Thursday, June 26, 2014

Promise of the Patent Met on the Facts

Allergan Inc v Cobalt Pharmaceuticals Company 2014 FC 566 O'Reilly J
Allergan Inc v Apotex Inc 2014 FC 567 O'Reilly J
            2,585,691 / bimatoprost / LUMIGAN RC / NOC

The background to this decision is provided in yesterday’s post.

O’Reilly J began his discussion of utility by stating that “On my reading of the patent, the stated utility of the claims in issue is that new Lumigan would have a comparable effect to old Lumigan, with less [bimatoprost] (and, therefore, fewer side effects)” [37]. In fact, the claims themselves make no mention of efficacy or side-effects. This conclusion as to stated utility is evidently derived from O’Reilly J’s reading of the description, not just the claims. It is also evident that the utility identified by O’Reilly J is higher than would otherwise be necessary to satisfy the utility requirement, since it was not disputed that LUMIGAN RC is effective in treating glaucoma and an invention is useful if it affords the public a useful choice: Consolboard [1981] 1 SCR 504, 525. Therefore, this is a case in which utility was measured against the promise of the patent, without any thorough assessment of whether such a promise was made, and despite the FCA’s recent admonition in Plavix 2013 FCA 186 (blog) that the promise must be explicit and not every patent necessarily has a promise. Moreover, on my own reading of the description, I did not see a clear statement of an explicit promise. This could potentially be a problematic departure from the Plavix guidance, except that on the facts, the promise was met [45]. Consequently, I do not really see this as an aggressive application of the promise doctrine; given that the highest arguable promise was satisfied, it may have been simpler to deal with the issue on the evidence, rather than conducting a complex investigation as to whether a promise was made, and exactly what it might have been.

Similarly, O’Reilly J held that because the exact formulation of the claim in question had not been tested, utility had to be based on sound prediction [37]. He then accepted that both the factual basis for the prediction and the sound line of reasoning had to be set out in the patent. However, he concluded that both these requirements were met [39], so this challenge failed as well.

Wednesday, June 25, 2014

The Inventive Concept of the Claim Cannot Always Be Found in the Claim

Allergan Inc v Cobalt Pharmaceuticals Company 2014 FC 566 O'Reilly J
Allergan Inc v Apotex Inc 2014 FC 567 O'Reilly J
            2,585,691 / bimatoprost / LUMIGAN RC / NOC

In these companion cases, O’Reilly J granted an order prohibiting the Minister from issuing an NOC to Cobalt and Apotex for generic versions of LUMIGAN RC. The decision turned on the facts, though there are a couple points of some legal interest. The reasoning is the same in both cases, and the reasons themselves are largely identical, with some variation to deal with differing evidence and arguments. For convenience, paragraph numbers will refer to the Cobalt decision.

LUMIGAN and the newer LUMIGAN RC are eye drops used in the treatment of glaucoma and ocular hypertension [1]. The active ingredient in both is bimatoprost, which was apparently encompassed as a compound by patent 2,144,967, which expired in 2013. LUMIGAN contained 0.03% bimatoprost and 50 ppm benzalkonium chloride (BAK) as a preservative. LUMIGAN caused some dose dependent side-effects such as eye irritation. Allergan developed LUMIGAN RC to provide a comparable reduction of intraocular pressure (IOP), but with fewer side effects [6]. LUMIGAN RC has only a third as much bimatoprost and more four times as much BAK as LUMIGAN. The claims at issue in the 691 patent claim a composition with that formulation, namely comprising 0.01% bimatoprost and 200 ppm BAK, and the use of that composition for treating glaucoma [8].

The 691 patent was attacked for obviousness, lack of utility and anticipation. This post deals with obviousness, and tomorrow’s will deal with utility. I will not deal with the anticipation argument, as I do not see it as raising any interesting point of law.

The legal point of interest here is that the patent need not have one interpretation for all purposes. More specifically, “Cobalt maintains that the patent should be given only one interpretation for all purposes – infringement, obviousness, and utility” [23]. O’Reilly J held that while “the interpretation of the patent should be as consistent as possible across the various issues in play, . . . that does not mean that construction of the claims necessarily determines the inventive concept for purposes of the obviousness analysis” [24], [25]. In my view, read in context, O’Reilly J is clearly right on this point. As he pointed out, “Where the patent relates to a bare chemical formula, the court must refer to the claim and the specification to determine what the claim’s inventive concept is, [25, citing Sanofi, 2008 SCC 61, [77]). He is not saying that the claim is to be construed differently when assessing obviousness as compared with anticipation, or infringement, or anything else. This point must also be distinguished from the debate as to whether it is the inventive concept of the claim or the inventive concept of the patent which is at issue. The claim is always construed the same way, and in my view, is it is the inventive concept of the claim which is properly at issue, but the inventive concept of the claim is not the same thing as the claim itself, and it cannot always be discerned from the claim, as the example of a claim to a compound per se illustrates. It is well-established that a new compound is not patentable if it has no known use, even if it is new and not “obvious” in the narrow sense that no one would have had any motivation to make it. Such an invention is arbitrary, not inventive, as was explained by Jacob LJ in Actavis v Novartis [2010] EWCA Civ 82, [36], [37] discussing the "5¼ inch plate paradox." See also this post discussing the issue at more length. This is an instance where the EPO problem-solution approach is helpful. The problem faced by the inventors was to develop a formulation that was effective but with fewer side effects than LUMIGAN. The question then is whether a formulation with reduced bimatoprost and increased BAK was an obvious solution to this problem. It is still the claimed invention, which is defined by the claim as properly construed, and which is the same for all purposes, which must not be an obvious solution to the problem at hand; but whether it is an obvious solution cannot be determined by looking solely to the claim itself.

On the facts, O’Reilly J held that the claimed invention was not obvious, essentially because substantially reducing the amount of the active ingredient would be expected to reduce efficacy, and increasing the amount of BAK would be expected to increase side-effects, because BAK has its own side-effects [32]. It was therefore surprising that this combination would have similar efficacy and reduced side effects. It appears that this is because that formulation has greater permeability across the eye cell layers, which would not have been obvious to a skilled person [27].

Monday, June 23, 2014

Worldwide Interim Injunction Against Google

Equustek Solutions Inc v Jack, 2014 BCSC 1063

In Equustek Solutions, Fenlon J of the BCSC granted a worldwide interim injunction against Google Inc, ordering it to cease indexing or referencing in search results on its internet search engines certain specified websites operated by the defendants in the underlying action. While this isn’t a patent case, it’s interesting enough that I’ve decided to post on it. Given that the subject is outside my main expertise, this post is largely descriptive, but I will say that Fenlon J’s decision struck me as well reasoned. While this type of order has apparently never before been made by a Canadian court [107], I didn’t see any obvious gaps of law or logic. The result seems surprising, but it is important to recognize that “Google acknowledges that it can do what is being asked of it. Google does not assert that it would be inconvenienced in any material way or that it would incur expense to do so” [153].

Google is not a party to the underlying dispute, which related to passing off and the defendants’ use of the plaintiffs’ trade secrets. The defendants had failed to comply with various court orders made against them and continued to sell their product in violation of these court orders, including an order prohibiting the defendants from carrying on business through any website [7]. After that last order, Google voluntarily complied with the plaintiffs’ request to remove specific webpages or URLs from its search results (ie from searches originating in Canada), but it was unwilling to block an entire category of URLs from its search results worldwide [9].

The bulk of the decision concerns jurisdictional questions. Justice Fenlon held that the British Columbia courts have territorial competence, in large part because Google does business in the jurisdiction by selling advertising to British Columbia clients, including to the defendants [50]. Google argued that this analysis would give every state in the world jurisdiction over Google’s search services, but Fenlon J noted that this “flows as a natural consequence of Google doing business on a global scale, not from a flaw in the territorial competence analysis” [64]. She then held that the BC courts were an appropriate forum as compared with the California courts. Google’s primary contention on this point was the difficulty of enforcing a Canadian judgment in California, which is the location of Google’s head office. Fenlon J noted that while Canadian courts are reluctant to grant injunctive relief against extra-territorial parties for this reason, the law did recognize exceptions to this general rule; there were some sanctions which the BC court could take in relation to Google’s activities in BC; Google had not established that the Canadian order would be unenforceable under California law; and in any event, Google had not shown that a California order (assuming one could be obtained) would be more appropriate than a BC order, as Google had not shown that the technical steps needed to carry out the order would be carried out in California. Fenlon J also noted that even though Google was not actively aiding the defendant’s contempt, that is not the sole ground for making orders against a non-party, including those outside the jurisdiction, as Norwich orders and particularly Mareva injunctions illustrate.

On the question of whether the injunction could be granted on the facts of the case, Google made four main arguments. First, Google argued that it cannot, as a practical matter, monitor content or arbitrate disputes over content. Fenlon J responded by noting that Google was not being required to monitor the content of the defendants’ websites, or the content of other websites that might provide information about the defendants’ products, but only to block the particular URLs which were specified in the order itself [137].

Second, Google submitted that de-indexing entire websites without regard to content of the specific URLs would constitute undue censorship. Fenlon J responded by noting that “Google acknowledges that it alters search results to avoid generating links to child pornography and ‘hate speech’ websites. It recognizes its corporate responsibility in this regard, employing 47 full-time employees worldwide who . . . take down specific websites, including websites subject to court order” [139].

Third, Google argued that an order affecting searches might “put Google in the impossible situation of being ordered to do something that could require it to contravene a law in another jurisdiction” [140]. Fenlon J noted that this concern could be addressed in appropriate cases by inserting a so-called Baltic proviso, such as was recognized in Bank Of China v NBM LLC & Ors [2001] EWCA Civ 1933, excusing the non-party from compliance with the order if to do so would breach local laws [143]. In any event, in this case, Fenlon J noted that most countries recognize the importance of protecting trade secrets, and Google did not suggest that the order sought would in fact offend California law, or the law of any other specific state or country in which a search could be conducted [144].

Fourth, Google argued that no court should make an order that has a reach that extends around the world. Fenlon J noted that the order need only be enforced in the particular jurisdiction from which the search engine is controlled. The effect of the order might be felt around the world, but that might also be true of any order relating to physical goods. " For example, a non-party corporation that warehouses and ships goods for a defendant manufacturing company might be ordered on an interim injunction to freeze the defendants’ goods and refrain from shipping them. That injunction could affect orders received from customers around the world" [147].

Finally, with all these preliminaries out of the way, the question remained as to whether the order should be granted on the facts of the case. This turned on whether the plaintiffs had made out a good arguable case, and then on a balance of the interests of the parties. On the first point, “the plaintiffs have not only raised an arguable claim; two of the defendants’ defences have been struck and they are presumed to have admitted the allegations” [151]. As for the balance of interests, the plaintiffs established that they are suffering irreparable harm by the defendants’ ongoing sale of the disputed product on the internet, and they had also established that blocking the defendant’s use of Google’s search services would cripple the defendants’ sales. On the other hand, “Google acknowledges that it can do what is being asked of it. Google does not assert that it would be inconvenienced in any material way or that it would incur expense to do so. The balance of convenience thus favours granting the injunction” [153].

Fenlon J therefore ordered that

Within 14 days of the date of this judgment, Google Inc. is to cease indexing or referencing in search results on its internet search engines the websites contained in Schedule A to the notice of application.

UPDATE: Leave to appeal granted 2014 BCCA 295

Friday, June 13, 2014

Evergreening Patent Held Invalid by the FCA

Pharmascience Inc v AstraZeneca Canada Inc / NEXIUM (NOC) 2014 FCA 133 Pelletier JA: Sharlow, Mainville JJA rev’g 2012 FC 1189, 105 CPR(4th) 267 O’Keefe J
            2,290,531 / esomeprazole / NEXIUM

In Pharmascience / NEXIUM the FCA held that O’Keefe J at first instance had erred in law in failing to apply the correct legal standard to the question of the burden of proof of utility [38], [42]. The FCA therefore reviewed the evidence de novo [43], and concluded that AstraZeneca had not satisfied the onus of showing that Pharmascience’s allegations of lack of utility was unjustified [43], [58]. Consequently, the application for a prohibition order was dismissed. Though there is no hint of it in the decision, I suspect that the FCA’s approach to the utility question was motivated by the “evergreening” nature of the 531 patent.

The patent claims an enteric coated formulation comprising (es)omeprazole*, an enteric coating, and a separating layer, in which the separating layer is hydroxypropyl methylcellulose (HPMC) with a specified cloud point (CP) [FC 13], [14]. The separating layer is used to prevent reactions between the API and the enteric coating which may lead to problems such as discoloration [FC 33]. HPMC was known in the prior art for use in the separating layer, and the technical contribution disclosed by the patent lay in the discovery that use of HPMC with the specified CP results in a higher release rate for the API [FC 47], and that there is variation in CP between batches of HPMC. The practical advantage of this is that if each batch of HPMC is checked for CP prior to tableting, and only batches with the specified CP are used, discard of the final product for failure to meet regulatory requirements for API release rate requirements will be reduced, thus reducing costs [FC 98, 100], [531 p4].

The utility point turned essentially on the question of whether it was true that the specified CP gives a higher release rate. But ignore this question for the moment. Suppose it is true, and the patent was valid. The result would be that a generic which produced a version of NEXIUM using what I understand to be the old method – that is, not by screening batches of HPMC for CP, but simply by using whatever came through the door and then screening the final product for release rate – would nonetheless infringe the patent. This is because the patent does not claim a method of production comprising screening HPMC for CP, and using only batches with the specified CP; it claims the pharmaceutical composition as such.** Assume it is true, as the patent asserts, that there is batch variation in HPMC. Because of that batch variation, even a generic using the old method would produce at least some lots of tablets which fall within the claims of the patent. The net result is that a technical contribution which provides a cost reduction in the production of esomeprazole tablets could be used to entirely block sales of such tablets, even if the production method did not take advantage of the technical teaching of the patent.

In the FC, this point was addressed largely via the argument that the 531 patent is not an invention because it merely verifies the properties of HPMC. O’Keefe J responded that

[176] On review of the evidence and the ‘531 Patent, I agree with AstraZeneca that the patent provides more information than merely identifying inherent physiochemical properties of a known substance. Rather, as submitted by AstraZeneca, the patent delves into batch-to-batch variations of a single low viscosity HPMC product and a property that can be tested to ensure consistent release of omeprazole in accordance with the marketing standard.

While it is all true (at least on the evidence as found by O’Keefe J), the problem is that the patent does not claim such an invention. The patentee is entitled to claim the practical embodiment of the new information it provides, and so the inventors would have been entitled to claim a method comprising testing for batch variation prior to tableting. But instead the patent claimed the formulation itself, even, on its face, if produced under the previously known method. Similarly, AstraZeneca argued that:

[100] When properly construed, the patent does not merely contribute a verification of the CP but also teaches that by selecting low viscosity HPMC above the claimed CP, a pharmaceutical formulator can reduce the amount of product discard that does not meet omeprazole release specifications. This was a surprising and unexpected teaching offering a substantial advantage.

The patent taught that, but it is not enough to teach a new invention; that invention must also be claimed. To my mind, this case is like the classic case of BVD Co [1937] SCR 441, in which the patentee invented and disclosed a good invention, but failed to claim it.

From a policy perspective, the patentee should be entitled to the exclusive right to exploit the advantage provided by its invention. In this case, the practical advantage is reduced production costs. What the 531 patent should give AstraZeneca is the right to compete against generics using a lower cost process, so it can afford to undercut the generics and still make a profit. The technical advance disclosed in the patent does not justify a monopoly on the production of enteric coated esomeprazole. (I should say that none of this has anything to do with the degree of ingenuity involved in the patent. It may require a stroke of genius to devise a new production method that reduces costs by 1%. The patent reward should be commensurate with the benefit to society, not with the degree of ingenuity.)

It may be that I haven’t fully understood the facts or the proper construction of the patent, as the case was not argued in exactly the way I have discussed, and consequently many of these issues were not discussed. But it does seem clear that a minor technical advance was being used to block competition in the market for enteric esomeprazole. This seems to be a true example of evergreening, in the pejorative sense. While the FCA took a stringent approach in its utility analysis, I would not read too much into that analysis beyond a desire to strike down what appears to be clearly a bad patent.

*Note: the 531 patent covers formulations of both omeoprazole and esomeprazole. The FC decision states that Pharmascience’ ANDS compared its capsultes to AstraZeneca’s NEXIUM, which is esomeprazole [3]. The FCA, on the other hand, says that the order sought was to prohibit an NOC “to Pharmascience for its version of the drug omeprazole “ [1], and the FCA also states that “Losec is a commercially marketed formulation of enteric coated esomeprazole, the (-) enantiomer of omeprazole.” [15]. As I understand it, LOSEC is omeoprazole, not esomeprazole. I take it that the FC was right that the case is really about esomeprazole. Nothing turns on this error by the FCA, but comparing the FC and FCA decisions can be confusing unless this point is kept in mind.

**In addition to claiming the formulation itself, the patent also claims the process of manufacture using HPMC of the specified CP, but it does not specify prior selection of the HPMC prior to tableting, so that again, the old method would infringe. This is as I construe the claims; the issue was not addressed in the decisions

Thursday, June 12, 2014

Permanent Injunction Not Available as of Right

Abbvie Corp v Janssen Inc / Injunction 2014 FC 489 Hughes J
            2,365,281 / anti-IL-12 antibodies / STELARA

This decision raises a number of important points relating to the availability of a permanent injunction to a successful patentee. Hughes J makes it clear that a permanent injunction is discretionary in principle, though it will normally be awarded to a successful patentee absent unusual circumstances. Such unusual circumstances are not a purely theoretical possibility; on the facts, a complete permanent injunction was refused. The decision also shows that the question is not simply whether a permanent injunction should be granted or refused; the question is how a permanent injunction should be crafted to balance the relevant interests. On the whole, this case shows that Canadian law related to permanent injunctions is well-placed to deal with issues such as injunctions sought by non-practising entities and standard-essential patents, if and when those questions surface in Canadian litigation, but without over-reacting against patentees generally. An equivalent to eBay Inc v MercExchange (2006) 547 US 388, is not necessary or desirable in Canada.

This trial has been not just bifurcated, but trifurcated. In the first part on infringement and invalidity, Hughes J held that AbbVie’s 281 patent was valid and infringed by Janssen’s STELARA [1]: 2014 FC 55, blogged here. The remedies portion was further bifurcated into the question of injunctive relief, and damages or profits. Consequently, this AbbVie / Injunction decision deals only with the issue of whether the successful plaintiff, AbbVie, is entitled to a permanent injunction, and if so, on what terms.

Hughes J reviewed the law relating to the grant of permanent injunctions, and held that “An injunction normally will follow once the Court has found that a patent is valid and has been infringed” [35]” The word “normally” is important here, as it is clear from the permissive wording of the s 57 [34], the prior case law [35]-[38], and equitable nature of injunctive relief [35], that injunctive relief is a discretionary remedy, which is not available as of right, even though it will be granted except in “rare circumstances” [36]-[37].

(Hughes J also held at [38] that the RJR-MacDonald [1994] 1 SCR 311 test for an interlocutory injunction is not the test which should be applied in respect of a permanent injunction, citing the Ontario and BC Courts of Appeal: 2014 ONCA 125, 2010 BCCA 396. For what it’s worth, I agree with the reasoning expressed in those decisions, and in the passage quoted by Hughes J at [38].)

The facts in this case were indeed very unusual. AbbVie does not practice the 281 patent, but neither is it a patent assertion entity or “troll.” Janssen’s infringing product is STELARA, a biologic used to treat psoriasis, which, in its severe form, can be disabling [17]. Three other biologics are also approved in Canada for treating proriasis: HUMIRA, sold by AbbVie, REMICADE (Janssen) and ENBREL (Amgen) [21]. All four treatments have significant market share, and none except STELARA fall within the scope of the 281 patent [15]. By keeping STELARA off the market, AbbVie is seeking to preserve the largest possible “footprint” for HUMIRA in the market for prosiasis treatments [45]. The twist is that these products are not perfect substitutes. STELARA operates by inhibiting IL-12, while the other three target TNF-α [21]. Even the TNF-α drugs are not perfects substitutes with one another, and it was a common treatment scenario for the physician to switch the patient among the TNF-α drugs before going to the sole IL-12 drug (STELARA) [23].

A permanent injunction would therefore have allowed AbbVie to prevent the sale of drug which AbbVie itself does not supply, and which for some patients is the only effective treatment for a disabling condition. On these unusual facts, AbbVie, no doubt wisely, did not even seek a complete permanent injunction. In broad terms, AbbVie sought an injunction, with an exception for existing patients, and restrictions on new patients. All the sales permitted under the exception would be subject to an continuing royalty [43]. Nonetheless, the discretionary nature of a permanent injunction was squarely at issue because Hughes J refused to grant the injunction in precisely the terms sought by Abbvie. As Hughes J put it:

[16] Thus, the Court is required to balance on the one hand, the rights of a patentee to the exclusive use of their claimed invention, including the right to control, by licence, others who wish to use the claimed invention, with the commercial desire of the Defendant to sell the infringing drug and, with a medical need by some members of the Canadian public to have continued access to the infringing drug.

In particular, AbbVie has sought to require physicians to formally certify that the patient has a medical need for Stelara that cannot be met by Humira before prescribing Stelara to new patients [63], and Hughes J refused to impose this requirement [66]. AbbVie did not seek to restrain dissemination of technical information regarding STELARA [68], but it sought to restrain active marketing by sales reps or a “detail” person. Hughes J agreed to this [71]. AbbVie proposed that Janssen be required to approach the formularies with new critiera for listing [73], and that Janssen be ordered to comply only with lawful requests from Health Canada [77], and to write a letter to physicians stating that STELARA infringes AbbVie’s patent [78] Hughes J refused all of these requests. With respect to the letter, Hughes J noted that a “forced” letter implicates freedom of expression, and such a letter “is an exceptional thing” [81]. On the other hand, Hughes J did order a prohibition on Phase IV studies of STELARA in Canada, although this apparently turned, at least in part, on the fact that none were planned [87].

While the details of the injunction may no doubt be debated, in my view Hughes J’s decision represents a sound approach to balancing the various interests. At this point, I have to point out the theoretical counter-argument. In principle, if AbbVie were granted a complete injunction, prohibiting any sales of STELARA without AbbVie’s permission, this does not mean, at least in theory, that patients who need STELARA would be forced to go without. If a patient is not responding to AbbVie’s HUMIRA, and does respond to STELARA, it would be in AbbVie’s own interest to allow Janssen to sell the STELARA, subject to a royalty negotiated with AbbVie. The general point here is that injunctive relief does not necessarily mean that the prohibited activity will not take place; it just means that the terms on which it takes place will be dictated by the patentee. If a complete injunction were granted, AbbVie would decide the royalty payable on sales of STELARA to patients who did not respond to HUMIRA, while given the limited injunction that was granted, the royalty will be decided by the court in the third stage of this trial.

The obvious rejoinder to this analysis is that the question is not just as to the royalty: if an injunction were granted, AbbVie, and not the patient’s physician, would ultimately be responsible for deciding whether STELARA was medically necessary for the patient. It is an interesting theoretical question as to whether, in principle, there is a divergence between AbbVie’s interests and those of the patient, such that we should expect sub-optimal outcomes if an injunction were granted, assuming that AbbVie acted purely rationally. But whatever the outcome of such an analysus, it would take a compelling practical argument that the patient’s health would not suffer, and not merely a theoretical one, before the courts should be willing to put a patient’s health in the hands of a patentee.

Wednesday, June 11, 2014

Must a Challenge to Listing Eligibility Be Brought on a 6(5) Motion?

Bayer Inc v Apotex Inc / drospirenone (NOC) 2014 FC 436 Hughes J
            2,382,426 / drospirenone & ethinylestradiol / YAZ

In Apotex / YAZ, Apotex argued that the 426 patent is ineligible for listing on the Patent Register. The main legal question of interest is whether Apotex could even raise the issue at the hearing, or whether it must bring a prior motion under s 6(5)(a) of the NOC Regulations. Hughes J noted at [72] that in 2005 FC 1421 Mosley J had held that Apotex was not required to make a motion under subsection 6(5), and at [74] Hughes J noted that he had commented in obiter to the same effect in 2013 FC 985 [109]. He also relied at [73] on the FCA decision in 2007 FCA 187, as being to the same effect, but it must be said that that case was about the interpretation of “claim for the medicine itself” under s 2, and not about subsection 6(5). And on the other hand, in 2008 FC 308, [65]-[66], Gauthier J after a review of the case law, held that she did not have jurisdiction to consider eligibility issues in a s 6(1) motion, as they had to be decided as a part of a s 6(5) motion. After all this, Hughes J said “It is time to put the matter to rest” [76], and held, contrary to Gauthier J, that eligibility can be raised in a s 6(1) motion, nothwithstanding that no motion was brought under 6(5). Given that Gauthier J is now in the FCA, I am not sure that Hughes J’s holding will put the matter to rest, but at least his decision does frame the issue and the split case law for the FCA to resolve.

Turning then to 426 patent, Apotex argued that it could not be listed against YAZ because the ethinylestradiol in YAZ is contained as a clathrate (a solid mixture in which small molecules of one compound are physically trapped in the holes of the crystal lattice of another substance [88]), and ethinylestradiol as claimed in the 426 patent does not encompass a clathrate. An initial question is whether a patent claiming a clathrate is eligible for listing, recalling that a patent is only eligible if it contains “a claim for the medicinal ingredient,” which excludes “different chemical forms of the medicinal ingredient.” However, a Health Canada policy statement (albeit one issued before subsequent changes to the NOC Regulations), did define the active moiety of the medicinal ingredient to include a clathrate [87]-[88], and this interpretation appears to have been accepted by Hughes J. The next question was whether ethinylestradiol in the claim included a clathrate. Hughes J held it did, based both on a straightforward grammatical analysis [91]-[92], and on Apotex’s own use of the term in its ANDS as including a clathrate [95]-[96].

Tuesday, June 10, 2014

Experimental Use Exception to Anticipation

Bayer Inc v Apotex Inc / drospirenone (NOC) 2014 FC 436 Hughes J
            2,382,426 / drospirenone & ethinylestradiol / YAZ

The anticipation argument in Apotex / YAZ turned on clinical trials conducted by Bayer in the US and Europe more than one year before the filing date, in which samples which embodied the invention were delivered to trial participants and their doctors. The doctors and participants did not know the precise ingredients (they knew of the active ingredients and dosage, but apparently not the micronized form) [100]. While Bayer took reasonable precautions to require participants to return unused samples [112], it appears that neither the doctors nor participants had signed confidentiality agreements [99]. While there was no evidence that anyone had ever actually analyzed the tablets [111], there was evidence that it was inevitable that some tablets would not be returned, given the large scale nature of the trials [113]. On these facts, Hughes J held

there has been established a ‘theoretical’ possibility that a tablet could have been kept and analyzed, [and] therefore the requirements of subsection 28.2(1) (a) of the Patent Act have been met” [118].

While Hughes J drew on European case law, and did not cite the recent FCA decision in Wenzel Downhole Tools 2012 FCA 333, it seems to me that this holding is consistent with the test set out by the majority in Wenzel [74, original emphasis] that it is sufficient that “there was an opportunity to access the relevant information.”

However, this did not end the matter. Hughes J held that “The law in Canada has long been established that experimental use in order to bring the invention to perfection, does not constitute public use” [119]:

[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.

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.

As authority, Hughes J relied on Conway v Ottawa Electric Railway Co., (1904), 8 ExCR 432, 442; Gibney v Ford Motor Co. of Canada, [1967] 2 ExCR 279 [49], citing Elias v Grovesend Tinplate Co. (1890), 7 RPC 455, 466; and Hi-Qual Mfg Ltd v Rea’s Welding & Steel Supplies Ltd (1994), 55 CPR(3rd) 224, aff’d 61 CPR(4th) 270 (FCA). Of these cases (and I will not go into all of the other case law cited in those cases), Conway does stand for a broad experimental use exception to anticipation, but the others are weaker authority. Gibney and Elias both insisted that the experiments must be kept secret if anticipation was to be avoided, and in both cases the patents were held to be invalid as anticipated. In Hi-Qual the experimental nature of the use was an alternative ground for holding that patent not anticipated, the first ground being that the invention was not publically available. (The invention, relating to farm equipment, was outdoors on the inventor’s property, but the property was not open to the public, and the invention could not be seen from public property.)

It seems to me that one decision more than a century old is not strong enough authority to say this point is well-established. With that said, while old, Conway raises an interesting point which is directly applicable to clinical trials. The invention in question was a snow-plow for clearing street car tracks. An important feature of the plow as compared with the prior art was that it was adapted so as to accommodate the irregularity of real street surfaces. Consequently, it was only possible to develop the invention by experimenting in public, and this fact was relied on by the court in holding the experiments did not destroy novelty. Evidently, with a mechanical snow-plow, even more than with pharmaceuticals, if the device is operated in public it will be disclosed to any knowledgeable observer, and it is impossible to exclude the pubic from the public streets. This suggests that if it is impossible to develop the invention in secret, an experimental use exception may be required. With that said, it is not clear that Bayer could not have filed a patent prior to conducting its clinical trials, as clinical trials are not necessary to establish patentable utility. But in any event, the problem of inventions which must be developed in public is an interesting one in principle.

A different consideration is that it does appear that if the inventors had signed all the doctors and participants to a confidentiality agreement, then the invention would not have been available to the public in the first place. But is this mere legal formalism? It is not clear that signing a confidentiality agreement would have been any more effective than the (unspecified) reasonable steps Bayer actually took to ensure the unused product was returned. Perhaps the law should recognize that taking reasonable steps to ensure product is returned is tantamount to a confidentiality agreement, at least when dealing with unsophisticated patients in a clinical trial. As the Fed Cir put it in Dey v Sunovion

The fact that a tiny fraction of the thousands of vials were lost without penalizing the responsible test subject(s), or that the practicalities of the study required self-administration at home rather than physician administration in a closed facility, does not preclude a reasonable jury from concluding that the use of Batch 3501A was sufficiently controlled and restricted, rather than unfettered and public.

As noted, strictly, this goes to the question of whether there is disclosure to the public in the first place, rather than whether there is an experimental use exception, but this logic does reach the same result as Hughes J on the same factual basis. A response to this argument, as to the point above, may be that the pharmaceutical company should get its patent before starting clinical trials. (Note that in Dey prior trials by the accused infringer were at issue.)

In summary, while there is some case law supporting Hughes J’s position, I would not say that the experimental use exception to anticipation is well-established, and the policy issues are difficult. This aspect of his decision raises important legal and policy questions for the FCA, which might be dealt with either in terms of an experimental use exception, or by a refinement of the Wenzel approach to disclosure. Patently-O posts here and here discussing the same issue indicate that there has been a shift in US case law which has narrowed the experimental use exception, while at the same time adopting a more restrictive test for what constitutes public use.

Addendum: When I wrote this post, I was focused on the interesting legal issue of whether there is an experimental use exception to anticipation, and I glossed over the prior issue of whether there was disclosure to the public in the first place. On further reflection, I do not find the analysis of that point to be entirely satisfactory (though of course this may be a consequence of the way the case was argued). A disclosure to a party under an obligation of confidence is not a disclosure to the public, and while it appears that neither the doctors nor participants had signed confidentiality agreements, it is clear law that an explicit confidentiality agreement is not required to establish an obligation of confidence. The question is whether the product was conveyed in circumstances giving rise to an obligation of confidence: see generally Corlac v Weatherford 2011 FCA 228 [36]- [65], which is now the leading FCA case on the point, and which was not cited by Hughes J. The question of whether the circumstances were such as to give rise to an obligation of confidence is ultimately one of fact. From this decision, all we really know of the relevant facts is that Bayer “took reasonable precautions so as to keep relevant information confidential and to require participants to return any unused tablets” [112]. That at least raises a serious issue as to whether the circumstances were such as to give rise to an obligation of confidence. The simple fact that there was no explicit written or oral confidentiality agreement is “ significant, but not dispositive” (Corlac [53]). On the whole, I am inclined to think that this case should really turn on whether the circumstances were such as to give rise to an obligation of confidence. If such an obligation did arise, then there is no need to invoke an experimental use exception to anticipation; if it did not, then it is difficult to see why an exception should be invoked to protect a party which had disclosed an invention to the public without adequate regard to its confidentiality. Furthermore, whether or not such an exception is desirable is a matter for the legislature. Canadian law does have a grace period for disclosure by the inventor, but many jurisdictions do not. Whether such a grace period is desirable is a debatable matter of policy, and one of the most contentious issues is the uncertainty which it can create (see Part I of the recent Tegernsee Group report). If a further exception is to be made for experimental disclosure, this should be done by the legislature, rather than through an open-ended and poorly defined judicial exception.

Monday, June 9, 2014

Tension Between Purposive and Textual Considerations in Claim Construction

Bayer Inc v Apotex Inc / drospirenone (NOC) 2014 FC 436 Hughes J
            2,382,426 / drospirenone & ethinylestradiol / YAZ

In Apotex / YAZ Hughes J refused to grant an order prohibiting the Minister from issuing an NOC to Apotex for its version of Bayer’s YAZ birth control pill, holding that infringement was not established. That issue turned primarily on the construction of the particular patent. While no new principles of law were at issue, the decision adopted a fairly strict textual approach to construction, and the case illustrates the difficulty facing patentees in drafting claims which capture the full scope of the inventive concept. Hughes J also addressed issues relating to eligibility for listing on the patent register, as well an experimental use exception to anticipation, which have wider implications. This post provides background and deals with the infringement issue. Note that Hughes J had previously dealt with the 426 patent in Cobalt / YAZ 2013 FC 1061, blogged here and here, though the evidence and many of the issues were different.

It was known in the prior art that a combination of drospirenone and ethinylestradiol could be used as an oral contraceptive, but “what was not known is that the dissolution of the drospirenone in the stomach could be enhanced by providing it . . . in a form such as micronized, so that it would dissolve rapidly” [Cobalt 80]. Claim 1 of the patent claimed a pharmaceutical composition comprising “micronized drospirenone” and Claims 30 and 31 claimed a composition comprising “drospirenone particles,” with Claim 31 also specifying particular a dissolution profile [50]. In Apotex’s product, drospirenone was present in a solid solution, or “molecular dispersion” [65]-[66]. The claim construction question was whether either “micronized drospirenone” or “drospirenone particles,” encompassed a molecular dispersion. The molecular dispersion of Apotex’s product results in almost exactly the same dissolution profile as Bayer’s YAZ, and meets the dissolution parameters specied in Claim 31.

In broad terms this raises a familiar problem of interpretation: how do we resolve a tension between a purposive and textual interpretation of a claim (or a statute or other legal document). The SCC has held that “the guiding principle” of purposive construction is that “where the uage of the specification, upon a reasonable view of it, can be so read as to afford the inventor protection for that which he has actually in good faith invented, the court, as a rule, will endeavour to give effect to that construction” 2004 SCC 34 [35], [1934] SCR 570, 574. As Bayer argued [Cobalt 57], this implies that since the technical contribution is the discovery is that a rapid dissolution is advantageous, the claim should be construed to encompass this contribution. On the other hand, the text is also crucial, and if the patentee has introduced an unnecessary limitation, which excludes the true invention, this is a “self-inflicted wound” 2000 SCC 66 [51]. The question is whether “micronized” and “particle” are textual contraints which over-ride a purposive construction. While the point was not specifically addressed, it appears that the patentee would have been entitled to draft a claim encompassing a molecular dispersion – such a claim would not have been overbroad – and the question is whether it did so.

Hughes J held that “micronized” refers to a particular method of producing small particles and so achieving a high dissolution rate, and does not cover other methods of achieving the same result, such as spraying or molecular dispersion [52]. The more difficult question relates to Claim 31 and the word “particles.” In Cobalt / YAZ Huighes J accepted Bayer’s argument, and construed Claim 31 as “not limited to drospirenone in its micronized form, but to any form in which the rapid dissolution rate stipulated by that claim can be achieved.” [Cobalt 59], [50], [53]. That suggests that it should encompass a molecular dispersion which achieves the same rapid dissolution profile. However, Hughes J pointed to the following passage of the patent [57]:

The composition of the invention may be formulated in any manner known in the pharmaceutical art. In particular, as indicated above, the composition may be formulated by a method comprising providing drospirenone and, if desired, ethinylestradiol in micrnoized form in said unit dosage form, or sprayed from a solution onto particles of an inert carrier in admixture with one or more pharmaceutically acceptable excipients that promote dissolution of the drospirenone and ethinylestradiol so as to promote rapid dissolution of drospirenone and preferably ethinylestradiol and oral administration.

He then held:

[58] The patent describes, therefore, drospirenone that is provided in one of two forms, in micronized form, or drospirenone that has been dissolved in a solvent, sprayed in to an inert carrier particles, then dried. Reference is also made to formulation by “any manner known in the pharmaceutical art” The formulation of those particles (micronized or sprayed on) with other excipients can then proceed in any manner known in the pharmaceutical art.

I must say that this strikes me as reading examples from the description into limitations in the claim. I don’t see how “in particular” limits “any manner known in the pharmaceutical art.”

He then concluded that

[59] No mention is made of a process whereby drospirenone is dissolved into a matrix [redacted], then mixed in with the other ingredients. In such a process drospirenone is no longer a “particle” or even sprayed onto a “particle”, it is in solution.

This seems to be a purely textual point that a molecule in a solid solution is not a “particle.” (From the context, “solution” means a solid solution, not a liquid solution.) I am not sure that this textual interpretation of “particle” is so compelling as to override the purposive point that Hughes J found convincing in Cobalt / YAZ, but it strikes me rather as the kind of “meticulous verbal analysis” referred to in Catnic [1982] RPC 183, 244 (HL). In any event, it does illustrate the great difficulty facing patent drafters in trying to draft claims language that encompasses all possible ways of implementing the inventive concept.

Friday, June 6, 2014

Punitive and Exemplary Damages Not Available under S 8 of the NOC Regulations

Teva Canada Ltd v Pfizer Canada Inc, 2014 FCA 138 Mainville J: Sharlow, Gauthier JJ aff’g 2014 FC 69 de Montigny J aff’g Aronovitch J 20 Aug 2013
            2,163,446 / sildenafil / VIAGRA

In this brief decision the FCA has affirmed that punitive and exemplary damages not available in an action under s 8 of the NOC Regulations. Aronovitch J had struck those portions of Teva’s statement of claim seeking such damages, and this decision was affirmed first by de Montigny J and now by the FCA. It is difficult to comment on the substance of the FCA’s reasoning, as Mainville J affirmed “substantially for the reasons expressed by Justice de Montigny at paragraphs 28 to 37 of his order, which I adopt” [6]. Unfortunately, de Montigny J’s reasons are not yet available on the FC website.

Mainville J did add some “brief comments” [6]. He emphasized that the issue is one of statutory interpretation [9], and he noted that s 8(1) provides for compensation “for any loss suffered” (his emphasis). He noted further that the FCA has consistently held that “this wording allows compensation for losses actually incurred by a second person by reason of the operation of the statutory stay contemplated by the NOC Regulations, but it does not allow for other types of relief, such as disgorgement of profits or punitive damages” [10]. The leading cases are Merck Frosst Canada Ltd v Apotex Inc / alendronate (NOC) 2009 FCA 187, [89]-[91], [101]-[102] and Apotex Inc v Eli Lilly Canada Inc. / raloxifene (NOC) 2011 FCA 358, [22]-[23], though it must be said that both of these were primarily concerned with holding that a disgorgement of profits was not available, not with the availability of punitive damages. The distinction is significant because a key aspect of the reasoning in those decisions was the legislative history of the regulations, in which the word “profits” was removed, and the RIAS stated that this was done to foreclose an accounting of profits remedy: see the raloxifene decision, blogged here. While this is a very powerful argument with respect to the exclusion of an accounting, it does not have quite the same force with respect to punitive damages.

The key authority with respect to punitive damages is the statement in the alendronate decision at [89] that “A contextual reading of section 8 of the PM(NOC) Regulations indicates that ‘compensation’ for the loss resulting from the operation of the automatic stay is to be computed by reference to the loss suffered by the second person by reason of the stay or the profits that it would have made during the period when it was prevented from going to the market.” This makes the point that not only is an accounting excluded, the s 8 remedy is purely compensatory, which rules out punitive or exemplary damages as well. This is supported by the consistent references to “compensate” and “compensation” throughout the section, as well as the reference to “any loss” noted by Mainville J in this decision. So, while there is certainly a good basis in the text of the statute for the holding that punitive damages are excluded, this holding does clarify the prior case law, which specifically focused on an accounting, in affirming the more general principle that s 8 is purely compensatory in nature. A fuller analysis of the decision will have to await the release of de Montigny J’s reasons.

Monday, June 2, 2014

Attendance of the Opposing Party at Experiments to Be Relied on at Trial

Dow Chemical Co v Nova Chemicals Corp 2012 FC 754 O’Keefe J

In this recently posted 2012 decision, O’Keefe J ordered that the plaintiff / patentee, Dow, permit experts retained by the defendant, Nova, to attend testing and experiments that Dow intended to rely on at trial. Dow had proposed instead to provide the defendant with a video of the experiments and information such as the raw data generated during the procedure [7].

After reviewing the relevant jurisprudence, O’Keefe J held that:

[51] I find it is the practice of this Court to allow attendance of the opposing party at testing conducted in support of the action, the results of which are planned to be used at trial.


[58] In summary, I find that it is a practice of this Court not to accept a party’s evidence of tests and experiments where notice and an opportunity to attend have not been given to the opposing party.

While Dow raised a number of arguments, the most serious concern, as I read it, was that because the testing would take place at Dow’s research labs at a number of different locations over a period of over four and a half months, “the defendant’s presence at the plaintiffs’ laboratories during trial testing would disrupt the regular functioning of these laboratories and require the plaintiffs to cease operation of all research and development (R&D) projects in those laboratories during this time,” [24] (and see similarly [28]). Dow viewed this as a particular concern because “the defendant’s expert, Dr. Mirabella, is not truly independent. The plaintiffs note that Dr. Mirabella has consulted exclusively for the defendant since early 2009” [29].

In addressing this point, O’Keefe J held that

[56] I also do not find that the plaintiffs’ privacy concerns are warranted. As stated by the defendant, all of its experts are covered under the protective order issued by this Court. In addition, visitors to the plaintiffs’ facilities will likely only be granted access under the terms of a confidentiality agreement.

Thanks as always to Alan Macek’s IPPractice Daily Email service for keeping us all up to date on the latest cases.