What Does HGS V Eli Lilly Mean for Canadian Law?

Human Genome Sciences Inc v Eli Lilly & Co [2011] UKSC 51 rev’g [2010] EWCA Civ 33 aff’g [2008] EWHC 1903 (Pat)  

Wednesday’s decision of the UKSC in Human Genome Sciences Inc v Eli Lilly is very interesting in its own right, but what impact will it have on Canadian law? In broad terms it demonstrates that there is a clear functional parallel between the European requirement of “industrial application” and the Canadian utility requirement; both deal primarily with the question of how far upstream in the innovation process a patent may be granted. We can no longer say that Europe has done away with the utility requirement; to a large extent they have just renamed it. This means that in principle Canadian courts and the Patent Office can look to UK and European law on industrial applicability for guidance in respect of questions of utility. The SCC, of course, has in recent years relied heavily on UK law in a number of important decisions. CIPO is also in the habit of looking to foreign law, particularly European law, for guidance in contexts where there is little Canadian case law. HGS v Lilly means that this course remains open in respect of utility.

With that said, at the intermediate level of the specifics of doctrine, there are very significant differences between European and Canadian law that mean the specific holdings of UK courts of the EPO Boards of Appeal may not be directly transferable to the Canadian context. In particular, Canadian law on how far upstream a patent may be granted has developed through the doctrine of sound prediction. European law has no such doctrine. While it came to us from the UK, it was abandoned there with the Patents Act, 1977 which implemented the European Patent Convention. Paradoxically, this arguably makes HGS more relevant than it might initially appear. In stating the principles applicable where a patent discloses a new protein and its encoding gene, the UKSC held that “[a] ‘plausible’ or ‘reasonably credible’ claimed use, or an ‘educated guess’, can suffice” to establish industrial applicability [107(viii)]. This may appear to set a different, perhaps lower, standard than the requirement of “sound” prediction that is established in Canadian law. However, the UKSC principles are not directed to a predicted use at all, as sound prediction is not a basis for demonstrating industrial applicability. The UKSC held that a “plausible” use is sufficient to establish what would in Canada be called a demonstrated use, not merely a sound prediction.

The question remains as to whether the UKSC has drawn the line further upstream than is permitted in Canadian law. This question is difficult to answer, particularly given the fact specific nature of the inquiry, emphasized by Lord Neuberger at [2]. Further, the test of a “plausible” use was not of general application, but was directed specifically to “[w]here a patent discloses a new protein and its encoding gene” [107]. Thus the relevance of HGS is emphatically not whether a requirement of sound prediction as a matter of law should be replaced by a requirement for plausible prediction; it is whether, in the case of a patent for a new protein and its gene, demonstrated utility is established by a plausible use. Lord Neuberger’s primary aim in setting out these principles was to ensure that “the law in this area is as clear, consistent and certain as possible” [2]. Consequently, the HGS provides authoritative detailed guidance on this narrow but important point. Moreover, because the UK courts view European harmonization as a particularly important goal given the common basis of European patent law in the EPC, the primary basis for the guidelines set out by the UKSC was the case law of the EPO Technical Board of Appeals. This means that the guidelines set out in HGS represent not just UK law, but also the EPO position. While one might normally accept the UKSC interpretation of the EPO case law at face value, in this case Jacob LJ in the EWCA and Kitchin J at trial, both highly respected patent judges, also considered the EPO case law, and came to the opposite conclusion. I therefore reviewed all the TBA cases cited by the EWCA and the UKSC. With due respect for Jacob LJ, my view is that Lord Neuberger was correct to conclude that the lower courts had misinterpreted the EPO case law. The great weight of the TBA case law is consistent with the UKSC decision in HGS: while the early leading decision in T 0870/04 comes to a contrary conclusion on similar facts, all subsequent decisions involving very similar facts, in particular, T 0604/04, T 0898/05, T 1165/06 and T 0018/09 (the TBA decision respecting the same patent), are consistent in reasoning and outcome with the UKSC position. (The other cited TBA cases are distinguishable.)

Clarity and predictability are just as important in Canada as in Europe. While harmonization with EPO law in particular is not as pressing for Canada as for the UK, consistency with the law of other jurisdictions is important in light of the practical reality that Canada is effectively just one part of a world-wide patent system. These considerations suggest that on the specific point of whether patents claiming a new protein and encoding gene satisfy the utility requirement, the principles set out by Lord Neubeger in HGS deserve very serious consideration in Canada.