Friday, March 30, 2012

Post-Final Action Prosecution: Belzberg Distinguished

CD1317 Balloon Catheter / Declath Systems (PAB & Comm'r of Patents)

In Belzberg 2009 FC 657 Simpson J held that “the defects identified in a final action are comprehensive rather than a mere selection” [43], or, as Hughes J put it in Bartley 2011 FC 873 (blogged here) “a ‘Final Action’ must be final” [71]. In both Belzberg and Bartley a Final Action report had been issued, a PAB hearing was convened and concluded that none of the defects identified in the report were substantiated. The Commissioner returned the application to the examiner for further prosecution, though without identifying any problems, after which the examiner issued a new report with new requisitions. In both cases the Federal Court held that this was improper, and the patent should be granted. In CD1317 Balloon Catheter / Declath Systems the applicant invoked Belzberg and Bartley to argue that the patent must be granted when the applicant had responded to all defects identified in the Final Action, even though in so doing new problems had been introduced. The PAB and Commissioner held, rightly in my view, that Belzberg and Bartley were distinguishable, and remanded for further prosecution.

Thursday, March 29, 2012

SCC Denies Leave in Corlac v Weatherford

The SCC today denied leave to appeal in Corlac Inc v Weatherford Canada Ltd 2011 FCA 228 (blogged here and here).

Is Requiring Security for Costs for Foreign Residents Contrary to TRIPS?

Fraser v. Janes Family Foods Ltd. 2012 FCA 99 Noël JA: Blais CJ; Gauthier JA

Prothonotary Aalto ordered that the plaintiff / appellants post security for costs on the basis, inter alia, that they were “ordinarily resident outside Canada,” which is a factor set out in Rule 416(1)(a). On appeal to the FCA, the appellants raised the argument that this Rule is contrary to NAFTA and TRIPS. The FCA held that it is doubtful whether the Rule is contrary to the national treatment provisions of those agreements, as Rule 416(1)(a) turns not on nationality, but on the distinct concept of residency [9]-[11], so that in some circumstances a Canadian national could be required to post security on the basis of this Rule. The appellants argued that even if that was formally true, the effect of the Rule in practice would be to subject foreign nationals to differential treatment [12]. The FCA did not resolve that argument, as it held that even if the Rule was contrary to NAFTA or TRIPS for this reason, those agreements do not directly have the force of law [15], and the Rule is sufficiently clear that it cannot be brought into line with those agreements (assuming there is any conflict), by interpreting it in the manner urged by the appellants [19].

While this resolves the point of law, it leaves open the possibility that this Rule is in conflict with TRIPS and NAFTA, and so might require amendment. My initial impression is that even if some amendment were required, it would not have a significant practical impact. The factors set out in Rule 416(1) all go to the question of whether the payment of costs is likely to be problematic if the plaintiffs are unsuccessful. A general discretionary rule requiring posting of security for costs in circumstances were payment was likely to be problematic, is surely legitimate and would pass muster under NAFTA and TRIPS, and yet it is just as likely to differentially affect foreign nationals. By analogy, one factor in determining whether a Mareva injunction should be granted is whether assets are likely to be removed from the jurisdiction in order to avoid satisfaction of a judgment. This is not a strict rule, as the impact of reciprocal enforcement of judgment legislation must be considered, but it is likely to differentially impact foreign litigants. However, it is substantively neutral. Put another way, to require that the court ignore the fact that judgments and costs orders may be more difficult to collect against foreign litigants would not artificially disadvantage foreign litigants, but artificially privilege them.

Tuesday, March 27, 2012

Article on Disclosure of Factual Basis of Sound Prediction

In a number of previous posts I have been critical of the doctrine that the factual basis for sound prediction must be disclosed in the patent itself, and I have finally managed to finish a good draft of an article on the topic. The abstract is below; the article is available for download from SSRN. This is still a draft, so feedback is welcome. (And I'll say now that I only picked up Vol 29(7) of the CIPR after finishing this draft, so it doesn't refer to any of the three(!) articles on sound prediction in that issue.)

It has been accepted at least since the Supreme Court decision in Consolboard v MacMillam Bloedel that the evidence supporting utility need not be disclosed in the patent itself. However, in its 2009 decision in Lilly / raloxifene, the Federal Court of Appeal held that when utility is based on sound prediction, the supporting evidence must be disclosed in the specification. Since that time, the raloxifene doctrine has been determinative of invalidity in three important pharmaceutical cases, including, most recently, the blockbuster blood-thinner, PLAVIX. This article argues that the raloxifene doctrine is unsound. There is no basis in the text of the Patent Act, in legal principle, or in practice, for a distinction between demonstrated utility and utility based on sound prediction. The raloxifene doctrine is not supported by the case law; there is no leading case affirming the validity of a patent on the basis of sound prediction in which the factual basis for the sound prediction was disclosed in the patent. Neither US nor European law has any such requirement. The raloxifene doctrine is unsound in principle, as neither the disclosure requirement, nor the utility requirement, purposively understood, mandates disclosure of the evidence supporting utility. Introducing such a requirement engenders technical attacks on patents for valuable inventions, without providing any offsetting benefit to the public. In short, the raloxifene doctrine is an ill-advised departure from well-established legal principles which threatens to undermine the crucial incentives to innovation in the pharmaceutical industry that are provided by the international patent system. It should be abandoned at the earliest possible opportunity.

Thursday, March 22, 2012

The “No Reach Back” Shoe is on the Other Foot – Sort of

Apotex Inc. v. Merck Frosst Canada Ltd. / lovastatin (NOC) 2011 FCA 364 Evans JA: Gauthier, Stratas JJA rev’g 2010 FC 1264 Snider J

This decision of the FCA is an important development, though not a final answer, in the debate over whether a generic which has succeeded in an NOC proceeding can get section 8 damages even if the patent is subsequently determined to be valid and infringed in an infringement action.

An initial question in this appeal was whether Apotex’s claim for compensation is governed by the 1993 NOC Regulations, or the 1998 Regulations. Under the transitional provisions, this turns on whether Merck’s application for prohibition was “pending” on the transitional date of March 11, 1998. On the transitional date the Federal Court had already dismissed Merck’s application for prohibition, and Merck had filed an appeal from this decision, but the appeal (which was ultimately dismissed for mootness) had not yet been decided. Snider J held that the 1993 Regulations applied. The FCA reversed Snider J on this point, essentially because she did not have the benefit of the FCA decision in Merck / norflaxin 2011 FCA 329 (blogged here). In an interesting point of statutory interpretation, the FCA held that an interpretation favouring the 1998 Regulations was to be preferred, as they were intended to, and did, clarify the 1993 Regulations [28]. In the result, the FCA stipulated a broad understanding of “pending.” The question is not whether the action is moot, but whether FCA still has jurisdiction to hear an appeal. The holding that the 1998 Regulations applies makes the Court’s conclusion on the substantive issue that much more important.

The question as to whether Apotex was entitled to section 8 damages arose because the stay expired without the application for the order of prohibition ever having been heard on the merits. Apotex argued that Merck had not been successful in the NOC proceedings. Merck, on the other hand, argued that it wasn’t unsuccessful, either. Snider J, interpreting the 1993 Regulations (blogged here), held that entitlement was triggered only when the Minister issued the NOC after expiry of the relevant patents; because the patent had not expired, Apotex was not entitled to damages. The FCA, interpreting the new Regulations, held that the only requirements for triggering section 8 are that the patentee’s application for prohibition is dismissed [34], and that the generic has suffered a loss by being kept out of the market as a result of the stay [35]. As both conditions were satisfied, Apotex was entitled to section 8 damages – with a major caveat.

On a broader level, the argument in favour of allowing the generic to claim damages in a case in which the patent was held invalid in the NOC proceedings, but valid in a subsequent infringement action, is the “no reach back” rule enunciated in Syntex / naproxen (NOC) 2010 FCA 155, which has since been affirmed a number of times (eg here and here). This principle says that NOC proceedings and an infringement action are independent. To be entitled to section 8 damages, the generic must succeed in the NOC proceeding itself; if it loses in the NOC proceeding, but subsequently prevails in the infringement action, the generic cannot reach back and apply the declaration of invalidity from the infringement action to gain entitlement to section 8 damages. Conversely, it would seem to follow that if the generic is successful in the NOC proceedings, but subsequently loses the infringement action, the patentee cannot reach back and apply the declaration of validity in the infringement action to deny the generic section 8 damages. While this result seemed to follow, it had not been tested, until now. Consistently with the no reach back rule, the FCA in this case held that Apotex could claim section 8 damages.

The difficulty with this logic, as Merck pointed out [33], is that the generic would be entitled to damages for having been kept out of a market which it had no right to enter. A holding in NOC proceedings that the patentee did not show the allegation of invalidity to be unjustified is not an in rem declaration of invalidity. If the patent is subsequently held to be valid in litigation, then it was always valid, including during the period when the generic entered the market after the NOC proceedings. This means that the generic had no right to enter the market, which we know with hindsight was protected by a valid patent; it is simply that the procedural mechanism of the NOC proceedings did not immediately vindicate the patentee’s right. In this case, Merck characterized this as a matter of ex turpi causa.

This leads to the major caveat on the generic’s entitlement to damages. The FCA reconciled these two conflicting principles by applying the no reach back rule in the liability question, and the ex turpi causa point in the damages phase. Apotex is entitled to section 8 damages, under the no reach back rule, but the quantum of damages might be reduced “or eliminated” [37] at the damages calculation as a result of ex turpi causa:

[38] The Court’s broad discretion under subsection 8(5) allows it, when considering arguments based on ex turpi causa, to have regard to the factual situation in its entirety, including its nuances. In the present case, one such nuance is that not all the tablets sold by Apotex were found in the infringement action to contain lovastatin made by the infringing process. A court is likely to find it easier to apply the ex turpi causa principle through an exercise of judicial discretion than through the definition of liability. Discretion enables the court to assess the appropriate amount of compensation payable (including nil) in a manner that properly takes account of all the relevant facts.

The Court did not decide whether Apotex was actually entitled to substantial damages on the facts, holding that this was a matter to be returned to the trial judge, including the crucial question of “the extent to which the ex turpi causa principle should be applied on these facts, if at all.” While the FCA is no doubt right to say that this is a matter which turns on issues of law and fact which should be determined by a trial judge, it also raises a crucial issue of principle on which the FCA has provided no guidance. The result is that this decision is an important step in the resolution of this question, but it is very far from being the final word.

Wednesday, March 21, 2012

Mayo v Prometheus

I've posted my initial reaction to the USSC decision in Mayo v Prometheus on IPKat, here.

Tuesday, March 20, 2012

Lovastatin Decision Affirmed on the Facts

Apotex Inc v Merck & Co Inc / lovastatin 2011 FCA 363, Gauthier JA: Evans, Stratas JJA aff’g 2010 FC 1265 Snider J

In a decision delivered last December, that has yet to be released on the FCA website, Gauthier J, writing for the court in what I believe is her first patent decision since being appointed to the FCA, has affirmed Snider J’s lovastatin decision in an appeal that essentially asked the FCA to reweigh the evidence. Leave to appeal to the SCC has been sought, but I would astonished if it were granted.

Legally, there are only two points of passing interest. First, Gauthier J’s opinion provides a brief but thorough discussion of the law related to the standard of appellate review. While this will not be a leading case in that it does not change the law, it will be a very useful reference decision on this issue.

Secondly, Snider J had interpreted s 55.1 (s 39(2) under the old Act), which provides that “In an action for infringement of a patent granted for a process for obtaining a new product, any product that is the same as the new product shall, in the absence of proof to the contrary, be considered to have been produced by the patented process,” as placing the persuasive burden of proving infringement on the patentee [FC 168- 184]. The FCA refused to endorse this interpretation, on the basis that the burden of proof was not determinative of the appeal, and Snider J did not have the benefit of full argument on the issue [9-10]. In my view, it is a wholly salutary principle that holdings of law are entitled to little weight if they are not essential to the case and are made without the benefit of full argument. Now, if only the SCC would take that principle to heart, and quit its bad habit of making new law in obiter on unargued points.

“Promise of the Patent” Is Unfamiliar to Experts

Wenzel Downhole Tools Ltd v National-Oilwell Canada Ltd 2011 FC 1323 Snider J

Given her conclusion that the patent was invalid for anticipation and obviousness, Snider J did not make any definitive finding with respect to utility. However, she did remark at [211] that

The first problem with the Defendants' arguments on this issue is that they have failed to clearly define the promise of the ‘630 Patent. Not one of the Defendants' experts provided their opinion on the promise until prompted during their oral testimony. Even then, the experts appeared to be unfamiliar with the term and unable to provide a comprehensible response.

In this passage Snider J is apparently somewhat critical of the defendant’s experts for failing to address the promise of the patent. To my mind, this actually highlights the artificiality of the concept. If a patent specification is supposed to be addressed to persons skilled in the art, and such persons have no idea what the “promise of the patent” means, then maybe this is a problem with the doctrine, and not with the experts. As another expert said of the promise of the patent: “It’s a strange word to me.”

Monday, March 19, 2012

“Obvious to Try” in the Mechanical Context

Wenzel Downhole Tools Ltd v National-Oilwell Canada Ltd 2011 FC 1323, 98 CPR(4th) 155, Snider J

While Snider J’s obviousness analysis in Wenzel is generally fairly routine, there are a couple of interesting points. One is that she invokes the “obvious to try” test in the context of a mechanical invention, saying “[a]n ‘obvious to try’ analysis is clearly warranted here” [197]. This is unusual, because the doctrine is usually thought to be relevant primarily "[i]n areas of endeavour where advances are often won by experimentation", such as chiral chemistry: Sanofi 2008 SCC 61, [68]. The obvious to try analysis addresses a situation where an approach is obvious to try, but success cannot be predicted without an actual trial: see here and here. It seems to be generally the case that in the mechanical arts, success prior to a trial is more predictable, and an obvious to try analysis is accordingly rare. And indeed, I’m not sure Wenzel is really an exception to that rule. While Snider J expressly invokes an “obvious to try” analysis, she makes no reference to the unpredictability of success prior to trial, or the difficulty of achieving success. It strikes me that the actual analysis in which Snider J concludes that the invention is obvious [198-204], would have been exactly the same even without invoking the “obvious to try” question. Her reference to “obvious to try” really only asks “was the invention more or less self-evident?” [197], which is much the same as simply asking “was the invention obvious?”

A second (unrelated) point, is relevant to the long-standing debate over whether the focus on the obviousness inquiry should be the inventive concept, or the claims as construed. While Windsurfing [1985] RPC 59 itself referred to identification of “the inventive concept embodied in the patent in suit,” Pozzoli [2007] EWCA Civ 588 [23] modified this step to “Identify the inventive concept of the claim in question or if that cannot readily be done, construe it.” Hughes J has suggested that it is wrong to focus on the inventive concept because “The claim or claims at issue, as construed by the Court is what are at issue. The "invention" as generally expressed in the patent or by the inventors is not the issue, it is the claim as properly construed” (Janssen-Ortho / levofloxacin 2006 FC 1234 [113.1]). Snider J herself has previously said that “it appears to me that the assessment must be focused on the "inventive concept of the claim in question" and not to some larger "invention" that might be described in the specification of the patent” (Sanofi-Aventis / ramipril, 2009 FC 676, [267]). In this case however, Snider J had no difficulty identifying the inventive concept of the patent generally: “The inventive step of the ‘630 Patent, in my view, was Bill Wenzel’s placement of one or more bi-directional thrust bearings into a single containment chamber with shoulders placed within the chamber such that the same bearings could handle both off-bottom and on-bottom loads during a drilling operation" [175]. Nothing in the case turned on the point, but it does illustrate that despite the arguments for focusing on the claim rather than the inventive concept, or at least focusing on the inventive concept of the particualr claim at issue, there are cases where the Windsurfing route of assessing the inventive concept of the patent as a whole, remains easy and convenient.

Thursday, March 15, 2012

The Problem-Solution Approach in the Claim Construction Context

Wenzel Downhole Tools Ltd v National-Oilwell Canada Ltd 2011 FC 1323, 98 CPR(4th) 155, Snider J

I am a bit of a fan of the EPO problem-and-solution approach to obviousness, as I feel it is a structured method of defining the inventive concept, and while it is not formally part of Canadian law, there are many cases which invoke similar language in the obviousness context: see here. Snider J’s approach to claim construction in Wenzel is interesting, first because she expressly equates the essential elements of the claim with the inventive elements of the invention, and secondly because she in effect invokes the problem-and-solution approach as part of the claim construction process.

Wednesday, March 14, 2012

A New Three Part Test for the Disclosure Branch of Anticipation

Wenzel Downhole Tools Ltd v National-Oilwell Canada Ltd 2011 FC 1323, 98 CPR(4th) 155, Snider J

The patent in issue (‘630) in Wenzel Downhole Tools concerned a bearing assembly for use in downhole drilling motors in oil and gas wells. Snider J held that the patent was invalid on the basis of both anticipation and obviousness. Her decision ultimately turned on the facts, but it raises a number of interesting points of law.  

The most striking development concerned the test for anticipation. Snider J began her anticipation analysis by citing the two part analysis set out in Sanofi 2008 SCC 61, which asks (1) was there disclosure to the public; and (2) was that disclosure enabling? [82]. She then summarized the law by stating a new three part test for the disclosure branch:

[94] The first branch of the test is disclosure. The question of disclosure raises three distinct sub-issues:
1. Does the prior art contain the subject matter defined by the ‘630 claims?
2. Was the prior art disclosed before the ‘630 Patent claim date?
3. Was the disclosure of the subject matter of the ‘630 Patent available to the public?
[95] Only if the answer to all of these questions is affirmative, will the Defendants be able to establish the first branch of the test set out in Sanofi-Synthelabo, above.

This does not change the law, but it is helpful in clarifying the distinct issues which must be addressed.

Friday, March 9, 2012

Pleading Issue Estoppel Based on Foreign Proceedings

Apotex Inc v AstraZeneca Canada Inc 2012 FCA 68 Stratas JA: Dawson, Trudel JJA aff’g 2011 FC 598 Mosley J, aff’g 95 CPR(4th) 414 Lafrenière Pr.

Can issue estoppel in Canadian patent litigation be based on foreign findings of fact? While we do not yet have a definitive answer to this question, the FCA has once again held that such a pleading will survive a motion to strike.

In early skirmishing in the omeprazole infringement action, AstraZeneca sought to allege that Apotex is estopped from litigating certain findings of fact made in US litigation respecting the equivalent US patent. AstraZeneca was careful in its pleading to exclude “matters regarding claim construction.” Despite opposition from Apotex, Prothonotary Lafrenière permitted these allegations to stand, and that decision was affirmed by Mosley J. The FCA has now affirmed, saying “it is not plain and obvious at this time that the facts alleged are inextricably bound or related to the foreign court’s construction of the claims and that these paragraphs cannot succeed in law” [9].

See here for a related discussion, including citations to earlier decision of the FC and FCA on point.