of this “injunction,” as there would be in an application for an interlocutory injunction as such. In the Canadian patent linkage system, embodied in the PM(NOC) Regulations, on applying for marketing authorization for a generic drug, the generic is subject to a statutory stay – the automatic interlocutory injunction – while validity and infringement are assessed in an NOC proceeding. The NOC proceeding is intended to be summary in nature, like the hearing in which a true interlocutory injunction application would be decided. And if the patentee is unsuccessful in the proceeding, under s 8 it must compensate the generic which has been wrongly kept out of the market during the period of the stay, just as a party who is granted an interlocutory injunction must normally give an undertaking in damages to compensate the defendant which has been prevented from exercising its legitimate rights. And just as with a traditional interlocutory injunction application, a subsequent infringement action can proceed to a potentially different result on the basis of a more complete record. The Canadian system is therefore intended to statutorily mimic a true interlocutory injunction application more closely than the US linkage system.

However, one feature distinguishes the Canadian linkage system from both a true interlocutory injunction application and the US-style linkage system, namely that the NOC proceeding and any subsequent infringement action are independent proceedings. This means that inconsistent results are possible, in principle and in practice. In the both the US and the UK, a patentee may be liable for foregone profits incurred by a successful generic which was kept off the market by the stay / interlocutory injunction, but in both systems the generic is entitled to compensation only if it prevails in the ultimate infringement action. Thus there can never be a conflict in which the generic is entitled to compensation for having been kept off the market by a stay based on a patent which was valid and infringed. In contrast, in Canada the generic may win the NOC proceeding, and so be entitled to compensation under s 8, and yet lose the infringement action, so that it would be entitled to 8 compensation under s 8 of the NOC Regulations for having been kept out of a market which, under the Patent Act, it had no right to enter.

This potential for conflict has begun to be addressed substantively. As Tabib J states “[t]he law as it stands is to the effect that hypothetical infringement is not a complete defence to a section 8 claim, but that it is a significant factor to be considered in assessing compensation, and that it can indeed reduce damages to zero” (citing 2012 FC 620, blogged here; and see also 2012 FC 559 aff’d 2013 FCA 77 blogged here and here), though as she notes the law “may continue to evolve” [11]. 

This decision by Tabib J on Apotex’s motion for bifurcation wrestles with the problem of how to deal with this issue procedurally. Alcon held two patents related to travoprost, the ‘287 and ‘370 patents. Alcon lost both NOC proceedings, and, after Apotex launched, Alcon commenced an infringement action based on the ‘370 patent only. At the same time, Apotex brought an action for s 8 damages, which Alcon sought to defend by alleging infringement of both the ‘370 patent and the ‘287 patent, as well as the ‘172 patent, which was not listed on the Patent Register and so was not at issue in the NOC proceedings [2], [3]. Apotex now seeks to bifurcate the s 8 action to have validity and infringement of the ‘287 and ‘172 patents determined separately. The parties agreed that validity of and infringement regardng the ‘370 patent were already effectively bifurcated as they will be determined in the infringement action and those findings would be binding in the s 8 action [6]. In some ways the bifurcation decision was quite easy. On the facts, Tabib J found that the issue proposed to be bifurcated were quite distinct, so bifurcation would not lead to wasteful duplication [10]. On the other hand, if bifurcation were refused, duplicative litigation of quantification between the infringement and liability phases might result [12]. Copnsequently, Tabib J granted the motion to bifurcate.

Two interesting points were raised. First, Alcon was apparently concerned that Apotex’s motion for bifurcation was a prelude to a move to consolidate the bifurcated infringement issues relating to the ‘287 and ‘172 patents with the infringement trial of the ‘370 patent, thus delaying the trial and Alcon’s hoped for injunction [7].While Tabib J gave some credence to this concern [7], in the end she considered that in this case bifurcation does not entail joinder, and so Alcon would not be disadvantaged in this manner [10]. The concern nonetheless illustrates the complex procedural considerations that arise because of the separate nature of these proceedings.

Secondly and more fundamentally, Tabib J suggested that if Alcon’s related infringement action was not already bifurcated, the best way forward might have been to consolidate both actions, without bifurcation [12]. This would solve the problem of the separate actions in the most straightforward way possible. However, as this case illustrates, consolidation is not always appropriate. And while consolidation might in some cases be possible, given the vagaries of timing of two independent actions, it is too much hope that this would be routine. It seems, therefore, that parallel s 8 and infringement actions will be coordinated only by ad hoc motions such as this one, with varying degrees of success in avoiding wasteful duplication. The procedural complexity created by our patent linkage system seems destined to endure so long as the system remains in its current form.