Friday, March 4, 2011

Caution Regarding Inequitable Conduct

Valence Technology, Inc. v Phostech Lithium Inc. 2011 FC 174, Gauthier J

Inequitable conduct in patent prosecution poses a thorny problem. On one hand, the practice of willfully misleading the patent office during prosecution in order to obtain a patent that would not have been granted must be discouraged. On the other hand, introducing an intent element into the determination of patent validity introduces uncertainty and expense to the litigation, and the sanction of invalidity is a severe punishment for bad faith in cases where the misinformation is substantively inconsequential. The US has been wrestling with this problem for years, and an en banc decision from the Federal Circuit in Therasense, Inc v Becton, Dickinson and Co is in the offing.

In contrast, Canadian courts have historically been reluctant to invalidate patents on this basis. Recently, however, Hughes J has been seeking to give life to this ground of attack, on the basis of both the older section 53(1) and the new section 73(1)(a). In GD Searle & Co v Novopharm Ltd / celecoxib (NOC) 2007 FC 81, Hughes J held a patent to be invalid on the basis of section 73. While he was reversed, without comment on this point, 2007 FCA 173, Malone JA: NoĆ«l, Sexton JJA, his decision was picked up in Mactavish J’s controversial decision in Lundbeck Canada Inc v Ratiopharm Inc / memantine (NOC), 2009 FC 1102. In Ratiopharm Inc. v Pfizer Ltd. / amlodipine besylate, 2009 FC 711, [195]-[204], Hughes J held a patent to be invalid on the basis of section 53(1). This was affirmed on other grounds 2010 FCA 204.

In Valence Technology, Inc v Phostech Lithium Inc 2011 FC 174, Gauthier J indirectly cast doubt on Hughes J’s decision in Ratiopharm v Pfizer respecting section 53. She stated [184] that “[i]t is important to mention that the comments of Justice Roger Hughes in Ratiopharm Inc. v Pfizer Ltd., 2009 FC 711, in respect of subsection 27(3) (as well as those relating to ss. 53(1)) were described by the Federal Court of Appeal as simple ‘obiter’ (2010 FCA 204 at para 2).” She then went on to distinguish Hughes J’s decision on the facts, saying she was satisfied that the case before her was substantially different, “regardless of the intrinsic value of the comments made by Justice Hughes on the law” [200].

It is certainly true that the two decisions can be easily distinguished on the facts. Phostech’s misconduct argument was curious and unique. It argued that Valence’s misconduct lay in copying the wording of Phostech’s subsequent patent application in the divisional to Valence’s prior application. Gauthier J explained that there is simply nothing wrong with this: “there is no copyright on claim language” [211]. That the cases are so readily distinguishable on the facts gives added significance to Gauthier J’s subtle remarks regarding Hughes J’s analysis.

It may be reading too much into a couple of phrases, and we certainly cannot draw any firm conclusions as to Gauthier J’s own views regarding inequitable conduct, but Valence Technology suggests that Gauthier J, for one, will be cautious before following the path that Hughes J seeks to blaze.

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